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The Hong Kong Court has recently handed down a judgment concerning the operation of the Mainland Judgments (Reciprocal Enforcement) Ordinance (Cap. 597) ("MJREO") (the old regime that still applies to judgments obtained before 29 January 2024) and clarified the duties of applicants seeking asset-freezing injunctions.
In華融華僑資產管理股份有限公司 v 李晓鹏 (Huarong v Li) [2025] HKCFI 6402, the Court (i) dismissed an application for summary judgment on the basis that the MJREO precludes common law enforcement of Mainland judgments that qualify for registration under the statutory regime; and (ii) refused to continue a Mareva injunction due to material non-disclosure by the applicant.
Background
The Plaintiff was the assignee of a RMB150 million debt, of which the Defendant was the guarantor and subsequently defaulted. The Plaintiff obtained judgment against the Defendant in the Mainland at the Xining Intermediate People's Court.
While the debt remained outstanding, the Defendant moved to Hong Kong and became a senior executive of a Hong Kong listed company, where he held a substantial shareholding. The Plaintiff alleged that the Defendant had undertaken not to dispose of those shares before the debt was fully repaid, and had breached that undertaking by selling a significant portion of them.
The Plaintiff obtained a Mareva injunction freezing the Defendant's assets up to RMB284 million and commenced common law enforcement proceedings in Hong Kong to enforce the Mainland judgment. This included an application for summary judgment, a continuation of the Mareva injunction and an order compelling disclosure of the Defendant's assets. The Defendant opposed, arguing in particular that section 22(2) of the MJREO bars common law enforcement of Mainland judgment that qualify for registration under the statutory regime.
Decision
The Court was satisfied that the Mainland judgment met the criteria of a judgment registrable under the MJREO, pursuant to section 5(2). It was a final and conclusive judgment for a definite sum of money, issued by a designated Mainland court and made pursuant to a valid choice of Mainland court agreement.
It followed that enforcement through the common law route was barred. The Court emphasised that section 22(2) of the MJREO is expressed in clear and mandatory terms: where a Mainland judgment satisfies the statutory criteria for registration, it may only be enforced under the MJREO regime and not at common law.
The reason why the Plaintiff had taken the common law enforcement route was that an application to register the Mainland judgment was already out of time, as it exceeded the two-year limitation period under the MJREO. In an attempt of doing so, the Plaintiff tried to rely on China Everbright Bank Co Ltd v China Kingho Energy Group Limited & Ors [2024] HKCFI 2586 where the judge considered that there was a good arguable case that the common law route remained available despite the expiry of the time limit.
The Court in the present case rejected that argument and explained that China Everbright was decided in the context of an interim injunction where the plaintiff had to show "a good arguable case". That is a lower threshold than the test for summary judgment, which will generally be refused unless the defendant's defence is "frivolous and practically moonshine".
In light of the above and the facts it faced, the Court held that the section 22(2) defence cannot be characterised as "moonshine". Further, there is no authority that affirmatively holds that the common law route is open to the Plaintiff where the Mainland judgment is registrable under the MJREO but the statutory time limit has expired. In any event, the existence of an arguable defence under section 22(2) was itself sufficient to defeat the application for summary judgment.
The Court also refused to continue the Mareva injunction due to the Plaintiff's material non-disclosure. This included providing inaccurate information about the Defendant's share disposal which overstated the risk of dissipation, failing to mention the potential defence under section 22(2), and failing to disclose a Mainland court-ordered sale of land intended to satisfy the debt under the Mainland judgment. The latter two omissions were regarded as particularly serious. The Court held that the Plaintiff had breached its duty of "full and frank" disclosure and accordingly declined to re-grant the Mareva injunction. Once the injunction was set aside, the basis for the disclosure application also fell away and was dismissed.
Comments
The judgment reminds us that if a Mainland judgment meets the registration criteria under the MJREO, common law enforcement is barred by section 22(2). Further, "full and frank" disclosure obligations apply to asset-freezing injunctions that are made on an ex-parte basis. Applicants must draw to the Court's attention potential legal defences and ensure factual accuracy when demonstrating the real risk of dissipation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
