Update: a supply or manufacturing contract with a Mainland China party

Cross-border supply and manufacturing arrangements between Hong Kong-anchored groups and Mainland China counterparties remain one of the most structurally demanding contract types in the corridor. The commercial stakes are clear: production continuity, payment security and the ability to enforce. What shifts less visibly – and more dangerously – is the governing-law and forum clause, and what happens when a dispute arises on day two of operations.

A supply or manufacturing contract with a Mainland China party requires careful attention to the governing instrument, the choice of law and forum, and the enforcement route available under the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645), which came into force on 29 January 2024. Groups that drafted contracts before that date – and have not revisited the forum clause – are operating with a mechanism that may no longer reflect the available routes.

This briefing covers: the recurring structural trigger; who it affects across the Hong Kong–Mainland corridor; and the immediate action.

What the structural trigger is – and why it keeps recurring

The most common trigger our desk sees is not a change in the law itself. It is a contract drafted before a procedural or regime change, left unchanged, and then tested under the new environment.

The Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645) replaced an earlier choice-of-court regime. Under the earlier rules, enforcement of a Mainland court judgment in Hong Kong required an exclusive jurisdiction clause pointing to a designated Mainland court. That requirement has been removed. The current rules apply a connection-based test. A Hong Kong court can now register an effective Mainland judgment in a broader range of circumstances – including judgments on monetary and non-monetary claims.

What does this mean for a supply or manufacturing contract signed before 29 January 2024? The forum clause may have been drafted to satisfy the old exclusive-jurisdiction standard. It may now do neither job well: it may not be the most protective formulation under the new regime, and it may not point to arbitration, which remains the most portable enforcement route where a Mainland counterparty's assets extend beyond Hong Kong.

Parties should also note the scope exclusions. The Ordinance does not apply to every judgment type. Insolvency-related matters, certain intellectual-property disputes and certain arbitration-related matters fall outside the registration mechanism. A supply or manufacturing contract that blends payment, IP licensing and production-process terms may straddle that boundary. The characterisation matters for enforcement.

Who is affected across the corridor

The position affects any group that sources, manufactures or supplies through a Mainland China counterparty under a contract anchored in Hong Kong or governed by a law other than Mainland law. That means:

• Hong Kong-incorporated or Hong Kong-registered foreign enterprises with Mainland production arrangements;
• offshore holding structures (BVI, Cayman) whose operating subsidiaries sit in the Mainland and whose supply contracts are executed at the Hong Kong level;
• international groups that use Hong Kong as the contracting hub for Greater China supply chains, with payment flows running through Hong Kong accounts;
• in-house teams managing contract renewal cycles in 2025 or 2026 who have not updated governing-law and forum clauses since the regime change.

The practical risk is concentrated at the forum-clause level. A clause that reads "disputes shall be submitted to the courts of [Mainland city]" without more may now have a different enforcement implication than it did when the contract was signed. Similarly, a clause selecting Hong Kong courts without an arbitration fall-back may limit the enforcement options against Mainland assets.

In our cross-border practice, we regularly see international groups assume that a generic "courts of Hong Kong" clause in a supply contract gives them a clean enforcement route against a Mainland counterparty. The position is more textured than that. The connection-based test under Cap. 645, the exclusions from its scope, and the parallel arbitration route each require separate assessment against the specific contract.

The immediate action

For any group with an active or renewed supply or manufacturing contract with a Mainland counterparty, three steps are immediate.

First, review the governing-law clause and the forum clause. Identify whether the contract predates 29 January 2024 and whether the forum clause was structured to satisfy the old exclusive-jurisdiction standard. If so, assess whether it remains fit for purpose under the current regime.

Second, consider the arbitration option explicitly. Where assets span both sides of the boundary, an arbitration clause seated in Hong Kong gives access to the Arrangement on Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings, in effect since 1 October 2019. This allows a party to a Hong Kong-seated arbitration to seek interim measures from Mainland courts before or during the arbitration. That option is not available under a court-only forum clause.

Third, map the enforcement route before the dispute arises. Cap. 645 opens a registration mechanism before the Court of First Instance for effective Mainland judgments. Parties should assess whether their specific contract type – and the claims most likely to arise from it – falls within the Ordinance's scope or within an exclusion. The answer affects both the forum choice and the contract drafting.

For a structured read of your supply or manufacturing contract position across the Hong Kong–Mainland corridor, contact us at info@lockhartyip.com.

Our corporate counsel practice handles cross-border contract review, forum and governing-law structuring, and coordination with locally licensed firms on Mainland-facing matters. For a comparative view of supply contract structuring across different counterparty jurisdictions, see our analysis of UAE-party supply arrangements and our guide to Cayman Islands-party contracts.

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