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The first anniversary of the RREJ (Reciprocal Recognition and Enforcement of Judgments) between the Mainland and Hong Kong is coming up in January. On the topic of interpreting jurisdiction clauses, which in the new RREJ is a strong determinant in awarding reciprocity, there has been a noticeable recognition by the courts these last months of real businesses’ needs in resolving cross-boundary disputes. In this article we provide several recent case studies that highlight this evolving approach, shifting from rigid formalistic review to a focus on practical fairness, which is welcomed.
Author: Anna Lau, Partner
Background: The Old and New Mechanisms of MJREO
With the deepening economic and trade cooperation between Hong Kong and Mainland China, the need for recognizing and enforcing cross-border civil and commercial judgments has grown significantly. To regulate and streamline judicial assistance between the two jurisdictions, the first attempt was the signing of the Arrangement on Reciprocal Recognition and Enforcement of Civil and Commercial Judgments (the "Old Arrangement"). This was formally implemented through the enactment of the Mainland Judgments (Reciprocal Enforcement) Ordinance (Cap. 597) (the "2008 Ordinance"), which came into effect in 2008.
After 11 years of practical application, the Supreme People's Court of China and the Hong Kong Department of Justice signed the updated Arrangement on Reciprocal Recognition and Enforcement of Civil and Commercial Judgments (the "New Arrangement") in 2019, introducing substantial improvements to the previous mechanism.
Ahead of the implementation of the new Mainland Judgments (Reciprocal Enforcement) Ordinance (Cap. 645) (the "2022 Ordinance"), we published a forward-looking analysis by our associate Erica SO, titled A Change for the Better: New Enforcement Mechanism in Hong Kong and Mainland China.
As highlighted in the article, one of the key enhancements under the 2022 Ordinance is the relaxation of the strict requirements under the 2008 Arrangement for an "exclusive jurisdiction" agreement. An exclusive jurisdiction agreement refers to an agreement between parties that specifies only the courts of a particular jurisdiction have authority to adjudicate disputes arising from or related to a contract. In cases where Hong Kong courts recognize Mainland judgments, this has significant implications: only when a Mainland court is confirmed to have jurisdiction under such an agreement will the corresponding judgment be deemed valid and enforceable by Hong Kong courts.
Under the new regime, applicants seeking to enforce Mainland judgment in Hong Long now need only demonstrate the existence of a "choice of Mainland court agreement," which reflects the parties’ agreement to designate Mainland courts as the jurisdiction for resolving disputes. "Choice of Mainland court agreement" no longer requires such agreements to explicitly specify one particular Mainland court.
Importantly, this mechanism under both the old and new arrangements is not one-sided. Just as Hong Kong courts recognize Mainland judgments, Mainland courts also recognize Hong Kong judgments under the same principle of mutual jurisdictional agreement.
As of now, the 2022 Ordinance does not entirely replace the 2008 Ordinance. According to Article 30(2) of the New Arrangement, for written jurisdiction agreements signed before the New Arrangement took effect, the 2008 Ordinance remains applicable. What impact does this delayed application of new rules have on judicial practice? Using jurisdiction clauses as a key example, we observe that judicial standards in practice are increasingly converging with the principles of the New Arrangement.
The article highlights a shift from formalistic scrutiny to substantive analysis in how courts recognize jurisdiction clauses in contracts. Rather than focusing on specific terms within written jurisdiction clauses, courts are now looking at the broader context to determine the parties intended forum for resolving disputes. This makes it easier to handle cross-border transactions and speeds up resolving disputes between parties from different countries.
Hong Kong Courts’ Review of Jurisdiction Clauses: Case Analysis
Case 1: Wang Qian Wei v 郭文雨 & 郭小琼 [2018] HKCFI 2253
This case involved a judgment from the Mainland Intermediate People’s Court arising from a breach of an investment agreement. The Plaintiff applied to register the Mainland judgment in Hong Kong, while the Defendant opposed the registration on three grounds, all centred on jurisdiction and the validity of the judgment.
Defendant’s Objection 1: Although the original debt agreement between the original creditor (a third-party to the current case) and the debtor (the Defendant) contained a jurisdiction clause, the plaintiff had not directly entered into any agreement with the Defendant. Further, the debt assignment agreement between the original creditor and the assignee (the Plaintiff) did not include a "choice of Mainland court" clause.
A "choice of Mainland court agreement" represents an agreement where parties designate Mainland courts as the jurisdiction for dispute resolution. Both the 2008 Ordinance and the 2022 Ordinance require such an agreement to reflect the parties’ clear choice of Mainland courts. Under the 2008 Ordinance, however, this choice must also exclude the jurisdiction of other courts, confining disputes to the designated Mainland court.
The court dismissed this objection. Under Section 2 of the 2008 Ordinance, a judgment creditor —a person or entity owed money under a court judgment and has the legal right to collect that debt— includes the transferee of rights under the original judgment debt. As the transferee of the creditor’s rights, the Plaintiff was allowed to assume the position of the original creditor and pursue the debt through legal proceedings, given the transfer of debt did not alter the jurisdictional agreement in the original contract.
Therefore, the Plaintiff was entitled to apply for registration.
Defendant’s Objection 2: The clause in the agreement stating, “In the event of a dispute arising from the performance of this agreement, the parties shall attempt to resolve it through negotiation. Failing agreement, both parties agree to submit the dispute to the court in the place where Party A is located for adjudication,” (emphasis and translation added) thereby indicating the Mainland Intermediate courts but not explicitly granting “exclusive jurisdiction.”
The court dismissed this objection. In the absence of expert evidence on Mainland contract interpretation, the court applied Hong Kong principles of contractual interpretation. Despite the lack of explicit terms such as “exclusive” or “sole,” the wording and context of the clause indicated that the parties had agreed to confer exclusive jurisdiction to the Xiamen Court.
Defendant’s Objection 3: The Mainland judgment had not completed all judicial procedures and therefore lacked finality.
The court dismissed this objection as well. The Mainland judgment was affirmed upon review by the Mainland Higher People’s Court. According to a certificate of judgment finality provided by the Mainland court, the judgment had been confirmed as final and conclusive, thereby satisfying the finality requirement under Section 6 of the 2008 Ordinance.
Ultimately, the Hong Kong court approved the registration of the Mainland judgment..
Case 2: 信达澳亚基金管理有限公司 v 宜华生活科技股份有限公司 (HCMP 442/2023)
The Plaintiff was an individual bondholder of corporate bonds issued by the First Defendant. As part of the purchase, legal papers including “bond documents to the investing public” (募集說明書) were issued, collectively referred to as 'Contract One,' which constituted a contract between the Plaintiff and the First Defendant. Notably, Contract One lacked a jurisdiction clause.
For interpretation of jurisdiction clauses in Contract One, the Plaintiff submitted the Bond Trustee Agreement (“Contract Two”) because under the bond structure, bondholders were “deemed to have agreed” to the terms of Contract Two. Contract Two is between the First Defendant and a Third-Party (the Trustee of the Trust) and includes a jurisdiction clause and dispute resolution mechanism. The Trustee was an independent party as is usual in these types of structures.
Clause 9 of Contract Two stated:
Any disputes, differences, or claims arising from or in connection with this agreement shall, in the spirit of equality and mutual benefit, be resolved through amicable negotiation between Party A [i.e., the First Defendant] and Party B [i.e., the trustee, non-party]. If no consensus is reached, such disputes may be directly submitted to the People’s Court at Party A’s location for resolution. During the litigation process, both parties shall continue to perform other provisions of this agreement, except for matters in dispute and under litigation. (Translation added.)
The Plaintiff sought to register and enforce in Hong Kong a Mainland judgment related to Contract One. The First Defendant applied to set aside the registration.
The key issue, then, being whether Clause 9 of the Contract Two constituted an exclusive "choice of Mainland court agreement".
The Hong Kong court disapproved the registration of the Mainland judgment.
Mechanism for Dispute Resolution:
Contract Two established a specific dispute resolution mechanism in the event of default by the First Defendant. According to this mechanism, the trustee was required to act on behalf of bondholders by obtaining authorization from a bondholder meeting before initiating litigation against the First Defendant. Individual Bondholders could only initiate proceedings independently if the trustee failed to act as required under Contract Two. In this case, the Plaintiff’s direct lawsuit was not triggered by the trustee's failure to perform its obligations.
As such, the Plaintiff's actions fell outside the prescribed dispute resolution mechanism in Contract Two, indicating the Plaintiff could not be deemed to have intended to agree to Clause 9 of Contract Two. The Plaintiff, therefore, could not simply substitute itself for the trustee and rely on Clause 9.
Applicability of Clause 9:
The court held that Clause 9 only governed disputes between the First Defendant and the trustee. The dispute resolution framework did not extend to individual bondholders, because the Plaintiff, as a bondholder, should have acted through the trustee. By directly initiating proceedings, the Plaintiff once again demonstrated that it had not consented to Clause 9 of Contract Two when signing Contract One.
Based on the above reasoning, the Hong Kong court ruled that Clause 9 of Contract Two, although deemed to be agreed by the Plaintiff, did not constitute an exclusive choice of Mainland court agreement in Contract One. Consequently, the Mainland judgment’s registration was set aside.
Insights from Cases 1 and 2: Court Scrutiny – Relevance of Jurisdiction Clause
In the two cases discussed above, neither contained an explicit "exclusive jurisdiction" clause in the contracts at issue, yet both relied on jurisdiction clauses in other related agreements to seek recognition from the Hong Kong courts. What, then, led to the different conclusions reached by the courts?
By comparison, the connection between the parties in Case 1 was much stronger. The original debt contract between the debtor and the original creditor clearly established the debtor's willingness to fulfil repayment obligations under specified terms and conditions. The transfer of the debt did not alter the conditions of performance for the debtor, and thus, the jurisdiction clause in the original debt contract remained applicable in the absence of any conflicting provisions.
In Case 2, however, the clause the Plaintiff sought to rely on had a much weaker connection to the Plaintiff. The Plaintiff's actions in the Mainland proceedings effectively bypassed the agreed dispute resolution mechanism, fundamentally altering the terms set out in the original contract. Furthermore, unlike the relatively equivalent positions of the original creditor and the assignee creditor as in Case 1, the bondholder and the trustee have a more strictly delineated difference in roles. As a result, even though the Plaintiff obtained a valid judgment in the Mainland regarding Contract One, the jurisdiction clause in the Contract Two could not be extended to support the Plaintiff's claims.
From these cases, it can be concluded that in the absence of an explicit "exclusive jurisdiction" clause, it is possible to rely on jurisdiction clauses in other related contracts. However, it is vital that the contract relied upon is closely connected to the contract in dispute. The relied-upon contract must provide sufficient basis to infer that the agreed dispute resolution mechanism should continue to apply, and such reliance must not result in unfairness to either party.
Case 3: 中国民生信托有限公司 v 傅军 (FU KWAN) [2024] 3 HKC 475
The Defendant provided a guarantee for the Plaintiff’s loan agreement, which the borrower subsequently failed to repay. After obtaining a ruling from a Mainland court, the Plaintiff applied to the Hong Kong court to register the Mainland ruling. The Plaintiff relied on Clause 12.2 of the guarantee agreement, which it claimed constituted a “choice of Mainland court agreement” under the 2008 Ordinance. Clause 12.2 stated:
The Guarantor undertakes: In the event that the Guarantor fails to perform or fully perform its obligations under this contract, it voluntarily submits to the enforcement of the judicial authorities without the need for litigation. The Creditor may, in accordance with Article 238 of the Civil Procedure Law, directly apply to a competent People’s Court for enforcement without litigation. The Guarantor waives the right to raise defences against the Creditor’s direct application for enforcement. (Translation added.)
The Defendant raised two grounds of objection:
Defendant’s Objection 1:
The Defendant argued that Clause 12.2 referred to Article 238 of the Mainland Civil Procedure Law, which identifies courts based on statutory jurisdiction rather than the parties’ choice. Therefore, the clause did not fall within the scope of a mutual agreement on jurisdiction.
Furthermore, the clause related only to enforcement procedures rather than dispute resolution and, thus, failed to meet the requirements for a “choice of Mainland court agreement” under the 2008 Ordinance.
The court rejected this objection, reasoning that although Clause 12.2 relied on Article 238 to determine the court for enforcement, this reliance still resulted from the parties’ agreement.
The Hong Kong court emphasized that the wording of Section 3(2) of the 2008 Ordinance, referring to disputes “arising in connection with the specified contract,” should not be narrowly construed. As long as the dispute relates to the guarantee agreement, even if arising during the enforcement stage, then it falls within the scope of the clause. Therefore, Clause 12.2 constituted a valid agreement for choosing Mainland courts to handle disputes.
Defendant’s Objection 2:
The Defendant argued that the Mainland ruling ordered specific performance instead of a direct monetary payment order. The ruling by the Beijing Third Intermediate People’s Court stated:
Following the conclusion of the current enforcement process, the applicant retains the right to require the respondent to continue performing its obligations and to apply to the People’s Court for resumption of enforcement. The respondent is obligated to continue performing its debt obligations. (Translation added)
The court agreed with this objection. Although the Mainland ruling described the Defendant’s payment obligations, it did not constitute a specific monetary order under Section 5(2)(e) of the 2008 Ordinance, which requires judgments to mandate “the payment of a sum of money.”
Insights from Case 3: A Trend Toward Flexible Formal Requirements
Under the 2022 Ordinance, Hong Kong courts have adopted a more flexible approach to recognizing jurisdiction clauses, even under the old 2008 Ordinance. As demonstrated in this case, a clause need not explicitly specify a court, and even clauses related to enforcement can be treated as valid “choice of Mainland court agreements.” This reflects a shift from rigid formalistic scrutiny (i.e. requiring explicit exclusive jurisdiction clauses) to substantive analysis (i.e. emphasizing the parties’ intent where clear jurisdiction clauses are absent). This trend enhances the enforceability of judgments across jurisdictions.
For practitioners handling cross-border enforcement cases, the focus has shifted toward substantive review of the content of Mainland judgments. For instance, in this case, the applicant should have ensured at the outset that the Mainland proceedings sought a clear monetary order rather than obligations of continued performance. This places a higher duty of care on applicants and requires careful attention to aligning Mainland judgments with Hong Kong’s legal requirements to avoid procedural setbacks in enforcement.
Mainland Courts’ Recognition of Hong Kong Judgments
Compared to the interpretative approach of Hong Kong courts, Mainland courts have shown regional and temporal variations in their interpretation of “exclusive jurisdiction” clauses. However, there is a gradual trend toward greater leniency.
Historically, for similar factual scenarios—such as cases where a contract specified that the guarantor accepted exclusive jurisdiction without mentioning the creditor—courts in different regions have applied varying standards, affecting the implementation of reciprocal recognition. For example:
In a Shanghai High People’s Court’s decision (2018沪认复1号), the clause was deemed an exclusive jurisdiction agreement.
In contrast, a Beijing High People’s Court’s decision (2020京民终321号) held that such clauses, which limited the guarantor’s jurisdiction, did not restrict creditors or trustees from pursuing claims in other courts with jurisdiction. Thus, it was not considered an exclusive jurisdiction agreement. Beijing courts have generally adopted stricter standards for such clauses.
In recent years, however, Mainland courts have exhibited a more flexible approach to recognizing exclusive jurisdiction clauses. Even where the agreement did not explicitly specify “exclusive jurisdiction,” courts have still acknowledged their exclusivity in the following cases:
The Huzhou Intermediate People’s Court - 《原告周桂兰与被告李茂春股权转让纠纷一审民事裁定书》（2020浙05民初90号）
The Nanning Intermediate People’s Court - 《夏志同与战志发合同纠纷民事一审民事裁定书》（2020桂01民初3088号）
The Guangzhou Intermediate People’s Court - 《Ocean Equity 申请认可和执行香港特别行政区法院民事判决认可与执行申请审查区际司法协助裁定书》（2021粤01认港3号）
These examples provide a simplified summary of Mainland judicial practices in similar cases and demonstrate that, like Hong Kong courts, Mainland courts are increasingly inclined to balance formal requirements of jurisdiction clauses with the practical resolution of disputes. This trend reflects a growing emphasis on fairness and efficiency in cross-border dispute resolution.
Conclusion: Toward Greater Flexibility and Fairness in Cross-Border Disputes
This article, through recent case studies, highlights the evolving approach of Hong Kong and Mainland courts in interpreting jurisdiction clauses—shifting from rigid formalistic review to a focus on practical fairness and dispute resolution. Whether it is the flexible interpretation of enforcement clauses by Hong Kong courts, or the increasingly lenient recognition of exclusive jurisdiction clauses by Mainland courts, both demonstrate a growing emphasis on addressing the real needs of cross-border dispute resolution.
These developments not only highlight the convergence of legal systems between the two jurisdictions but also provide a more efficient and equitable legal framework for cross-border transactions. Going forward, further judicial practice and coordination under the new framework will unlock new possibilities for resolving cross-border disputes.
Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.
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