Hong Kong publishes mechanism for reciprocal legal recognition with Mainland China

Hong Kong’s Department of Justice launched a public consultation on 17 December for a legislative proposal to implement an agreement with the Chinese Mainland on the reciprocal recognition and enforcement of judgments in civil and commercial matters. The consultation runs to 31 January 2022.

The so-called ‘REJ Arrangement’ – 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 – was signed by both the Supreme People’s Court and the Hong Kong SAR government in January 2019.

The legislative proposal to make the REJ Arrangement effective is contained in the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Bill and the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Rules.

These introduce a mechanism under which a person can apply to the Hong Kong Court of First Instance (CFI) to have a Mainland judgment in a civil or commercial matter registered with the CFI on an ex parte basis. A registered judgment can then be enforced in the same way as if it were a judgment originally given by the CFI.

Subject to certain restrictions, the proposed mechanism covers both monetary (excluding punitive or exemplary damages) and non-monetary relief. The CFI can set aside the registration if an applicant is able to prove to the satisfaction of the court that any of the exhaustive grounds of refusal exists.

The mechanism also facilitates the recognition and enforcement of Hong Kong judgments in civil or commercial matters in Mainland China by empowering the Hong Kong court to issue certified copies of and certificates for such Hong Kong judgments.

In formulating the REJ Arrangement, reference was made to the then draft version of the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters, while also taking into account the practical needs and circumstances of Mainland China and the HKSAR.

In fact, the REJ Arrangement goes beyond the Hague Judgments Convention by expressly covering judgments given in respect of disputes over intellectual property (IP) rights, which are specifically excluded from the Convention.

“The proposed legislation is excellent news for anyone doing business with individuals or companies that have assets in both Hong Kong and the Mainland,” said a consultant with Sovereign Trust (Hong Kong).

“It will not only make the Hong Kong SAR the first jurisdiction to have a legal pact with Mainland China for the reciprocal recognition and enforcement of judgments but it will expressly cover judgments given in respect of disputes over IP rights.”