The newly enacted regime for reciprocal enforcement of judgments in Mainland and Hong Kong

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Authored by: Joseph Kwan and Andy Lam

The Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Bill was passed by the Legislative Council on 26 October 2022 and an Ordinance with that name will come into effect on a date to be announced.  This is an important step towards the implementation of the arrangement on reciprocal recognition and enforcement of judgments in civil and commercial matters by the Courts in the Mainland and in Hong Kong (REJ Arrangement).

Once the REJ Arrangement is in force, parties will be able to benefit in the following aspects:

• Hong Kong becomes the only place with such a wide scope of matters covered. Before the REJ Arrangement, the local regime is rather restrictive, as it covers only monetary judgments (where parties have also agreed to designate the Mainland court with exclusive jurisdiction) and certain matrimonial and family cases.  On the other hand, the REJ Arrangement canvasses a judgment in civil or commercial matters, which perhaps most notably, includes specified intellectual property right cases (e.g. copyright, trademarks and patents), as well as certain non-monetary relief.

• A cost-efficient mechanism on reciprocal enforcement is now in place.  The Ordinance sets out the legal framework in a streamlined and straightforward manner, from the registration of the Mainland judgment to the setting aside application if the registration is challenged. Parties will soon be able to avoid the  inconvenience of  starting the action afresh and adducing foreign law expert evidence in Hong Kong, or  re-litigating before the Mainland court, as they do for now.  This is attributable to the new regime which ensures certainty and clarity.

• Hong Kong has the advantage of a common law system, with a strong heritage and excellent reputation on the one hand, and deepening economic and business ties with the Mainland on the other.  The pro-enforcement regime provides confidence to conduct business in the Mainland and Hong Kong.  It will also encourage foreign parties who are used to the common law system, to choose Hong Kong as the venue for dispute resolution.

The commencement date of the REJ Arrangement is to be decided, upon the promulgation of a judicial interpretation by the Supreme People’s Court in the Mainland and settling of the rules to provide for the relevant practice and procedures in Hong Kong.¹  We will let our clients know when the Ordinance becomes effective.

Last but not least, it is worth-mentioning that several amendments were later effected to the Bill (that we covered in our previous article) and are now incorporated in the Ordinance:

• The description of the insolvency and debt restructuring matters has been revised, so that the language in the Ordinance now aligns with that adopted in the existing cooperation mechanism (i.e. “Record of Meeting of the Supreme People’s Court and the Government of the Hong Kong Special Administrative Region on Mutual Recognition of and Assistance to Bankruptcy (Insolvency) Proceedings between the Courts of the Mainland and of the Hong Kong Special Administrative Region”).  The overlapping matters are excluded from the Ordinance, but applicable under the cooperation mechanism.

• Regarding the application to set aside registration of a judgment, the drafting of the provision is now in clearer terms and clarifies that unless otherwise ordered by the Court of First Instance, the time limit for making a setting aside application is 14 days by default after the date on which a notice of registration is served.

These amendments again highlight the purpose of the Ordinance and the underlying REJ Arrangement, that  together with other mutual legal assistance between the Mainland and Hong Kong,  disputes with cross boundary elements can be dealt with in a more effective and efficient manner.

¹ https://www.doj.gov.hk/en/mainland_and_macao/RRECCJ.html

Key Contacts

Joseph Kwan

Partner | Litigation and Dispute Resolution

Email or call +852 2825 9324