Enforcement of Mainland Judgments in Hong Kong: An Overview of Common Law Enforcement Methods
As a Hong Kong law firm that handles Mainland-Hong Kong litigation, we have handled many cases for enforcement of Mainland judgments in Hong Kong. The most commonly used method for enforcing a Mainland judgment in Hong Kong is through the common law method of enforcement, by which the debt adjudicated by the Mainland court is treated as a cause of action for litigation in Hong Kong. The judgment creditor of the Mainland judgment therefore can file a civil lawsuit in the Hong Kong courts, requesting the Hong Kong courts to make the same judgment against the defendant debtor. Once the Hong Kong courts makes a judgment of the same contents, the judgment becomes a Hong Kong court judgment, which can be enforceed in Hong Kong like any other Hong Kong judgment.
Core dispute issues: The “final” and “conclusive” nature of the Mainland judgment
As the cause of action of such common law enforcement is the debt determined by Mainland judgment itself, instead of the original basic cause of action such as breach of contract, the defendant cannot rely on those defenses to the basic cause of action available to him in the Mainland court any more in Hong Kong. According to the principle of res judicata under the common law, the Mainland courts have already considered the defenses to the basic cause of action before making the Mainland judgment, and the Hong Kong courts shall not retry these issues again. Usually, in a common law enforcement civil action in Hong Kong, the defenses that the defendant can put forward are procedural matters, such as the Mainland court has no jurisdiction, breach of due process, or the mainland judgment is not final and conclusive. Under the common law of Hong Kong, for an extraterritorial judgment to be enforced, the applicant for enforcement must prove that the judgment is final and conclusive.
The meaning of final and conclusive: issue of Res Judicata
In the case of Aeroflot v Berezovsky [2014] CLC 53, the court, citing the judgment of Varniene v Lithuania, said that legal certainty must be based on the premise of respecting the principle of res judicata, that is, the principle of finality of judgment. No party has the right to request a re-examination of a final and conclusive judgment in order to obtain a retrial and a new judgment. The review of the case by a higher court should be limited to correcting errors in the judicial process and unfair trial, but not a retrial of the case. The re-examination of the finality and conclusiveness of the judgment should not be disguised as an appeal, and that there are two different views on an issue is not a good ground for looking back at finality and conclusiveness. This principle should only be deviated in very rare cases.
Deciding on finality and conclusiveness: the applicable law and method
In the Hong Kong proceedings of enforcing the Mainland judgment, should Hong Kong law or the Mainland law be applicable to decide on the issue of finality and conclusiveness of the Mainland judgment? It is quite understandable that the application of different laws might lead to different conclusions.
In Korea Data System Co Ltd v Chiang Jay Tien [2001] 3 HKC 239, the judge stated that when Hong Kong courts deal with enforcement of foreign judgments, Hong Kong courts should apply Hong Kong’s conflict of laws to determine whether the substantive law of the place of enforcement court, i.e. Hong Kong law or the substantive law of the place where the original judgment was made i.e., the Mainland law should be applied to judge whether the judgment is final and conclusive. In Aeroflot v Berezovsky [2014] CLC 53, the court held that it is absurd if the enforcement court treats a judgment as final and conclusive while the same judgment is treated as not final and conclusive in accordance with the law of the place where the judgment is made, and vice versa.
In the aforementioned Aeroflot v Berezovsky [2014] CLC 53 case, the court determined whether a foreign judgment is final and conclusive by the following method. First, the court considers whether the judgment is final and conclusive according to the law of the place where the judgment was made. Secondly, the court then considers whether the legal theory on the finality and conclusiveness of the place where the judgment is made is against the public policy of the place where the judgment is enforced (for example, Hong Kong). As for whether it is against the public policy of the place where the judgment is enforced, the issue includes two aspects. One is that the matter that has been decided by the court cannot be retried (issue estoppel), and the other is the Henderson v Henderson principle, i.e., if one of the parties can and should have run a certain argument during the past proceedings, he can no longer run the same argument in the new legal proceedings.
The “final” and “conclusive” issue of Mainland judgments: some specific issues
(1) The existence of the mainland’s trial supervision procedures does not necessarily lead to the lack of finality and conclusiveness of the mainland’s effective judgments
At Jiang Xi An Fa Da Wing Co In theLtd v Zhan King case, the court held that the existence of trial supervision procedures in the Mainland does not necessarily lead to the lack of finality and conclusiveness of the Mainland judgment.
(2) The issue of finality and conclusiveness of judgments in the Mainland needs to be determined through consideration of the opinions of mainland legal experts.
In the case of Lee Yau Wing v Lee Shui Kwan [2007] 2 HKLRD 749 and later Wu Weiv Liu Yiping’s CACV 32/2009 and the aforementioned Jiang Xi An Fa Da Wing Co. Ltd v Zhan King, the court held that determining whether the Mainland judgment is “final” and conclusive in individual cases is of great importance involving complicated legal issues of public importance. Therefore the court can only determine it by a formal trial and by considering the opinions of legal experts. Therefore, there is currently no general conclusion on the issue whether a Mainland judgment is final and conclusive.
(3) Once the Mainland judgment enters the appeal or retrial process, it should not be final and conclusive.
In the Bank of China v Yang Fan case, the judge, by analogy to the legal principle of Hong Kong common law that appeal will not cause the original judgment to lose its finality and conclusiveness, believes that similarly the Mainland’s retrial procedure does not necessarily lead to a lack of finality and conclusiveness of the Mainland judgment.
In the case of CHINA NPL HOLDINGS PTE. LTD v MO HAIDAN, CACV 583/2020 , the judge held that once a Mainland judgment is suspended due to an appeal or retrial procedure, such suspension of execution do have a impact on the enforcement of the original Mainland judgment in Hong Kong. The legal consequence is that he suspended judgment does not have current enforceability and therefore cannot be enforced in Hong Kong.
In view of the Mainland law which provides that once a case enters into appeal procedure or is ordered to be retried, the original judgment shall be suspended. The actual effect of the above CACV 583/2020 case is that once the mainland judgment enters the appeal or retrial process, the original judgment cannot be enforced in Hong Kong.
Therefore, the legal principle under the common law of Hong Kong that appeal will not cause the original judgment to lose its finality and conclusiveness is not equally applicable to a Mainland judgment. Once a Mainland judgment enters the appeal or retrial procedure, the enforcement of the original Mainland judgment will be suspended in the Mainland, and it cannot be enforced in Hong Kong accordingly on the force of the above case CACV 583/2020.
If you have any questions regarding the enforcement of Mainland judgments in Hong Kong, please do not hesitate to contact us for a consultation by email to us at our email address [email protected].