HK to allow recognition of some China court rulings

HONG KONG: A new law which will allow mainland Chinese courts to enforce their rulings in Hong Kong in commercial and civil cases took effect in the regional finance hub on Monday.

The reciprocal arrangement will allow for the two-way recognition of court judgments in Hong Kong and China for civil or commercial lawsuits, should the parties apply for it.

The former United Kingdom colony has a common law system distinct from mainland China, and it is often cited as key to the city’s appeal to international investors.

But observers have said the legal firewall between Hong Kong and China has gradually eroded as Beijing tightens its grip on the city after the enactment of a national security law in 2020 designed to quell dissent.

The new measure would lead to “a higher degree of certainty and predictability” and “reduce the need for relitigation,” officials have said.

Major exemptions to the new arrangement include judgments about insolvency — like the winding-up decision issued by a Hong Kong court about Chinese property giant Evergrande on Monday — as well as maritime and arbitration matters.

Officials have stressed that crossover recognition is optional and that the decision is up to the parties to a lawsuit.

“Mainland judgments will not automatically take effect in Hong Kong, and assets in Hong Kong will not be confiscated by the mainland directly after the arrangement has come into operation,” a Department of Justice spokesman said last week.

The new arrangement was the product of a 2019 agreement between Hong Kong’s Department of Justice and the Supreme People’s Court of China, officials said.

Hong Kong has already passed laws to allow similar two-way recognition of judgments concerning matrimonial and some monetary disputes.

There is also a separate pilot program for reciprocal recognition of insolvency rulings since 2021.