Key Points:

  • Reciprocal Court Judgment Recognition and Enforcement Procedures Outlined
  • Two-Year Application Time Limit

Pursuant to Article 95 of the Basic Law of the Hong Kong Special Administrative Region (“HKSAR”), following negotiations, the Supreme People’s Court and the HKSAR have concluded the Arrangement on Reciprocal Recognition and Enforcement of the Decisions of Civil and Commercial Cases Under Consensual Jurisdiction (”the Arrangement”), signed on July 14, 2006 and effective August 1, 2008.

According to the Arrangement, parties may apply to either a PRC court or a Hong Kong court for recognition and enforcement of a final decision of payment with judicial force made by either court in a civil or commercial case under a written jurisdiction agreement.

The term “final decision with executive force” refers, in mainland PRC, to either:

  1. Judgments rendered by the Supreme People’s Court, or;
  2. Judgments rendered by a People’s Court (District, Intermediate and Higher) that has been delegated jurisdiction at first instance of a civil or commercial case involving foreign, Hong Kong, Macao or Taiwan affairs, when an appeal is not allowed in respect of the first instance decision, no appeal is made within the prescribed time limit, or when an effective second instance decision or a decision made after the case are reviewed by the People’s Court at the next higher level in accordance with the procedure for adjudication supervision.

“Final decision with executive force” in the HKSAR refers to an effective decision made by the Court of Final Appeal or the Court of Appeal of the High Court, the Court of First Instance or the District Court.

The “decisions” as mentioned in the Arrangement include decisions, verdicts, mediation awards and payment orders in the mainland and decisions, orders and legal cost appraisal certificates in the HKSAR.

The “written jurisdiction agreement” as mentioned in the Arrangement refers to an agreement concluded after the Arrangement became effective that expressly stipulates in writing that a People’s Court or a Hong Kong court has exclusive jurisdiction over any dispute related to a certain legal relationship that occurred or may occur.

The “certain legal relationship” refers to a civil or commercial contract between the parties concerned, excluding a contract of employment or a contract to which a natural person is involved as a party for purposes of personal consumption, family affairs or other non-commercial purposes.

“In writing” means that the contract was concluded in the form of a written contract, letter, data message (such as a fax or e-mail) or other form that enables the availability of the contract content in a physical form that can be consulted at a future date.

In Mainland China, an application for recognition and enforcement of a civil or commercial decision must be filed with the Intermediate People’s Court located at the defendant’s place of domicile, residency or in the locality where the property of the defendant. In Hong Kong, application must be submitted to the High Court of the HKSAR.

If the defendant’s domicile, residency and the locality of the defendant’s property are in different jurisdictions, the applicant may file the application with the Intermediate People’s Court in only one of these jurisdictions. However, if the defendant’s domicile, residency and the locality of the defendant’s property are under the jurisdiction of both Mainland China and the HKSAR, the applicant may file the application with the competent courts of both places simultaneously, but the collective total amount sought in both enforcement applications cannot exceed the amount determined in the Decision.

The Arrangement also lists, in detail, the various documents that should accompany an application. Theses include a certificate issued by the Court rendering the final Decision evidencing that the Decision is, in fact, the Final Decision, as required by the Arrangement and that it can be executed at the place where it is rendered. Translation, notarization and legalization requirements are also set forth.

The Arrangement specifies that the applicable law in applications for recognition and enforcement shall be the law of the place of enforcement unless otherwise provided in the Arrangement.

The application time limit for recognition and enforcement of a decision is two years. For a decision made in Mainland China to be executed in the HKSAR, the time limit is calculated from the last day of the time limit for voluntary execution as stated in the Decision. If the Decision is to be executed in stages, the time limit is set from the last day of the time limit set for each stage or, if there is no time limit for performance contained in the Decision, then from the day when the Decision becomes effective. For a Decision made in the HKSAR that is to be executed in Mainland China, the time limit is calculated from the day when the Decision becomes enforceable, i.e., the date when the decision was made as indicated in the Decision or, if there is any other provision for the enforcement period, then from the date when the prescribed enforcement period expires. Where the debtor identified in the Decision provides evidence to prove any of the following circumstances, the court accepting the application shall, upon verification, make a ruling to disallow its recognition and enforcement:

  1.  According to the law of the place of the court of first instance selected by the parties, the jurisdiction agreement concluded by the disputing parties is invalid, unless the selected court has determined the agreement as valid.
  2. The Decision has been fully executed.
  3. According to the law of the place of enforcement, the court of the place of enforcement has exclusive jurisdiction over the case.
  4. According to the law of the place of the court of first instance, the party losing the lawsuit, by failing to appear in court, has not been summoned according to law or has been summoned but not been informed of the time limit for filing its defense. However, if the court of first instance has served the party with public notice in accordance with relevant laws and provisions, the party losing the lawsuit will be deemed as having been summoned according to law.
  5. The Decision was obtained fraudulently.
  6. The court of the place of enforcement, another country or an overseas region has made a decision for the same claim, or an arbitral agency has made an arbitral award for the same claim, and that decision or arbitral award has been recognized or enforced by the court at the place of enforcement.

Where a PRC court believes that enforcement of a Decision rendered by a HKSAR court is contrary to the public interest of Mainland China, or a HKSAR court believes that enforcement in Hong Kong of a Decision made by a People’s Court is against Hong Kong’s “public policies,” then that court will not recognize and enforce the Decision.

The Arrangement includes provision for preservation and conservatory measures. Before or after accepting an application for the recognition and enforcement of a Decision, a court may, if the applicant so requests, order an attachment of property or other measures against the losing party.

Where a court in either jurisdiction refuses recognition and enforcement, an appeal can be filed with the next higher court.

Objects subject to reciprocal recognition and enforcement by courts on the Mainland and in the HKSAR include the amount determined in a Decision, the interest payable, and the attorneys’ fees and legal costs ratified by the court, with the exception of taxes and penalties. In the HKSAR, legal costs refers to legal costs ratified by, or the payment whereof is ordered by, the judge or the registrar in the legal cost appraisal certificate.