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The "Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Bill" clarifies that "one country, two systems" is not just a mere phrase. But we now witness a further step towards simplifying the recognition and enforcement of judgments between Hong Kong and Mainland China.
Enactment Bill passed in October 2022
With the enactment of the Enactment Bill (Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Bill), a further step has been taken towards simplified enforcement of civil and commercial judgments from Mainland China in Hong Kong. The Enactment Bill was gazetted on 22 April 2022, and finally passed on 26 October 2022.
The background of the Enactment Bill is the implementation of the REJ Agreement (Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and the Hong Kong Special Administrative Region) signed on 18 January 2019, by the Supreme People's Court and the Hong Kong government. In the REJ Agreement, mutual recognition and enforcement of judgments in civil and commercial matters between Hong Kong and Mainland China was agreed. In doing so, both jurisdictions undertook to implement corresponding regulations in their respective legal systems.
Previously, for simplified legal, economic and administrative cooperation between Mainland China and Hong Kong, there were only a few agreements that provided legal assistance, such as the “Agreement on the Mutual Service of Judicial Documents in Civil and Commercial Proceedings between the Courts of Mainland China and Hong Kong”, signed on 14 January 1999. This meant that for enforcing a Mainland judgment in Hong Kong, new court proceedings had to be sought again, which was very time and money consuming.
Law only effective once Mainland China enacts similar legislation
A significant simplification was achieved by the Choice of Court Arrangement (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). signed on 14 July 2006.
‘’The purpose of Enactment Bill is to simplify the recognition and enforcement of judgments from Mainland China.’’
The latter is based on the Foreign Judgment (Reciprocal Enforcement) Ordinance (Cap. 319), which, after Hong Kong’s return to China, was no longer applicable to judgments of courts from Mainland China, since China was no longer considered a foreign country.
The Enactment Bill therefore significantly expands the already existing regime of the recognition and enforcement of Mainland judgments in Hong Kong.
However, the Enactment Bill will not come into effect until there is a corresponding regulation for Hong Kong court decisions to be enforced in Mainland China as well. In addition, the law only applies to judgments issued on or after the effective date of the Enactment Bill, meaning only after Mainland China has enacted similar legislation.
Bill covers civil and commercial judgments only
However, the Enactment Bill does not apply to every kind of judgment from Mainland China, and only covers judgments in civil and commercial matters. Thus, unlike the previous agreements, this law goes far beyond the existing regulations by covering judgments in both monetary and non-monetary matters. Another new addition is, that the law explicitly covers certain types of intellectual property disputes. However it does not cover judgments relating to corporate insolvency, debt restructuring and personal insolvency, succession of a deceased person and certain matrimonial or family matters.
For this, the Mainland judgment must first be registered with the Court of First Instance. As a further requirement for registration in Hong Kong, the judgment must be effective in Mainland China.
‘’Only after registration, the creditor can enforce the judgment in Hong Kong in the same way as if it were a local judgment from a Hong Kong court.’’
Should the judgment debtor wish to oppose the enforcement and have the registration cancelled, one must present certain reasons within a certain period. In essence, these objection reasons are similar to those already known from the Foreign Judgment (Reciprocal Enforcement) Ordinance (Cap. 319). However, the new law also includes grounds for objection concerning arbitration decisions. Thus, a valid reason for the judgment debtor can be that an arbitration tribunal has made an award on the same cause of action between the same parties in an arbitration, for which the place of arbitration was in Hong Kong or if the place of arbitration was not in Hong Kong, but the award has already been recognised or enforced by a court in Hong Kong.
Law facilitates certified copies and certificates requests of Hong Kong judgments
At the same time, the law also introduces a second innovation: It facilitates the request for certified copies and certificates of Hong Kong judgments in civil or commercial matters. Thus, it is easier to obtain certified copies and certificates to facilitate the recognition and enforcement of Hong Kong judgments in Mainland China.
As a final innovation, the Enactment Bill eliminates the need for an exclusive choice of jurisdiction agreement. Instead, appropriate grounds of jurisdiction for recognition and enforcement purposes as well as grounds for refusal of recognition and enforcement are specified.
What does this mean?
These changes in the Hong Kong legal system as well as in the legal system of Mainland China will significantly facilitate the recognition and enforcement of court judgments between Hong Kong and Mainland China.
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.
For specific advice about your situation, please contact:
Managing Partner
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