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Reciprocal Enforcement of Mainland and HK Judgments

2008-07-01

This article briefly explains the new mechanism for enforcing judgments obtained in the Mainland in Hong Kong and vice versa. The new mechanism comes into effect on 1 August 2008.

The Vice President of the Supreme People’s Court of the Mainland and the Secretary for Justice of the Hong Kong signed an 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”) on 14 July 2006.

The long-anticipated Arrangement was effected with a view to making reciprocal enforcement of judgments of the Mainland and Hong Kong possible.  On 23 April 2008, the Legislative Council consolidated the Arrangement into Hong Kong law with the passing of the Mainland Judgments (Reciprocal Enforcement) Bill, which will come into operation as the Mainland Judgments (Reciprocal Enforcement) Ordinance (the “Ordinance”) on 1 August 2008.

Enforcing judgments of the Mainland in Hong Kong

Under the Ordinance, a judgment creditor may in principle make an application for the registration of the Mainland Judgment with the Hong Kong Court for the purpose of enforcing it in Hong Kong.

Enforcement of Mainland Judgments in Hong Kong is restricted to a category of judgments that possesses the following qualities : -

1.            Only commercial contracts

Articles 1 and 3 of the Arrangement prescribe that only judgments pertaining to commercial contracts are enforceable under the Arrangement; see the definition of a “specified contract” under section 2 of the Ordinance.  Contracts relating to employment, matrimonial matters, contracts for personal consumption and other contracts in a non-commercial context are excluded, as prescribed under section 3.

2.         Only money judgments

Section 5(2) of the Ordinance stipulates, amongst others, that the Ordinance shall only apply to judgments that require “the payment of a sum of money”. Judgments or orders of injunctions and specific performance are not covered.  

3.         Express exclusive choice of court agreement

Section 5(2)(b) of the Ordinance stipulates only judgments on disputes which arise from the specified contracts containing a “choice of Mainland court agreement” can be registered.  This means the parties to the contract must have opted for the exclusive jurisdiction of the Mainland courts.  In other words, parties can choose to opt out of the reciprocal enforcement of judgments provided for under the Ordinance simply by using a “non-exclusive jurisdiction” clause in their contracts.

4.         Level of judgment court

Section 5(2)(a) of the Ordinance stipulates only judgments from a “designated court” in the Mainland can be registered in Hong Kong.  Schedule 1 of the Ordinance sets out the designated courts can be any one of the following : - the Supreme People’s Court, a Higher People’s Court, an Intermediate People’s Court and a recognised Basic People’s Court.   Sections 25 and 26 of the Ordinance further give directions on whether a  Basic People’s Court is “recognised” for the purpose of the Ordinance - the Secretary for Justice shall from time to time publish a list of the “recognised” Basic People’s Court in the Gazette.

5.         Finality of judgments

The lack of finality of Mainland Judgments has been a key issue in respect of their enforceability in Hong Kong.  Under the Ordinance, one of the criteria for applying for registration of judgments of Mainland is the judgment must be “final and conclusive”; see Section 5(2)(c) of the Ordinance. 

Section 6 of the Ordinance addresses the issue of finality of Mainland Judgments by defining that such judgments shall be “final and conclusive” if they are given by the court at the highest level, the Supreme People’s Court, or any of the other designated courts and provided that no appeal is allowed or where the time limit for appeal has expired. 

Judgments on first appeal that have been given by a designated court in the Mainland other than a recognised Basic People’s Court are also deemed to be “final and conclusive” for the purpose of the Ordinance. 

Regarding the unique trial supervision system in the Mainland – an executive branch of the Chinese Government with powers to override decisions or judgments of the Judiciary in the Mainland; the parties themselves can make applications for a review and the trial court itself also has power to instigate a review of the judgment – the Ordinance attempts to restrict the re-opening of cases by the original trial court by way of section 6(1)(d) in that the Hong Kong Courts will only recognise as “final and conclusive” a Mainland Judgment given upon a retrial provided it is given by a designated court and that the retrial was conducted at a level of court higher than the court whose judgment has been first given. 

Where a case is to be retried by a Mainland court after an application for registration of the judgment has been made in Hong Kong, under Article 2 of the Arrangement the case may only be brought up for retrial by a Mainland court one level higher than the original trial court.  It is further provided under section 19 of the Ordinance that the courts of Hong Kong may suspend the recognition and enforcement process for a Mainland Judgment if permission for retrying the case has been given in the Mainland.  Although this would have the effect of procuring a judgment from a Mainland court that will be deemed as “final and conclusive” for the purpose of the Ordinance, this provision does not resolve completely the issues of delay and the lack of finality brought about by retrials in the Mainland.

6.         Grounds for refusal

Satisfaction of the criteria listed under section 5(2) of the Ordinance does not equate to an absolute right to enforcement of judgments of Mainland in Hong Kong.  Section 18 of the Ordinance sets out a number of grounds on which the Hong Kong Court may set aside the registered judgments of Mainland, the more noteworthy of which are listed below:

i)             the  choice of jurisdiction/Mainland court in the parties’ agreement is invalid under the law of the Mainland;

ii)            the judgment in question has been wholly satisfied in the Mainland;

iii)           the courts in Hong Kong have exclusive jurisdiction over the case;

iv)           the judgment has been reversed or otherwise set aside pursuant to an appeal or a retrial under the law of the Mainland;

v)            a judgment or arbitral award on the same cause of action, whether given by a court in Hong Kong or otherwise, has already been enforced in Hong Kong;

vi)           the judgment debtor was not given notice of the proceedings or was not given sufficient time to defend the case;  note however under subsection 18(2) of the Ordinance this ground for refusal would not apply where the judgment debtor was summoned to the original court of service by public announcement according to the law of the Mainland;

vii)          the courts in Hong Kong find that enforcing the judgment is contrary to the public policy of the HKSAR.

7.         Limitation period

The time limit for making an application for registration of Mainland Judgments is provided under section 7 of the Ordinance, which prescribes a period of 2 years from:

i)             either the last day for performance where a period for performance of the Mainland Judgment has been specified in the judgment; or

ii)            in any other case, from the date from which the Mainland Judgment takes effect.

Pursuant to the Ordinance, the judgment creditor is required to produce a certificate issued by the original Mainland court certifying that the judgment is final and enforceable in the Mainland.  Since the Ordinance is unable to govern the issuance of the certificate in the Mainland courts, the timeliness of an application for registration may be limited by the bureaucracy of the Mainland judicial system, which is out of the control of judgment creditors.

Enforcing judgments of Hong Kong in the Mainland

On 4 July 2008, the Supreme People’s Court has promulgated a judicial interpretation (dated 3 July 2008) declaring that the Arrangement will also come into force on 1 August 2008.  Under the Arrangement, the requirements for enforcing a judgment of Hong Kong (“Hong Kong Judgment”) in the Mainland are largely a mirror-image of those which apply to the enforcement of Mainland

Judgments in Hong Kong.  Firstly the parties must opt for the exclusive jurisdiction of the Hong Kong courts (as opposed to the Mainland courts) by way of inclusion of a “Choice of Hong Kong Court Agreement” in the specified contract.  Secondly, any legally effective judgment of the Court of Final Appeal, the Court of Appeal or the Court of First Instance of the High Court or of the District Court is deemed to be “an enforceable final judgment” under Article 2.  Similarly, under Article 10, where a Hong Kong Judgment is pending appeal the Mainland courts may suspend the recognition and enforcement process.

A judgment creditor intending to enforce a legally effective Hong Kong Judgment in the Mainland must apply to the appropriate court under section 21 of the Ordinance for a certified copy of the judgment and certificate of enforceability by execution in Hong Kong.  These are required in the application for recognition and enforcement of the Hong Kong Judgment in the Mainland, as prescribed by Article 6 of the Arrangement.

However, nothing further is provided in the judicial interpretation of 3 July 2008 or otherwise to elaborate on the practical implementation of the Arrangement in the Mainland as yet – for example, it is silent on whether a judgment creditor of a Hong Kong Judgment is required to provide security for costs, and on other procedural matters specific to the Mainland courts.


For enquiries, please contact our Litigation & Dispute Resolution Department:

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Important: The law and procedure on this subject are very specialised and complicated. This article is just a very general outline for reference and cannot be relied upon as legal advice in any individual case. If any advice or assistance is needed, please contact our solicitors.
Published by ONC Lawyers © 2008

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