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The new Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance Cap.645



The Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645) is set to come into force on 29 January 2024. The Ordinance will implement the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region, signed between Hong Kong and the Mainland authorities on 18 January 2019. This development establishes a more comprehensive and streamlined mechanism for the reciprocal enforcement of Hong Kong judgments in Mainland China and vice versa.


Highlight of the new legislation:

  1. Removal of the exclusive jurisdiction agreement requirement:Under the Ordinance, a significant change from the old arrangement is the replacement of the 'exclusive jurisdiction agreement' requirement with a jurisdictional test based on a 'connection' with the Mainland or Hong Kong. The judgment creditor will only need to establish a connection with the Mainland at the time when the proceedings were accepted. This connection test considers factors such as the defendant's place of residence or establishment, the place of performance of the disputed contract, the location of a tortious act, or a written agreement to submit to the Mainland's jurisdiction. This change provides greater flexibility to parties when drafting dispute resolution clauses.

  2. Expansion of subject matter:The Ordinance extends coverage to judgments arising from most civil and commercial matters, as well as compensation or damages awarded in criminal proceedings. Certain types of judgments, such as insolvency and bankruptcy cases, certain arbitration-related matters, certain matrimonial, family and succession cases, certain intellectual property and maritime matters, are excluded but covered under alternate Mainland-Hong Kong mutual assistance arrangements. This expansion broadens the scope of enforceable judgments compared to the old arrangement, which was limited to judgments arising from contractual disputes only.

  3. Expansion of enforceable relief:The categories of remedies have also been expanded under the Ordinance to cover both monetary and non-monetary relief, including specific performance and injunction orders. This is a significant improvement compared to the old arrangement, which only covered monetary judgments.

  4. Expansion of Courts:The Ordinance now includes judgments made by lower courts and tribunals, in addition to the Supreme People's Court, Higher People's Court, and Intermediate People's Court in the Mainland. In Hong Kong, judgments issued by Tribunals, including the Labour Tribunal, Lands Tribunal, Small Claims Tribunal, and the Competition Tribunal, will now be included alongside judgments of the Court of Final Appeal, the High Court, and the District Court.


Practicality Challenges in Enforcing Judgments in Other Jurisdictions:

While the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance aims to establish a more comprehensive and streamlined mechanism for reciprocal enforcement of judgments between Hong Kong and Mainland China, there may still be practical difficulties faced by practitioners when trying to enforce judgments in other jurisdictions.

  1. Complexity of Cross-Border Enforcement Procedures:Enforcing judgments in a foreign jurisdiction can be a complex and time-consuming process. Parties who wants to enforce a non-local judgment may encounter challenges in navigating the legal systems and procedures of the foreign jurisdiction, which may differ significantly from their own jurisdiction. This can lead to delays and increased costs in the enforcement process.

  2. Language and Cultural Barriers:Language and cultural differences can pose significant challenges in enforcing judgments in other jurisdictions. Liquidators may face difficulties in translating and understanding legal documents, communicating with local authorities, and navigating cultural nuances that could impact the enforcement process.

  3. Recognition and Compliance Issues:Despite the existence of reciprocal enforcement arrangements, there may still be instances where foreign courts or authorities may not readily recognize or comply with judgments obtained in another jurisdiction. This could be due to differences in legal standards, conflicting laws, or a lack of trust in the foreign legal system.

  4. Asset Recovery:The enforcement of judgments in other jurisdictions can also be hindered by difficulties in asset recovery. Even if a judgment is successfully enforced, there may be challenges in locating and seizing assets to satisfy the judgment debt. This is especially true in cases where the judgment debtor has hidden or transferred assets to avoid enforcement.


Conclusion:

While the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance is a significant step towards facilitating reciprocal enforcement between Hong Kong and Mainland China, practical difficulties may still arise in enforcing judgments in other jurisdictions. It is important for practitioners and parties involved in cross-border disputes to be aware of these challenges and seek professional advice to navigate the enforcement process effectively.


Thank you for reading our newsletter. At Chak & Associates LLP, we are committed to staying up-to-date with the latest legal developments in this area and are dedicated to providing our clients with expert guidance on all aspects of civil dispute and alternative dispute resolution practice. If you have any enquiries about the topics discussed in this newsletter or any other legal matters related, please do not hesitate to contact us. Our team of experienced lawyers is ready to assist you.

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