China Minsheng Trust Co., Ltd v. Fu Kwan
Read the full judgment text of CACV 118/2024 on BabelCite. This Court of Appeal judgment was delivered on 21 May 2025.
1. These are 4 appeals brought by the plaintiff from the orders of Deputy High Court Judge H Au-Yeung made on 29 February 2024 in 4 sets of proceedings to set aside the registration of 4 rulings all given by a court in Beijing. The parties to and the material facts of the 4 cases are the same and they have therefore been dealt with together both before the judge and in this court. The judge’s reasons for setting aside the registration of the rulings were set out in his decision dated 29 Februa
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CACV 118, 119, 120 & 121/2024, [2025] HKCA 462 On Appeal From [2024] HKCFI 590 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO. 118, 119, 120 & 121 OF 2024 (ON APPEAL FROM HCMP NO. 1943, 1944, 1945 & 1946 OF 2022) ____________
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_________________ J U D G M E N T _________________ Hon G Lam JA (giving the Judgment of the Court): A. Introduction 1.These are 4 appeals brought by the plaintiff from the orders of Deputy High Court Judge H Au-Yeung made on 29 February 2024 in 4 sets of proceedings to set aside the registration of 4 rulings all given by a court in Beijing. The parties to and the material facts of the 4 cases are the same and they have therefore been dealt with together both before the judge and in this court. The judge’s reasons for setting aside the registration of the rulings were set out in his decision dated 29 February 2024 (“Decision”).[1] 2.There are 3 questions raised in these appeals, all connected with the requirements of the Mainland Judgments (Reciprocal Enforcement) Ordinance (Cap 597) (“MJREO”): (1) whether the rulings are judgments that order the payment of a sum of money; (2) whether the rulings are judgments given by a “chosen court” and in particular whether there was any “choice of Mainland court agreement”; and (3) whether the defendant was “not summoned to appear” in the Beijing court “according to the law of the Mainland”. B. The facts 3.Pursuant to 4 loan agreements entered into on 4 April 2019 (“Loan Agreements”), the plaintiff, China Minsheng Trust Co., Ltd (“Minsheng”), lent 4 sums of money, namely RMB 110 million, RMB 120 million, RMB 110 million and RMB 100 million respectively, to the borrower Xinhualian Holdings Co Ltd (新華聯控股有限公司) (“Borrower”). 4.On the same day, Minsheng and the defendant herein, Mr Fu Kwan (“Fu”), entered into 4 guarantee agreements (“Guarantee Agreements”), each relating to one of the Loan Agreements, whereby Fu agreed to guarantee the loans granted to the Borrower under the Loan Agreements. 5.The Loan Agreements and Guarantee Agreements each contain a provision (in the latter, found in clause 8.2) that:
6.Each of those agreements also contains provisions that allow Minsheng to take steps pursuant to Art. 238 of the Civil Procedure Law of the PRC to apply for direct enforcement of the borrower’s or the guarantor’s obligations, as the case may be, without going through litigation. In the Guarantee Agreements, this is found in clause 12, which has the title “Enforceable Notarisation” (强制執行公證) and reads as follows:
7.Art. 238 of the Civil Procedure Law (民事訴訟法) (2017 revision), referred to in clause 12.2 quoted above, read as follows:[4]
8.Pursuant to clause 12.1 of the Guarantee Agreements and the equivalent provision in the Loan Agreements, on 8 April 2019 the parties obtained notarial certificates (公證書) from the Beijing Chang’an Notary Public Office (“Beijing Notary Office”) in relation to the effect of the contracts for the purpose of enforcement (强制執行效力) (“Notarisation Certificates”). These certificates stated that under the relevant provisions of the contract, the intention is clearly expressed that if Party B (i.e. the borrower or the guarantor, as the case may be) fails to perform or fully perform his obligations under the contract, then he voluntarily accepts its enforcement by a court that possesses jurisdiction without going through litigation procedures. The certificates also stated that the contract in question has effect for enforcement (具有强制執行效力), and that if Party B fails to perform or fully perform his obligations under the contract, then Party A may, within the time prescribed by law and with the Notarisation Certificate and relevant evidential materials, apply to the Beijing Notary Office for a certificate for execution and apply to a People’s Court that possesses jurisdiction for enforcement. 9.The loans were originally for a period of 12 months. The Borrower paid certain interest but due to the occurrence of an event of default, Minsheng gave notice on 26 December 2019 declaring that the loans had become repayable in their entirety together with accrued interest. 10.When the Borrower and Fu failed to repay, Minsheng took steps for direct enforcement pursuant to Art. 238 of the Civil Procedure Law. On 6 January 2020 Minsheng applied for, and on 13 January obtained, certificates for execution (執行證書) (“Execution Certificates”) from the Beijing Notary Office. These certificates:
11.Armed with these Execution Certificates, Minsheng sought enforcement in the Beijing No. 3 Intermediate People’s Court (“Beijing Court”). On 14 January 2020, the Beijing Court issued a Notice of Execution (執行通知書) (“Execution Notice”) to the Borrower and Fu, informing them that Minsheng had applied for enforcement and commanding that they perform the obligations confirmed by the specified legal documents (i.e. the Notarisation Certificates and the Execution Certificates) and to bear the interest arising during the period of delayed performance and enforcement fees and expenses.[5] It was stated that in the absence of timely performance, the Beijing Court would carry out enforcement. 12.On 15 January 2020, the Beijing Court issued an execution ruling (執行裁定書) which ordered, inter alia, that certain bank deposits of the Borrower and Fu be frozen. 13.A compromise was soon reached and on 20 January 2020, on Minsheng’s application, the Beijing Court terminated the enforcement procedures. On 12 March 2020, however, the Beijing Court resumed the enforcement procedures on Minsheng’s application on the ground that the Borrower and Fu had not performed the settlement agreement. Another Execution Notice dated 14 March 2020 was issued to the Borrower and Fu with contents similar to the one dated 14 January 2020. 14.In the course of the enforcement procedures, further orders were made by the Beijing Court for impounding the assets of the Borrower and Fu. Eventually, on 1 December 2020, the Beijing Court issued a ruling (執行裁定書) in each of the 4 cases (“Rulings”) terminating the enforcement procedures. The Rulings are materially identical in wording and differ only in the reference numbers and monetary amounts. Taking the one relating to one of the RMB 110 million loans as an example, it reads as follows:[6]
15.It is in particular the final sentence in the quoted passage above on which Minsheng has pinned its case for registration of the Rulings in Hong Kong. C. The registration proceedings in Hong Kong 16.By 4 ex parte originating summonses issued on 25 November 2022, Minsheng applied to have each of the Rulings registered as a judgment in Hong Kong against Fu pursuant to the MJREO. After raising certain requisitions, which were answered by Minsheng, Master Hui granted the orders for registration on 7 March 2023. 17.On 31 March 2023, Fu applied to have the registration set aside. He put forward 6 grounds but only 3 of them are relevant in these appeals, namely:
18.In his Decision, the judge upheld the No Payment Order Ground but rejected all the other grounds relied on by Fu below, and ordered that the registration of the Rulings be set aside. 19.On these appeals, Minsheng challenges the judge’s conclusion on the No Payment Order Ground. Fu opposes that challenge and further contends that the result below should be affirmed on the No Chosen Court Ground and the Not Summoned to Appear Ground as alternative or additional grounds. We shall discuss these 3 grounds in turn below. D. The No Payment Order Ground D1. The Decision of the judge 20.In order to enforce a Mainland judgment by registration under the MJREO, the judgment creditor has to show that the 5 requirements set out in section 5(2)(a)-(e) are all satisfied. Section 5(2) provides:
21.Section 7 makes provision for the time limit for registration as follows:
22.Fu contended that the Rulings were not orders compelling him to make any payment to Minsheng and did not therefore satisfy the requirement in section 5(2)(e). Minsheng’s case was that the Rulings, in particular the final sentence highlighted as quoted in §14 above, constituted orders for the payment of sums of money due from Fu. 23.In his Decision, the judge set out a summary of the Mainland law experts’ opinions on whether the Rulings have the effect of ordering the payment of a sum of money. Accepting Fu’s submissions, the judge held that on a plain reading of the Rulings, there was no demand of payment against Fu. The part of the Rulings containing the “adjudication” did no more than describe Fu’s continuing obligation to pay – an obligation pronounced by the Beijing Court in its Execution Notice dated 14 January 2020. The judge focused on the nature of the order rather than whether it is legally enforceable. In any event, the Rulings will come into play in future enforcement only because they record the outcome of the enforcement steps taken thus far and the amount outstanding and therefore provide the starting point for any resumed enforcement, not because they contain an order for payment. Minsheng’s argument would mean that every time the Mainland court issues a ruling, in a form like the Rulings, after enforcement steps have resulted in partial payment of an existing order, the time limit of 2 years for registration prescribed by section 7 would start running again, which cannot be right. Accordingly, the judge held that the registration of the Rulings should be set aside on the ground that section 5(2)(e) was not satisfied.[7] D2. The parties’ arguments on appeal 24.On this appeal, on behalf of Minsheng, Mr Bernard Man SC attacks the judge’s decision along the following lines:
25.Opposing the appeal on behalf of Fu, Mr Douglas Lam SC submits:
D3. The nature of the proceedings, orders and rulings in the Mainland 26.Before delving into the contents and language of the Rulings, it is in our view necessary to step back and examine the relevant legal procedures undertaken in the Mainland in this case, so as to be able to understand in the proper context their nature and effect. 27.As explained in the expert evidence, what had been instituted by Minsheng in the Mainland was the procedure for the direct enforcement of notarised instruments creating debt obligations (公證債權文書) (in short, “notarised debt instruments”). A pilot system for enforcing notarised debt instruments through the courts was introduced in the early 1980s, pursuant to the promulgation of the Interim Regulations on Notarisation (公證暫行條例) and other provisional laws and regulations at that time. The system has been retained and put on a more permanent basis with the enactment of subsequent laws including the Notarisation Law of the PRC (公證法). Under this system, the enforcement of notarised debt instruments consists essentially of three stages, which are reflected in the procedures adopted in the present case. 28.If the parties wish to avail of this system and the instrument creating the primary obligations falls within a category that can be directly enforced in this way (such as guarantee contracts), the first stage is for the parties to specify in the instrument their agreement to submit to this system, and then procure the instrument to be notarised by a notary office.
29.The second stage is that when the debtor fails to perform or perform completely his obligations under the notarised debt instrument, the creditor may apply to the same notary office for an execution certificate.
30.The third stage is for the creditor to apply to a Mainland court for enforcement of the notarised debt instruments.
31.It can be seen, therefore, this is a system – not found in Hong Kong – in which the rights and liabilities of the parties are in effect determined by the notary office and thereafter enforced by the courts, and the 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. As described by Minsheng’s expert Prof Ji Gefei (紀格非), this system, which allows parties to seek the court’s enforcement of notarised debt instruments directly without going through litigation, is one of the diverse mechanisms of dispute resolution in the Mainland. D4. Whether the Rulings satisfy section 5(2)(e) 32.Examined against this background, it is in our view clear that the Rulings are not a judgment that orders the payment of a sum of money within the meaning of section 5(2)(e). The court proceedings in the Mainland were proceedings for the direct enforcement of the notarised debt instruments, i.e. the Guarantee Agreements, through the special system described above. Minsheng was not a judgment creditor in the Mainland; it sought enforcement not of any judgment but of the notarised debt obligations against Fu. The objects of enforcement (執行標的) 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. The determination or certificate of a notary office is obviously not a Mainland judgment within the meaning in the MJREO. “Mainland judgment” is defined in section 2 to mean “a judgment, ruling, conciliatory statement or order of payment in civil or commercial matters that is given by a designated court”. “Designated court” in turn means “a court in the Mainland which are specified in Schedule 1”. 33.A ruling (裁定書) issued by the Beijing Court – an Intermediate People’s Court – is within the definition of “Mainland judgment”. But 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. As Fu’s experts Prof Jiang Ping (江平) and Mr Zhu Zejun (朱澤俊) opine, the true “adjudication” made in the Rulings was that those enforcement proceedings were concluded. The next part in the Rulings, i.e. the final paragraph including the final sentence relied upon by Minsheng, was simply a description or recitation of the existing state of affairs, including the fact that Fu remained liable for performing his obligations, which would be the case irrespective of that paragraph. The final sentence is not a judgment or order which itself made money payable. In substance, after reciting that nothing had been recovered from Fu and that there was at that stage no asset for enforcement, the court ruled that this round of enforcement be terminated. As such, it strains the language to describe the Rulings as a judgment in favour of Minsheng and against Fu, and it is difficult to see how concepts such as “judgment creditor”[14] and “judgment debtor”[15] can arise from the Rulings. 34.It was also recorded in the Rulings that Minsheng had the right to apply to the court for resumption of enforcement. Clearly, however, any resumed enforcement would be enforcement of the notarised debt instruments pursuant to Art. 238 of the Civil Procedure Law and the 2018 Regulations, which was the nature of the enforcement proceedings up until the Rulings. To the extent the Rulings might loosely be said to be a basis for future enforcement, we agree with the judge that this means no more than that they recorded the state of enforcement thus far, so that in practical terms the court could in future pick up where it left off. We can see no basis in Mainland law to suggest that the Rulings themselves could be said to be the subject matter of future enforcement proceedings. 35.Section 5(2)(e) in essence requires that there is a judgment debt – an obligation arising from a judgment to pay a definite sum of money. Here the obligation to pay and the sums payable are determined by the Beijing Notary Office, not by a judgment of any Mainland court. Section 10 provides that if the judgment has been partly satisfied, then it shall only be registered in respect of the balance remaining payable. Here, if any sum is recovered from Fu, it is his obligations set out in the Execution Certificates, rather than a judgment, that would be partly satisfied. Section 12 provides that interest that becomes due “under the judgment” is to be included in the registration of the judgment. Here, interest accrues under the Execution Certificates pursuant to the stipulations set out therein, not under the Rulings. In short, all these provisions are not apt to apply to the Rulings. 36.We also agree with the judge that 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. 37.It follows that section 5(2)(e) is in our view not satisfied and the registration of the Rulings was correctly set aside by the judge on this ground. It is unnecessary to express any opinion on Mr Lam’s suggestion that what might satisfy section 5(2)(e) in the present case was instead the Execution Notice issued by the Beijing Court on 14 January 2020. That suggestion has its own problems which we need not delve into here. E. The No Chosen Court Ground 38.Though strictly unnecessary, we shall briefly deal with the two grounds raised by Fu’s respondent’s notice. 39.Under section 5(2)(a), to be registered the Mainland judgment must be given by a “chosen court”. “Chosen court” is defined in section 2 to mean, so far as relevant here, “the court or any of the courts specified in a choice of Mainland court agreement … as the court to determine a dispute to which the agreement applies”. A “choice of Mainland court agreement” is in turn defined in section 3(2) to mean:
40.The judge held that clause 12.2 of the Guarantee Agreements (quoted in §6 above) was the relevant choice of Mainland court agreement here. It was an agreement between Minsheng and Fu choosing the Mainland courts under Art. 238 of the Civil Procedure Law to deal with enforcement of Fu’s notarised debt obligations. The words “in connection with” in section 3(2) are wide enough to cover disputes over enforcement. 41.In general we do not disagree with the judge that the words “in connection with” in section 3(2) have a wide import. In the context of the present case, however, as there was no “dispute” actually raised during the enforcement stage, and since we have, in agreement with the judge, found that the Rulings were not operative orders requiring the payment of money and determined nothing in favour of Minsheng or against Fu, it seems to us artificial to debate whether, in relation to the Rulings, clause 12.2 of the Guarantee Agreements was the relevant choice of Mainland court agreement. It is unprofitable to engage in a distorted discussion of the requirement of a choice of Mainland court agreement based on a false assumption that the Rulings fulfil all the other requirements for registration. F. The Not Summoned to Appear Ground 42.Section 18(1) provides that the registration of the judgment shall be set aside if the court is satisfied of any one of the matters specified in paragraphs (a) to (k), including in particular:
43.Fu contended that since the Rulings were given without him appearing in the Beijing Court to defend the proceedings, and he was not summoned to appear according to the law of the Mainland, their registration must be set aside pursuant to section 18(1)(f)(i). He argued that the phrase “according to the law of the Mainland” in that provision refers to the mode of summoning, so that the condition in paragraph (i) is satisfied as long as the person was not summoned in a manner that accorded with Mainland law regardless of whether there was any requirement under Mainland law for him to be summoned. 44.The judge rejected this argument. He held that the phrase “according to the law of the Mainland” is concerned with whether the judgment debtor must by Mainland law be summoned to appear, and therefore held that section 18(1)(f)(i) is only applicable where Mainland law requires the judgment debtor to be summoned to appear but the requirement is not met. This did not apply to the present case because under the procedures for enforcing notarised debt instruments, there was no requirement under Mainland law to summon Fu to appear before the Beijing Court. 45.On appeal, Mr Lam SC maintains the argument below. He says that section 18(1)(f)(i) means that the registration must be set aside if (1) the judgment debtor did not appear in the original court to defend, and (2) either (a) he was not summoned to appear at all, or (b) he was summoned but not in a manner in accordance with Mainland law. This, he submits, is more consistent with the protection of the rights of a defendant under Hong Kong’s notions of fairness. The judge’s construction would leave entirely to Mainland law the question whether the judgment debtor has a right to be heard, so that if Mainland law does not require the judgment debtor to be summoned to appear, his non-appearance will not be a ground for setting aside registration. Mr Lam also submits that the Chinese version of section 18(1)(f)(i), which reads “沒有按照內地法律被傳召出庭”, supports his construction. 46.We do not accept Mr Lam’s submissions. The statute does not mention the mode of summoning, and we see no reason why overriding importance should be attached to the mode of summoning the defendant to appear. If notice to appear was in fact given to the defendant albeit not via a mode prescribed by Mainland law, but the defendant chose not to appear, we do not see why Hong Kong law should make it mandatory for the registration of the judgment to be set aside for that reason alone. Rather, section 18(1)(f)(i) seems to us to be concerned with ensuring that the defendant was in fact given such opportunity as he should have been afforded under Mainland law to contest the proceedings. 47.We do not agree that this would leave the right of the judgment debtor to be heard completely to Mainland law. It should be remembered that apart from paragraph (f), there are also paragraph (g) (“the judgment was obtained by fraud”) and paragraph (j) (“the enforcement of the judgment is contrary to public policy”) in section 18(1). As pointed out in the Explanatory Report on the 2005 Hague Convention on Choice of Court Agreements (by Trevor Hartley & Masato Dogauchi) at §190, these three grounds have considerable overlap amongst one another and “all relate, partly or wholly, to procedural fairness” which is “also known as … natural justice” in some jurisdictions. In proposing the Bill for the MJREO, the Administration had also explained that the defence of natural justice was encompassed by the public policy defence.[16] In the context of enforcement of arbitral awards in Hong Kong, it has been held that the public policy ground for refusing enforcement encompasses fundamental conceptions of morality and justice of the forum: see Hebei Import & Export Corp v Polytek Engineering Co Ltd (1999) 2 HKCFAR 111, 139. It follows, in our view, that there is no relevant lacuna in section 18. If Mainland law does not require the defendant to be summoned to appear, section 18(1)(f)(i) is inapplicable, but if the Hong Kong court is satisfied that there was as a result a fundamental breach of natural justice, the registration of the judgment could still be set aside under section 18(1)(j). 48.We do not think that the Chinese version of section 18(1)(f)(i) is more consistent with Mr Lam’s construction than the judge’s. 49.Accordingly we reject the Not Summoned to Appear Ground. G. Conclusion and Orders 50.For the above reasons, we dismiss Minsheng’s appeals. 51.Having regard to the outcome in the appeals and on the points raised by the respondent’s notice, we make an order nisi that Minsheng do pay Fu 75% of the costs of the appeals.
Mr Bernard Man SC & Mr James Man, instructed by Messrs. Anthony Siu & Co., for the Plaintiff (Appellant) Mr Douglas Lam SC, Mr Michael Lok & Ms Clara Wong, instructed by Messrs. Li & Partners, for the Defendant (Respondent) [1] [2024] HKCFI 590; [2024] 3 HKC 475. [2] In Chinese: “凡因本合同引起的或與本合同有關的任何爭議，各方當事人首先應協商或通過調解解决；協商或調解不成的，雙方均應提交起訴時債權人住所地有管轄權的人民法院裁决。” [3] In Chinese:
[4] In Chinese: “對公證機關依法賦予強制執行效力的債權文書，一方當事人不履行的，對方當事人可以向有管轄權的人民法院申請執行，受申請的人民法院應當執行。……” [5] In Chinese: “責令你方立即履行上述生效法律文書確定的義務，並承擔延遲履行期間的債務利息、申請執行費以及執行中實際支出的費用”. [6] (2020) 京03 執恢46 號之二. In Chinese it reads:
[7] Decision, §§39-50. [8] In Chinese:
[9] In Chinese:
[10] See Art. 5 of the Joint Notice of the Supreme People’s Court and the Ministry of Justice on Issues Concerning the Notarial Agencies Giving Effect of Compulsory Execution to Debt Instruments (《最高人民法院 司法部关于公证机关赋予强制执行效力的债权文书执行有关问题的联合通知》) and “Guiding Opinions on Notarization of Debt Instruments having Compulsory Execution Effect and Issuance of Execution Certificate” by the China Notary Association (中国公证协会《办理具有强制执行效力债权文书公证及出具执行证书的指导意见》). [11] In Chinese:
[12] In Chinese:
[13] In Chinese: “公证债权文书载明的民事权利义务关系与事实不符” and “经公证的债权文书具有法律规定的无效、可撤销等情形”. [14] Defined in section 2 to mean “the person in whose favour a Mainland judgment was given, and includes any person in whom the rights under the judgment have become vested by succession or assignment or otherwise”. [15] Defined in section 2 to mean “the person against whom a Mainland judgment was given, and includes any person against whom the judgment is enforceable under the law of the Mainland”. [16] Report of the Bills Committee on Mainland Judgments (Reciprocal Enforcement) Bill, LC Paper No. CB(2)1666/07-08, §§101-105. | ||||||||||||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under CACV 118/2024