New Hong Kong-Mainland China Reciprocal Enforcement Regime to Come Into Force on 29 January 2024
The long-awaited Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance Cap 645 (Ordinance) will come into force on 29 January 2024. The Ordinance will provide a more comprehensive mechanism for reciprocal recognition and enforcement of judgments in civil and commercial matters between Hong Kong and Mainland China. Aside from an increase in certainty and predictability for parties, we can expect to see a reduction in time and legal costs spent on cross-boundary enforcement of judgments.
In this Legal Update, we set out the key changes under the Ordinance and what this means in practice.
Key Changes under the Ordinance
The Ordinance, once in force, will supersede the existing reciprocal enforcement regime under the Mainland Judgments (Reciprocal Enforcement) Ordinance Cap 597 (Existing Regime). The Ordinance will apply to judgments given on or after the commencement date of the Ordinance (i.e. 29 January 2024), and the default in complying with the relevant judgment must have occurred within two years before the date of the registration application.
The Existing Regime will continue to apply to judgments (given pursuant to an exclusive jurisdiction agreement in favour of the courts in Mainland China or Hong Kong) dated before the commencement date of the Ordinance. The key changes under the Ordinance are as follows:
1. Removal of the Exclusive Jurisdiction Requirement
The Existing Regime requires the judgment creditor to show that the parties have, in their underlying contract, agreed to submit to the exclusive jurisdiction of the courts in Mainland China or Hong Kong. This exclusive jurisdiction requirement will be removed under the Ordinance, and the judgment creditor will instead satisfy the jurisdiction requirement by showing the Hong Kong court how the original proceedings had sufficient connection with Mainland China. Factors that establish sufficient connection include the defendant's residence or place of business being in Mainland China at the time proceedings were accepted by the Mainland court, and proceedings being brought in respect of a contract that is performed or a tortious act that is committed in Mainland China.
2. Expanded Scope of Judgments
Under the Existing Regime, only monetary judgments given by courts in Mainland China or Hong Kong in commercial disputes are recognised and enforced. The Ordinance will expand the types of judgments that can be recognised and enforced to include both monetary and non-monetary judgments that are civil and commercial in nature, orders for compensation and damages arising from criminal proceedings, and certain intellectual property judgments.
This widened scope is, however, subject to a list of exclusions set out in the Ordinance e.g. judgments given in insolvency, debt restructuring, bankruptcy, succession of estate and matrimonial cases, certain intellectual property cases, and proceedings to confirm the validity of an arbitration agreement or to set aside an arbitral award. Anti-suit injunctions and interim relief are also excluded.
3. Broader Range of Courts
The Ordinance will broaden the range of acceptable courts and tribunals. In relation to Mainland China, judgments from the Primary People's Courts will no longer be limited to only those courts that are specifically designated. In relation to Hong Kong, enforceable judgments will be expanded to include those issued by the Competition Tribunal, Lands Tribunal and Labour Tribunal.
What This Means in Practice
The Ordinance enables Hong Kong to be a unique dispute resolution venue in the region for matters connected to Mainland China. Its simple reciprocal enforcement mechanism and broad application will allow parties to better protect their rights and reduce the risks, costs and time usually associated with enforcement of judgments across the boundary.
If you are a judgment creditor with a Mainland China judgment that remains unsatisfied, you can make a registration application to the Hong Kong courts as prescribed by the Ordinance, on an ex parte basis i.e. without involving the judgment debtor. Once the application is accepted, the Hong Kong court may, as an interim measure, order the judgment debtor's assets to be 'frozen' in order to prevent any dissipation. The judgment debtor can contest the registration, however, the debtor will generally only have 14 days (from the date the notice of registration was served on them) to do so and only on a limited number of grounds relating to procedural fairness and public policy.
If you are a judgment creditor with a Hong Kong judgment that remains unsatisfied, you can follow simple steps under the Ordinance to file the judgment with the appropriate Intermediate People's Court in Mainland China for the facilitation of enforcement.
