Legal update: Mainland Judgments (Reciprocal Enforcement) Ordinance (Highlights)26Sep2018
- Enforcement of foreign judgments in Hong Kong is ordinarily governed by the Foreign Judgments (Reciprocal Enforcement) Ordinance. Following the handover in 1997 however, China is no longer considered a foreign country by Hong Kong, therefore this ordinance is no longer applicable when enforcing Mainland judgments.
- Post-handover, judgments given by Mainland courts requiring payment of money could only be recognised and enforced in Hong Kong by beginning a new action in debt at common law, which proceedings were often time consuming and involved high legal costs.
- The Mainland had a similar law pre-handover in Article 281 of the Civil Procedure Law of the PRC, which became inapplicable once Hong Kong became a Special Administrative Region.
The new arrangement
- On 14 July 2006, ‘The Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region Pursuant to Choice of Court Agreements between Parties Concerned’ was signed between the Department of Justice and the Supreme People’s Court in the Mainland.
- The Mainland Judgments (Reciprocal Enforcement) Ordinance (Cap. 597) (the “Ordinance”) gave effect to the arrangement from 1 August 2008 onwards.
How does reciprocal enforcement work?
- The Ordinance is modelled on the Foreign Judgment (Reciprocal Enforcement) Ordinance (Cap. 319).
- Enforcement in Hong Kong is by way of registration of Mainland money judgments.
- A registered Mainland judgment has the same force as a judgment originally given by the Court of First Instance and entered on the date of registration.
Conditions of registration under the Ordinance
- The Ordinance only applies to enforcement of money judgments on disputes arising out of commercial contracts.
- Non-commercial contracts such as matrimonial or employment contracts, or contracts for personal consumption are excluded.
Valid agreement on choice of Hong Kong court or choice of Mainland court
- The underlying commercial contracts must contain a valid ‘choice of Hong Kong Court agreement’ or a ‘choice of Mainland court agreement’, meaning that the underlying contract must designate either the Mainland or Hong Kong courts as having exclusive jurisdiction in disputes arising from the contract.
- A party seeking to enforce a mainland judgment in Hong Kong needs not show that the underlying contract confers exclusive jurisdiction to the Mainland courts by pointing to express words such as “sole” or “exclusive”. It would suffice if the jurisdiction clause in the contract, properly construed under Mainland law, confers exclusive jurisdiction on the courts of the Mainland.
- The choice of court agreement has to be made after the commencement of the Ordinance.
Money judgments from a designated court
- Judgments to be registered must be money judgments not in respect of payment of tax, fine or penalty
- Costs orders and allocaturs are registrable In Hong Kong, only Mainland judgments from designated courts (namely the Supreme People’s Court, a Higher People’s Court, an Intermediate People’s Court or a recognised Basic People’s Court) are recognised
- In the Mainland, money judgments from any Hong Kong court are recognised
Final and conclusive judgments
- The judgment to be enforced has to be final and conclusive and is given after the commencement of the Ordinance
- In Hong Kong, an applicant can produce a certificate from the original Mainland court as proof that the judgment is final and conclusive. Hong Kong courts will also accept other evidence (e.g. an enforcement notice from a Mainland court) as proof that the judgment is final and conclusive.
- In the Mainland, (i) a copy of the judgment in Hong Kong certified by a Hong Kong court and (ii) a certificate to certify the judgment is enforceable by way of execution in Hong Kong are required
When to apply for registration
Short limitation period
- Within 2 years
- Limitation period starts running from the last day of the specified period within which the judgment ought to have been performed; or, in any other case, from the date from which the judgment takes effect.
Where to apply for registration
Registration of Mainland judgments in Hong Kong
- Court of First Instance
Registration of Hong Kong judgments in the Mainland
- Jurisdiction lies with the courts of the respondent’s domicile or ordinary residence and also with the courts of any place where the respondent has property
- the applicant must elect to file in only one such court
Grounds for setting aside a registered Mainland judgment in Hong Kong
11 grounds are specified in the Ordinance; they include:-
- the Mainland judgment is not a judgment of a designated court under the Ordinance
- the choice of Mainland court agreement is not valid
- the judgment has been wholly satisfied
- the Hong Kong courts have exclusive jurisdiction over the matter
- the judgment was obtained by fraud
- enforcement of the judgment is contrary to public policy
- the judgment is reversed or set aside pursuant to an appeal or a retrial under the laws of the Mainland
The effect of the Ordinance has recently been tested in High Court Miscellaneous Proceedings No. 2080 of 2015. The Plaintiff was seeking to enforce in Hong Kong a judgment (the Mainland Judgment) granted in his favour in the Shenzhen Intermediate People’s Court (the Shenzhen Court). Prior to this the Plaintiff had obtained a certificate from the Shenzhen Court that the Mainland Judgment was final and enforceable in the Mainland. The Plaintiff was then able to obtain an order from the Hong Kong High Court to register parts of the Mainland Judgment pursuant to the Ordinance. The 5th Defendant later claimed that the 1st Defendant had applied to the Shenzhen Court to set aside the enforcement order and that while that application was pending, the Mainland Judgment should not be enforced in Hong Kong.
The Court held that the onus was on the defendants to prove that the Mainland Judgment was not final and enforceable, and that an application to set aside the enforcement certificate of the Shenzhen Court was pending was not enough to do so. In any event, in this case the time to appeal the Mainland Judgment had lapsed. The application to set aside the order was dismissed with costs.
Pursuant to section 25(1) of the Ordinance, on 25 July 2014 the Supreme People’s Court updated and gazetted the list of Basic People’s Courts authorised to exercise jurisdiction of the first instance in commercial and civil cases involving Hong Kong judgments, which was subsequently incorporated into the Ordinance.
The list can be found here.
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Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.