Partner Perspectives: Nathan Wong

Would you please briefly introduce what is Reciprocal Recognition and Enforcement of Civil and Commercial Judgments between Mainland China and Hong Kong?

On 29th of January, 2024, the mainland judgments in civil and commercial matters, reciprocal enforcement ordinance came into force in Hong Kong. The ordinance has implemented the arrangement on the matter which was signed between the respective Nan and Hong Kong authorities back in 2019. Under the new mechanism of the arrangement, the courts of the two places may recognise and enforce judgments in civil and commercial matters that are made by the courts of the other place.

This reduces the need for the party to relitigate the same dispute in mainland China or Hong Kong, resulting in reducing legal costs and time usually associated with the cross boundary and enforcement of judgments. Historically, there have been prior reciprocal arrangements for the recognition enforcement of judgments.

What was the background of the reciprocal recognition and enforcement of Civil and Commercial Judgments between Mainland China and Hong Kong?

In 2006, mainland China and Hong Kong has signed the old arrangement, commonly known as the choice of court arrangement. According to this old arrangement, to enforce mainland judgment in Hong Kong, the judgment creditors must meet certain statutory requirements, such as there must be an agreement in writing to designate a mainland court as a forum to have sole jurisdiction for resolving disputes.

The mainland judgment must be made by a designated court, and the judgment must be monetary judgment. Because of the relatively narrow scope of the old arrangement, this has given rise to quite a number of litigations about registrable of mainland judgements and questions about practical usefulness of the arrangement. In the light of this issue, the mainland and Hong Kong authorities entered into a new arrangement in 2019, and the law to implement it has come into force in 2024.

What are the key changes under the new arrangement?

Firstly, the highlight of the new arrangement is the removal of the written exclusive jurisdiction requirement. In the old arrangement, it required an exclusive jurisdiction agreement in the underlying written contract. Now, this requirement is removed and replaced by jurisdictional tests. The judgment creditor enforcing a maintenance judgment will only need to establish a connection with mainland, and this can be satisfied if, for example, the defendant’s place of business was in mainland, the place of the performance of the contract was in Magnan. This change will provide greater flexibility to the contracting parties when negotiating the dispute resolution clause.

Secondly, the judgments are no longer limited to those made by designated higher courts. Judgments made by lower courts can also be recognized and enforced in mainland judgments would cover those made by Supreme People’s Court, high People’s Court, intermediate People’s Court, as well as primary people’s in Hong Kong. It includes judgments made by Court of Final Appeal, high court District Court, as well as Labor Tribunal Lens Tribunal, small claims Tribunal and competition tribunal.

Thirdly, the scope of judgments has been burdened to go beyond contractual disputes. It adopt an excluded judgments mechanism. Many civil and commercial cases are covered unless expressly excluded. Both monetary and non-monetary judgments can also be involved. I should also mention that it also covers payment of a sum of money as compensation in criminal judgments.

How can we register and enforce Mainland judgments in Hong Kong?

In terms of procedure, the registration application must be made ex parte to the court of first instance in Hong Kong by originating summons and must be supported by an affidavit. The limitation period is two years. The supporting affidavit must exhibit the relevant judgment sealed by the original mainland court, and a certificate issued by the original mainland court certifying that the judgment is effective in magnan upon making of the registration order.

The applicant must serve a notice of registration on the purses against whom the judgment may be enforced. An application to set aside the registration of judgment may be made within 14 days after the surface. The grounds for setting aside include fraud, jurisdiction, procedural fairness, and public policy. An action to enforce the registered judgment may be taken after the expiry of the period for making the setting aside application or upon such application being disposed of in favour of the advocate.

Vice versa, how can we register and enforce Hong Kong judgments in Mainland?

The Hong Kong court can issue a certified copy of the Hong Kong judgment with a certificate certify that the judgment is a Hong Kong judgment in a civil and commercial matter and is effective in Hong Kong. The applications for recognition and enforcement of Hong Kong judgments in mainland should be filed with an intermediate people’s court of the place of residence of the applicant or respondent, or where the property of the respondent is located.

In what ways will the implementation of this new arrangement bring benefits to Hong Kong?

Under Article 95 of Basic Law, Hong Kong may maintain juridical relations with judicial organs of other parts of the country, and they may render assistance to each other. I trust that the new arrangement is a significant development to further develop mutual legal assistance between mainland China and Hong Kong so that disputes with cross boundary elements could be dealt with more effectively. This is also an important milestone in the dispute resolution development in the Greater Bay Area.

The new arrangement establishes a more comprehensive mechanism for reciprocal recognition and enforcement of judgments, offering better protections to parties interests, and enhancing Hong Kong’s competitiveness as a regional centre for legal and dispute resolution services involving mainland parties and assets. And I anticipate the whole system will become more streamlined and efficient going forward, bringing more certainty and convenience to businesses and individuals.