Significance of the Decision
The Mainland Judgments (Reciprocal Enforcement) Ordinance1 (“Mainland Judgments Ordinance”) allows recognition and enforcement of Mainland2 money judgments in Hong Kong by way of registration. A registered Mainland judgment has the same force as a judgment originally given by the Hong Kong Court of First Instance.
Recently3, Master Harold Leong decided the first reported decision4 concerning the Mainland Judgments Ordinance since its enactment in 2008. The case involved an application by the 1st to 5th defendants to set aside an order for registration of a Mainland judgment in Hong Kong.
It was the first reported decision in which a Mainland judgment registered in Hong Kong had been subject to an application to have it set aside. The decision highlights the importance of the presumption that a judgment is final and enforceable in the Mainland where a certificate has been issued by the original court to the same effect. Obviously, this presumption places the burden on an applicant to “prove the contrary”.
Background to the Mainland Judgments Ordinance
Recognition and enforcement of foreign judgments in Hong Kong are governed by the Foreign Judgments (Reciprocal Enforcement) Ordinance5. Following the handover on July 1, 1997, the Mainland is no longer considered a foreign country by Hong Kong and this Ordinance became applicable to enforcing Mainland judgments. Judgments given by Mainland courts requiring payment of money could only be recognised and enforced in Hong Kong by commencing a new action in debt at common law.
The Mainland had a similar law6. Following the handover, Hong Kong became a Special Administrative Region of China and the law also became inapplicable.
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 SAR Pursuant to Choice of Court Agreements between Parties Concerned” (“Arrangement”) came into force on July 14, 2006. The Arrangement covers money judgments on contractual disputes relating to civil or commercial matters, in the event, the parties concerned have made a prior express agreement to submit to the exclusive jurisdiction of the courts of the Mainland or Hong Kong. The Arrangement represents an important step with regard to resolution of disputes arising from the increasing commercial and economic relations between Hong Kong and the Mainland.
The Mainland Judgments Ordinance came into force on August 1, 20087. The Mainland Judgment Ordinance implemented the Arrangement in Hong Kong.
The Hong Kong Court High Court of First Instance must order a Mainland judgment to be registered (in accordance with the Mainland Judgments Ordinance) if the judgment creditor proves that the following requirements are satisfied:
- The Mainland judgment being enforced must be a money judgment on a dispute arising out of a commercial contract. Non-commercial contracts are excluded because they fall within the exclusive jurisdiction of the Mainland courts.
- The underlying commercial contracts must contain a valid ‘choice of Hong Kong court’, or ‘choice of Mainland court’ agreement made after the commencement of the Ordinance (i.e. after August 1, 2008).
- The Mainland judgment must be an order for the payment of a sum of money (not being a sum payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalty) from a designated court (namely the Supreme People’s Court, a Higher People’s Court, an Intermediate People’s Court or a recognised Basic People’s Court).
- The Mainland judgment to be enforced has to be “final and conclusive” and delivered after the commencement of the Ordinance. A certificate from the Mainland court is required on finality of the judgment8.
An application to register a Mainland judgment must be must be filed with the Court of First Instance within two years from last day of the specified period within which the judgment ought to have been performed; or, in any other case, from the date from which the judgment takes effect.
Facts of the Case
A summary of the key facts of the case are as follows:
- On November 4, 2014, the Shenzhen Intermediate People’s Court issued a Reconciliation Statement setting out the settlement terms of the parties (“2014 Mainland Judgment”).
- On January 15, 2015, the plaintiff obtained a certificate from the Shenzhen Court certifying that the 2014 Mainland Judgment was final and enforceable in the Mainland.
- On September 30, 2015, it was alleged that the 1st defendant made an application to set aside the 2014 Mainland Judgment (“Application”). However, Master Leong noted that from the wording of the Application exhibited, it appeared to be an Application to set aside the enforcement order rather than the 2014 Mainland Judgment itself.
- On October 28, 2015, the plaintiff obtained an order from the Court of First Instance to register parts of the 2014 Mainland Judgment pursuant to the Mainland Judgments Ordinance (“Registration Order”).
Counsel for the plaintiff argued that since the decision of the Application “had not been dismissed or refused”, parts of the 2014 Mainland Judgment were not “enforceable in the Mainland” and that the Registration Order should therefore be set aside.
Master Leong disagreed with this argument noting that Sections 5(2) and 6(2) of the Mainland Judgments Ordinance state that:
Section 5(2): “On an application...., the Court of First Instance shall order the Mainland Judgment to be registered...if the judgment creditor has proved to the satisfaction of the Court...that the following requirements are satisfied ....(d) the judgment is enforceable in the Mainland...”
Section 6(2): “For the purposes of section 5(2)(d), a Mainland Judgment is deemed, unless the contrary is proved, to be enforceable in the Mainland if a certificate is issued by the original court that the judgment is final and enforceable in the Mainland.”
Master Leong noted that since the plaintiff produced the certificate, the defendants were required to “prove the contrary” that the judgment was final and enforceable. He held that submitting a pending Application to set aside an enforcement order was far from enough. Furthermore, Master Leong referred to the plaintiff’s Mainland expert who stated that an appeal against a Reconciliation Statement must be made within 6 months of it taking legal effect. He held that since the Application was made after the 6 month period, it could not have been a proper application for appeal against the 2014 Mainland Judgment.
Master Leong concluded by ordering that the defendant’s application to set aside the order for registration of the 2014 Mainland Judgment be dismissed with costs.
This decision proves to be a timely reminder that statutory appeal periods must be strictly adhered to, as in this case the defendants appear to have attempted to appeal the 2014 Mainland Judgment by way of the Application, but were outside of the statutory time limit. This had the effect of conclusively showing that 2014 Mainland Judgment was final and enforceable.