China: The Hubei Gezhouba Sanlian Case: Enforcement of a Chinese Monetary Judgment in the United States

Last Updated: 25 March 2012
Article by Ariel Ye and Ge Yan


With the exception of judgments dealing with divorce and custodial issues, it is rare for those issued by Chinese courts to be enforced in the United States. Therefore, it was a significant development when, in the matter of Hubei Gezhouba Sanlian Industrial Co., Ltd. et. al. v. Robinson Helicopter Co., Inc., 06-01798 (C.D. Cal 2009) (the "Sanlian Case"), United States District Court Judge Florence-Marie Cooper decided to enforce a monetary judgment of almost US $6.5 million awarded by the Higher People's Court of Hubei Province, China, (the "Hubei Higher Court") against Robinson Helicopter Company, an aircraft manufacturer based in Torrance, California ("Robinson").

On 29 March 2011, the judgment was affirmed by circuit Judges Rymer, Callahan and Ikuta of the United States Court of Appeals for the Ninth Circuit. This is the first ever United States appellate ruling that affirms enforcement of a PRC court judgment in the United States.

Case History

Hubei Gezhouba Sanlian Industrial Co., Ltd. ("Gezhouba") was the owner of a model R-44 helicopter manufactured by Robinson. Hubei Pinghu Cruise Co., Ltd. ("Pinghu") was the owner of a river cruise boat from which the helicopter had been operating. On Tuesday, March 22, 1994 the helicopter crashed into the Yangtze River, causing the death of three people. The crash was the result of a manufacturing defect in the particular Robinson R-44 model and in March 1995, the two Chinese companies sued Robinson in the Superior Court of the State of California claiming negligence, strict liability and breach of implied warranty. Robinson demurred, arguing that the Peoples' Republic of China had an independent judiciary which followed due process of law and that a Chinese court would have jurisdiction over the case. The California Superior Court agreed, and the suit was dismissed on the grounds that China was a more convenient forum. However, as a condition for dismissal of the California lawsuit, Robinson agreed to toll the statute of limitations and to abide by any judgment rendered by a Chinese court.

In 2001, after an attempt to submit the case to arbitration in the United States failed, the Chinese companies decided to commence civil proceedings against Robinson in the Hubei Higher Court in Hubei. A three-judge panel was formed, and among other things, it properly notified Robinson of the date set down for trial, March 25, 2004, in accordance with the

provisions of the PRC Civil Procedure Law 1) 2. Robinson failed to appear on that date but the trial continued. After assessing the evidence submitted in due course by the plaintiffs, the three-judge panel found that the fatal helicopter crash had indeed been the result of manufacturing defects in the Robinson R-44. Finally, in December 2004, the Hubei Higher Court issued a judgment awarding the equivalent of approximately US $ 6.5 million in favour of Gezhouba and Pinghu (Hubei Gezhouba Sanlian Industrial Co., Ltd., v. Robinson Helicopter Company Inc., Case No (2001) E-Min-Si-Chu-1), (the "PRC Judgment"). and Article 5(a) of the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters ("Hague Convention"

Since the PRC Judgment was rendered by a court of first instance, Robinson had an automatic right of appeal under the PRC Civil Procedure Law which, as a party without domicile in the PRC, it had to exercise within 30 days of service. However, Robinson did not exercise its right of appeal in the PRC courts, and as a consequence the PRC Judgment became final and enforceable under PRC law. Because Robinson was a party without domicile in the PRC, the plaintiffs were entitled, in principle, in accordance with the PRC Civil Procedure Law, to apply for recognition and enforcement of the PRC Judgment directly to the foreign court with jurisdiction over Robinson's assets.

There is no treaty and there are no reciprocal arrangements between the U.S. and China with respect to the mutual recognition and enforcement of judgments issued by each other's courts in civil and commercial matters. However, in the U.S., the general principles of comity and recognition of foreign money judgments have been codified in the Uniform Foreign Money Judgments

Recognition Act ("UFM-JRA") 3 and the state of California has adopted the provisions of the UFM-JRA in its Code of Civil Procedure.

Notwithstanding this, the plaintiffs' initial efforts to obtain recognition of the PRC Judgment in the U.S. were rejected. In enforcement proceedings before the United States District Court for Central District of California, Robinson argued, and presiding Judge Cooper agreed, that the PRC Judgment was void because California Law rather than PRC Law applied to the statute of limitations, which had expired before the Chinese proceedings were commenced. However, the plaintiffs appealed Judge Cooper's decision to the U.S. Court of Appeals for the Ninth Circuit which ruled that the Chinese proceedings were not time-barred. This was so, according to the Court of Appeals, because Robinson's agreement to toll the statute of limitations in the original California Superior Court proceedings remained in place. The Court of Appeals also found that recognition and enforcement of the PRC judgment would not offend California's public policy against stale claims.

The Enforcement Decision

On remand to the California Central District Court, Judge Cooper again heard argument from the parties concerning recognition and enforcement of the PRC Judgment. At the bench trial on June 2 and 3 2009, Robinson argued, contrary to its original position, that the Chinese legal system does not provide impartial tribunals or procedures compatible with the requirements of due process. However, finding no evidence that the Hubei Higher Court's decision lacked either impartiality or due process, Judge Cooper ruled that the PRC Judgment was "final, conclusive and enforceable under the laws of the People's Republic of China" deciding on August 12, 2009 that "Plaintiffs are hereby entitled to the issuance of a domestic judgment in this action in the amount of the PRC Judgment, with interest calculated as set forth in the PRC Judgment."

The Appeal Decision

Robinson appealed Judge Cooper's decision to a panel of three judges of the United States Court of Appeals for the Ninth Circuit. Following a hearing on 9 March 2011 the appeal court ruled that "Robinson Helicopter is estopped from arguing that the judgment of the Higher People's Court of Hubei Province in the People's Republic of China (PRC) in favour of Hubei Gezhouba Sanlian Industrial and Hubei Pinghu Cruise Company (collectively "Hubei") is not "enforceable where rendered" under California's Uniform Foreign-Money Judgments Recognition Act" and declined to consider a new argument raised by Robinson that the PRC statute of limitations had expired before the Chinese parties had filed their claim with the Hubei Higher Court in Hubei. Thus, on 29 March 2011, the United States Court of Appeals for the Ninth Circuit issued its ruling which affirmed Judge Cooper's decision to enforce the US $ 6.5 million PRC Judgment.

Legal Analysis

The UFM-JRA has been adopted as law by the majority of the U.S. states. Under the UFM-JRA, a "Foreign Money Judgment" means any judgment rendered in a jurisdiction outside the U.S. and its territories which has the effect of granting or refusing the recovery of a sum of money. Under the law of states which have adopted the UFM-JRA, a Foreign Money Judgment is subject to a limited-scope inquiry before it can be recognized and enforced as a domestic money judgment. A defendant challenging recognition of a Foreign Money Judgment may not retry issues of liability or damages, but is instead limited to the due-process type defenses enumerated in the UFM-JRA.

As a mandatory condition, a Foreign Money Judgment must be final, conclusive and enforceable under the law of the jurisdiction in which it was rendered. In addition, a U.S. court applying the UFM-JRA must be satisfied that the foreign court a) has rendered its judgment under a system that provides impartial tribunals or procedures compatible with the requirements of due process; (b) has personal jurisdiction over the defendant; and (c) has subject matter jurisdiction over the controversy.

A U.S. court applying the UFM-JRA may also take into consideration any of the following circumstances: (a) that the defendant received sufficient notice of the proceedings; (b) that the judgment was not obtained by fraud; (c) that the judgment is not repugnant to the enforcing court's public policy; (d) that the judgment is not in conflict with another final and conclusive judgment; (e) that the judgment is not inconsistent with an alternative dispute resolution (ADR) agreement between the parties; (f) where jurisdiction is based on personal service alone, that the foreign tribunal was not a seriously inconvenient forum; and (g) whether or not the foreign court reciprocally recognizes judgments from the U.S. However, it is not necessary for a U.S. court to consider any of these discretionary factors when making a decision to enforce a foreign monetary judgment under the UFM-JRA.

In the Sanlian case, the California District Court found that the PRC judgment involved the recovery of a sum of money, the PRC judgment itself was final, conclusive, and enforceable under the laws of the PRC, and service was proper. As California's law adopting the UFM-JRA applied to the case, and no evidence was put forward that any of the mandatory conditions for recognition had not been fulfilled, the plaintiffs were entitled to a domestic judgment. The uniform principles governing recognition of Foreign Money Judgments in the U.S. do not discriminate against any particular jurisdiction of origin. As a result, Chinese litigants can rely on U.S. legal authority pertaining to the recognition of Foreign Money Judgments originating from any country in order to determine whether a judgment from China will be granted domestic recognition and enforcement under a given set of facts.

While cases under the UFM-JRA abound, cases specifically addressing recognition of Foreign Money Judgments entered in China are still relatively few. The decision of the United States Court of Appeals for the Ninth Circuit is the first ever appellate ruling which affirms the enforcement a PRC court judgment in the United States. More importantly, the decision can be cited as a precedent by other Chinese companies seeking enforcement of domestic money judgments in the United States.


If future Chinese monetary judgments otherwise meet the mandatory requirements of the UFM-JRA, there is very little to distinguish them under U.S. law from Foreign Money Judgments entered in jurisdictions with well-established reputations for impartiality and due process such as the courts of England, Australia or Canada, as demonstrated in the Sanlian Case. Litigants domiciled in the U.S. but defending claims in the PRC courts should take note of the California District Court's recent findings and the appellate ruling of the United States Court of Appeals for the Ninth Circuit.

Ms. Ariel Ye is the head of King & Wood's cross-border dispute resolution department and Ms. Ge Yan is a partner in King & Wood's cross-border dispute resolution department. Ms. Ye and Ms. Ge were PRC counsel for the plaintiff Hubei Gezhouba Sanlian Industrial Co., Ltd. in this case, part of a team of lawyers which achieved the important milestone of obtaining recognition of a Chinese monetary judgment in a United States court and in 2011 they were part of the team which obtained the first ever United States appellate ruling affirming enforcement of a PRC court judgment.

(This article was originally written in Chinese, the English version is a translation)


[1] The PRC Civil Procedure Law promulgated and effective as of April 9, 1991 is applicable to the Case.
[2] Hague Convention was opened for signing as from November 15, 1965 and was effective as from February 10, 1969. Both the US and the PRC have signed the Hague Convention, which is applicable to service of documents from a member country to another member country.
[3] UFMJRA was formulated by the US National Conference of Commissioners on Uniform State Laws in 1962. Each US state can decide whether to adopt UFMJRA according to its own conditions. Up to July 2008, UFMJRA has been adopted by 32 states and territories of the US.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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