Executing Foreign Judgments-Hong Kong

This document contains reference notes and should not be considered as formal or informal legal advice.  These notes are in accordance with the experiences of our firm in executing foreign judgments in Hong Kong.  We assume no responsibility for inaccuracies or information that is no longer current.

With reference to execution and enforceability of foreign judgments in Hong Kong courts, there are various issues to be discussed. Parties commonly seek to enforce judgments obtained from Courts in the People’s Republic of China ("PRC"), and other countries, against defendants in Hong Kong. Many cases involve situations where the proceedings overseas were not contested by the defendants (default judgments), but the defendants now wish to argue that such judgments should not be enforced in Hong Kong.

There are two options by which a judgment of a foreign Court can be

enforced in Hong Kong:

1. Under the provisions of the Foreign Judgments (Reciprocal Enforcement)

Ordinance (Cap.319);

To assure the possibility of enforcement of foreign judgments in Hong Kong, the Foreign Judgments (Reciprocal Enforcement) Ordinance (Cap.319) has been adopted modeled closely on the Foreign Judgments (Reciprocal Enforcement) Act 1933 (U.K.). Although the Foreign Judgments Ordinance Cap 319 is to assure the enforcement of foreign judgments, it is not applicable to China for two reasons: firstly the Ordinance is only applicable to countries designated under the Ordinance which China is not part of, and secondly China cannot be considered by the Hong Kong court as a foreign country after the handover of Hong Kong in 1997.

2. Or, at common law.

Subject to the following conditions, a judgment granted by a foreign court shall be recognized and enforced by the Hong Kong court at Common Law. At Common law there is no restriction to the countries whose judgments can be enforced in Hong Kong. It does not matter whether the judgments to be enforced were granted in Common Law countries or Civil Law countries. Further the enforcement of foreign judgments in Hong Kong in reliance of the Common Law principles does not depend on the existence of any bilateral enforcement arrangements between Hong Kong and the foreign country or principle of reciprocity.

Under the provision of the FJ (RE) Ordinance, the plaintiff must apply for an ex parte order that the judgment be registered. Once registered, the judgment has all the features of a Hong Kong judgment and can be enforced by the usual methods of executing judgments in Hong Kong.

However, the Ordinance only applies to superior Court judgments from certain countries, including Australia, Belgium, France, Germany, India, Israel, Italy, New Zealand and Singapore.

Judgments from courts in other countries (commonly the PRC, United Kingdom and the U.S.A.) cannot be registered under the FJ (RE) Ordinance.

Under common law rules, the plaintiff must file legal proceedings in Hong

Kong in the normal manner, citing the foreign judgment debt as the cause of action. The original cause of action becomes irrelevant. The plaintiff will usually apply for summary judgment (arguing that the defendant has no defense). Once summary judgment has been obtained, the plaintiff will have a valid Hong Kong judgment, which can be enforced using the ordinary methods of execution.  A Hong Kong solicitor should be consulted with reference to this procedure.  Generally our firm (Asiavest) will co-ordinate all activities for the foreign client.

However, certain preconditions will apply before summary judgment is

granted in such cases.  Those preconditions are as follows:

1. The foreign judgment on which the application is based must be "final and conclusive".  This primarily means that the appeal process has been exhausted and no longer falls within certain statutes of limitations.

2. The foreign Court must have had jurisdiction to make the order, which the plaintiff is seeking to enforce in Hong Kong.

3. The defendant must be unable to establish a ground on which the judgment should not be enforced (e.g. breach of natural justice, contrary to the public policy of Hong Kong, expiration of limitation periods etc.).

In addition, please note that any judgment given by a U.S. court will not automatically be recognized and enforced in Hong Kong. No treaty exists between Hong Kong and the U.S. providing for the reciprocal enforcement of foreign judgments. However, the courts of Hong Kong are generally prepared to accept a foreign judgment as evidence of a debt due. To enforce the debt due an action must be commenced in Hong Kong for recovery of the debt.  A Hong Kong court will only accept a foreign judgment as evidence of a debt due if:

The judgment is a liquidated amount in a civil matter.

The judgment is final and conclusive and has not been stayed or satisfied in full;

The judgment is not directly or indirectly for the payment of foreign taxes, penalties, fines or charges of a like nature;

The judgment was not obtained by actual or constructive fraud or duress;

 The foreign court has taken jurisdiction on grounds that are recognized by the common law rules as to conflict of laws in Hong Kong;

The proceedings in which the judgment was obtained were not contrary to natural justice;

The proceedings in which the judgment was obtained, the judgment itself and the enforcement of the judgment are not contrary to public policy of Hong Kong; and

The person against whom the judgment is given is subject to the jurisdiction of the Hong Kong courts.

In the proceedings of Tan Tay Cuan v. Ng Chi Hung (HCA 5477/2000, 5 February 2001), the plaintiff sought to enforce in Hong Kong a judgment from the Higher People’s Court of the Fujian province of the PRC. The defendant argued

that the judgment was not "final and conclusive" because, pursuant to

the PRC law, there was a two-year period in which the judgment was

capable of being "corrected" on "retrial or review", also referred to as an appeal. Even though no retrial or review had been ordered, the Court of First Instance in Hong Kong was not prepared to grant summary judgment, based on the two year period still being in effect. In circumstances where an application for retrial or review could still be made, the judgment from the Higher People’s Court could not be considered as being "final and conclusive".

In Korea Data Systems Ltd et al v. Jay Tien Chiang & et al (HCA

9265/2000, 17 July 2001), the plaintiff sought to enforce a judgment

obtained from the Superior Court of the State of California for the

County of Orange. There were two defendants. The first defendant had not

appeared at the trial in California and judgment was entered in his

absence (basically a default judgment). He argued that the Californian judgment had been obtained contrary to natural justice. The second defendant had appeared at the trial in California, but claimed that he had been prejudiced by the

non-attendance of the first defendant. He therefore also argued that the

Californian judgment had been obtained in breach of natural justice.

Both defendants argued that the plaintiff’s evidence did not sufficiently prove that the Californian judgment was final or conclusive.

The plaintiff’s California attorney filed an affidavit setting out in

clear terms why the defendants were deemed to have submitted to the

California jurisdiction and setting out the procedures of which both

defendants could have availed themselves. He therefore concluded in his

affidavit that the California judgment was "final, conclusive, valid

and binding" on the defendants. The defendants argued that his evidence

was merely an assertion, and was not supported by an appropriate legal

analysis.

In considering this point, the Court had to determine whether the plaintiff’s evidence on foreign law had been proven as a fact. The plaintiff’s affidavit had not set out in full the legal bases relied upon, nor the reasoning as to their effect. However, the Court held that the failure to do this was not fatal. Further, in circumstances where the challenge to such evidence was made, it was incumbent on the defendants to do more than make a bare assertion that the judgment was not final and conclusive. The challenge to the evidence was not

supported by a prima facie contrary case. Summary judgment was granted

to the plaintiff.

Comment

In view of the issues raised in the Korea Data Systems case, parties

wishing to enforce foreign judgments in Hong Kong should prepare detailed affidavits, with exhibits as necessary, to prove that the judgment is "final and conclusive" in the country in which it was obtained. This is a similar procedure to be considered when dealing with the Taiwan judicial system.

In the case of KU CHIA CHUN AND OTHERS v. TING LEI MIAO AND OTHERS

CACV000178/1997 -[1998] HKCA 271 (2 July 1998) the HK Court of Appeal had to consider whether an order of bankruptcy from the Taipei District Court could be enforced against assets within Hong Kong. When the decision at first instance was heard, Hong Kong was a colony of the United Kingdom. By the time of the appeal, however, Hong Kong was a special administrative region of the People's Republic of China (which has its own English based common law system, distinct from PRC law). With references to "propositions expressed in the United States Supreme Court in the civil war cases" which was a "situation which is not entirely irrelevant to that in the present appeal", the Court found that Taiwan was effectively a rogue state of the People's Republic of China, run by a rebel government. Nonetheless, "clearly it is in the sovereign's interest that

acts "necessary to the peace and good order" of its citizens in Taiwan should be

respected. A recognition of the rights of the trustees in bankruptcy appointed by the Taiwanese court to sue for movables situated in Hong Kong which are part of the bankrupt estate's accords with common sense and justice, and provides a necessary remedy for the creditors. Such recognition of the status of the trustees in bankruptcy is not contrary to public policy and does not involve any recognition of the legality of the Taiwanese courts. Nor is a recognition of the rights of the trustees in bankruptcy to sue in Hong Kong in any way inimical to the interests of the sovereign power." The court (by a 2-1 majority) was thus able to allow the enforcement of a Taiwanese court order in Hong Kong, without upsetting the mainland PRC government.

The minority decision considered this point:

"The report of the Chief Justice and President of the P.R.C. Supreme People's Court quoted in the affirmation of Qi Rui Qing and cited in the judgment below is consistent with the above approach. What is reported to have been said is :

"..... The Supreme People's Court of the PRC announced in April 1991 that on the basis that it does not contravene the laws of the PRC and damage the public interest of the society, the civil activities of a Taiwan resident in Taiwan and the civil rights obtained by a Taiwan resident in accordance with the regulations of the Taiwan region can be recognized as having its factual validity. Regarding the civil judgments made by the Courts of Taiwan region, the question of recognition on the validity can also be resolved in accordance with the aforesaid principles depending on the different circumstances....”

It appears to me that this approach is entirely in accordance with the approach we have outlined above. Recognition is given to a factual state of affairs whether it be status of marriage or divorce or ownership of property but recognition is not given to Orders of Court which entitle trustees acting under the direction of that Court to bring proceedings in this jurisdiction... [from earlier in the judgment] If the Court were so to act, it seems to us, it would unwittingly become part of the judicial process of Taiwan, namely the process of administration of assets in what is in effect a rebel territory under the control of a Court of the rebel government."

The above notes are intended to give our clients and visitors a generalized view of the procedure of executing a foreign judgment in Hong Kong.

Disclaimer: The above information on the execution of foreign judgments in Hong Kong is a very broad explanation of the process as we have personally experienced said process.  This process may change from time to time and or be amended.  As indicated, we are not providing legal advice.  We are only providing a generalized overview of the process which we have experienced.  A legal assessment of your particular matter would be addressed by Hong Kong legal counsel that we would retain in your behalf.  We generally select a local Hong Kong solicitor that we feel has experience in these types of matters and would be able to serve our clients needs, without any conflicts of interest or unnecessary costs.  Generally it is recommended that our client have a face to face meeting with Hong Kong solicitor once they have had an opportunity to review the case, although this is not a requirement.  Client will be billed for all hourly rates and any costs incurred in their behalf.  All retainers are non-refundable.  This overview has been prepared by the Taiwan office of Asiavest Investigative Services in co-operation with our United States office.  All inquiries with reference to the services of Asiavest, should be directed to our United States office at:

 

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