北京合眾思壯時空物聯科技有限公司 v. MULTIPLE SURVEYORS & CONSULTANTS LTD AND ANOTHER

HCRE 21/2024

[2025] HKCFI 257

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

RECIPROCAL ENFORCEMENT CASE NO 21 OF 2024

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D E C I S I O N

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1.  In these proceedings, the plaintiff seeks to enforce a judgment issued by the Fourth Intermediate People’s Court of Beijing Municipality (“the PRC Court”) obtained in Suit No. 1031 of 2021 on 30 October 2023 (“the PRC Judgment”) against the 1^st and 2^nd defendants. Under the PRC Judgment, the defendants are ordered to pay to the plaintiff a sum of US$740,505.

2.  The plaintiff took out an Originating Summons dated 19 April 2024 for its application for the registration of the PRC Judgment as a judgment in Hong Kong. The Originating Summons was dealt with by Master Hui on 13 June 2024 and the Master made an order (“the Registration Order”) that the PRC Judgment be registered pursuant to the Mainland Judgments (Reciprocal Enforcement) Ordinance, Cap 597 (“the MJREO”).

3.  By summons dated 30 July 2024 (“the Summons”), the defendants apply to set aside the Registration Order. The Summons is supported by the affirmations filed by the 2^nd defendant and the plaintiff has duly filed its affidavit to oppose this application.

4.  The following factual background facts taken from the skeleton submissions for the plaintiff is not in dispute and I adopt the same in this Decision as follows.

5.  The plaintiff is a wholly-owned subsidiary of Beijing Unistrong Science & Technology Co. Ltd (“Unistrong”), a company incorporated in the PRC and listed on the Shenzhen Stock Exchange.

6.  On 22 November 2016, Unistrong entered into a memorandum of understanding (“the MOU”) with the defendants. The MOU was written in the English language. Pursuant to the MOU, the parties agreed on the following matters:

(1)  Unistrong shall transfer a sum of US$740,505 (“the Sum”) to the bank account of the 1^st defendant.

(2)  The defendants shall in exchange make arrangement for the issuance of a bank guarantee as performance security (“the Performance Security”) on behalf of Unistrong, to be issued by the Hongkong and Shanghai Banking Corporation Limited for the Sum and in favour of Pakistan Civil Aviation Authority (“the PCAA”).

(3)  Upon the return of the Performance Security by the PCAA, the defendants shall return the full amount of the Performance Security in the Sum to Unistrong within three working days thereafter.

(4)  The MOU shall be governed by and construed in accordance with the laws of the PRC.

(5)  The MOU was signed at Beijing, and the courts of Beijing shall have exclusive jurisdiction to adjudicate upon any dispute or matter arising from or under the provisions of the MOU.

(6)  Pursuant to the MOU, on 25 and 28 November 2016 respectively, Unistrong caused the two sums of US$255,000 and US$485,505, amounting to the Sum, to be transferred to the 1^st defendant. The 1^st defendant thereafter arranged for the issuance of the Performance Security in favour of the PCAA.

(7)  On 30 September 2019, the PCAA returned the Performance Security to the 1^st defendant. Notwithstanding the provisions in the MOU, the defendants failed to return the Sum to Unistrong.

(8)  On 1 September 2021. Unistrong assigned all its claim against the defendants to the plaintiff. On 22 September 2021, the plaintiff commenced proceedings against the defendants at the PRC Court to recover the Sum.

(9)  On 30 October 2023, the PRC Court delivered the PRC Judgment and ordered that:

(1)  The defendants shall, within 10 days from the PRC Judgment taking effect (ie by 11 December 2023), return to the plaintiff the Sum;

(2)  The defendants shall, within 10 days from the PRC Judgment taking effect, pay the plaintiff overdue liquidated damages from 11 October 2019 (being the day when the Sum is due to be returned to Unistrong pursuant to the MOU) to the date of actual payment; and

(3)  If the defendants fail to pay the plaintiff in accordance with the above, the defendants shall pay additional interest accrued during the default period.

7.  Mr Leung for the defendants confirms that the defendants rely on two grounds only. The first ground is that the enforcement of the PRC Judgment is contrary to public policy in Hong Kong. He refers to section 18(1)(j) of the MJREO. The second ground is that there was a breach of natural justice involved in the procurement of the PRC Judgment.

8.  Mr Leung takes this court through the terms of the MOU and points out that there is no consideration provided to the defendants to perform their obligations under the MOU, and hence, the MOU is unenforceable in Hong Kong law because of lack of consideration. He submits that the PRC Court wrongfully upheld the validity of the MOU despite the lack of consideration, and to enforce the PRC Judgment, it would be tantamount to upholding an agreement not supported by consideration, which is contrary to Hong Kong law, and hence, contrary to public policy in Hong Kong.

9.  Section 18 of the MJREO provides specific grounds upon which the court may set aside the registration of registered judgments, and indeed, section 18(1)(j) provides that where the enforcement of the judgment is contrary to public policy, the court may set aside the registration of the registered judgment.

10.  I am far from convinced that the enforcement of the PRC Judgment is contrary to public policy. As rightly pointed out by Ms Chau, for the plaintiff, Mr Leung has conflated Hong Kong law and public policy in Hong Kong.

11.  The MOU is expressly provided to be governed by the PRC law and, naturally, the PRC Court applied PRC law to resolve the dispute between the parties. The PRC Court cannot be faulted in its decision not to have considered Hong Kong law in their consideration of the validity of the MOU. If the PRC Judgment is above criticism, I fail to see how the enforcement of the PRC Judgment in Hong Kong could be said to be contrary to public policy in Hong Kong.

12.  Ms Chau helpfully draws the attention of this court to the decision of the Court of Final Appeal in Hebei Import & Export Corporation v Polytek Engineering Company Limited [1999] 2 HKC 205. Public policy should be taken to mean only those elements of a state’s own public policy which were so fundamental to its notions of justice that its court felt obliged to apply the same not only to purely internal matters but also matters with a foreign element by which other states were affected. Pertinently, it was further held that contrary to the public policy of that country means contrary to the fundamental conceptions of morality and justice.

13.  It is not a requirement that to enforce a foreign judgment in Hong Kong, the foreign judgment must also be compatible with the Hong Kong law. I am unable to understand how the enforcement of the PRC Judgment decided in accordance with PRC law would be contrary to public policy in Hong Kong. So the first ground must fail.

14.  Now I turn to the second ground. Also, as rightly pointed out by Ms Chau, breach of natural justice is not one of the specified grounds under section 18(1) of the MJREO. It must be dismissed.

15.  Mr Leung basically criticises that the PRC Court did not question the parties on the amount of remuneration to which the defendants were entitled to, and hence, the defendants are truly aggrieved. He points out that if a foreign judgment was obtained in breach of natural justice, it would also be contrary to public policy of a domestic court to enforce such a foreign judgment. He argues that the PRC Judgment is tainted by procedural unfairness and defects and, therefore, it should not be enforced in Hong Kong.

16.  I am not convinced by his submission at all. In the first place, I am unwilling to reopen the issues canvassed in the PRC Court. This is not the function of this court. I am also unable to discern any breach of natural justice in the PRC Judgment. I fail to share the view of the defendants that there was procedural unfairness. It is remarkable that the defendants expressly confirmed with the PRC Court that they would not pursue their counterclaim. In the premises, this ground has no merit and falls to be rejected.

17.  For the foregoing reasons, I find no substance in the two grounds advanced on behalf of the defendants in this application and I have no hesitation in dismissing the Summons.

18.  Costs should follow the event under usual circumstances and I have received a statement of costs from the plaintiff.

(Discussion re costs)

19.  I would only adopt a broad-brush approach in my summary assessment of the plaintiff’s costs. The plaintiff asks for HK$142,322. After some deductions, I come up with an amount around HK$100,000. I believe a just and fair amount would be HK$100,000. So I order that costs be to plaintiff, summarily assessed at HK$100,000.