The Mainland Judgments (Reciprocal Enforcement) Ordinance, Cap. 597 (the “Ordinance”) provides a mechanism through which Mainland Court a judgment is enforced in Hong Kong, subject to other statutory requirements set out in section 5 of the Ordinance.
One of the statutory requirements for the Ordinance to apply is that the agreement under dispute that resulted in the Mainland judgment needs to specify that the Mainland court has exclusive jurisdiction over the dispute. Without such agreement, the parties may challenge the enforceability of the Mainland judgment.
The question of whether there is an exclusive jurisdiction clause in an agreement under dispute is essential for enforcing a PRC judgment. The exclusivity of a jurisdiction clause is a question of law to be ruled upon by the court.
In reality, as reflected from The Expert-Import Bank of China v Taifeng Textile Group Co. Ltd and Another [2018] HKCFI 1840 and Bank of China Limited v Yang Fan [2016] 3 HKLRD 7, Hong Kong courts will start from the ordinary meaning of the words of the jurisdiction clause and then consider other factors including (1) the identity of parties in the disputes, (2) the parties’ place of residence or incorporation, (3) the parties’ place of business, and (4) the place of execution, performance and breach of that agreement.
While in the above said two cases the Hong Kong court ruled that there was an exclusive jurisdiction clause, a point to note is that the Hong Kong court would also take into account expert evidence in relation to the interpretation of clauses. In the Taifeng Textile Group case, the court was asked to construe the meaning of the word “可以” (in English “may”), and in the Yang Fan case, the essential word was “應” (“should”, in English). These two cases highlight the importance of using an appropriate word when drafting the exclusive jurisdiction clause in a contract.
If you have any concerns in relation to the exclusive jurisdiction clause in your contract, please contact us today for a discussion.