Reciprocal enforcement in Hong Kong and Taiwan
November 02, 2009 | BY
clpstaff &clp articles &The Arrangement on Reciprocal Enforcement of Judgments in Civil and Commercial Matters makes enforcement of regional court judgments much easier
Hong Kong has long been regarded as a reliable and convenient choice for both litigation and arbitration. Since August 1 2008, things have become theoretically easier for companies resolving disputes in the region. This is due to the passage of the Mainland Judgments (Reciprocal Enforcement) Ordinance in Hong Kong and a PRC judicial announcement bringing into effect the Arrangement on Reciprocal Enforcement of Judgments in Civil and Commercial Matters (which was signed by both governments in 2006).
The Arrangement provides for reciprocal enforcement of money judgments in both jurisdictions, as long as the parties have expressly agreed in writing to designate a mainland or a Hong Kong court to have exclusive jurisdiction for resolving any appropriate dispute; the new Arrangement resembles the New York Convention in many ways. (A similar structure was put into place to cover reciprocal enforcement of arbitral awards late in 1999.)
Before the agreement became effective on August 1 (wrote CLP sister publication Asialaw in November 2008), the mainland provided no legislative basis for the recognition and enforcement of Hong Kong judgments, while mainland judgments could only be enforced in Hong Kong under common law, which required initiating a fresh action in which the mainland judgment was admissible as evidence only. The reality of the agreement means companies doing business in the mainland or with mainland parties will be able to use the Hong Kong courts to resolve disputes and obtain judgments, which can then be enforced against assets in the mainland. In theory this should lead to increased confidence in doing business with mainland parties, as companies will have access to the common law legal system.
Although there was considerable excitement in both Hong Kong and mainland China when the Arrangement came into effect, no further developments have taken place since then.
“As far as we are aware, there is so far no court case in Hong Kong or the mainland where judgment [has been] enforced under the Arrangement,” says DLA Piper's Roy Chan.
This is not entirely surprising, as it will take time for parties to write the required clause into their contracts, and for an applicable dispute to arise and be heard. But Chan says his firm is starting to see people using the clauses for banking transactions. PRC banks, which are usually more comfortable with the PRC courts, are inserting the clauses to make sure that if they obtain a judgment in mainland China they will be able to enforce it in Hong Kong, where much of their important business takes place.
“Before, they would have to have separate jurisdictions, and arbitrate in China or go to court in Hong Kong,” Chan says. “But now they can have the same platform for dispute resolution if their preference is to use the courts.”
With regard to Taiwan, the Supplementary Provisions of the Supreme People's Court on the People's Courts' Recognition of Civil Judgments of the Relevant Courts of the Taiwan Region (最高人民法院发布关于人民法院认可台湾地区有关法院民事判决的补充规定) – issued in May 2009 – allow for judgments of relevant courts in Taiwan to be recognised upon application. These include the judgments in commercial, IP, maritime and some other civil dispute cases. The Provisions also expressly provide that a civil judgment of a relevant court in Taiwan which is recognised upon a ruling of a PRC people's court will have the same effect as an effective judgment of the people's court.
[This article forms part of a feature on enforcement of dispute resolution awards in China.]
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