The Enforceability of Notarised Debt Instruments in Hong Kong: An Analysis of Hong Kong Court of Appeal Civil Appeal No. 118, 119, 120 & 121 of 2024

2025-08-21

Case Reference: [2025] HKCA 462 

Overview

On 21 May 2025, the Court of Appeal of the High Court of Hong Kong handed down a judgment in Court of Appeal Civil Appeal No. 118, 119, 120 and 121 of 2024 and held that the “Execution Ruling” (执行裁定书）issued by the Mainland court based on the “Execution Certificate” (执行证书） issued by the notary office in Mainland of China was not a registrable Mainland judgment under the Mainland Judgments (Reciprocal Enforcement) Ordinance (Cap. 597) (“MJREO”). Consequently, the creditor was unable to register the “Execution Ruling”  (执行裁定书）through the statutory registration mechanism in the Hong Kong court. 

Case Background

The Plaintiff Company A (“Plaintiff”) entered into four loan agreements with the Borrower B (“Borrower”) in 2019 (collectively referred to as the “Loan Agreements”). On the same day, the Guarantor C (i.e. the Defendant in this case) and the Plaintiff entered into four guarantee agreements (collectively referred to as the “Guarantee Agreements”) separately, each relating to one of the loan agreements, to secure the performance of the Loan Agreements. By the Guarantee Agreements, both parties agreed that they would voluntarily apply to Beijing Chang’an Notary Public Office (“Beijing Notary Office”) for notarization of the enforcement of the Guarantee Agreements, and voluntarily accept their enforcement by judicial authorities without the need to go through litigation procedures. As the Borrower and the Guarantor failed to repay the loan on time, the Plaintiff applied to Beijing Notary Office and obtained the certificates for execution (执行证书) (“Execution Certificates”). Armed with these Execution Certificates, the Plaintiff sought enforcement in the Beijing No. 3 Intermediate People’s Court (“Beijing Court”).

Upon receipt of the Plaintiff’s enforcement application, the Beijing Court issued a Notice of Execution (执行通知书）in January 2020,  requiring the Borrower and the Guarantor (i.e. the Defendant in this case) to perform the obligations set forth in the Execution Certificates.  Subsequently, by reason of the compromise reached among the Plaintiff, the Borrower and the Guarantor (i.e. the Defendant in this case), the Beijing Court terminated this round of  the enforcement procedures. Upon the Plaintiff’s subsequent application, the Beijing Court resumed the enforcement procedures and commenced a new round of enforcement proceedings in March 2020. On 1 December 2020, the Beijing Court issued an execution ruling (执行裁定书) in each of the 4 cases (collectively referred to as the “Rulings”) terminating the enforcement procedures.  

Enforcement Proceedings in Hong Kong

In November 2022, the Plaintiff made an ex-parte application to the High Court of Hong Kong for the registration and recognition of the Rulings (执行裁定书）issued by the Beijing Court pursuant to the MJREO, and obtained the order for registration in March 2023. On 31 March 2023, the Defendant applied to the Court of First Instance of the High Court of Hong Kong (“CFI”) for leave to set aside the registration , primarily on the basis of the following three grounds:

（1）The Rulings were not given by a “chosen court” in accordance with section 5(2)(a) of the MJREO;

（2）The Rulings did not order the payment of a sum of money (No Payment  Order), and did not fulfill the requirement for the Mainland judgments under section 5(2)(e) of the MJREO;

（3）The defendant did not appear in the Beijing Court to defend the proceedings and was not summoned to appear as there were no court proceedings in the Mainland for the defendant to appear in. The registration should therefore be set aside under section 18(1)(f)(i) of the MJREO.   

CFI upheld the second ground as mentioned above, i.e. the Rulings did not order the payment of a sum of money, and ordered that the registration of the Rulings be set aside. The Plaintiff, who was dissatisfied with the CFI’s decision to set aside the registration, lodged an appeal to the Court of Appeal of the High Court of Hong Kong (“CA”).

Appeal Decisions

First, CA conducted an in-depth analysis and consideration of the nature of the Rulings in the legal proceedings in  Mainland of China. According to the expert evidence, the Plaintiff’s enforcement proceedings in the Mainland of China was the procedure for the direct enforcement of notarised instruments creating debt obligations. The rights and liabilities of the parties were essentially examined and verified by the notary office and thereafter enforced by the Chinese Mainland courts. The Chinese Mainland courts do not engage in any adjudication of those rights and liabilities unless there is an application or litigation brought by a party to oppose enforcement on specified grounds. The enforcement procedures adopted by the Plaintiff in Mainland of China did not involve litigation. CA held that this is a system not found in Hong Kong.

Second, Section 5(2)(e) of the MJREO requires that a judgment shall order the payment of a sum of money. CA meticulously analyzed the issue of whether the Rulings ordered the payment of a sum of money and held that the Rulings in this case did not fulfil the relevant requirements for the following reasons:

The Plaintiff was not a judgment creditor in the Mainland. It sought enforcement not of any judgment but of the notarised debt obligations.  

The objects of enforcement were set out in the Execution Certificates issued by the Beijing Notary Office.  The relevant sums of money were determined, not by the Beijing Court in the Rulings, but by the Beijing Notary Office, to be payable.  In substance, the Rulings were merely for the direct enforcement of the instruments issued by the notary office in the Mainland.

The purpose and function of the Rulings was to bring the particular “round” of enforcement proceedings to an end, such closure being apparently a legal and administrative necessity in the Mainland legal system. The final paragraph including the final sentence in the Ruling that “[a]fter termination of the present enforcement proceedings, the applicant for enforcement has the right to request the persons subject to enforcement to continue to fulfil the debt obligation and to apply to the People’s Court for resumption of enforcement in accordance with the law.  The persons subject to enforcement have the obligation to continue to fulfil the debt obligation to the applicant for enforcement.” was simply a description or recitation of the existing state of affairs. It is not a judgment or order which itself made money payable.  

It was also recorded in the Rulings that the Plaintiff had the right to apply to the Mainland court for resumption of enforcement. Any resumed enforcement would be no more than enforcement of the notarised debt instruments. CA saw no basis in Mainland law to suggest that the Rulings themselves could be said to be the subject matter of future enforcement proceedings.  

Further, it would be incongruous with the statutory scheme of the MJREO for a plaintiff to have a fresh period of 2 years for registration every time a Mainland court issues a ruling at the conclusion of a round of enforcement stating that the defendant continues to be liable to perform such part of his obligations as remains outstanding.

CA finally dismissed the Plaintiff’s appeal and affirmed the CFI’s  decision that the Rulings did not fulfill the requirements under section 5(2)(e) of MJREO.

Practical Significance

Following the formal implementation of the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645) on 29 January 2024, and the more convenient arrangement for the mutual recognition and enforcement of civil and commercial judgments between Hong Kong and Mainland of China, cross-border enforcement of civil and commercial judgments between Hong Kong and Mainland of China has become increasingly frequent, which provides judgment creditors with greater legal protection.

In this case, CA conducted an in-depth analysis and consideration of the nature of the notarised debt instruments,  highlighting the importance of mutual understanding of the legal systems in the two jurisdictions in cross-border enforcement of civil and commercial judgments between Hong Kong and  Mainland of China. It also provided practical insights in relation to the cross-border enforcement of civil and commercial judgments as follows.

1.Conducting Comprehensive Asset and Debt Investigations in Hong Kong at an Early Stage

Unlike the Mainland courts, an applicant seeking to enforce a civil and commercial judgment in Hong Kong has to proactively initiate enforcement proceedings and provide evidence in relation to the assets and property of the judgment debtor. In general, Hong Kong courts will not, on their own initiatives, investigate and find out clues on the assets and property of the judgment debtor, and they will only process applications for enforcement based on the evidence submitted by the applicants. Where a party in a transaction is a Hong Kong entity, the parties should conduct a comprehensive investigation on the assets and liabilities of the Hong Kong party at an early stage of the cross-border transaction or cross-border dispute in order to obtain clues on enforceable assets and property in Hong Kong with a view to facilitating future enforcement in Hong Kong.

2.Understanding the Legal Elements of Hong Kong and Mainland of China in order to Formulate Appropriate and Complementary Litigation Strategies for Cross-border Dispute Resolution and Enforcement

In this case, one of the reasons why the Hong Kong court dismissed the Plaintiff’s appeal was that the Mainland notarised debt instruments were not judgments given by the Mainland court through the judicial adjudication procedures, and thus does not fulfill the criteria for registration under the statutory registration mechanism. It can be seen that in dealing with applications for enforcement of Mainland judgments and notarised debt instruments issued by the Mainland notary offices in Hong Kong, Hong Kong courts will often consider the details of the relevant Mainland documents and legal procedures, and even legal opinions on the Mainland law rendered by the Chinese Mainland legal experts. In practice, whether a civil and commercial judgment given by a Mainland court or a notarised debt instrument can be registered and enforced by Hong Kong courts hinges on the importance of comprehensive coordination and communication of legal practitioners between Hong Kong and Mainland of China. In cross-border legal disputes involving Hong Kong and  Mainland of China, the parties should understand the legal elements of both jurisdictions at an early stage in order to formulate comprehensive litigation strategies as soon as possible. Accordingly,  when a cross-border dispute arises, if the debtor has assets in Hong Kong and there is a possibility for overseas recovery, the creditor should also consult Hong Kong lawyers in order to understand the requirements for the recognition and enforcement of the Mainland civil judgments by Hong Kong courts when initiating legal action in Mainland of China. This will also enable the creditor to formulate complementary strategies for debt recovery and enforcement proceedings in both Hong Kong and Mainland of China.

3.The Judgment Debtor May Seek Relief Through Common Law in Hong Kong Courts Where the Criteria for Registration Under the Statutory Registration Mechanism cannot be met  

Hong Kong practises common law system. If the Mainland civil and commercial judgments or the notarised debt instruments does not fulfill the criteria for registration under the statutory registration mechanism, the creditor may still seek relief through common law. Through the common law route, creditors may initiate civil proceedings in Hong Kong courts and rely on the objects of enforcement in notarised debt instruments or Mainland judgments as the cause of action upon meeting relevant legal requirements. If the defence pleaded by the defendant is not supported with any reasonable grounds, the plaintiff may apply to the court for a summary judgment against the defendant so that the costs of a full trial may be saved.

In summary, irrespective of whether creditors obtain the judgments through litigation from the courts or the notarised debt instruments through notarization procedure from the notary office, they should promptly consult lawyers who are familiar with Hong Kong  and the Chinese Mainland laws  in order  to formulate convenient and efficient cross-border enforcement strategies. DeHeng Law Offices (Hong Kong) LLP ("DeHeng Hong Kong") possesses the unique feature of collaboration of common law and civil law expertise, providing premium legal services for cross-jurisdictional commercial matters. On 7 March 2025, DeHeng Hong Kong established a Cross-Border Enforcement Centre (“ Centre”) which consolidates global investigation and enforcement resources to provide one-stop cross-border enforcement services through its specialized legal team, to resolve the cross-border enforcement difficulties for domestic and international clients. 

Disclaimer：

This article and the information contained within it are provided for educational and general informational purposes only. It is intended to provide the public a general understanding of the cases or issues discussed, and shall not be construed as legal advice provided by the author or DeHeng Law Offices. Readers should not act upon this information without seeking professional legal advice. The views expressed do not necessarily reflect the official policy or position of any court or legal authority. Reproduction or citation of any content from this article requires proper attribution to the original source.