Submissions to the Consultation Paper on Proposed Arrangement between Hong Kong and the Mainland on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters

24 September 2018
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The Department of Justice (“DOJ”) issued a consultation paper in July 2018 on the Proposed Arrangement between Hong Kong and the Mainland on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters ("Consultation Paper"). In response thereto, the Council provides the following submissions on the issues raised. Unless otherwise stated, we shall adopt the same abbreviations as in the Consultation Paper.

 

  1. The ambit of “civil and commercial” matters for the purpose of the Proposed Arrangement

 

  1. Having taken into consideration that most consumer disputes are contractual or tortious in nature and the increasing cross-border consumer transactions between Hong Kong and Mainland, the Council has no objection to DOJ’s suggestion that the Proposed Arrangement should cover only matters which are considered to be civil and commercial matters under both Hong Kong and Mainland law.

 

  1. The specific types of matters to be covered under or excluded from the Proposed Arrangement

 

  1. Insofar as corporate insolvency, restructuring and personal bankruptcy matters are concerned, the Council believes that having an bilateral arrangement in place with Mainland for mutual recognition of and assistance in these matters is necessary, not only to ensure fair and effective administration when cross-boundary elements are involved but such introduction would also enhance consumer protection for both Hong Kong and the Mainland.

 

  1. It is noted that although for the time being those matters would not be covered by the Proposed Arrangement due to complexity of the subject, DOJ and other relevant bureaux / departments are actively considering the proposal of a separate bilateral agreement for handling them and plans to conduct a stand-alone consultation exercise on the relevant subject with the Mainland. For the reason mentioned in paragraph 2 hereof, we hope that such bilateral arrangements will be achieved shortly to respond to the need for cross-boundary enforcement of judgments which would be increasing alongside the growth of cross-border consumption activities.  

 

  1. The Council has no comments on whether the other types of matters referred to in paragraph 20 of the Consultation Paper such as succession of the estate of deceased persons; matters outside of the Matrimonial Agreement, intellectual property rights and maritime rights should be included in the Proposed Arrangement.

 

  1. The principle of enforceability and level of courts to be covered by the Proposed Arrangement

 

  1. The Council agrees with the DOJ’s proposal that only judgments which are legally enforceable under the law of the requesting place should be eligible for recognition and enforcement under the Proposed Arrangement.  In Hong Kong, this should cover legally enforceable judgments made by the Court of Final Appeal, the Court of Appeal, the Court of First Instance and the District Court.

 

  1. Based on the Council’s experience, the majority of consumer claims are usually relatively modest and would often fall within the jurisdiction of the Small Claims Tribunal. This will be more so given that the jurisdictional limit of the Small Claims Tribunal is going to be raised to $75,000 in December 2018[1]. Although service out of Hong Kong jurisdiction is not permitted in the Small Claims Tribunal, one cannot rule out the possibility of a consumer or numerous consumers with similar grievances wishing to enforce a judgment against a trader’s assets located in the Mainland. The Council therefore invites DOJ to consider including the Small Claims Tribunal in the Proposed Arrangement. In the same vein and in the spirit of reciprocity, it may be appropriate to consider extending coverage to judgments made by any Mainland courts at any level (see also paragraph 10 below).

 

  1. The jurisdictional basis for reciprocal recognition and enforcement under the Proposed Arrangement

 

  1. Having considered the different approaches put forward by the DOJ, the Council is of the view that for the sake of clarity and certainty, the second approach in paragraph 28 is more desirable, namely to have additional jurisdictional rules in express terms. The Council has no comment on the other related issues mentioned in paragraph 28 of the Consultation Paper.

 

  1. Grounds for refusal

 

  1. The Council agrees with the DOJ’s proposed grounds for refusal.

 

  1. Types of relief

 

  1. Based on the Council’s experience, for the majority of consumer claims, monetary relief is probably the most common form of relief sought. However, the Council has no objections in principle for the Proposed Arrangement to cover other types of relief (including interim relief) under both Hong Kong and Mainland law.

 

  1. Relationship with the Choice of Court Arrangement

 

The Council considers that if the Choice of Court Arrangement were to continue to be in operation after the Proposed Arrangement comes into effect, this may give rise to confusion and as a result, this can lead to disputes. To avoid this and given the restrictive application of the Choice of Court Arrangement which would naturally limit its use once the Proposed Arrangement is in place, the Council is of the view that it would be preferable and more streamlined for the Proposed Arrangement to cover those judgments eligible for recognition and enforcement under the Choice of Court Arrangement, i.e., to have the Choice of Court Arrangement superseded.

 

  1. Insofar as the coverage of Basic People’s Courts is concerned, the Council considers that it is desirable to lift the designated court restriction.  The Council agrees and accepts that similar proposals as set out in paragraph 39(2)(b) & 39(2)(c) are also necessary to allow for the smooth grandfathering of the Choice of Court Arrangement.

 

Consumer Council

September 2018

 

[1] See http://www.info.gov.hk/gia/general/201807/06/P2018070500771.htm