Update: shareholder and joint-venture disputes with a Mainland China partner

Since the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645) came into force on 29 January 2024, the enforcement calculus for shareholder and joint-venture disputes across the Hong Kong – Mainland China corridor has shifted materially. Where an award or judgment lands – and how quickly it can be executed – is no longer an afterthought. It is the first question.

The central development is this: under Cap. 645, effective Mainland civil and commercial judgments are now registrable with the Court of First Instance in Hong Kong without the old requirement that the parties have chosen the originating court by exclusive agreement. The reciprocal position applies for Hong Kong judgments sought to be enforced in the Mainland. For any group with a joint-venture or minority-shareholder dispute involving a Mainland counterparty, that change redraws the asset-recovery map.

This briefing sets out what changed, who it affects, and the immediate steps counsel should be taking now.

What changed – and why it matters for joint-venture and shareholder disputes

The pre-2024 regime required that the parties have agreed in writing to the exclusive jurisdiction of the court that issued the judgment. That condition eliminated most commercial relationships from the mutual-enforcement route: joint-venture agreements drafted without a specific exclusive-jurisdiction clause were stranded. Cap. 645 replaces that test with a connection-based approach, which is wider in scope and more workable across a typical joint-venture structure.

The ordinance covers monetary and certain non-monetary judgments made on or after 29 January 2024. Insolvency-related matters, certain intellectual-property actions, succession and matrimonial proceedings remain outside its scope. A shareholder dispute anchored in contract or company law – the typical joint-venture falling-out – ordinarily falls within scope, though the facts of each matter require careful analysis.

For groups that seat their disputes in arbitration rather than court litigation, the position rests on a separate but complementary regime. The 1999 Arrangement for the mutual enforcement of arbitral awards between Hong Kong and the Mainland, supplemented in 2020, allows simultaneous enforcement applications in both systems since the 2021 amendment. Interim measures for Hong Kong-seated arbitrations before Mainland courts have been available since 1 October 2019. Together, these mechanisms mean the corridor has genuine teeth – provided the dispute is structured to use them.

The practical gap our desk sees most frequently is not in the law. It is in the dispute-resolution clause. A joint-venture agreement with a vague or defective arbitration clause, or one that selects an unrecognised seat, forfeits the benefit of both regimes. The enforceability question must be answered at the drafting stage, not after the relationship has broken down.

Who is affected – and what to do now

Any group that holds a minority or controlling interest in a Mainland joint-venture entity, or that operates through a sino-foreign joint venture (a collaborative enterprise structure governed by Mainland law), should treat this development as a trigger for a review.

The immediate actions are three:

• Review the dispute-resolution clause in every active joint-venture agreement for compatibility with the HKIAC Administered Arbitration Rules (or another recognised institutional regime) and confirm the seat. Under the current HKIAC rules, the default seat is Hong Kong where the parties have not agreed otherwise – that default preserves access to the interim-measures arrangement and the mutual enforcement regime for arbitral awards.
• Map the asset position. Under Cap. 645, the enforcement route runs to where the counterparty's assets sit. If the Mainland entity holds operating assets and the Hong Kong entity holds cash or receivables, the registration steps and the sequencing of applications differ. That map needs to be drawn before a dispute crystallises.
• If a dispute has already arisen, assess whether interim measures are still available and whether the enforcement window under the relevant arrangement has been engaged. Delays at this stage can be dispositive.

In our cross-border practice, the matters that stall most often are those where the parties reached a Hong Kong-seated award but failed to register it promptly in the Mainland, or where the asset map had not been run before the counterparty moved assets. Both errors are correctable at the planning stage and very difficult to remedy afterwards.

The sequence above describes the standard position. Your matter turns on the documents, the jurisdictions actually engaged, and the order of steps – which is where the route is won or lost. For a structured assessment of your joint-venture or shareholder dispute position across the Hong Kong – Mainland China corridor, write to us at info@lockhartyip.com.

For further detail on our disputes and arbitration practice, see Disputes & Arbitration at Lockhart & Yip. Guidance on clause drafting in a comparable cross-border context is available at Drafting an HKIAC Arbitration Clause for a UAE Counterparty. For a comparative analysis of shareholder and joint-venture disputes with a Singapore partner, see Shareholder and Joint-Venture Disputes: Singapore Partner.

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• Disputes Arbitration
• Drafting Hkiac Arbitration Clause Uae Counterparty Uae
• Shareholder Joint Venture Disputes Singapore Partner Singapore Analysis

This publication is general information and does not constitute legal advice. For advice on your situation, contact info@lockhartyip.com.