Just read a post over at the China Law Prof Blog on what Professor Clarke rightly calls “an interesting case in which a Chinese court (the Nanjing Intermediate-Level People’s Court) enforced a Singapore court judgment.”
Professor Clarke then goes on to explain how Chinese courts “may enforce foreign judgments that are not fundamentally offensive in some way under two circumstances: (1) there is a treaty with the foreign country calling for mutual enforcement of judgments; or (2) on the basis of reciprocity, which has been interpreted to mean that the foreign country has a practice of enforcing Chinese judgments, or at least has done so before.” This has been the law in China for quite some time.
Clarke then states that there is no Singapore-China treaty calling for mutual recognition and enforcement of judgments, which is my understanding as well. But — and this is the kicker — the Nanjing court nonetheless decided to recognize and enforce the Singapore judgment because in 2014 a Singapore court had enforced a Chinese judgment. And get this: the judgment the Chinese court enforced was a default judgment against a Chinese corporate defendant. I say “get this” because courts everywhere are far more reluctant to enforce default judgments (typically given out because the defendant failed to appear or defend) than to enforce a judgment on the merits of the case.
Professor Clarke does not know if this is the first foreign judgment Chinese courts have enforced on the basis of reciprocity and I too do not know whether that is the case. Professor Clarke does add though that he thinks “it’s fair to say that such cases are pretty thin on the ground.” To which I will add, yes that is for sure.
Now here’s the million (actually probably billions) dollar question this case raises: does this mean China will start enforcing U.S. judgments? I mean U.S. courts have enforced Chinese judgments (my law firm haas secured such an enforcement order) so does this mean Chinese courts might do so if the case is right? Professor Clarke has this to say on this question:
But if I were trying to enforce a US judgment in a Chinese court, I’d certainly bring it up. To the best of my knowledge, Chinese courts have not yet enforced a contested US money judgment. (I’m attaching those qualifications because they may, for example, have recognized a US divorce decree for some purpose.)
Just a few months ago, in Enforcing US Judgments in China. Not Yet, I said “no way”:
At least once a month, one of our China lawyers will get a call or an email from a U.S. lawyer seeking our help in taking a U.S. judgment (usually a default judgment) to China to enforce. The thinking of the U.S. lawyer is that all we need do is go to a China court and ask it to convert the U.S. judgment into a Chinese judgment and then send out the Chinese equivalent of a sheriff to the Chinese company and start seizing its assets until it pays.
As we have consistently written, nope, nope, nope.
I then went on to talk about how my firm’s China lawyers are often called upon to conduct research on this very issue (oftentimes for lawyers or companies wanting to prove to their insurance company or to a court that it would be futile for them to pursue enforcement of their United States judgment in China) and I pulled a large section from the latest of our memoranda on that topic, and I do so again below.
Article 282 of the PRC Civil Procedure Law, requires all of the following conditions be met for enforcement of a foreign judgment to be recognized in China:
The foreign judgment has taken legal effect in the jurisdiction in which it was rendered.
The country where the deciding court is located has a treaty with China or is a signatory to an international treaty to which China is also a signatory or there is reciprocity between the countries.
The foreign judgment does not violate any basic principles of Chinese law, national sovereignty, security, or social public interest.
Though China is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, it is not a signatory to any international treaty on the recognition and enforcement of foreign court judgments. There is no bilateral treaty between China and the U.S. on recognition and enforcement of foreign court judgments. There also is no bilateral treaty between the two countries on civil or commercial judicial assistance.
Even judgments from countries that have an enforcement treaty with China, are oftentimes not enforced in China. For example, China and Australia entered into an agreement on reciprocal encouragement and protection of investments in 1988 that mandates both countries promulgate laws recognizing and enforcing each other’s judgments. But in response to a 2007 request by the Guangdong Province High People’s Court for instructions regarding an application by an Australian plaintiff for recognition and enforcement of an Australian court judgment, the Supreme People’s Court of China (the “SPC”) rejected enforcement since there was no international treaty to which China was a signatory nor any treaty between China and Australia on mutual recognition and enforcement of court judgments, nor any reciprocity between the two countries, the application should be rejected.
Since China is not a signatory to any international treaty on recognition and enforcement of foreign court judgments nor is there any treaty between China and the U.S. regarding judgment enforcement, the only possible way to get a U.S. judgment enforced in China would be if there were reciprocity between the two countries, but there isn’t.
In considering the question of reciprocity, a Chinese court will consider whether there is any precedent indicating reciprocity. In other words, the court will seek to determine whether there are any prior cases where a U.S. court recognized or enforced a Chinese court’s decision. If there are no examples of a U.S. court having enforced a Chinese judgment, the Chinese court will almost certainly rule against enforcing the U.S. judgment because the reciprocityIs Now the Time to Take Your U.S. Judgment to China?