China: Case Alert: Chinese Court Recognized And Enforced A Civil Judgment Rendered By US Court

Last Updated: 10 January 2018
Article by John Liu, Minli Tang and Huijie Wu

Facts

The petitioner and respondent made an Agreement on Share Transfer (the Agreement) in the United States on September 22, 2013. Pursuant to the Agreement, the petitioner paid the respondent the full amount of contract price, US$12,500, on September 22 and 25, 2013 respectively. The respondent's whereabouts have been unknown since receipt of the payment.

The petitioner (the plaintiff) brought the case before Los Angeles Superior Court in California on July 17, 2014, on the ground of contractual fraud (case No. EC062608).

After failing to serve the legal documents by post, Los Angeles Superior Court made an order on service by publication. The declarations were published on San Gabriel Forum four times successively on January 15, January 22, January 29 and February 5, 2015. The court rendered a default judgment (the Judgment) in favor of the plaintiff (the petitioner) since the defendant (the respondent) failed to appear and file an answer before the deadline.

Main issues

  1. Does the Judgment rendered by Los Angeles Superior Court have legal effect within the jurisdiction of China?
  2. Can Chinese court enforce the Judgment?

Reasoning

1. The Judgment has legal effect within the jurisdiction of China.

Based on the evidence submitted by the petitioner, it shown that there were precedents in which the United States recognized and enforced civil judgments rendered by Chinese courts. Therefore, although China and the States have not concluded or jointly accessed any treaty on the recognition and enforcement of foreign civil judgments, there has been reciprocal relationship between China and the States on this issues.

The recognition of the Judgment neither contradicts the basic principles of Chinese law nor violates state sovereignty, security or public interest of China

Although the Judgment was made by default, the subpoena had been properly served on the respondent.

This case involved only judicial assistance and there was no need to examine the substantial rights and obligations of both parties.

2. The Chinese court can enforce the Judgment.

The party against whom the enforcement was sought has property in Wuhan city. As the forum domicilii and forum rei sitae, Wuhan Intermediate People's Court has jurisdiction over this case.

Ruling

Wuhan Intermediate People's Court recognized the Judgment (no. EC062608) and issued a writ of execution to enforce it.

Comments

The subject case is the first US civil judgment which recognized and enforced by Chinese court.

Under current Chinese law, the recognition and enforcement of a judgment rendered by a foreign court shall be based on international treaty (e.g. judicial assistance treaty) entered by the foreign country and China or according to reciprocity principle.

Till now, there are 37 countries which have entered judicial assistance treaties in civil matter with China, namely Bosnia and Herzegovina, Algeria, Peru, Brazil, UAE, Kuwait, South Korea, North Korea, Argentina, Lithuania, Tunisia, Laos, Viet Nam, Uzbekistan, Singapore, Tajikistan, Kyrgyzstan, Morocco, Hungary, Cyprus, Greece, Egypt, Thailand, Bulgaria, Kazakhstan, Belarus, Cuba, Ukraine, Turkey, Russia, Spain, Italy, Romania, Mongolia, Belgium, Poland, and France.

For those countries which have not concluded judicial assistance treaties with China, reciprocity will apply. There is no legal definition of reciprocity under Chinese law, however, based on practice and precedents, it can be inferred that Chinese courts usually recognize and enforce a foreign judgment from a country which has already enforced a Chinese judgment (like the subject case).

Therefore, the precondition for Chinese court to enforce a foreign judgment is that the foreign country has previously already enforced a Chinese judgment. However, on 16th June 2015, Several Opinions of the Supreme People's Court on Providing Judicial Services and Safeguards by People's Courts for the Promotion of the "Belt and Road" Initiative (the Opinions) came into force. Under article 6 of the Opinions, it stipulated that for the purpose of strengthening judicial assistance among "Belt and Road" countries, if a "Belt and Road" country promises to enter judicial assistance treaty with China, Chinese court can provide judicial assistance first in order to promote reciprocity relationship with that country.

Besides, it is noteworthy that on 12th Sept 2017, China signed the Hague Convention on the Choice of Court Agreements (the Convention). This may facilitate the recognition and enforcement of foreign judgments in China. Nevertheless, the execution of the Convention in China is still subject to official ratification by the Chinese government. Please stay tuned for further information on this issue.

Related Provisions under Current Chinese Law

Civil Procedural Law of the People's Republic of China

Article 281

If an effective judgment or written order made by a foreign court requires recognition and enforcement by the people's court of the People's Republic of China, the party may directly apply for recognition and enforcement to the intermediate people's court of the People's Republic of China which has jurisdiction. The foreign court may also, in accordance with the provisions of the international treaties concluded or acceded to by both the foreign country and the People's Republic of China or with the principle of reciprocity, request recognition and enforcement by the people's court.

Article 282

In the case of an application or request for recognition and enforcement of an effective judgment or written order issued by a foreign court, the people's court shall, after examining it in accordance with the international treaty concluded or acceded to by the People's Republic of China or with the principle of reciprocity and arriving at the conclusion that it neither contradicts the basic principles of the law of the People's Republic of China nor violates state sovereignty, security or public interest of the country, recognize the validity of the judgment or written order, and if required, issue a writ of execution to enforce it in accordance with the relevant provisions of this Law. If the judgment or written order contradicts the basic principles of the law of the People's Republic of China or violates the state sovereignty, security or public interest of China, the people's court shall not recognize or enforce it.

Interpretations of the Supreme People's Court on Application of the "Civil Procedural Law of the People's Republic of China

Article 543.1

A petitioner applying to a People's Court for recognition and enforcement of a judgment or written order of a foreign court, which has come into legal effect, shall submit a petition form, and attach the original copy of the judgment or written order of the foreign court which has come into legal effect, or a certified error-free duplicate copy and Chinese translation thereof. Where the judgment or written order of a foreign court is made in the absence of a litigant, the petitioner shall also submit proof of proper service, except where the judgment or ruling has specifically stated so.

Article 546.1

Where a judgment or written order of a foreign court which has come into legal effect or a foreign arbitral award requires enforcement by a court in the People's Republic of China, the litigants shall first apply to a People's Court for recognition. Upon examination, where the People's Court confirms recognition, the judgment or written order or arbitral award shall be enforced pursuant to the provisions of Part 3 of the Civil Procedural Law.

Originally published by Lexology, September 13 2017

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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