Option (1) “The long-awaited reciprocal enforcement regime for Hong Kong-Mainland China judgments”

The Ordinance will supersede the existing Mainland Judgments (Reciprocal Enforcement) Ordinance (Cap 597) and will apply to judgments in a civil or commercial matter that is given on or after 29 January 2024. The key features of the Ordinance are as follows:

(1) Removal of the exclusive jurisdiction agreement requirement

Under the existing regime, a party enforcing a judgment needs to satisfy that the parties have in the underlying agreement agreed to submit to the exclusive jurisdiction of either Mainland China or the Hong Kong courts in respect of any disputes which may arise. This prerequisite will however be replaced with a jurisdictional test under the Ordinance. A party enforcing a judgment under the Ordinance needs to show the Hong Kong court that the court in Mainland China had jurisdiction at the time that the proceedings were accepted. This would be established by showing that the original proceedings had sufficient nexus with Mainland China.

(2) Expanded scope of coverage

The current regime in place is limited to monetary judgments in Mainland China or Hong Kong in commercial disputes. The Ordinance will however extend its reach to include both monetary and non-monetary judgments in civil and commercial matters, as well as orders for compensation and damages arising from criminal proceedings. Notably, the Ordinance also allows for the recognition and enforcement of judgments in respect of certain intellectual property rights. A spokesman for the Hong Kong Department of Justice said, the express inclusion of judgments relating to specific intellectual property rights would help consolidate Hong Kong's status as a regional intellectual property trading centre.

The Ordinance is also set to expand the level of courts that can grant enforceable judgments. The scope of Hong Kong judgments enforceable in Mainland China will be extended to include those issued by the Labour Tribunal, Lands Tribunal as well as the Competition Tribunal. Further, judgments issued by the Primary People’s Court of Mainland China no longer needs to be specifically designated in order to be enforced in Hong Kong once the changes come into effect.

Implications

The Ordinance will avoid the need to duplicate proceedings in both jurisdictions and will enhance certainty and the predictability of the enforcement of civil and commercial judgments. Parties engaged in cross-border transactions that are linked to Mainland China should consider reviewing the dispute resolution clause contained in their agreements.