Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645) comes into effect on 29/01/2024
2024-01-26

Introduction

 

As announced by the Government of HKSAR on 10 November 2023, the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645) (“Ordinance”) and the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Rules (“Rules”) will come into force on 29 January 2024.

 

The Ordinance and Rules establishes a comprehensive mechanism in Hong Kong in respect of registration and enforcement of Mainland Judgments in civil and commercial matters (as well as for enforcing Hong Kong Judgments in the Mainland) handed down on or after 29 January 2024. In particular, the Rules sets out detailed requirements and procedures for registration and execution of a Mainland Judgment in Hong Kong.

 

Also coming into effect on 29 January 2024 is a new Practice Direction 38 – “Reciprocal Enforcement of Mainland and Hong Kong Judgments in Civil and Commercial Matters” (“PD38”) which governs the practice and procedure for the registration of Mainland Judgments in Hong Kong and the application for certified copies of Hong Kong Judgments and Registrar’s Certificates for recognition and enforcement in the Mainland.

 

Background

 

The Ordinance implements the 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 (“Arrangement”) which was previously signed between the Supreme People’s Court and the Government of HKSAR on 18 January 2019.

 

The Arrangement provides a comprehensive mechanism for reciprocal recognition and enforcement of judgments in civil and commercial matters between Hong Kong and the Mainland, thereby reducing the need for re-litigation of the same disputes in both places. 

 

The Arrangement sets out, amongst others, the scope of judgments, jurisdictional grounds, grounds for refusing the reciprocal recognition and enforcement of judgments, and procedural requirements. The Arrangement is required to be implemented by local legislation in Hong Kong and takes effect after both Hong Kong and Mainland have completed the necessary procedures to enable implementation. The Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Bill was gazetted on 22 April 2022 and passed on 26 October 2022, however, it was only announced by the Government of HKSAR on 10 November 2023 that the Ordinance will commence on 29 January 2024.

 

Benefits of the Ordinance and Rules

 

The key feature of the Ordinance is the implementation of a registration system for streamlined enforcement of Mainland Judgments in civil and commercial matters in Hong Kong.  A judgment creditor of a Mainland Judgment in a civil or commercial matter will now be able to apply to the Court of First Instance in Hong Kong to register the Mainland judgment (or any part of it) if certain conditions under the Ordinance are satisfied and upon payment of the prescribed fee. This reduces the need for re-litigation (which in turn reduces time, costs and risks), offers greater predictability, and offers better protection to the parties’ interests.

 

Overview of key provisions and procedures involved in registration and enforcement

 

1. Registration application

 

Pursuant to the Rules, a registration application must be made ex parte by originating summons and supported by an affidavit with the prescribed content and exhibits.  Notably, the affidavit must exhibit:

 

  1. a copy of the Judgment duly sealed by the original Mainland court; and

 

  1. a certificate issued by the original Mainland court certifying that the Judgment is a Mainland Judgment in a civil or commercial matter that is effective in the Mainland (section 5(2) of the Rules).

 

The Rules require further information in the supporting affidavit for certain circumstances such as:

 

  1. Mainland Judgments given partly in respect of civil or commercial matters;

 

  1. Mainland Judgments prohibiting or restricting performance of acts;

 

  1. Mainland Judgments requiring sums of money or acts to be paid or performed (other than in stages);

 

  1. Mainland Judgments requiring sums of money or acts to be paid or performed in stages;

 

  1. Mainland Judgment given in absence of party at trial; and

 

  1. Mainland Judgment registered previously.

 

The originating summons must also be accompanied by:

 

  1. a draft registration order stating the required particulars drawn up by the applicant or on behalf of the applicant (section 14 of the Rules);

 

  1. a duly completed form containing particulars of the Mainland Judgment prescribed in Annexure 5 to the PD38; and

 

  1. a statement of costs (section 6(4)(b) of the Rules) for summary assessment of costs.

 

2. Security for costs

 

Under the Rules, the Court may order a party applying for registration to give security for the costs of (a) the registration application; and (b) any setting aside application (see below) to the registration of judgment (section 13 of the Rules). 

 

3. Notice of registration must be served

 

Pursuant to section 13(3)(b), the applicant must serve the notice of registration on all persons, so far as is known to the applicant, against whom the judgment or part may be enforced. The service of the notice must be effected in the manner prescribed under section 16 of the Rules or by the Court.  Notably, service of the notice out of jurisdiction is permissible without leave (section 16(2) of the Rules). 

 

4. Setting aside application

 

Pursuant to sections 20 and 21 of the Ordinance, within 14 days (or otherwise ordered by the Court) after the date on which a notice of registration is served on the person, a person against whom a registered judgment may be enforced may apply to set aside the registration of the judgment or any part of the judgment.

 

A setting aside application must be made by summons supported by affidavit (section 17(a) of the Rules). 

 

If the Court is satisfied that one of the grounds under section 22(1) of the Ordinance is proven, the registration of a judgment or any part of such a judgment can be set aside. For example, if a court in Hong Kong has given a judgment on the same cause of action between the same parties, the registration may be set aside.

 

The Court may order any issue to be tried (section 17(2) of the Rules), and it has wide discretion under section 17(3) of the Rules to direct the further conduct of the setting aside application, whether on its own initiatives or by application.  The Court may also impose any terms, whether as to giving security or otherwise, it considers appropriate if having regard to all circumstances of the case, and if the Court considers it just to do so. 

 

The setting aside application can be adjourned, pursuant to section 24 of the Ordinance, if the Court is satisfied that (a) an appeal against the judgment is pending; or (b) the case on which the judgment was based is ordered to be retried. 

 

If the Court sets aside the registration of a registered judgment or any part of such a judgment, the applicant may not make a further registration application, except that the registration is set aside as a result of non-compliance with sections 10 to 19 of the Ordinance (section 25 of the Ordinance) which relate to the registration application.

 

5. Execution

 

Upon complying with the registration and notification requirements, and if the period for setting aside application has expired or a setting aside application has been disposed of, the applicant can take execution actions (section 27 of the Ordinance), and the registered judgment will be enforceable in Hong Kong as if it were a judgment originally given by the Court.  An application for execution must be supported by:

 

  1. an affidavit of service of the notice of registration of the judgment;

 

  1. an affidavit in compliance with the content requirement under section 19(2) of the Rules; and

 

  1. an order made by the Court of First Instance in relation to the judgment.

 

Conclusion

 

Given the increasingly close ties between Hong Kong and the Mainland, the implementation of the Ordinance and the Rules is a significant and positive development. Obviously only time will tell how well it works in practice, but it certainly appears to provide an efficient and straightforward mechanism for Mainland judgment creditors given that it reduces the need for re-litigation of the same disputes in both jurisdictions.  There should also be significant costs benefits compared to other enforcement measures available.

 

For further information on this topic, please contact 

 

Tony Leung

Partner

 

T+852 2803 3688

F+852 2803 3608

E tony.leung@howsewilliams.com

 

 

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Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice. Please contact [email protected] if you have any questions about the article.