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New Regime for Cross-border Enforcement of Judgments: What You Need to Know
On 29 January 2024, a new regime for the reciprocal enforcement of judgments in civil and commercial matters between Hong Kong and Mainland China will come into effect. This regime is based on the **Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance Cap 645** (the Ordinance), which implements the **Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by Courts of the Mainland and of the Hong Kong Special Administrative Region** (the Arrangement) signed on 18 January 2019.
The new regime will replace the existing one under the **Mainland Judgments (Reciprocal Enforcement) Ordinance Cap 597** (the MJREO), which only applies to judgments issued under an exclusive jurisdiction clause. The new regime will expand the scope of judgments that can be recognized and enforced across the border, and will also simplify the procedures and requirements for doing so.
Difference between the new and previous regime
The main difference between the new and previous regimes is that the new regime will cover a wider range of judgments in civil and commercial matters, regardless of whether they are based on an exclusive jurisdiction clause or not. The previous regime only applied to judgments issued according to an exclusive jurisdiction clause, which means that the parties had to agree in writing before the dispute arose that they would submit their dispute to the exclusive jurisdiction of either Hong Kong or Mainland China courts.
The new regime will also cover consent orders and orders for the performance of duty other than payment of money, which were not covered by the previous regime. However, the new regime will not cover default judgments, unless they are confirmed by a court after an oral hearing.
Another difference between the new and previous regimes is that the new regime will have fewer grounds for refusal of recognition and enforcement of judgments. The previous regime had some additional grounds for refusal, such as:
- The judgment was given in a proceeding contrary to an arbitration agreement;
- The judgment was given in a matter excluded from the scope of application of the MJREO;
- The judgment was given by a court that did not have jurisdiction according to the laws of Hong Kong or Mainland China.
The new regime will also have simpler procedures and requirements for applying for recognition and enforcement of judgments. The previous regime required the applicant to provide evidence of service of process, finality of judgment, and absence of parallel proceedings. The new regime will only require the applicant to provide a certified copy of the judgment and a certificate issued by the original court confirming its validity and enforceability.
Key features of the new regime
The new regime will apply to judgments given by a court of either Hong Kong or Mainland China in civil or commercial matters, regardless of whether they are final or interlocutory, monetary or non-monetary. However, there are some exclusions, such as judgments relating to arbitration, bankruptcy, intellectual property, maritime matters, matrimonial or family matters, succession, trusts, or criminal penalties.
To apply for recognition and enforcement of a judgment under the new regime, the applicant must file an application with the relevant court within two years from the date when the judgment becomes enforceable. The applicant must also submit a certified copy of the judgment and a certificate issued by the original court confirming its validity and enforceability. The applicant may also need to provide a translation of these documents if they are not in the language of the enforcing court.
The enforcing court will recognize and enforce the judgment unless one of the grounds for refusal under the Ordinance applies. These grounds include:
- The judgment was obtained by fraud or in breach of natural justice;
- The judgment is contrary to public policy or social morality;
- The judgment is inconsistent with a previous judgment given by a court of either Hong Kong or Mainland China;
- The judgment concerns a matter that falls within the exclusive jurisdiction of either Hong Kong or Mainland China;
- The judgment debtor was not properly served with the summons or notice of the proceedings;
- The judgment has been wholly satisfied or is not enforceable in the original court;
- The original court did not have jurisdiction over the matter according to the Arrangement;
- The parties have agreed to resolve their dispute by arbitration or another dispute resolution mechanism.
The enforcing court may also stay or adjourn the application if there is a pending appeal or challenge against the judgment in the original court.
Implications for businesses
The new regime will provide a more convenient and effective way for businesses to enforce their contractual rights and obligations across Hong Kong and Mainland China. It will also reduce the risk of parallel proceedings and conflicting judgments in cross-border disputes. Businesses should be aware of the following implications:
- When entering into contracts with parties from either Hong Kong or Mainland China, businesses should consider whether to include an exclusive jurisdiction clause or not. An exclusive jurisdiction clause will give certainty as to which court will have jurisdiction over any dispute arising from the contract, but it will also limit the choice of forum and may affect the enforceability of arbitration agreements.
- When seeking to enforce a judgment obtained from either Hong Kong or Mainland China, businesses should act promptly and comply with the requirements and procedures under the Ordinance. Businesses should also be prepared to deal with any possible challenges or objections from the judgment debtor based on the grounds for refusal under the Ordinance.
- When facing a claim from a party who has obtained a judgment from either Hong Kong or Mainland China, businesses should assess whether they have any valid defences or grounds for refusal under the Ordinance. Businesses should also consider whether to appeal or challenge the judgment in the original court before it becomes final and enforceable.
The new regime will enhance judicial cooperation and mutual trust between Hong Kong and Mainland China and will facilitate cross-border trade and investment. Businesses should seek legal advice on how to best protect their interests and rights under this regime.
- The Ordinance provides a mechanism for the mutual recognition and enforcement of judgments in civil and commercial matters between Hong Kong and Mainland China
- The Ordinance sets out the conditions and procedures for applying for recognition and enforcement, as well as the grounds for refusal
- The Ordinance aims to enhance legal certainty and facilitate cross-border trade and investment
