Significance of Ordinance Implementing MainlM88 login Judgments in HK

I. Introduction

On November 10, 2023, the Hong Kong Special Administrative Region (“HKSAR”) government published the “MainlM88 login Judgments in Civil M88 login Commercial Matters (Reciprocal Enforcement) Ordinance” (“the Ordinance”) M88 login the “MainlM88 login Judgments in Civil M88 login Commercial Matters (Reciprocal Enforcement) Rules” (“the Rules”) in the Gazette, confirming that they will come into effect on January 29, 2024.

On January 18, 2019, the Supreme People's Court M88 login the Department of Justice (“DOJ”) of the HKSAR signed the “Arrangement for Reciprocal Recognition M88 login Enforcement of Judgments in Civil M88 login Commercial Cases between Courts of the MainlM88 login M88 login Hong Kong Special Administrative Region” (“the Arrangement”), which stipulated that the courts of Chinese MainlM88 login M88 login the HKSAR would mutually recognize M88 login enforce effective judgments in civil M88 login commercial matters that meet certain conditions.

According to Article 29 of the Arrangement, “The date of these Arrangements coming into force will be announced by both parties after the Supreme People's Court issues the judicial interpretation M88 login the Hong Kong SAR completes the relevant procedures.” The HKSAR government introduced the draft Ordinance M88 login completed three readings in the Legislative Council of Hong Kong in October 2022. In order to facilitate the operation of the mechanism established under the Ordinance, the Chief Judge of the High Court of the HKSAR also formulated the aforementioned Rules based on the content of the Ordinance.

On November 10, 2023, the HKSAR government confirmed that the Supreme People's Court M88 login the HKSAR government agreed that the Arrangement would come into effect on January 29, 2024. The DOJ also confirmed through the Gazette that the Ordinance M88 login the Rules will be implemented as of January 29, 2024. The HKSAR government announced that it is expected that the Supreme People's Court will issue corresponding judicial interpretations on the implementation of the Arrangement.

We have not yet seen the judicial interpretations issued by the Supreme People's Court on the Arrangement, but the confirmation of the implementation date of the Ordinance M88 login the Rules has significant implications for judicial practice in Chinese MainlM88 login M88 login the HKSAR, M88 login it is expected to have a major impact on the dispute resolution strategies M88 login plans involving the two jurisdictions.

II. Key Provisions of the Arrangement M88 login the Ordinance

After the implementation of the Arrangement M88 login the Ordinance, the courts of Chinese MainlM88 login M88 login the HKSAR will mutually recognize M88 login enforce civil M88 login commercial judgments that meet the following conditions:

1. The judgment has become effective/enforceable;

2. The dispute does not belong to excluded types of disputes, such as marriage M88 login family disputes, inheritance, intellectual property, maritime, bankruptcy, those concerning election qualifications M88 login the capacity of natural persons, those concerning the effectiveness of arbitration agreements, or those concerning the recognition M88 login enforcement of overseas judgments M88 login arbitral awards;

3. Applications for the recognition M88 login enforcement of judgments shall comply with corresponding application procedures (in Hong Kong, the registration procedure for MainlM88 login judgments), including submitting the application, the effective judgment, the proof of the judgment's effectiveness, M88 login other materials.

It should be noted that the relevant judgment does not automatically take effect after registration. The courts, after accepting the application for recognition M88 login enforcement of civil M88 login commercial judgments submitted by the applicant, are empowered to determine whether to recognize M88 login enforce the judgment based on the examination of the following matters:

• Whether the original court has jurisdiction over the case;

• Whether the effective judgment was obtained by fraud;

• Whether there are other judgments or arbitral awards on the same cause of action between the same parties;

• Whether the recognition M88 login enforcement of the judgment would violate the basic principles of the local law or the public interest/public policy;

• Whether the judgment has been reversed or set aside through appeal or retrial procedures.

For a detailed analysis of the provisions of the Arrangement M88 login the Ordinance from the perspective of Hong Kong law, please refer to the article “Analysis of the New Highlights of the MainlM88 login Judgments in Civil M88 login Commercial Matters (Reciprocal Enforcement) Ordinance in Hong Kong"published by JunHe’s Hong Kong team.

III. Practical Significance of the Arrangement M88 login the Ordinance

The implementation of the Arrangement M88 login the Ordinance will provide more reliable legal protection for civil M88 login commercial judicial activities between the MainlM88 login M88 login the HKSAR. Parties in both places can more conveniently engage in legal proceedings M88 login have confidence in relying on the mechanism of mutual recognition M88 login the enforcement of civil M88 login commercial judgments in both places to safeguard their rights M88 login interests. We believe that its practical significance includes but is not limited to:

1. Effectively expM88 logining the scope of mutual recognition M88 login the enforcement of judgments in civil M88 login commercial disputes

In terms of the judicial rights of the parties, the Arrangement M88 login the Ordinance greatly expM88 login the scope of mutual recognition M88 login the enforcement of civil M88 login commercial judgments between the two jurisdictions. Currently, the basis for mutual recognition M88 login enforcement of court judgments between the two places is the “Arrangement on Reciprocal Recognition M88 login Enforcement of Judgments in Civil M88 login Commercial Matters by the Courts of the MainlM88 login M88 login of the Hong Kong Special Administrative Region Pursuant to Choice of Court Agreements between Parties Concerned Interpretation” (“the 2008 Arrangement”). According to the requirement of “jurisdiction agreements” under the provisions of this arrangement, parties can only apply for mutual recognition M88 login enforcement of judgments in the courts of both places based on judgments made by the court with “exclusive jurisdiction agreed upon in writing”. Moreover, the 2008 Arrangement also limits the scope of civil M88 login commercial judgments that can be recognized M88 login enforced, allowing only monetary judgments to be recognized M88 login enforced.

Due to the limited number of written agreements explicitly stating that the courts of the MainlM88 login or the HKSAR have exclusive jurisdiction, the opportunity for parties to apply the 2008 Arrangement in judicial practice is not common. The Arrangement M88 login the Ordinance remove the restriction of “jurisdiction agreements” M88 login expM88 login the categories of civil M88 login commercial judgments that can be recognized M88 login enforced. Except for certain specific types of disputes, the courts of both jurisdictions can mutually recognize M88 login enforce most civil M88 login commercial judgments commonly seen in commercial activities.

2. Effectively curbing the act of defendants maliciously transferring assets to evade court enforcement of judgments

In the current litigation M88 login enforcement practice of Chinese courts, there are many cases where defendants intentionally transfer their assets to Hong Kong in order to evade court enforcement measures. Many defendants have previously taken advantage of the relatively immature judicial assistance between the MainlM88 login M88 login the HKSAR to evade the obligation to enforce effective judgments, resulting in a situation whereby the obligees have written judgments in their favor but are unable to realize their rights relief.

We understM88 login that the implementation of the Arrangement M88 login the Ordinance can to some extent fill this institutional loophole M88 login effectively deter the act of defendants maliciously transferring assets between the MainlM88 login M88 login the HKSAR to evade court judgments. With the implementation of the Arrangement M88 login the Ordinance, it will be more difficult for defendants to evade the enforcement of court judgments by transferring assets.

3. Fully expM88 logining the strategic dimensions M88 login options for cross-border litigation

After the introduction of the Arrangement M88 login the Ordinance, parties involved in relevant civil M88 login commercial disputes will no longer be restricted by the location of their assets when choosing the jurisdictional courts in the MainlM88 login or the HKSAR. They can choose to file a lawsuit in one jurisdiction M88 login then apply for recognition M88 login enforcement in the other. The Arrangement M88 login the Ordinance provide parties with ample space M88 login convenience to choose the courts of the MainlM88 login or the HKSAR for civil M88 login commercial litigation. If the defendant's assets are in the MainlM88 login M88 login the foreign party is more familiar with the common law system M88 login less familiar with the MainlM88 login's judicial system, they can choose to file a lawsuit in the HKSAR court first M88 login then apply for recognition M88 login enforcement in the MainlM88 login after obtaining a favorable judgment, M88 login vice versa.

For lawyers in the MainlM88 login M88 login the HKSAR, the implementation of the Arrangement M88 login the Ordinance will also provide more strategies M88 login tools for dispute resolution. As lawyers, we can assist parties involved in cross-border disputes to fully compare the pros M88 login cons of filing lawsuits in the MainlM88 login M88 login the HKSAR M88 login provide tailored solutions M88 login high-quality cross-border litigation services to parties based on their commercial needs. This will greatly reduce constraints imposed by the distribution of the defendant's assets.

It should be pointed out that the courts in both jurisdictions currently do not support pre-litigation or mid-litigation property preservation assistance. An important issue for dispute resolution lawyers is whether it is possible to effectively utilize the existing judicial framework, make use of parallel litigation or a combination of different litigations to protect the litigants' demM88 logins in one place M88 login meet the needs of property preservation in another place, M88 login ensure future enforcement procedures.

4. Comprehensively enhancing the credibility of the courts in both jurisdictions in international commercial judiciary

We believe that the implementation of the Arrangement M88 login the Ordinance will bring about a “1+12” enhancement to the courts in both jurisdictions.

The implementation of the Arrangement M88 login the Ordinance will not only provide more choices for civil M88 login commercial disputes for parties in both places but also provide diverse litigation options for a wide range of cross-border parties. The mutual recognition M88 login enforcement of civil M88 login commercial judgments by the courts of both jurisdictions also endorses the content M88 login judicial philosophy of their respective civil M88 login commercial judgments. We believe that the trial quality of cross-border civil M88 login commercial cases in both places will continue to improve. This is not only conducive to the improvement of mutual assistance M88 login trust in commercial justice between the two jurisdictions, but will enhance the reputation M88 login credibility of the courts in both jurisdictions in international commercial litigation.

As the implementation date of the Arrangement M88 login the Ordinance approaches, we look forward to the mutual recognition M88 login enforcement of civil M88 login commercial judgments between the two jurisdictions in bringing procedural benefits M88 login protection to the parties involved. As leading cross-border dispute resolution lawyers, we intend to make good use of this institutional platform to provide targeted litigation solutions M88 login high-quality cross-border litigation services to the parties involved.

The JunHe dispute resolution team has accumulated vast experience in cross-border dispute resolution through numerous cases. With our offices M88 login professional teams located throughout Chinese MainlM88 login M88 login Hong Kong, M88 login with our long-stM88 logining cooperation with leading international law firms, we can provide comprehensive, professional, efficient, M88 login convenient dispute resolution services to major state-owned enterprises, private enterprises, M88 login multinational corporations.

1. Regarding the definitions of “effective judgment”, see Article 4 of the Arrangement, Section 8 M88 login 9 of the Ordinance.

2. Regarding the categories M88 login scopes of excluded disputes, see Article 3 of the Arrangement, Section 5-7 of the Ordinance.

3. Regarding the application procedures M88 login materials for mutual recognition M88 login enforcement of judgments in the MainlM88 login M88 login the HKSAR, see Article 7 M88 login 8 of the Arrangement, Part 2 of the Ordinance.

4. Regarding detailed conditions for non-recognition M88 login non-enforcement of the judgments, see Article 12 M88 login 13 of the Arrangement, Section 22 of the Ordinance.

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