By Alex Liu and Geoffrey Kam
Hong Kong, 6 December 2023: A new era in cross-border legal co-operation will be ushered in next month when the long-awaited Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap 645) comes into force. The new law will widen the scope of existing legislation which currently applies only to some monetary judgments.
Following the signing of an Arrangement between the Supreme People’s Court and the Hong Kong government almost five years ago, the Legislative Council passed the relevant Bill in October 2022. Last month, the Judiciary tabled a set of procedural rules before LegCo. Consequently, the Ordinance will take effect on 29 January 2024. The major changes are as follows:
Removal of the exclusive jurisdiction requirement: Until now, the parties must have agreed to the exclusive jurisdiction of a Mainland or Hong Kong court, but this requirement is removed under the new legislation. Instead, the judgment creditor will simply need to show the Hong Kong court that the original proceedings had sufficient connection with the Mainland – for example, that the defendant’s residence or place of business were in the Mainland, or the contract under dispute was being performed there.
Expanded scope of judgments: The new legislation expands the types of judgments that can be recognised and enforced to include both monetary and non-monetary rulings that are civil and commercial in nature, as well as criminal proceedings which contain an order for payment of compensation or damages, plus certain intellectual property judgments.
Broader range of courts: With the regard to the Mainland, the new legislation applies from the Primary People’s Court all the way up to the Supreme People’s Court; in Hong Kong, it is relevant from District Court level up to the Court of Final Appeal and includes rulings by the Labour Tribunal, Lands Tribunal, Small Claims Tribunal and Competition Tribunal.
It should be noted that the Ordinance does not apply to Mainland judgments in matrimonial and family cases; these are covered by separate legislation which came into force in February 2022. The list of excluded cases also features, among others: matters concerning succession, administration or distribution of estate; some intellectual property cases; and certain maritime cases.
Under the new regime, a party may apply to the Hong Kong court to have a Mainland judgment in a civil or commercial matter registered on an ex parte (meaning “by or for one party”) basis. If the application is accepted, the court has the option to freeze the judgment debtor’s assets pending further proceedings. The debtor can contest the registration, but only within 14 days and on a limited number of grounds. Similarly, Hong Kong judgments can be registered with the Intermediate People’s Court in the Mainland.
Overall, the Ordinance is excellent news for those conducting business on both sides of the border. It means a much more streamlined and efficient process for recognition and enforcement of judgments while greatly reducing the costs of re-litigation. The legislation will generate further confidence in the cross-border business environment and bring a higher degree of certainty for stakeholders. It is particularly important in the context of Hong Kong’s growing connectivity with the Greater Bay Area.
While welcoming this milestone, it is important to recognise that the cross-border legal landscape remains complex and is continuously evolving. Hence, sound advice is paramount. Here at Boase Cohen & Collins, we have an accomplished team, many of them fluent in Putonghua, who thrive in this challenging environment.
Alex Liu is Managing Partner of BC&C. His key areas of practice include commercial and corporate litigation, investigations by governmental bodies such as the SFC, ICAC and Commercial Crime Bureau, insolvency and debt restructuring, intellectual property and employment matters. He can be contacted at alex@boasecohencollins.com.
Geoffrey Kam is a Consultant with BC&C. He has wide experience in a broad range of litigation matters, including bankruptcy and winding-up proceedings, building management, commercial litigation, contract disputes, debt recovery, landlord and tenant disputes and personal injury. He can be contacted at geoffrey@boasecohencollins.com.
