Reciprocal arrangement on mainland, HK judgments

With continual progress in developing the Greater Bay Area vision and increasing number of arbitration and civil and commercial litigation cases involving mainland China and the Hong Kong Special Administrative Region (HKSAR), several mutual agreements have been signed to facilitate judicial convergence.

The author of this article compares and analyses major similarities and differences in the enforcement of such judgments between the two jurisdictions.

Legal basis

Among mutual recognition and enforcement of arbitral awards and judgments, the main agreements are:

• Arbitration. The Arrangement for the Mutual Enforcement of Arbitral Awards between the mainland and the HKSAR and its Supplemental Arrangement; and
• Litigation. The Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the mainland and the HKSAR pursuant to the Choice of Court Agreements between Parties Concerned (the 2008 Judgment Arrangement, repealed), and the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the mainland and the HKSAR (the 2019 Judgment Arrangement).

Enforceable awards, judgments

Arbitration. Regarding arbitral awards under the Hong Kong Arbitration Ordinance or the Arbitration Law of China, compared with provisions of the arbitration arrangement, the supplemental arbitration arrangement removes the restriction that mainland awards must be made by specific arbitral institutions, and lifts the limit on arbitration venue, further expanding the scope of institutions that may enforce arbitral awards.

It also incorporates ad hoc arbitrations and awards made in places other than Hong Kong and the mainland – but under the Hong Kong Arbitration Ordinance or the Arbitration Law of China – into the scope of enforcement.

Litigation. Civil and commercial cases under the laws of the mainland and the HKSAR, excluding specific cases such as succession, estate administration and distribution, and certain IP cases.

Comparison. Compared with the 2008 judgment arrangement, the 2019 version cancels the requirement to expressly agree in writing that the mainland or Hong Kong court has sole jurisdiction, and the enforcement includes criminal proceedings with an incidental civil litigation case and certain IP damages.

New arrangements for mutual legal assistance concerning arbitration and judgments in civil and commercial matters broaden the scope of application. In comparison, arbitration has a wider scope of application concerning contractual disputes.

Combined with the Arbitration Law of China (Draft), which is currently under revision, mainland arbitration is likely to further engage in emerging areas such as international investment and sports arbitration, covering all “contractual disputes and other property right disputes between natural persons, legal persons and other organisations” in principle.

Tort disputes are often settled by court judgment only due to the lack of consent to arbitration. The highlights of the 2019 judgment arrangement are inclusion of the enforcement of most tort cases, and dual enforcement of judgments on criminal proceedings with an incidental civil litigation case.

Enforceable circumstances

Arbitration. The applicant may apply for enforcement to the court at the respondent’s domicile or the property’s location. If the respondent has a domicile or enforceable property in both the mainland and the HKSAR, the applicant may apply to courts in the two places separately for enforcement.

Litigation. The applicant may apply for enforcement to the court at the applicant’s or respondent’s domicile, or the property’s location. If the respondent has a domicile or enforceable property in both the mainland and the HKSAR, the applicant may apply to courts in the two places separately for enforcement.

Comparison. Separate enforcement of arbitral awards does not depend on prior knowledge of clues to the respondent’s enforceable property, but only on the existence of a domicile in both places, which is more conducive to in-depth investigation of clues to the respondent’s hidden property.

As for the enforcement of judgments, the applicant can apply to the court of his or her own domicile for the enforcement of Hong Kong awards, which is more convenient.

Non-enforcement

Arbitration. This mainly reviews due process of the arbitration procedure and excludes enforcement of content exceeding arbitral authority.

Litigation. The main emphasis is that the trial court’s jurisdiction over litigations needs to comply with due process under article 11 of the 2019 judgment arrangement, and must not conflict with a prior decision or judgment.

Comparison. In terms of the conditions for non-enforcement, the courts in both jurisdictions have set up reservations of rights based on fundamental legal principles and public interest and policies.

In the recent case of Song Lihua v Lee Chee Hon (2023), such reservation has once again drawn the attention of the legal community. In the judgment, High Court of Hong Kong Judge Mimmie Chan emphasised that, “when deciding whether the enforcement of an arbitral award was contrary to public policy, the courts of Hong Kong apply its own standards and law”. This is a prominent manifestation of the differentiation of laws within the Greater Bay Area, which should be brought to the attention of the mainland arbitration community.

Comparatively, there are fewer cases of non-enforcement for arbitration between the mainland and Hong Kong, and it rarely involves a review of the merits of the case. However, the non-enforcement of civil and commercial judgments includes the condition that “the judgment was obtained by fraud”, which may be related to the merits of the case, making enforcement more uncertain.

In conclusion, procedures for mutual enforcement of arbitral awards and civil and commercial judgments between the mainland and Hong Kong are getting more convenient.

In future, regardless of arbitration or litigation, concerned parties will be able to enforce judgments more efficiently, with their legitimate rights and interests further safeguarded.

Chen Biao is a founding partner at Lianggao Law Firm Shenzhen branch. He can be contacted by phone at +86 136 3266 5560 and by e-mail at lawyerbill@163.com