How Chinese Courts Ensure Impartiality in Enforcing Foreign Judgments: Ex Ante Internal Approval and Ex Post Filing- Breakthrough for Collecting Judgments in China Series (XI)

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Key takeaways:

The 2021 Conference Summary provides the rules on ex ante internal approval and ex post filings – a mechanism designed by China’s Supreme People’s Court (SPC) to ensure impartiality in enforcing foreign judgments.
The adoption of ex ante approval depends on whether the court examines the application based on treaty or reciprocity. Ex ante approval is a must for those based on reciprocity. By contrast, such approval is not required for those based on a pertinent treaty.
In ex ante approval mechanism, the local court shall, before making a ruling, report its handling opinions level by level for approval, and the SPC shall have a final say on the handling opinions.
Ex ante approval is believed to lead to an increase in the success rate of recognition and enforcement of foreign judgments.

China published a landmark judicial policy on the enforcement of foreign judgments in 2022, embarking on a new era for judgment collection in China.

The judicial policy is the “Conference Summary of the Symposium on Foreign-related Commercial and Maritime Trials of Courts Nationwide” (hereinafter the “2021 Conference Summary”, 全国法院涉外商事海事审判工作座谈会会议纪要) issued by the China’s Supreme People’s Court (SPC) on 31 Dec. 2021.

As part of the ‘Breakthrough for Collecting Judgments in China Series’, this post introduces Article 49 of the 2021 Conference Summary, which the rules on ex ante internal approval and ex post filings – a mechanism designed by China’s Supreme Court to ensure impartiality in enforcing foreign judgments.

Texts of the 2021 Conference Summary

Article 49 of the 2021 Conference Summary [Ex Ante Internal Approval and Ex Post Filing Mechanism]:

“People’s courts at all levels that close cases of recognition and enforcement of foreign judgments shall, within 15 days after making the ruling, report the cases level by level to the Supreme People’s Court for filing. The filing materials include the application submitted by the applicant, the foreign judgment and its Chinese translation, and the ruling made by the people’s court.

The people’s court shall, before making a ruling on a case examined in accordance with the principle of reciprocity, submit its proposed handling opinions to the high people’s court of the same jurisdiction for examination; if the high people’s court agrees with the proposed handling opinions, it shall submit its examination opinions to the SPC for examination and approval. No ruling shall be made until the SPC gives a reply. “

Interpretations

1. Ex ante internal approval mechanism

It is through the ex ante internal approval mechanism that the SPC limits the discretion of local courts in cases of recognition and enforcement of foreign judgments. Although this mechanism impairs, to some extent, the independence of local courts, it will in practice greatly improve the success rate of recognition and enforcement of foreign judgments.

(1) The adoption of ex ante approval depends on whether the court examines the application based on treaty or reciprocity

i. No ex ante approval required for applications based on pertinent treaties

If the country where the judgment is rendered has concluded relevant international and bilateral treaties with China, the local court accepting the application can examine the case directly based on such treaties.

At this point, the local court does not need to report to its next higher level court for approval before making a ruling.

ii. Ex ante approval required for applications based on reciprocity

If the country where the judgment is rendered has not concluded relevant international and bilateral treaties with China, the local court accepting the application will examine the case based on reciprocity.

At this point, the local court shall, before making a ruling, report its handling opinions level by level for approval, and the SPC shall have a final say on the handling opinions.

(2) How is ex ante approval carried out?

Specifically:

Step 1: the local court accepting the application shall, after deciding to make a ruling, request its next higher level court, i.e., the high people’s court of the same jurisdiction, to conduct a preliminary examination of its proposal. If the high people’s court disagrees with the proposal, it will require the local court to make revisions.

Step 2: if the proposal of the local court accepting the application is approved by the high people’s court, the proposal will be further reported to the next higher level court, i.e., the SPC. Therefore, the SPC has a final say to the proposal.

(3) Why does the approval procedure vary depending on the examination basis

In our view, the core reason is that the SPC is not fully confident in the ability of local courts to handle such cases, and is worried that some may unreasonably refuse to recognize and enforce foreign judgments.

i. Case examination based on treaties

Since the examination requirements are detailed in the treaties, local courts only need to conduct the examination according to such explicit requirements. In this situation, the SPC is relatively less worried about local courts making mistakes in such cases.

ii. Case examination based on reciprocity

The SPC is not fully confident in the ability of local courts in determining the reciprocal relationship between China and the country where the judgment is rendered. Well, we have to admit that this worry is reasonable to some extent.

Because if local courts want to make such a determination, they need the ability to ascertain and fully understand the law of the country where the judgment is rendered; which, however, is something that some local courts are not very capable of. As a result, they may not be able to fully understand the situation and make reasonable judgments accordingly.

(4) What does ex ante approval mean?

This, in most situations, means an increase in the success rate of recognition and enforcement of foreign judgments.

If the local courts need the approval of the SPC before making a ruling, this means that the view of the SPC will directly affect the outcome of each case.

So, what is the view of the SPC?

Judging from the judicial policies of the SPC since 2015 and the outcome of local courts hearing such cases under the guidance of these judicial policies, the SPC hopes that more foreign judgments can be recognized and enforced in China.

The latest evidence of this judgment is that the 2021 Conference Summary has further relaxed the criteria on reciprocity, so as to avoid foreign judgments being refused for recognition and enforcement in China due to the previous strict reciprocity criteria.

Therefore, we believe that the SPC’s ex ante approval intends to improve the success rate in recognition and enforcement of foreign judgments.

In fact, the SPC has also designed an internal report and review mechanism to ensure that foreign arbitral awards are treated reasonably by local Chinese courts. Although the said mechanism is slightly different from the ex ante approval, their purposes are basically the same.

2. Ex post filing of the SPC

For any case of recognition and enforcement of foreign judgments, whether it is examined in accordance with international and bilateral treaties or based on reciprocity, the local court shall, after making a ruling on recognition or non-recognition, report to the SPC for filing.

For cases examined based on international and bilateral treaties, local courts are not subject to the SPC’s ex ante approval mechanism, but they still need to report to the SPC for filing afterwards. This means that the SPC hopes to have a timely knowledge of local courts’ handling of such cases.

Why is the ex post filing required? We believe that:

From a macro perspective, the SPC hopes to have a comprehensive knowledge of the recognition and enforcement of foreign judgments in China, so as to facilitate itself to adjust China’s overall policy in this field.

From a micro perspective, the SPC also hopes to understand the problems encountered and solutions adopted by local courts in each case. If the SPC believes that the practices of the local courts are inappropriate, it may, through relevant mechanisms, make the local courts adopt more reasonable practices on these issues in the future.

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Photo by James Coleman on Unsplash

Contributors: Guodong Du 杜国栋 , Meng Yu 余萌

Recognizing and Enforcing Foreign Judgments in China

Litigation in China

Breakthrough for Collecting Judgments in China Series