New ordinance will support judgment enforcement between Hong Kong SAR and China

Mohammed Talib, disputes expert at Pinsent Masons said: “Given the sheer volume of commercial and business activity between Hong Kong SAR and mainland China, the implementation of the ordinance is a positive step forward, helping to protect parties, enable consistent outcomes and enhance predictability for cross-border transactions.”

The Mainland Judgements in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance Cap 645 (39 pages/ 461 KB) will implement the arrangement on reciprocal recognition and enforcement of judgements in civil and commercial matters by the courts of mainland China and Hong Kong SAR, which will come into force on 29 January. The arrangement, which was signed by the authorities back in January 2019, works to establish a more comprehensive and streamlined mechanism for reciprocal recognition and enforcement of judgments handed down by courts in the two jurisdictions.  

The ordinance widens the scope of the judgments that can be reciprocally enforced. It also removes the requirement for there to be an exclusive jurisdiction clause and instead replaces it with a test based on a “connection” with mainland China or Hong Kong SAR. The previous agreement required written exclusive jurisdiction in favour of the mainland courts in the underlying contract before judgments by courts in mainland China could be enforced in Hong Kong SAR.

The new rules only require that a connection with the mainland be established at the time when the proceedings are accepted. The connection test will be satisfied in instances such as where the defendant’s place of residence was in the mainland; where a representative office, brand, place of business or other establishment was in the mainland; or where the place of performance of the disputed contract was in the mainland, among other relevant connections.

The ordinance extends the subject matter of judgments eligible for mutual recognition and enforcement to include most civil and commercial matters, as well as compensation or damages awarded in criminal proceedings. The previous list was limited to judgments arising from contractual disputes only. The new ordinance also expands the courts by which reciprocal judgments can be made, including judgments made by lower courts and tribunals. Additionally, the ordinance includes an expansion of enforceable relief, now covering both monetary and non-monetary relief – such as orders for specific performance or injunction orders.

The update aims to avoid the need for duplicate proceedings in both jurisdictions, therefore providing a level of certainty and predictability of the enforcement of both civil and commercial judgments, Talib said.