HONG KONG
How does the new framework operate in Hong Kong?
As with the current framework, the RE Ordinance operates through registration, whereby applications can be made to the Hong Kong Court of First Instance (“CFI”) to have Mainland judgments in civil or commercial matters registered. Once registered, a judgment may be enforced as though it were a judgment of the CFI itself.
What are the core requirements for registration under the new framework?
An application for registration of a Mainland judgment in Hong Kong is straightforward and conducted on an ex parte basis. The key conditions are:
Are any types of judgments excluded?
Section 5 of the RE Ordinance sets out certain categories of “excluded judgments” which are not amenable to registration.
These include, for example, certain matrimonial / family law judgments, judgments for enforcement of arbitral awards, and corporate and personal insolvency judgments – all of which are covered by alternative regimes. Most notably, insolvency matters are also part of a separate pilot program that is underway to harmonise cross border insolvencies, announced on 14 May 2021 (see our earlier alert here). [4]
Subject to limited exclusions, the new regime also permits judgments relating to certain types of intellectual property rights disputes to be enforced.
Can registration be set aside?
The Hong Kong court must set aside the registration of a judgment in a limited range of circumstances, including for example if it can be shown that:
- The defendant to the original proceedings was: (1) not summoned to appear before the original Mainland court according to the law of the Mainland, or (2) “… was so summoned but was not given a reasonable opportunity to make submissions or defend the proceedings”.
- A court in Hong Kong has given a judgment on the same cause of action between the parties, or a court elsewhere has given judgment on the same cause of action, and it has already been recognised or enforced by a court in Hong Kong.
- The registered judgment was obtained by fraud or has been reversed or set aside pursuant to an appeal or retrial.
- Enforcement of the registered judgment would be “manifestly incompatible with the public policy of Hong Kong”.
How is the new regime an improvement on the status quo?
The existing framework is set out in the Mainland Judgments (Reciprocal Enforcement) Ordinance (Cap. 597), which gave effect to an arrangement from 2006. The key enhancements include:
MAINLAND CHINA
The improvements outlined above are effectively mirrored in Mainland China and are therefore also relevant for judgment creditors seeking to have Hong Kong judgments recognised and enforced there.
One particular point regarding the enforcement court needs to be mentioned. In the Mainland, according to Article 7 of the RRE Arrangement, an application for the recognition and enforcement of a qualified Hong Kong judgment shall be submitted to an Intermediate People's Court “at the place of residence of the applicant or the respondent, or place where the property is located”. The option to seek enforcement where the applicant is domiciled is a new addition in the RRE Arrangement, which solves the problem that the respondent may not have his domicile in the Mainland, or the location of his property cannot be identified.
As mentioned above, as the Supreme People's Court has yet to issue a judicial interpretation for the RRE Arrangement, it remains to be seen how the Mainland will further implement the RRE Arrangement.
IMPACT
The narrow ambit of the outgoing regime, under which many judgments were ineligible for registration, often resulted in the need to effectively relitigate disputes in either the Mainland or Hong Kong to obtain comprehensive enforcement. The expanded scope of the new regime is likely to reduce the need for duplicated proceedings, thereby offering significant cost-savings to parties looking to enforce Mainland judgments in Hong Kong and vice versa.
More broadly, enactment of the RE Ordinance in Hong Kong marks a positive step towards further commercial integration between Hong Kong and the Mainland, promoting welcome clarity for parties engaged in cross-border transactions and disputes.
Any reference to "Hong Kong" or "Hong Kong SAR" shall be construed as a reference to "Hong Kong Special Administrative Region of the People's Republic of China".
Reference
[1] The full text of the RRE Arrangement can be accessed in the original Chinese here. A courtesy English translation can be found here. And an outline of the key features of the RRE Arrangement issued by the Hong Kong Government in English can be accessed here.
[2] The full text of the RE Ordinance can be found here.
[3] See the Press Release issued by the Hong Kong Government on 10 November 2023 and RRE Arrangement, Article 29.
[4] The courtesy English translation of the Record of Meeting of the Supreme People’s Court and the Government of the Hong Kong Special Administrative Region on Mutual Recognition of and Assistance to Bankruptcy (Insolvency) Proceedings between the Courts of the Mainland and of the Hong Kong Special Administrative Region can be found here.
