Some Western media have discovered, and become comfortable with, very unfair ways to examine the legal system of Hong Kong through a distorting lens. Not surprisingly, good things often turn bad in accordance with the defamatory interpretations propagated by these Western media. A new arrangement allowing courts in Hong Kong and the Chinese mainland to reciprocally enforce judgments in civil and commercial disputes has recently come into effect in the city.

The new law is called the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (MJCCMO). It has provided a hard-to-miss opportunity for critics to tarnish Hong Kong’s reputation as a global business hub. Andrew Collier, managing director at Orient Capital Research, said the new law “further eroded” the differences between the legal systems of Hong Kong and the mainland. Other critics raised “concerns” that assets in Hong Kong would “easily and automatically” be confiscated by mainland authorities.

The fact is, the MJCCMO has brought a lot of advantages to the city. As Secretary for Justice Paul Lam Ting-kwok has correctly pointed out, Hong Kong is the only jurisdiction with such an agreement with the mainland. He further stated that the MJCCMO will enhance the city’s status as an international legal services center. The comments by Chief Judge Jeremy Poon Shiu-chor of the High Court on the MCJJMO have offered the best conceptual lens through which to understand the advantages brought about by the new ordinance.

First, the chief judge emphasized that the new ordinance will save time, costs and resources. According to veteran dispute resolution lawyer, Charles Allen, the enforcement of judgments in civil and commercial matters between Hong Kong and the mainland should be more expedient and less expensive (Hong Kong Lawyer, December 2023). Noteworthy is the fact that the MJCCMO can reduce the need for relitigation and offer greater predictability and protection to parties’ interests.

Normally, it would not be easy to enforce a judgment obtained from the court of Jurisdiction A in Jurisdiction B. One would typically have to convert the judgment of the court in Jurisdiction A into an order or judgment of a court in Jurisdiction B. Such tedious conversion may require following complex procedures, and may, as a result, entail time-consuming litigation in Jurisdiction B. Clients need to seek help from foreign lawyers in order to enforce judgment in the foreign jurisdiction. It will inevitably impose further financial burdens on clients. Nobody, unless he is a reckless risk-taker, would want to live under the shadow of anxiety by venturing into the uncertainty of relitigation.

Other beneficial developments under the new ordinance have further inspired trust in Hong Kong’s status as an international legal services center. The new ordinance deserves credit for extending coverage to judgments arising from most civil and commercial matters, as well as compensation or damages awarded in criminal proceedings

Unlike the old arrangement, the new law has removed the written exclusive jurisdiction agreement requirement, making it easier for a judgment creditor to initiate legal proceedings in Hong Kong or the mainland. The new law relies on a “connection test”, which is based on a nexus with the mainland or Hong Kong. For example, the “connection test” will be satisfied if the defendant’s place of residence was on the mainland. The removal of the exclusive jurisdiction agreement requirement will provide greater flexibility to parties when drafting dispute resolution clauses (Gall Solicitors, Long-awaited Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance Set to Take Effect on 29 January 2024).

Other beneficial developments under the new ordinance have further inspired trust in Hong Kong’s status as an international legal services center. The new ordinance deserves credit for extending coverage to judgments arising from most civil and commercial matters, as well as compensation or damages awarded in criminal proceedings. The old arrangement, on the other hand, was limited to judgments arising from contractual disputes only. Finally, the categories of remedies have also been expanded to cover both monetary and nonmonetary relief (ibid).

We see no merit in the argument that the new ordinance equates to an automatic enforcement agreement. A closer look at the setting-aside procedure may help ease the skeptics’ worries. If the court is satisfied that one of the grounds under Section 22(1) of the ordinance is proven, the registration of a judgment or any part of such a judgment can be set aside. Cross-boundary enforcement will be refused if the relevant party is not given a reasonable opportunity to defend the action, if the mainland judgment is obtained by fraud, or if the parties start legal proceedings in Hong Kong before a mainland court takes on the case. Moreover, if a court in Hong Kong has given a judgment on the same cause of action between the same parties, the registration may be set aside.

In response to the allegation that the MCJJMO has conferred an automatic power on mainland authorities to confiscate assets in Hong Kong, we would like to state in no uncertain terms that the critics have relied on false information to abuse the right to freedom of expression. Confiscation is not a remedy available in civil asset recovery actions. The common civil remedies are: damages, restitution, seizure of goods or property (bankruptcy proceedings), final injunction, constructive trust, and accounts of profits. A confiscation order, on the other hand, is common in criminal cases. After conviction, the prosecution may apply to the court for a confiscation order against the offender as part of the sentencing. Even confiscation of secondary proceeds (such as property derived indirectly from direct proceeds) is possible in accordance with the Mutual Legal Assistance in Criminal Matters Ordinance.

As an international legal dispute resolution center, Hong Kong must ensure that it trims its sails according to the winds of change. One conspicuous wind of change is the closer economic ties between Hong Kong and the mainland. Mutual recognition is also vital to Hong Kong as an international financial center because the city is one of the most preferred destinations for mainland companies seeking listings. But closer economic integration does not mean the erosion of differences between the legal systems of the two sides. Unlike the legal system of the mainland, the common law system provides Hong Kong with unique strengths under the principle of “one country, two systems”.

Pang Yan-lun is a solicitor and Greater Bay Area legal affairs co-director of the Chinese Dream Think Tank.

Kacee Ting Wong is a barrister, a part-time researcher of Shenzhen University Hong Kong and the Macao Basic Law Research Center, chairman of the Chinese Dream Think Tank, and a district councilor.

The views do not necessarily reflect those of China Daily.