HK enforcement of mainland judgments, arbitral awards

By Lam Sek Kong and Vivien Li, Guantao Law Firm
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The Arrangement on Reciprocal Recognition and Enforcement of Judgements in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region was signed between the Supreme People’s Court and the Hong Kong government on 18 January 2019. The Mainland Judgements in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance was approved on 26 October 2022 and is expected to come into effect at the end of 2022.

The Supplemental Arrangement Concerning Mutual Enforcement of Arbitral Awards Between the Mainland and the Hong Kong Special Administrative Region and the Arbitration (Amendment) Ordinance 2021 took effect on 19 May 2021. In addition, the Mainland Judgments in Matrimonial and Family Cases (Reciprocal Recognition and Enforcement) Ordinance came into effect on 15 February 2022, which gives effect to the Arrangement on Reciprocal Recognition and Enforcement of Civil Judgments in Matrimonial and Family Cases by the Courts of the Mainland and of the Hong Kong Special Administrative Region, signed between the Supreme People’s Court and the Hong Kong Government on 20 June 2017.

Enforcement in HK

For the registration of mainland judgments, in accordance with the existing Mainland Judgments (Reciprocal Enforcement) Ordinance, a mainland judgment may be registered in Hong Kong as the judgment of the equivalent Hong Kong court. However, the registration needs to comply with some regulations, e.g. the parties agree in writing to designate a mainland or Hong Kong court as the only court with exclusive jurisdiction for resolving disputes.

Lam Sek Kong, Guantao Law Firm
Lam Sek Kong
Partner
Guantao Law Firm
Tel: +852 2878 1130
Email: sekkong@guantao.com

In practice, not all agreements use the terms “exclusive jurisdiction” or “only” in designating the court. Rather, the terms “may” or “should” are often used. The requirement for “written exclusive jurisdiction clause” was removed in the 2019 arrangement.

Regarding “the judgment must be final and conclusive” contained in the above-mentioned ordinance, does the first-instance judgment of mainland courts constitute as not “final” or “conclusive” under their two-tier trial system? The 2019 arrangement uses the “effective judgment” to replace the expression of “conclusive judgment” and provides a simple way to prove an effective judgment.

Hong Kong courts may issue certified copies and certificates of Hong Kong judgments to facilitate their enforcement on the mainland. The relevant procedures are detailed in Rule 71B of the Rules of the High Court.

In addition, the new 2019 arrangement expands the scope and contents of reciprocal recognition and enforcement of judgments in civil and commercial matters between the mainland and Hong Kong. The High Court is also formulating a set of rules for the details of the 2019 arrangement. Once completed, the Department of Justice will consult with the mainland and announce the simultaneous implementation date of the 2019 arrangement on the mainland and in Hong Kong.

Bankruptcy proceedings

The Record of Meeting on Mutual Recognition of and Assistance to Bankruptcy (Insolvency) Proceedings between the Courts of the Mainland and of the Hong Kong Special Administrative Region was signed between the Supreme People’s Court and the Hong Kong government on 14 May 2021, establishing a mutual recognition mechanism with respect to Hong Kong companies with winding up, debt restructuring and mainland bankruptcy proceedings.

Vivien Li, Guantao Law Firm
Vivien Li
Paralegal
Guantao Law Firm
Tel: +852 2878 6153
Email: vivien.li@guantao.com

The companies winding up and debt restructuring are not covered in the 2019 arrangement. The Department of Justice proposed to include the term “specified corporate process” in the The Mainland Judgements in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance to accurately cover such matters: “In the case of mainland judgments, specified corporation process means the reorganisation, settlement or bankruptcy liquidation specified in article 7 of the Enterprise Bankruptcy Law of the People’s Republic of China. In the case of Hong Kong judgments, specified corporation process means the winding-up of entities other than natural persons or the arrangements or compromises admitted by the Hong Kong courts of first instance under the Companies Ordinance (Cap. 622).”

Matters relating to the bankruptcy of natural persons are not covered by the 2019 arrangement or the Record of Meeting due to differences in the laws of the two jurisdictions.

Enforcing arbitral awards

After the Supplementary Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and Hong Kong Special Administrative Region and the Arbitration (Amendment) Ordinance came into force, there were three important adjustments:

    1. The list of “recognised” mainland arbitration institutions was removed from article 97 of the Hong Kong Arbitration Ordinance;
    2. Mainland debtors are allowed to apply for enforcement of arbitral awards simultaneously in the mainland and Hong Kong. Before the supplementary arrangement came into effect, such an application on the mainland was not subject to trial deadlines and procrastinations, resulting in the dissipation of Hong Kong property and ultimately rendering the arbitral awards unenforceable; and
    3. The interim measures are allowed before or after the enforcement of arbitral awards.

Previously, the parties to a Hong Kong arbitration proceeding may apply for interim measures with a mainland court only before the rendering arbitral award. After the amendments, the parties can apply for interim or compulsory measures after the arbitral award is rendered, providing the creditor better and fuller protection.

Cross-border marriage disputes

There is a large number of cross-border marriages between the mainland and Hong Kong, witnessed by the growing judicial demand in relation to the guardianship of children. Cross-border issues are involved in such matrimonial cases. The new Mainland Judgements in Matrimonial and Family Cases (Reciprocal Recognition and Enforcement) Ordinance can prevent cases from being delayed for many years due to the parties’ insistence on filing lawsuits in their respective domiciles and their refusal to withdraw appeals, which cause more harm to the parties and their children.

A significant breakthrough, this ordinance covers the relevant custody and care orders issued by Hong Kong courts and provides that if a child of the parties to a cross-border matrimonial and family case is being illegally removed to relocate to or detained on the mainland, the Hong Kong party may apply to the mainland court for recognition and enforcement of the care and custody orders issued by the Hong Kong court from 15 February 2022, the effective date of the ordinance.


Lam Sek Kong is a partner at Guantao Law Firm. He can be contacted at +852 2878 1130 or by e-mail at sekkong@guantao.com

Vivien Li is a paralegal at Guantao Law Firm. She can be contacted at +852 2878 6153 or by e-mail at vivien.li@guantao.com

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