Recognizing, enforcing HK judgments in mainland China

By Zhang Guanglei, Chen Cheng, Jingtian & Gongcheng
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The Hong Kong courts’ judgments on disputes over commercial matters involving enforcement against property located in mainland China need to be recognized and enforced by mainland courts through judicial assistance.

As for inter-regional legal assistance, the written arrangements signed by the Supreme People’s Court (SPC) and the Government of the Hong Kong Special Administrative Region (HKSAR) include the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters under Consensual Jurisdiction between the Courts of the Mainland and of the HKSAR, (the arrangement on cases under consensual jurisdiction), effective on 1 August 2008, and the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters between the Courts of the Mainland and of the HKSAR (the arrangement on civil and commercial matters), signed on 18 January 2019.

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Zhang Guanglei
Partner
Jingtian & Gongcheng

In addition, the Civil Procedure Law and its judicial interpretations prescribe that the relevant provisions on the recognition and enforcement of foreign judgments can be applied to cases involving Hong Kong.

To date, the arrangement on civil and commercial matters has not come into effect, and it is extremely rare to see the judgments of Hong Kong courts recognized and enforced by mainland courts when the arrangement on cases under consensual jurisdiction is not applicable to such judgments. In practice, therefore, mainland China recognizes and enforces Hong Kong court judgments mainly based on the arrangement on cases under consensual jurisdiction.

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Chen Cheng
Lawyer
Jingtian & Gongcheng

Valid jurisdiction agreement

The arrangement on cases under consensual jurisdiction imposes strict restrictions on Hong Kong court judgments recognizable and enforceable on the mainland, that is, there must be a valid jurisdiction agreement on the disputes involved. A valid jurisdictional agreement should have at least three elements: (1) it is agreed in writing that the Hong Kong court is of competent jurisdiction; (2) the Hong Kong court has actual connection with the case; and (3) the Hong Kong court has exclusive jurisdiction. In practice, special attention should be paid to the following circumstances:

  • The agreement on applicable laws does not constitute an agreement on jurisdiction. In Case [2017] Xiang Min Zhong No. 692, the parties claimed that the contractual provision that “the parties enter into this share transfer agreement in accordance with relevant laws and regulations of Hong Kong” constituted a clause on jurisdiction, but the court held that the clause addressed the choice of applicable laws but did not suffice to indicate the presence of an effective jurisdiction agreement under the arrangement on cases under consensual jurisdiction. In Case [2013] Yue Gao Fa Li Min Zhong Zi No. 468, a party claimed exclusive jurisdiction of the Hong Kong court on the contractual ground that “this agreement is protected and governed by the laws of the HKSAR”, which was also not affirmed by the court.
  • The jurisdiction clause should not contain the words “non-exclusive jurisdiction”, or similar expressions. In Case [2015] Min Si Zhong Zi No. 57 and Case [2017] Yue 0391 Min Chu No. 1372/1373, the parties in dispute agreed on the “exclusive jurisdiction” of Hong Kong courts. In this regard, the courts accepting the two cases held that although the jurisdiction clause explicitly agreed to accept the jurisdiction of Hong Kong courts, such “non-exclusive [with] jurisdiction” provisions could not preclude the jurisdiction of mainland courts, and therefore were not covered by the arrangement on cases under consensual jurisdiction.
  • The agreed court of jurisdiction should have actual connection with the dispute in question. When assessing the validity of jurisdiction clauses, mainland courts usually also pay attention to whether Hong Kong courts have actual connection with the disputes in question. For example, in Case [2013] Min Ti Zi No. 243, the agreement that the parties “shall be unconditionally subject to the jurisdiction of the Hong Kong court” conforms in form to the arrangement on cases under consensual jurisdiction, but the court held that the parties in the case, and the place of contract performance, had no actual connection with Hong Kong, so the jurisdiction clause did not constitute a valid jurisdiction agreement under the arrangement on cases under consensual jurisdiction.

Mainland lawsuits

If there is no such valid jurisdiction agreement as mentioned above, the arrangement on cases under consensual jurisdiction is not applicable. In such circumstances, one can consider bringing a lawsuit directly on the mainland. According to the relevant provisions of the Civil Procedure Law, and its judicial interpretations on parallel proceedings, mainland courts still have jurisdiction over cases subject to the jurisdiction of both mainland and Hong Kong courts, even if the Hong Kong court has accepted the case, or made effective judgment.

As the court stated in Case [2016] Yue Min Chu No. 1944/1945: “the plaintiff … has filed a lawsuit in the HKSAR regarding the dispute between the two parties, and the High Court of the HKSAR has made a judgment, … the plaintiff … still has the right to file a lawsuit with this [mainland] court regarding the same dispute, and this court should accept the case and make a judgment in accordance with the law.”

In addition, the Hong Kong court judgment can be presented as evidence in mainland court proceedings. “In the absence of sufficient evidence to the contrary”, the mainland court will recognize it as the basis of fact finding. For details, please refer to Case [2018] Hu Min Zhong No. 330.

Jurisdiction clause draft

As mentioned above, the key to the recognition and enforcement of Hong Kong court judgments on the mainland is to reach a valid jurisdiction agreement in accordance with the arrangement on cases under consensual jurisdiction. Therefore, the agreed jurisdiction clause should contain the required elements such as the actual connection between Hong Kong courts and the case, the written agreement on jurisdiction of Hong Kong courts, and the exclusive jurisdiction of Hong Kong courts.

In addition, given the certainty of enforcement and importance of property attachment, it is recommended to first make an agreement on arbitration. If a court is chosen for jurisdiction, extra attention should be paid to the following points: (1) when the debtor’s property available for enforcement is located on the mainland, the creditor should request agreeing to the jurisdiction of the mainland court to the greatest extent; and (2) if there is also property located in Hong Kong available for enforcement, it is recommended to make an agreement on non-exclusive jurisdiction of the Hong Kong court, so as to effectively attach and enforce the debtor’s property through parallel proceedings in the mainland and Hong Kong.

Zhang Guanglei is a partner and Chen Cheng is an associate at Jingtian & Gongcheng. Zhang is also an arbitrator of Hong Kong International Arbitration Centre

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