Hong Kong approves legislation to make reciprocal enforcement of civil and commercial judgments straightforward
The Hong Kong legislature passed The Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (the Ordinance) on October 26, 2022, to enact the 2019 Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and the Hong Kong Special Administrative Region (the Mutual Arrangement). The Hong Kong government has stated that the Ordinance will take into force in about six to seven months, in the middle of 2023, once the relevant processes in both jurisdictions are in place.
The Ordinance and the Mutual Arrangement, through a simple and expedited registration procedure, would allow a greater range of civil and commercial judgments issued by mainland Chinese courts to be enforced in Hong Kong and vice versa. This marks a substantial advancement in the mutual enforcement of civil and commercial judgments between the two legal jurisdictions, with a significant extension of the scope of enforceable judgments.
Prior to this extended reciprocal enforcement framework, only certain sorts of monetary judgments could be enforced between the jurisdictions under a choice-of-court provision, and the recognition mechanism was employed relatively infrequently. Most legal and commercial decisions are enforceable between Hong Kong and mainland China under the enlarged framework, with a few exceptions. Among these are (but are not limited to):
(i) both nonmonetary and monetary civil judgments;
(ii) judgments for civil damages awarded in criminal cases; and
(iii) certain intellectual property judgments (for example, those involving copyright and trademark issues).
The extended framework excludes corporate and personal bankruptcy, and marriage, and family disputes, as current arrangements between Hong Kong and mainland China apply to judgments in those areas.
The major implications for businesses from the new policy are: I there is no longer a clear difference between onshore and offshore (HK) assets for enforcement purposes; and as a result, (ii) corporations may be obliged to use onshore assets to fulfill offshore judgments and vice versa.
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