First Application made pursuant to the Cooperation Mechanism
On 14 May 2021, the Supreme People's Court (“SPC”) and the Government of the HKSAR entered into a new arrangement for the mutual recognition and assistance of insolvency proceedings between the courts of the Mainland and the HKSAR (“Cooperation Mechanism”). The Cooperation Mechanism comprises (i) a record of meeting between the Courts of the Mainland and the HKSAR, (ii) an Opinion issued by the SPC ( “SPC Opinion”) and (iii) a Practical Guide issued by the HKSAR government (“HK Practical Guide”). See our earlier post here.
On 20 July 2021, Harris J heard and allowed the first application under the Cooperation Mechanism in Re The Joint and Several Liquidators of Samson Paper Co Ltd [2021] HKCFI 2151.
The application was made by the liquidators of a Hong Kong incorporated company (Samson Paper Co), which had substantial assets located principally in Shenzhen. The Liquidator applied to the Hong Kong Court to issue a letter of request to the Shenzhen Intermediate People’s Court seeking its assistance in aid of the company’s liquidation.
Harris J had no difficulty in finding that the requirements of the Cooperation Mechanism were satisfied and that an order was appropriate. His Lordship gave practical guidance regarding the procedure for Hong Kong liquidators making an application under the new arrangement:
- Article 6 of the SPC Opinion requires a Hong Kong liquidator applying for recognition and assistance in the Mainland to obtain from the Hong Kong Court two documents, (i) a letter of request, and (ii) a judgment determining that a letter of request should be issued.
- The letter of request should be issued in simplified Chinese and addressed to the relevant Intermediate People’s Court. It would likely expedite the process if applicants prepared the draft letter of request in both English and simplified Chinese.
- It also is desirable for applicants to prepare a translation of the Hong Kong Court’s judgment in simplified Chinese to be submitted to the relevant Mainland Court together with their application.
For reference, the simplified Chinese and English versions of the letter of request to be issued in this case are appended to Harris J’s decision.
Comment
Although the Hong Kong Courts have previously granted recognition of Mainland insolvencies under the common law, a Mainland court has yet to grant recognition of a Hong Kong insolvency. Accordingly, should the Shenzhen Intermediate People’s Court grant recognition and assistance, this will also be the first occasion on which a Mainland Court has formally recognised and assisted a Hong Kong appointed liquidator. This marks a significant development in cross-border cooperation in insolvency matters between Hong Kong and the Mainland.