In the second and final part of their article, Evelyn Chan, Partner, and Adriel Wong, Associate, Gall, continue their general overview of Hong Kong’s civil litigation process.

The first part of this article, published in last month’s CGj, looked at the various courts in Hong Kong that preside over civil disputes and how such claims are commenced. This final part looks at the final stages of civil litigation in Hong Kong, such as the procedures for enforcing judgments. 

1. What happens if I win at trial and the judgment is in my favour?

In many cases that will be the conclusion of the matter and, for example, where the judgment is in respect of a sum of money, the losing party pays the judgment sum to the winning party. However, unfortunately, this is not always the case, and the winning party (the judgment creditor) may need to enforce the judgment against the losing party (the judgment debtor). There are a number of potential methods of enforcing a judgment against the judgment debtor, including those set out below. If the judgment debtor is a company, the judgment creditor may issue a petition to wind up the judgment debtor. If the judgment debtor is an individual, the judgment creditor may petition to declare the judgment debtor bankrupt.

• If the judgment debtor is a creditor to another person, for example a bank, the judgment creditor may commence garnishee proceedings where the third party would be obliged to pay the debt directly to the judgment creditor in satisfaction (or partial satisfaction, as the case may be) of the judgment.
• The judgment creditor may apply for the judgment debtor to be examined before the court regarding any debts owing to the judgment debtor and any assets owned by the judgment debtor.
• The judgment debtor may apply for a prohibition order which prohibits the judgment debtor from leaving Hong Kong.
• The judgment debtor can apply for a writ of fieri facias, warrant of distress, or writ of possession directing the bailiff to seize and sell the judgment debtor’s goods and chattels to satisfy the judgment debt.
• If the judgment debtor does not have any cash but has assets, the judgment creditor may issue a charging order for securing the payment of any money owed under the judgment. 

2. Can I enforce my Hong Kong judgment in other jurisdictions? 

See question 4 in respect of the Mainland.  

Judgments of the High Court, Court of Appeal and Court of Final Appeal can be enforced (a) in most common law jurisdictions, and (b) in a number of countries including Belgium, France, Germany, Italy, Austria, the Netherlands and Israel, due to international agreements and arrangements.

3. Can I enforce my foreign judgment in Hong Kong? 

See question 4 in respect of the Mainland.  

A foreign judgment can be enforced in Hong Kong under two methods, (1) under the Foreign Judgments (Reciprocal Enforcement) Ordinance (Cap 319A) (FJREO) and (2) under common law. Pursuant to the FJREO, an application can be made to the Hong Kong court to register a foreign judgment for the payment of debt obtained in the superior court of certain countries as specified in the FJREO. Once leave is granted, the foreign judgment can be enforced in the same way as a Hong Kong judgment. Under the Ordinance, there are 15 designated countries, namely Australia, Bermuda, Brunei, India, Malaysia, New Zealand, Singapore, Sri Lanka, Belgium, France, Germany, Italy, Austria, the Netherlands and Israel. 

If the foreign judgment is not from a country listed under the FJREO and therefore cannot be registered, it can only be enforced under common law. In this case, the foreign judgment will form the basis of a cause of action and the judgment will be treated as a debt between the parties. To be enforceable at common law, there are the following requirements:

• the foreign judgment must be for a debt or a definite sum of money, and the defendant must have submitted to the jurisdiction of the foreign court
• the foreign judgment is final and conclusive
• the foreign judgment is not obtained by fraud and is obtained against the same defendant
• the foreign judgment is not contrary to Hong Kong rules of public policy or notions of natural justice
• the foreign court had jurisdiction over the defendant according to Hong Kong rules, and
• an action in Hong Kong based on a foreign judgment must be brought within 12 years from the date on which the foreign judgment became enforceable.

Once the foreign judgment has been registered under common law, it will be treated and enforced as a Hong Kong judgment. 

4. Can I enforce my Hong Kong judgment in the Mainland and enforce my Mainland judgment in Hong Kong?

The enforcement of Mainland judgments is governed by the Mainland Judgments (Reciprocal Enforcement) Ordinance (Cap 597) (2006 Arrangement), which will be superseded by the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap 645) (2019 Arrangement). The Ordinance makes provision for the mutual enforcement in Hong Kong and the Mainland of judgments in civil and commercial matters.  

The 2019 Arrangement will only take effect in about six to seven months’ time and will supersede the 2006 Arrangement. In the Mainland, the 2019 Arrangement will be implemented by way of judicial interpretation to be promulgated by the Supreme People’s Court. In the meantime, the 2006 Arrangement will continue to apply for circumstances where there is an exclusive jurisdiction agreement in favour of the Mainland courts. Previously, only Mainland judgments for monetary claims with an exclusive jurisdiction could be enforced in Hong Kong. The 2019 Arrangement replaces the exclusive jurisdiction agreement requirement with a jurisdictional test whereby parties must show there is a connection with the Mainland. The requirement will be satisfied if one of the conditions under the 2019 Arrangement is satisfied, such as: 

a) the defendant’s place of residence was in the Mainland  

b) the defendant’s representative office, branch, office, place of business or other establishment was in the Mainland  

c) the place of performance of the disputed contract was in the Mainland, or 

d) the parties agreed in writing to submit to the jurisdiction (whether exclusive or non-exclusive) of the Mainland courts, and if the places of residence of all the parties were in Hong Kong, together with evidence that there was a connection between the dispute and the Mainland (such as the place of performance was in the Mainland, the contract was signed in the Mainland or the subject matter was situated in the Mainland). 

Additionally, the 2019 Arrangement has now expanded the scope to the various civil and commercial matters allowed under the scheme, but there are still certain matters such as debt restructuring, personal bankruptcy, and certain matrimonial and family matters that are excluded. This is because there are existing arrangements between Hong Kong and the Mainland that apply to judgments concerning those matters. Now, both monetary and non-monetary judgments can be enforced.  

To register a Mainland judgment in a civil or commercial matter, a judgment creditor may apply to the Court of First Instance to register the judgment if the following requirements are met:

• the judgment was given on or after the commencement of the 2019 Arrangement
• the judgment must be from a designated court under the Ordinance (that is, the Supreme People’s Court, the High People’s Court, the Intermediate People’s Court or Primary People’s Courts)
• the default has not been made good as at the date of the application
• the judgment must order the payment of a sum of money (not being a sum payable in respect of taxes, fines or penalties), and
• a default in complying with the requirement occurred  within two years before the date of the application.

To register a Hong Kong judgment for recognition and enforcement in the Mainland, the Ordinance provides that (a) a judgment creditor can apply to the relevant specified Hong Kong court for a certified copy of the Hong Kong judgment; and (b) when issuing a certified copy of the Hong Kong judgment, the specified Hong Kong court must also issue a certificate certifying that the judgment is given in a civil or commercial matter and is effective in Hong Kong. Further rules regarding the procedure of enforcing and recognising a Hong Kong judgment will be set out in the Rules made by the Chief Judge of the High Court of Hong Kong. 

5. Does the winner recover their legal expenses/other costs?

Whilst costs (for example, solicitor’s and barrister’s fees) can be awarded at any stage of the proceedings, usually costs are awarded to the winner at the conclusion of the matter. Note, however, that, the winning party will generally only recover between 40% to 60% of the actual costs incurred after taxation as a matter of reality. The remainder will be borne by the litigant. There is a chance that you may have to bear the legal costs of your opponent if you do not prevail. 

6. What if the plaintiff ordinarily resides outside Hong Kong – are there any mechanisms to ensure that I will receive the costs awarded to me if I win?

In these circumstances, the defendant can apply to court during the course of the proceedings to require the plaintiff to provide security for costs. For these purposes, the court will consider:

• the plaintiff’s prospects of success
• whether the defendant has an arguable defence to the plaintiff’s claim
• whether an order for security for costs would stifle the plaintiff’s claim
• whether the plaintiff has any assets in the jurisdiction
• the plaintiff’s impecuniosity, and
• whether there was any delay in making the application for the security for costs (generally speaking, the closer to trial the greater the prejudice that will be caused to the plaintiff).

If the application is successful, the plaintiff will be required to pay into court a sum representing the amount of costs the defendant may recover in the event that the defendant wins.

7. I am concerned that the other party will hide or dissipate their assets before I am able to secure judgment against them. Is there anything I can do?

In these circumstances, a Mareva injunction can be sought from the Court of First Instance, which will restrain a party from dealing with and removing assets out of Hong Kong, up to a certain value. The court can also grant a worldwide Mareva injunction which, covers assets inside and outside Hong Kong. As it is often imperative that the other party is not ‘tipped off’ to the application, a Mareva injunction is usually obtained ex parte, or without notice to the other party. When applying for a Mareva injunction, the court will generally need to be satisfied that:

• the applicant has a good arguable case on the merits
• there is a real risk that the defendant will dissipate assets
• it is just and convenient to grant the Mareva injunction, and
• the other party has assets in (or, in the case of a worldwide Mareva, outside) Hong Kong.

Evelyn Chan, Partner, and Adriel Wong, Associate  
Gall