Security for Costs Mainland Plaintiffs Hong Kong

Author: Michael Poon, Associate Solicitor

Since the enactment of the Reciprocal Enforcement Ordinance (REO) on 29 January 2024, the recognition and enforcement of judgments in Hong Kong and in the PRC have been broadened. The impact of the REO on the requirements for security for costs concerning cross‑border disputes in Hong Kong and the PRC, however, remains to be seen, as held in Du Guorong v Bank of China International Limited, despite the REO’s recent enactment.

Security for Costs Mainland Plaintiffs Hong Kong and the REO

Under the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (“REO”), which came into force on 29 January 2024, the scope of recognition and enforcement of judgments in civil and commercial matters between Hong Kong and the PRC has been broadened.

To the extent that this broadened scope translates to easier and more straightforward enforcement of a Hong Kong judgment in the PRC, rendering unnecessary the need for a defendant to obtain security for costs against a PRC plaintiff, was addressed in Du Guorong v Bank of China International Limited.

Court’s Position in Du Guorong

In Du Guorong, the Court held that for the purposes of a security for costs application against a Mainland plaintiff, the extent to which enforcement of a Hong Kong costs order in the PRC may be easy is only one of several considerations.

As a matter of practice, the Hong Kong Courts’ position that there is difficulty in enforcing Hong Kong court orders in the PRC remains unchanged.

Plaintiff’s Position: Additional Security for Costs Unnecessary

The background to this case arose from the plaintiff’s opposition, on both liability and quantum, to further security for costs requested by the defendant amounting to HK$12 million.

Despite already having provided security twice, the plaintiff argued that security for costs should be unnecessary because enforcement of a Hong Kong costs order in the PRC would be facilitated under the REO.

Court’s Finding: REO Details Not Yet Available

At the time of the decision, the REO had not yet been fully implemented, but the Court found the issue significant enough to warrant a written judgment.

The Court distinguished enforcement in common law jurisdictions, where Hong Kong Courts are familiar with registration procedures, from enforcement in the PRC, where detailed REO rules had not yet been flushed out.

Without detailed rules or evidence on how recognition and enforcement would operate under the REO, the Court rejected the plaintiff’s argument and granted security for costs in favour of the defendant.

REO Now in Force: Future Position Remains to Be Seen

Bearing in mind that Du Guorong was decided prior to full implementation of the REO, whether Hong Kong Courts will adjust their approach to security for costs applications against Mainland plaintiffs remains to be seen.

The case serves as a reminder that courts will consider all circumstances, not merely the theoretical ease of enforcement under the REO.

How Ravenscroft & Schmierer Can Help?

Issues relating to security for costs Mainland plaintiffs Hong Kong involve evolving enforcement mechanisms and judicial discretion under the REO. Ravenscroft & Schmierer advises parties in cross‑border disputes on enforcement risk, cost exposure, and litigation strategy involving Mainland plaintiffs.

If you are involved in proceedings where security for costs may be an issue, contact us to discuss your circumstances and available options.

FAQ: Security for Costs Mainland Plaintiffs Hong Kong Update

What is security for costs?

Security for costs is an order requiring a party to provide financial security to cover potential adverse cost orders.

Does the REO abolish security for costs against Mainland plaintiffs?

No. Courts still consider all circumstances, including enforcement uncertainty.

What did the Court decide in Du Guorong v Bank of China International Limited?

The Court held that ease of enforcement under the REO is only one factor and granted security for costs.

Has the REO changed enforcement of Hong Kong judgments in the PRC?

The scope has broadened, but detailed court practice remains to develop.

How can Ravenscroft & Schmierer advise on security for costs applications?

Ravenscroft & Schmierer advises on security for costs strategy in cross‑border litigation involving Mainland plaintiffs.

Does Ravenscroft & Schmierer advise on enforcement of Hong Kong judgments in the PRC?

Yes. We advise on recognition, enforcement, and risk assessment under the REO framework.

Can Ravenscroft & Schmierer advise defendants facing Mainland plaintiffs?

Yes. We assist defendants in assessing enforcement risks and applications for security for costs.

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Disclaimer: Whilst every effort has been made to ensure the accuracy of this article, it is general in nature and does not constitute legal advice of any kind. You should seek your own personal legal advice before taking legal action. We accept no liability whatsoever for loss arising out of the use or misuse of this article.

For specific advice about your situation, please contact us.

Michael Poon

Associate

+852 2388 3899