IP perspective on the mutual recognition and enforcement of judgement in civil and commercial matters

Introduction

Due to the “One Country, Two Systems” constitutional principle that maintained the two separate legal jurisdictions in the Hong Kong Special Administrative Region and Mainland China respectively, judicial decisions rendered in the Hong Kong Courts have not ordinarily been enforceable in Mainland China, and vice-versa, until the promulgation of the Mainland Judgments (Reciprocal Enforcement) Ordinance, Cap. 597, which came into operation in Hong Kong on 1 August 2008.

On 18 January 2019, China’s Supreme People’s Court and the Hong Kong government signed the “Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region” (the “Arrangement”).

The Arrangement would be implemented in Hong Kong through the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance, Cap. 645 (the “Ordinance”), which came into operation on 29 January 2024. In addition to the Ordinance, the Chief Judge of the High Court of Hong Kong has also made a set of rules, the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Rules (the “Rules”), to provide for the relevant practice and procedures. The Rules came into operation on the same date as the Ordinance. The Hong Kong Judiciary has also promulgated a new Practice Direction 38 (“PD38”) to govern the practice and procedure for the registration of a Mainland China Judgment in Hong Kong pursuant to the Ordinance. PD38 also provides for the procedure for applying for a certified copy of a Hong Kong Judgment and a Registrar’s Certificate for the purpose of the application for recognition and enforcement in Mainland China.

The Ordinance recognises and enforce certain judgments rendered in Mainland China (defined as China excluding the special administrative regions of Hong Kong, Macao and Taiwan). In this article, we specifically discuss the recognition and enforcement in Hong Kong of a Mainland China Judgment relating to intellectual property cases.

The recognition and enforcement of a Mainland China Judgment in Hong Kong

Under the Ordinance, to qualify for recognition and enforcement in Hong Kong:-

1. The Mainland China Judgment must be effective in Mainland China;
2. In respect of an intellectual property case, it must not be an “excluded judgment”;
3. It must be (a) given in proceedings that are civil or commercial in nature under the law of Mainland China; or (b) given in proceedings that are criminal in nature under the law of Mainland China, and contains an order for the payment of a sum of money (i.e. a liquidated amount) in respect of compensation or damages by a party to the proceedings; and
4. The reliefs granted by the Court in Mainland China must not contain an “excluded relief”.

First requirement: effective Mainland Judgment

Whether a Mainland China Judgment is effective in Mainland China for the purpose of the recognition and enforcement in Hong Kong is provided under section 8 of the Ordinance, which stipulates the following requirements:-

1. The Mainland Judgment must be enforceable in the Mainland; and
2. It is a Mainland Judgment given by the Supreme’s People’s Court, or a second instance Mainland Judgment (given by a Higher People’s Court or an Intermediate People’s Court), or a first instance Mainland Judgment (given by a High People’s Court, an Intermediate People’s Court or a Primary People’s Court) where either no appeal is allowed under the law of the Mainland or that the time limit for an appeal has expired and no appeal has been filed.

A Mainland Judgment mentioned above also includes a Mainland Judgment given according to the trial supervision procedure of Mainland China.

In relation to the first instance Mainland Judgment given by a Higher People’s Court, an Intermediate People’s Court or a Primary People’s Court, the English version of the Ordinance provides that, for such a Mainland Judgment to be effective, “no appeal is allowed from the Judgment according to the law of the Mainland”. However, the Chinese version of the Ordinance provides that, an effective Mainland Judgment means that there must be no right to appeal from the first instance Mainland Judgment according to the law of Mainland China (按照內地法律，不准對該判決提出上訴).

The language used in the English version of the Ordinance is ambiguous and does not correspond well with the Chinese language, since “no appeal is allowed” could mean that an appeal is filed and the Court held that the appeal is dismissed (or not allowed). We consider that the correct interpretation of the law is reflected in the Chinese version of the Ordinance. This is supported by the language of the Arrangement, which was originally drafted in Chinese. Under Article 4 of the Arrangement, an effective Judgment (生效判決) means, for a first instance Mainland Judgment, a judgment where there is no right to appeal under the law or no appeal has been filed within the limitation period prescribed by the law (依法不准上訴或 者超過法定期限沒有上訴的第一審判決).

The Ordinance does not provide a definition of what “enforceable” means. However, under Rule 5 of the Rules, the supporting affidavit provided with the registration application must exhibit, in particular, a copy of the Mainland Judgment duly sealed by the original Mainland Court and a certificate issued by the original Mainland Court certifying that the judgment is a Mainland Judgment in a civil and commercial matter that is effective in Mainland China.

Rule 5 implements Article 8 of the Arrangement. Under Article 8, an application for recognition and enforcement of a judgment provided under the Arrangement must be submitted with, amongst others, a certificate issued by the Court giving the legally effective judgment certifying that (i) the judgment is a legally effective judgment; and (ii) if the content of that judgment includes enforcement of the judgment, the judgment is enforceable in the requesting place.

This means that the certificate provided under Rule 5 of the Rules must include a certification that the Mainland Judgment is both effective and enforceable in Mainland China.

Second requirement: Mainland Judgment must not relate to an excluded judgment

Certain excluded Mainland Judgments cannot be recognized and enforced in Hong Kong under the Ordinance. The list of these “excluded judgments” is provided under section 5 of the Ordinance. For intellectual property cases, a Mainland Judgment or a Hong Kong Judgment is an excluded judgment if it is given in respect of an excluded intellectual property case. As we focus in this article on recognition and enforcement in Hong Kong of a Mainland Judgment concerning intellectual property case, we will not further discuss excluded Hong Kong Judgment or other types of excluded judgments not related to intellectual property cases.

“Excluded intellectual property case” is defined under section 7 of the Ordinance. Certain relief sought in an intellectual property case are also excluded and they are provided in section 15. We will address section 15 in later paragraphs under this section after our discussion on section 7.

The following Mainland Judgment concerning intellectual property cases is excluded for recognition and enforcement in Hong Kong:-

1. Where the Mainland Judgment is given in proceedings brought in respect of a tortious dispute over an infringement of an invention patent or utility model patent (section 7(1)(a) of the Ordinance);
2. Where the Mainland Judgment is given in proceedings for a determination of the licence fee rate of a Standard-Essential Patent (section 7(1)(b) of the Ordinance); and
3. Where the Mainland Judgment is given in proceedings brought in respect of a dispute over an intellectual property right that is not a specified intellectual property right (section 7(1)(c) of the Ordinance).

The term “tortious dispute” is not defined in the Ordinance. What we can say though is that a tortious dispute certainly does not include, for example, a contractual dispute. For the reasons below, we consider that the addition of the words “tortious” under section 7(1)(a) is superfluous.

The Chinese version of section 7(1)(a) provides that an excluded intellectual property case includes, amongst others, infringement dispute (侵權糾紛) in relation to invention patents or utility model patents (就關乎侵犯發明專利或實用新型專利的侵權糾紛提起的法律程序). Section 7(1)(a) gives effect to Article 3 of the Arrangement, which provides that the Arrangement does not apply to, amongst others, infringement of invention patents and utility model patents heard by a People’s Court of the Mainland (內地人民法院審理的有關發明專利、實用新型專利侵權的案件).

Section 7(1)(a) therefore applies to infringement (or infringement dispute) in relation to invention patents or utility model patents, despite the clumsy language of “tortious dispute over an infringement…”

It is noted that the Chinese version of the Ordinance has added the word “dispute” (糾紛) after the word “infringement” (侵權) when Article 3 of the Arrangement is implemented in Hong Kong. We do not consider the addition of the word “dispute” (糾紛) has materially changed the meaning of Article 3 of the Arrangement. But the addition of the word “dispute” (糾紛) is arguably also superfluous.

The language in section 7(1)(b) of the Ordinance is reasonably clear.

In relation to section 7(1)(c), it provides for a catch-all provision in that a Mainland Judgment given in proceedings brought in respect of a dispute over an intellectual property that is not a specified intellectual property right is also excluded.

The term “specified intellectual property right” is defined under section 2 of the Ordinance to include, amongst others, copyright, trade mark, industrial design, patent, a right to protect undisclosed information. Under normal circumstances, these specified intellectual property right should in general include all the common intellectual property rights. This means that section 7(1)(c) should normally not be engaged.

In addition to section 7, section 15 of the Ordinance also contains a category of intellectual property cases which are excluded to the extent of them containing excluded relief, although, strangely enough, this category of excluded cases is not contained in section 7, which provides the definition of “excluded intellectual property cases” (we discuss excluded relief in the next section).

Where a Mainland Judgment concerning an intellectual property case contains a ruling on the validity, establishment or subsistence of a specified intellectual property right (see section 2 of the Ordinance for a definition of a specified intellectual property right, see also above), such a Mainland Judgment is not eligible for recognition and enforcement in Hong Kong under the Ordinance to the extent that it relates to the validity, established or subsistence of a specified intellectual property right.

Section 15(3) goes on to provide that the prohibition on recognition and enforcement does not extend to the Mainland Judgment or part of the Mainland Judgment which relates to a ruling on liability based on the validity, established or subsistence of a specified intellectual property right.

This means that, for example, in a patent infringement case where the defendant is alleging invalidity of the patent, the portion of the Mainland Judgment that deals with the validity of the patent will not be recognised and enforced in Hong Kong, whereas the portion that deals with the liability and, if established, the amount of damages, will be recognised and enforced.

Third requirement: Mainland Judgments given in civil or commercial matters and Mainland Judgments given in criminal matters

The third requirement is reasonably clear. For recognising and enforcing a Mainland Judgment, it must be a judgment given in a civil or commercial matter or a judgment given in a criminal matter and contains an order for the payment of a sum of money in respect of compensation or damages by a party to the proceedings.

Where the Mainland Judgment concerns a civil or commercial matter, the third requirement should be satisfied when the original Mainland Court issue a certificate certifying that the Mainland Judgment is a civil or commercial matter that is effective in the Mainland, as provided under Rule 5 of the Rules.

However, where the Mainland Judgment concerns a criminal matter which contains an order for the payment of monetary compensation or damages, the Rules is silent on how the third requirement may be satisfied.

Article 1 of the Arrangement provides that the Arrangement also applies to the reciprocal recognition and enforcement of legally effective judgments in relation to civil compensation (民事賠償) awarded in criminal cases (this is reflected in section 3(1)(a)(ii) of the Ordinance).

In the absence of an express provision under the Rules covering the monetary compensation awarded in criminal cases, we consider that such monetary compensation may be considered as a “civil” matter under the Ordinance and the Rules (not an ideal classification), to bring the recognition and enforcement of the monetary compensation awarded in criminal cases within the ambit of the Ordinance and the Rules.

Fourth requirement: Mainland Judgment must not contain an excluded relief

The fourth requirement is, strictly speaking, not a requirement in the sense that noncompliance with which would render the Mainland Judgment not recognised and not enforceable under the Ordinance.

Section 16 of the Ordinance provides that a Mainland Judgement or part of which in a civil or commercial matter will not be recognized and enforced in Hong Kong under the Ordinance to the extent that it relates to an excluded relief. Section 16(3) provides the definition of excluded relief. It means a relief other than monetary damages, including punitive or exemplary damages, awarded in proceedings brought in respect of a dispute over an infringement or act of unfair competition committed in Mainland China.

This means that monetary damages, including punitive or exemplary damages, awarded in proceedings brought in respect of a dispute over an infringement or act of unfair competition taking place in Mainland China may be considered as “included reliefs” (note that “included relief” is not a term used in the Ordinance or the Rules, it is just used here to illustrate these are reliefs that are included for the purpose of recognition and enforcement in Hong Kong) and all other reliefs, such as non-monetary relief, are “excluded reliefs”.

The Chinese version of the section provides support to the interpretation above. In fact, the Chinese version put the punitive or exemplary damages in parentheses after the words “monetary compensation”. The Chinese section reads “被排除的濟助 (excluded relief) 指以下項目以外的濟助：在法律程序中判給的金錢上的損害賠償 (包括懲罰性或懲戒性的損害賠償), 而該法律程序是就關乎於內地作出的侵犯行為或不正當競爭行為的糾紛提起的。”

As the Ordinance and the Rules has already come into operation, we will wait and see how the Hong Kong Courts interpret and apply the Ordinance in cases before them.