With the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645) (the “Ordinance”) coming into effect on 29 January 2024, the long-awaited new statutory regime on reciprocal enforcement of judgments between Hong Kong and Mainland China has finally been implemented.
In our previous Newsletter issue 06, June 2023, we discussed the main features of the old and new regimes on enforcement of Mainland judgments in Hong Kong. In this article, we will recap the remarkable changes introduced by the new regime. Further, with 3 months into the enactment of the new regime along with introduction of the implementing rules and practice direction, we will also walk you through some commonly asked questions regarding the new regime.
Important Changes Under the New Regime
The old regime outlined under the Mainland Judgments (Reciprocal Enforcement) Ordinance (Cap. 597) (the “MJREO”) was in force in Hong Kong since 1 August 2008. Restrictive conditions, including most notably, the requirement of a contract in the underlying dispute to contain an exclusive jurisdiction clause in favour of the Mainland courts, must be fulfilled for a Mainland judgment to be eligible for registration in Hong Kong under the old regime.
With the growing business ties between Hong Kong and Mainland China, there is a pressing demand to broaden the scope of reciprocal enforcement of judgments. This calls for the enactment of the new regime which introduces the following important changes:-
1. 1. Expanded Scope of Disputes: Under the old regime, disputes covered by the Mainland judgment must arise from a contract in a civil or commercial matter. In contrast, the new regime is expanded to cover most civil and commercial matters as well as criminal matters with monetary compensation or damages ordered.
2. 2. Choice of Mainland Court Requirements Removed: The old regime imposes a stringent condition that the contract in the underlying dispute shall contain an exclusive jurisdiction clause in favour of the Mainland courts. The new regime relaxes the same, and the jurisdiction requirement will generally be satisfied if it can be shown that the individual defendant’s place of residence was in the Mainland or that the corporate defendant maintained a representative office, branch, office, place of business in the Mainland, the place of performance of the contract or the place of commitment of the tortious act was in the Mainland, etc.
3. 3. Extension to the enforcement of non-money judgments: In addition to monetary judgments, the new regime also encompasses judgments which require the performance of an act. This opens the possibility of the enforcement of injunctions and specific performance ordered by Mainland courts in Hong Kong.
4. 4. Judgments by Lower Mainland Courts Covered: Judgment from lower Mainland courts may not be enforced under the old regime unless it is given by one of the courts in the list of Recognized Primary People’s Court. That said, the new regime abolishes such requirement and recognizes judgments, rulings, conciliatory statements, and payment orders made by all Mainland courts.
Commonly Asked Questions Regarding the New Regime
1. Question: If I obtained a favourable Mainland judgment before 29 January 2024, can I register the same in Hong Kong under the new regime with the Ordinance being effective now?
Answer: No. The new regime is only applicable to Mainland judgments given after the commencement date of the Ordinance, i.e. 29 January 2024.
However, the old regime runs in parallel, and Mainland judgments fulfilling the relevant requirements under the MJREO (i.e. the old regime) may still be registered under the old regime. For those Mainland judgments that does not fulfill such requirements, enforcement under common law through commencing a fresh action in Hong Kong may be explored.
2. Question: Is there a deadline to apply for registration under the new regime?
Answer: Yes, the application must be made within 2 years after a default in complying with the Mainland judgment has first occurred. Further, if the Mainland judgment orders for payment/performance of an act to be made in stages, the application covering that specific obligation must be made within 2 years from the non-compliance of that obligation first occurred or from the relevant date for compliance.
For example, if the Mainland judgment orders for the defendant to make payment in stages, with the 1st installment being due immediately, the deadline for the Plaintiff to make an application in Hong Kong to register the judgment relating to the 1st installment is 2 years from the effective date of the judgment.
3. Question: If my Mainland judgment is obtained in insolvency proceedings, can I register it in Hong Kong under the new regime?
Answer: No. The new regime only covers judgments given in proceedings that are civil and commercial in nature, and does not cover judgments on corporate insolvency, debt restructuring or personal insolvency.
However, an application for recognition of Mainland insolvency proceedings may be made with the Hong Kong court under the pilot measure for mutual recognition and assistance of insolvency proceedings between the courts of three pilot areas in Mainland China and Hong Kong, which is known as the Cooperation Mechanism (or in case the insolvency proceedings were carried out at a Mainland court outside the pilot areas, the Hong Kong court may still accept the request for recognition and assistance under common law. For details, please see here).
4. Question: After I file the application for registration of the Mainland judgment, if the judgment is stayed in Mainland China, do I have to inform the Hong Kong court of this new development?
Answer: Yes. The application for registration is made on an ex-parte basis (i.e. without giving notice to the defendant), and the applicant has a continuing duty of making full and frank disclosure, disclosing to the Court all relevant information and documents, whether such information or documents are beneficial or adverse to the applicant.
In particular, if it has come to your attention any latest development of change of circumstances that would render the basis for granting the registration order no longer valid and sustainable (e.g. where the Mainland Judgment is stayed or set aside, etc.), you must immediately inform the Hong Kong court the same by way of supplemental affidavits. Failure to comply with such disclosure requirement may render the registration application refused or final order discharged.
5. Question: After I successfully registered the Mainland judgment in Hong Kong, can I immediately enforce it against the defendant?
Answer: After the registration order has been granted, the applicant must serve a notice of registration on the defendant (and all other parties against whom the Mainland judgment may be enforced) by delivering it personally or sending it by registered post to the recipient.
Generally, if no application for setting aside the registration of the judgment is made within 14 days after service of the notice of registration, action may be taken to enforce the registered Mainland judgment as if it were a judgment originally given by the Hong Kong court on the date of registration.
Conclusion
The implementation of the new regime marks a significant milestone in cross-jurisdictional reciprocal recognition and enforcement of judgments between Hong Kong and Mainland China. With the more comprehensive legal framework, parties may now enforce a wide range of civil and commercial judgments issued by courts in Hong Kong or Mainland China, thereby reducing the need to initiate separate lawsuits in both jurisdictions.
We will continue to monitor further developments and provide timely updates.
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