New Hong Kong-Mainland China Reciprocal Enforcement Regime to come into force

On 26 October 2022, the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (“the Ordinance”) was passed by the Legislative Council. The Ordinance effectively implements the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by Courts of the Mainland and of the Hong Kong Special Administrative Region (“the Arrangement”) signed back in 2019, and is expected to come into effect in January 2024.

There are a number of key changes with the enforcement of the new Ordinance, including:

1. Easing of requirement for exclusive jurisdiction
The new Ordinance will replace the requirement for exclusive jurisdiction with a jurisdiction test, which requires to be proven an actual connection between the dispute and the Mainland. The requirement is satisfied if one of the conditions is met, such as the place of performance of contract, the defendant’s place of residence or representative office located in Mainland. Under this new requirement, the process of registering a Mainland judgment to be enforced in Hong Kong will be greatly streamlined.

2. Expanded scope of enforceable judgments
Most civil and commercial judgments in the Mainland can be registered and enforced in Hong Kong under the Ordinance, a departure from the courts previously only enforcing contractual disputes. Note that the ordinance contains a list of excluded judgments, including corporate insolvency, debt restructuring and personal bankruptcy, arbitration, administration of estate of a deceased person, along with certain matrimonial and intellectual property matters.

The types of enforceable judgments have also broadened from “final and conclusive” to any which is legally “effective”.

3. Widened range of remedies
Before the expanded regime, only certain types of monetary judgments could be enforced reciprocally between the two jurisdictions. The Ordinance will enable both cases involving monetary and non-monetary relief to be enforced.

Under the new Ordinance, a judgment creditor under an effective Mainland judgment after the commencement of the Ordinance would be able to apply to the Court of First Instance (CFI) for a registration order on an ex parte basis. If the Mainland judgment is successfully registered, it would be enforced in Hong Kong as if it were originally delivered by CFI. A judgment debtor may also apply to set aside the registration on grounds listed in the Ordinance, such as the judgment being obtained by fraud, the court has already rendered a judgment on the same course of action between the parties, or the judgment is manifestly incompatible with the public policy in Hong Kong.

With the imminent implementation of the Ordinance, companies will enjoy great flexibility in drafting contracts, where an exclusive jurisdiction clause will no longer be required. It will also increase access for companies to recover debts as the forum for litigation expands. In view of the larger context, this will enhance Hong Kong as a venue of disputes resolution with its strengthened links to mainland China.

Author:

Anthony Marrin is a partner at H.Y. Leung & Co LLP, where he specializes in litigation and dispute resolution and has experience in international fraud and asset tracing, shareholders' disputes, contractual disputes, trusts and enforcement of foreign judgments in Hong Kong. Anthony is also a member of Alliott Global Alliance's Cyber Crime, Fraud & Asset Recovery Group. For more information on how we can help email anthony@hyleung.com.

Further reading:

• Hong Kong enhances e-crime reporting and analysis system
• Removing the fraud exception rule in summary judgment applications
• Internet Fraud - How to recover your funds in Hong Kong

About H.Y. Leung & Co. LLP:

H. Y. Leung & Co., LLP is AGA's representative law firm in Hong Kong founded by Mr. Alexander H.Y. Leung in 2014. The firm has rapidly grown in size since its inception, with over 27 lawyers specializing in a wide range of practice areas. H. Y. Leung & Co., LLP has a highly experienced and skilled team of lawyers providing practical and commercial legal advice tailored to its clients’ needs at competitive rates. The firm serves local and international clients, including major MNCs and China State Owned Enterprises.