XCHRX KONINLJIKE PHILIPS ELECTRONICS N.V. v. UTRAN TECHNOLOGY DEVELOPMENT LTD.

HCMP 4509/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 4509 OF 2000

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REASONS FOR DECISION

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1. This is an appeal from a decision of Master Jones, given on 15 June 2001, dismissing the defendant's application to have set aside the registration of a judgment of the District Court of The Hague, Netherlands dated 14 September 1999 against the defendant. It is not necessary for the purpose of this appeal to repeat the details of the plaintiff's claim against the defendant, save to say that the judgment was for a sum equivalent to HK$223,549.63, and it was ordered to be registered under the provisions of the Foreign Judgments (Reciprocal Enforcement) Ordinance, Cap.319 (the ordinance) by Master Barnes on 30 August 2000.

2. Before the Master, a number of grounds were argued to support the application to have the registration set aside. However, before me, Mr Dykes for the appellant has put forward only one, that the ordinance does not apply to this judgment as a result of the effect of Article 96 of the Basic Law which, he submits, makes the ordinance ineffective in relation to the Netherlands, no new treaty or arrangement having been made with the Netherlands since 1 July 1997, and there being no reciprocity in enforcement of judgments.

3. The ordinance itself provides that the power of extending its provisions to foreign countries, and varying or revoking such provisions, is exercisable by the Chief Executive in Council, and before 1 July 1997 the Governor in Council, in the following terms, under section 3:

"(1) The Governor in Council, if he is satisfied that, in the event of the benefits conferred by this Ordinance being extended to judgments given in the superior courts of any foreign country, substantial reciprocity of treatment will be assured as respects the enforcement in that foreign country of judgments given in the superior courts of the Colony, may by order direct

(a) that the provisions of this Ordinance shall extend to that foreign country; and

(b) that such courts of that foreign country as are specified in the order shall be deemed superior courts of that foreign country for the purposes of this Ordinance.

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(4) The Governor in Council may by a subsequent order vary or revoke any order previously made under this section."

4. Prior to 1 July 1997, the matter of recognition and enforcement of judgments was the subject of a treaty between the United Kingdom and the Netherlands made on 17 November 1967. It is the defendant's case that, not only did this treaty cease to have effect upon the resumption of sovereignty by the People's Republic of China, but that no new treaty nor arrangement has been made with the Netherlands since. Not only that, but the government of the Netherlands has indicated that, in the absence of an international agreement between them and the Hong Kong SAR, judgments of the courts here will be recognised, but will not be enforced and/or executed in the Netherlands. Yet, in the second schedule to Foreign Judgments (Reciprocal Enforcement) Order, made under the ordinance, the Kingdom of the Netherlands remains listed as one of those countries, the judgments of whose superior courts may be enforced in Hong Kong, and the Chief Executive in Council has taken no steps to revoke the order in respect of the Netherlands, nor has any immediate intention of so doing.

5. Article 96 of the Basic Law, on which the defendant bases its case, and which comes in Chapter IV: Political Structure, under Section 4: The Judiciary, reads:

"With the assistance or authorization of the Central People's Government, the Government of the Hong Kong Special Administrative Region may make appropriate arrangements with foreign states for reciprocal juridical assistance."

6. Mr Dykes contends that, the original treaty between the United Kingdom and the Netherlands having fallen away with the handover, no new treaty nor arrangement having been made pursuant to Article 96, and it having been confirmed that, at present at least, judgments of the superior courts of Hong Kong will be recognised only but not enforced or executed in the Netherlands, there is no reciprocity and the continued inclusion of the Netherlands is accordingly unconstitutional and it is within the power of the Court to declare the ordinance null and void in so far as it relates to the Netherlands.

7. However, Article 96 is clearly an empowering provision. It enables the Hong Kong SAR to enter into new reciprocal arrangements with foreign countries, as was recognised by Stock J in Chong Bing Keung, Peter v The Government of the United States and anor HCAL 127 of 1999. The only relevance of that article would be in respect of any fresh treaty negotiated with the Netherlands. I must consider the situation as it is now.

8. As to his argument that there is presently no treaty in force with the Netherlands in respect of reciprocal enforcement of judgments, I can find no fault with it. It is apparent from the stance of the Netherlands authorities that they no longer consider the treaty as to reciprocal enforcement of any effect in relation to Hong Kong. Equally, it is apparent from Article 96 that any new treaty or arrangement in respect of reciprocal juridical assistance, not restricted to enforcement of judgments, must be made with the assistance or authorization of the Central People's Government. It is also clear that Article 153, which provides for international agreements to which the People's Republic of China is not a party, but which were implemented in Hong Kong on 30 June 1997, to continue to be implemented, applies only to acts done under a treaty before 1 July 1997, which continue afterwards. The judgment of Bokhary PJ in Re Yung Kwan Lee & ors [1999] 4 HKC 281 confirmed that in finding that detention of persons under a treaty made in 1990 between Thailand and the United Kingdom in respect of prisoner transfers, did not become unlawful on the treaty falling away in 1997, but any future transfers would require fresh treaty arrangements. Similarly, Mr Dykes maintains, a judgment registered before 1 July 1997 could continue to be enforced, but any fresh application for enforcement of a judgment would require a new treaty or arrangement with the country from which the judgment emanates.

9. I regret that this is not an argument with which I find favour. The correct approach to this matter in my view is to return to the ordinance itself and the intentions of the Basic Law in relation to the continuing effect of legislation already in place. Article 8 provides for all legislation to be maintained, except in so far as any contravene the Basic Law. As I have found above, the only Article upon which reliance is placed by the defendant, Article 96, is an empowering provision in relation to new agreements, and cannot strike down legislation which is already in existence. This ordinance does not contravene any part of the Basic Law and therefore survived the handover.

10. The main argument advanced by Mr Dykes is as to the lack of reciprocity. I accept, as I must, that on the facts here, there can be no dispute that reciprocity is lacking as to enforcement, yet the inclusion of the Netherlands continues, and the Chief Executive has taken no steps to remove that country under the provisions of section 3(4). This is not an oversight, as correspondence with the Department of Justice's International Law section makes clear. The government is aware that a number of countries no longer offer reciprocal enforcement, but has decided to retain them as countries to which the ordinance applies, and whose judgments may be enforced here under its provisions. One of the reasons given for this is their participation, with the Hong Kong SAR, in ongoing negotiations on a draft Hague Convention on Jurisdiction and Effects of Foreign Judgments in Civil and Commercial Matters.

11. Section 3(1) of the ordinance gives a discretion to the Governor in Council, now the Chief Executive in Council, to extend its provisions to any foreign country if he is satisfied that substantial reciprocity of treatment will be assured in respect of Hong Kong judgments. There is no dispute that there was such reciprocity when the Netherlands was included, and the question now is whether the Chief Executive is required to revoke that inclusion once reciprocity is no longer assured. In considering this, it is instructive to look at the conditions under which he may order the inclusion of a country. The ordinance does not require that there must be reciprocity, only that he is satisfied substantial reciprocity will be assured. The use of the future rather than the present tense is also interesting, as it indicates that present reciprocity is not what he has to be satisfied of, but that there will be reciprocity, and I would add, at some time.

12. In short, the ordinance does not impose a duty upon the Chief Executive to ensure that reciprocity is assured, nor to revoke an order if reciprocity ceases. It gives a discretion only. It is, of course, only the revocation which concerns me here. From what I have said above, I find that there is no reason for any part of the ordinance to be struck down as being unconstitutional under the Basic Law, so it continues in force as it did before 1997, and enables enforcement of judgments from countries it applies to. The only question is whether the Chief Executive in Council should, in the absence of continuing reciprocity, have revoked that part relating to those countries, including the Netherlands, who no longer assure it, or are silent as to it.

13. I accept the submission of Mr Bartlett for the plaintiff that the wording of this ordinance gives both discretion and flexibility to the Chief Executive to allow the ordinance to continue in force in respect of any country pending either clarification of its position, or the formulation of further agreements as to enforcement of judgments or other reciprocal juridical assistance, which would have to comply with Article 96. That discretion not having been exercised to revoke any part of the ordinance, it follows that it continues in force in full.

14. I am asked by the defendant to set aside this registration under section 6(1)(a)(i) of the ordinance, that it is not a judgment to which the provisions of the ordinance apply or that it was registered in contravention of them. I am unable to do that. This is a valid ordinance which has been unaffected by the change of sovereignty and remains in force until the Chief Executive in Council decides to vary or revoke it or any part of it. The judgment falls within the class of judgments which may be registered and enforced, and the plaintiff is within its rights so to do. I accordingly dismiss this appeal, with an order nisi for costs in favour of the plaintiff to be taxed.