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Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters

On 18 January 2019, the Supreme People’s Courts of the Mainland and the Hong Kong Government signed the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the HKSAR (“Arrangement”), being the 6th arrangement over the years on mutual legal assistance in civil and commercial matters between the Mainland and Hong Kong.

The Arrangement has yet to take effect, pending implementation by local legislation in Hong Kong and necessary procedures in the Mainland. On its implementation, the Choice of Court Arrangement previously made in 2006 with a much narrower scope will be replaced.

Scope of the Arrangement

The Arrangement, consisting of 31 Articles, establishes a bilateral legal mechanism for the recognition and enforcement of judgments in a wide range of matters which are considered “civil and commercial” in nature under both Hong Kong and Mainland Law. It covers both monetary and non-monetary relief.

All judgments within the scope of the Arrangement can be registered and enforced in Hong Kong without re-litigating the same dispute by commencing a separate legal action for enforcement at common law, unless a ground for refusal exists.

Exclusions under the Arrangement

Broadly speaking, judgments ruling on several types of matters remain excluded, and so cannot benefit from the Arrangement. These matters include, amongst other things, (i) exemplary or punitive damages, (ii) non-judicial proceedings and judicial proceedings relating to administrative or regulatory matter, (iii) corporate insolvency and debt restructuring, and personal insolvency, (vi) succession, administration or distribution of the estate of a deceased person, (v) matrimonial or family matters already covered by separate Matrimonial Arrangement of 2017, or (vi) the validity of an arbitration agreement and the setting aside of an arbitral award already covered by the Arbitration Arrangement of 1999.

Grounds for Refusal

Even if a judgment lies within the scope of the Arrangement, an application for recognition and enforcement of a judgment may still be refused.

Mandatory grounds for refusal include, amongst others, (i) failure to meet jurisdictional requirements, (ii) respondent not being summoned in accordance with the law of the place of the original court, (iii) respondent not given a reasonable opportunity to defend at the original court, (iv) a judgment obtained by fraud, (v) a court of the requested place having already accepted the cause of action upon the same dispute, (vi) judgment on the same cause of action already rendered or recognized in a court of the requested place, (vii) arbitral award already given or recognized in the requested place, or (viii) a manifest contradiction to the basic legal principles or public policy of the requested place.

Discretionary ground for refusal caters for the situation where the proceedings in the original court are contrary to a valid arbitration agreement or a valid agreement designating a court (not being a court of the requesting place) having jurisdiction for resolving the same cause of action.

Take-Away and Way Forward

The Arrangement will apply to judgments made on or after the commencement date. In the circumstances, the scope and limitations of the Arrangement should be carefully considered when negotiating a new agreement (in particular the jurisdiction clause therein), or when seeking relief regarding civil and/or commercial matters in court actions to be commenced.

The Arrangement will be particularly helpful where a Mainland or Hong Kong party is involved or where a counter-party has substantial assets in these jurisdictions. It will facilitate and maximize the chance of successful enforcement of judgments in Hong Kong or in the Mainland, and hence help avoid obtaining an empty paper judgment.

Nigel Binnersley and Yolanda Kok

Stay tuned for our further updates when the local legislation is implemented.

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