Enforcement of UK Judgments in China

In March 2022, an English judgment in Spar Shipping v Grand China Logistics (2018) Hu 72 Xie Wai Ren No.1 was recognised and enforced by Shanghai Maritime Court, which is a remarkable progress on that an English monetary judgment has been enforced in China based on reciprocity. This article is to discuss about the crucial factors which can decide how the reciprocity principle has been adopted on the recognition and enforcement of  foreign judgements in Chinese legal system.

• The grounds for recognizing and enforcing judgments of foreign courts in civil and commercial matters

The “Civil Procedure Law of the People’s Republic of China (Revised in 2021)” (hereinafter referred to as the “Civil Procedure Law”) provides a framework for Chinese courts to recognize and enforce judgments of foreign courts. According to Article 289 of the Civil Procedure Law, any foreign judgment to be recognized and enforced by a Chinese court must meet the following four requirements:

1. The foreign judgment must have legal effect, i.e., it must be final and conclusive.
2. China must have signed an international treaty with the foreign country on the recognition and enforcement of court judgments, or there must be reciprocity between the two countries.
3. The recognition and enforcement of the judgment must not contravene the basic principles of Chinese law.
4. The recognition and enforcement of the judgment must not harm China’s national sovereignty, security, or public interests.

Since no international treaty on the recognition and enforcement of court judgments exists between China and the United Kingdom, in order to meet the second requirement, the recognition and enforcement of UK judgments by Chinese courts must be based on reciprocity between these two states.

On December 31, 2021, the Supreme People’s Court issued the “Minutes of the National Symposium on Foreign-related Commercial and Maritime Trial Work” (hereinafter referred to as the “Minutes”). Article 44 of the “Minutes” provides clear opinions on the criteria for determining reciprocity in Chinese courts when handling cases involving applications for recognition and enforcement of foreign court judgments and rulings. The criteria for reciprocity recognition by Chinese courts have shifted from “factual reciprocity” to “legal reciprocity,” marking a significant change. In this regard, the determination of reciprocity no longer requires foreign courts to have precedents of recognizing and enforcing judgments of Chinese courts. For example, according to the laws of the country where the foreign court is located, judgments of Chinese courts in civil and commercial matters can be recognized and enforced by that foreign court, which can be considered as reciprocity. In addition, the criteria also includes that if China has reached a mutual understanding or agreement on reciprocity with the country where the foreign court is located.

When determining whether reciprocity exists, consideration should also be given to whether foreign courts have previously refused to recognize and enforce judgments of Chinese courts in civil and commercial matters on the grounds of the absence of reciprocity, and whether it is necessary to exclude reciprocity.

• The grounds for refusing to recognize and enforce judgments of foreign courts in civil and commercial matters.

In accordance with Article 45 of the “Minutes”, “If the foreign court’s judgment includes damages that significantly exceed actual losses, the people’s court may refuse to recognize and enforce the excess portion.” In Chinese law, compensation for damages is primarily compensatory rather than punitive. Therefore, if it is the case, it violates the basic principles of the laws in China, and thus it cannot be fully recognized and enforced by Chinese courts.

Additionally, Article 46 of the “Minutes” lists four grounds for refusing to recognize and enforce foreign judgments as follows:

1. The foreign court lacks jurisdiction over the case according to the laws of the People’s Republic of China;
2. The respondent was not lawfully served or, even if lawfully served, did not receive a fair opportunity to present arguments or evidence, or the party without litigation capacity did not receive appropriate representation;
3. The judgment was obtained through fraudulent means;
4. The people’s court has already rendered a judgment on the same dispute, or has recognized and enforced a judgment or arbitration award from a third country on the same dispute.

• Conclusion

Overall, Chinese government has been promoting international judicial cooperation in the recognition and enforcement of foreign civil and commercial judgments. But obviously there is still a long way to go.

If you have any queries regarding the above, please feel free to call Michael Coyle / Yann Tang on 023 8023 5979 or book a Free Consultation now.