Background

Under the constitutional principle of “one country, two systems”, Hong Kong’s common law system is contrasted with Mainland China’s law system, which is based primarily on the model of civil law. Before the return of sovereignty, if a plaintiff obtained a judgment or arbitration award in Mainland China and became a judgment or award creditor, and if he intended to enforce the relevant judgment or award in Hong Kong, the plaintiff would need to apply for an enforcement of the Mainland judgment or commence fresh proceedings under common law principles. After the return of sovereignty, cooperation and interaction between businesses and individuals of the two jurisdictions have grown rapidly, which has also led to an increase in civil and commercial disputes, rendering the problem of lack of mutual legal assistance between the two jurisdictions increasingly apparent. In order to resolve this matter, Hong Kong and Mainland China have already reached a number of mutual legal assistance arrangements to resolve various disputes related to civil and commercial matters. This article seeks to explain the requirements and processes of the enforcement of Mainland judgments in Hong Kong.

Recognition and Enforcement of Mainland Judgments in Hong Kong

Existing Choice of Court Arrangement

As early as 2006, Hong Kong and Mainland China have signed 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 (the “Choice of Court Arrangement”). To give effect to the Choice of Court Arrangement, the Hong Kong government enacted the Mainland Judgments (Reciprocal Enforcement) Ordinance (Cap. 597) (the “MJREO”) which came into effect on 1 August 2008.

Pursuant to the MJREO, judgment creditors should first apply to the Hong Kong High Court for the registration of a Mainland judgment in order to enforce the judgment. Registration of Mainland judgments must meet the following statutory requirements¹:

1. The Mainland judgments are in connection with disputes arising from civil or commercial contracts;
2. The judgment orders the payment of a sum of money;
3. There must be agreement in writing to designate a Mainland court as the forum to have sole jurisdiction for resolving such disputes;
4. The relevant Mainland judgment must be made by a designated court listed in Schedule 1 of the MJREO; and
5. The judgment must be a final and conclusive judgment enforceable in Mainland China.

An application may be made ex parte upon supporting affidavit and draft order to a master in Hong Kong High Court. Nonetheless, the courts may direct a summons to be issued, in which case the summons shall be an originating summons. If a judgment creditor’s application meets the statutory requirements for registration of Mainland judgments with submission of the required application documents, Hong Kong courts will generally approve the registration of the relevant Mainland judgments.

A judgment debtor may apply to set aside the registration of Mainland judgments. The MJREO clearly sets out the circumstances in which a registered judgment shall be set aside, including but not limited to the following²:

1. The judgment is not a Mainland judgment which satisfies the requirements specified in the MJREO (for example, the Mainland judgment is not a final and conclusive one);
2. The Hong Kong courts have exclusive jurisdiction over the case according to the laws of Hong Kong;
3. The judgment was obtained by fraud;
4. The enforcement of the judgment is contrary to public policy;
5. The judgment has been wholly satisfied; and
6. A judgment on the same cause of action between the parties to the judgment has been given by a Hong Kong court, or an arbitral award on the same cause of action between the parties has been made by an arbitration body in Hong Kong.

For the purpose of execution, a registered judgment shall be of the same force and effect as if it had been a judgment originally given by the Hong Kong courts and entered on the day of registration³. However, the existing Choice of Court Arrangement can only be applied when certain conditions are met, and this gives rise to many problems including a narrow scope of application and a large number of litigations arising from the registration of Mainland judgments⁴. In sum, recognising and enforcing Mainland judgments in Hong Kong can still be potentially problematic.

New Arrangement for Mutual Recognition of Civil and Commercial Judgments

In light of the above issues, the Supreme People’s Court and the Hong Kong government signed 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 (the “Arrangement for Mutual Recognition of Civil and Commercial Judgments”) on 18 January 2019. Under the Arrangement for Mutual Recognition of Civil and Commercial Judgments, the scope of application of registration was widened to cover both monetary and non-monetary judgments, and most of the civil and commercial matters. However, the Arrangement for Mutual Recognition of Civil and Commercial Judgments requires the enactment of a new legislation or amendment of the current MJREO in Hong Kong before it can formally come into effect.

The following are some of the key features of the Arrangement for Mutual Recognition of Civil and Commercial Judgments:

1. Requirement to have jurisdictional basis: save for express or deemed agreement, the applicant will need to show a connection between the dispute and the requesting place so as to prove that the requesting court has jurisdiction for the purpose of Arrangement for Mutual Recognition of Civil and Commercial Judgments (the “Jurisdictional Basis Requirement”). Relevant factors include the place of the defendant’s residence, the place of the defendant’s business and the place of performance of the contract or tort⁵.
2. Removal of exclusive jurisdiction requirements: the requirement of exclusive jurisdiction under the Choice of Court Arrangement has been removed, which means there is no need for the parties to agree on exclusive jurisdiction clauses when signing the agreement. Mainland judgments are enforceable in Hong Kong as long as they meet the Jurisdictional Basis Requirement⁶.
3. Recognition of judgments made by lower courts: the judgments that are mutually recognised and enforced are not limited to judgments made by designated courts or higher courts. Judgments made by lower courts and other tribunals can also be recognised and enforced under the Arrangement for Mutual Recognition of Civil and Commercial Judgments⁷.
4. Expansion on the scope for various types of cases: the Arrangement for Mutual Recognition of Civil and Commercial Judgments adopted an “excluded list” mechanism. Most civil and commercial cases will be covered unless expressly excluded. Both monetary and non-monetary judgments can be enforced. Excluded matters may include judgments relating to corporate insolvency, debt restructuring and personal bankruptcy, and certain matrimonial or family matters. Certain maritime matters and matters in relation to succession of estate of a deceased may also be excluded⁸.
5. Expansion on the scope for types of judgments: most types of judgments from the two jurisdictions are included. In Mainland China, any judgment, ruling, conciliatory statement and order of payment are included, except ruling on preservation measures⁹.
6. Clear grounds for refusal of registration: an application for recognition and enforcement of a judgment must be refused if, among others, (i) it does not meet the Jurisdictional Basis Requirement; (ii) it was obtained by fraud; (iii) there exists procedural impropriety; (iv) a judgment or arbitral award has been issued on the same cause of action; or (v) a judgment is manifestly contrary to the basic legal principles of requesting place, the public interests or public policy of the requesting place¹⁰.

Concluding Remarks

With the implementation of the Arrangement for Mutual Recognition of Civil and Commercial Judgments, it is expected that 90 per cent of the civil and commercial judgments in Mainland China and Hong Kong can be mutually recognised and enforced. The need for re-litigation of the same disputes in both jurisdictions can be reduced and the litigation costs can be lowered. The enforcement of judgments will become more expedient and the parties’ rights and interests can be better protected, thereby promoting Hong Kong’s status as a regional hub for international dispute resolution.

Despite the fact that the date on which the Arrangement for Mutual Recognition of Civil and Commercial Judgments will take effect is still uncertain, we believe that it will be successfully implemented in both jurisdictions in the near future. At the moment, the provisions of the Choice of Court Arrangement remain the governing rules for mutual recognition and enforcement of judgments between Hong Kong and Mainland China.

As the world’s largest law firm, we have unparalleled presence and capabilities across all major jurisdictions in the world. Our Hong Kong team has a wealth of experience in a wide variety of litigation, mediation and arbitration matters, and the capability to provide world-class legal service. If you are looking to enforce a Mainland judgment or award in Hong Kong, apply for interim measures in aid of arbitral proceedings or looking for support in formulating your dispute management strategy generally, please get in touch with us. 

1. Section 5 of the MJREO↩
2. Section 18 of the MJREO↩
3. Section 14 of the MJREO↩
4. KFE Hong Kong Co., Ltd v. Extract Group Limited [2011] HKCU 136; Bank of China Limited v. Yang Fan [2016] 3 HKLRD 7; The Export-Import Bank of China v. Taifeng Textile Group Co. Ltd and Another [2018] HKCFI 1840↩
5. Article 11 of the Arrangement for Mutual Recognition of Civil and Commercial Judgments↩
6. ibid↩
7. Article 4 of the Arrangement for Mutual Recognition of Civil and Commercial Judgments↩
8. Article 3 of the Arrangement for Mutual Recognition of Civil and Commercial Judgments↩
9. Article 4 of the Arrangement for Mutual Recognition of Civil and Commercial Judgments↩
10. Article 12 of the Arrangement for Mutual Recognition of Civil and Commercial Judgments↩