On 27 Dec. 2019, China’s Supreme People’s Court (SPC) promulgated the latest judicial policy on the Belt and Road Initiative (BRI), the provisions of which on recognition and enforcement of foreign judgments deserve our attention.
The said judicial policy refers to the Several Opinions of the Supreme People’s Court on Further Providing Judicial Services and Safeguards for the Construction of the ‘Belt and Road’ by People’s Courts (关于人民法院进一步为“一带一路”建设提供司法服务和保障的若干意见) (“the 2019 Opinions”).
There are two paragraphs addressing recognition and enforcement of foreign judgments in the 2019 Opinions, namely:
(1) Para. 19: “take proactive measures to facilitate the recognition and enforcement of foreign civil and commercial judgments”;
(2) Para. 20: “adopt a judicial attitude of presumptive reciprocity to continuously promote the mutual recognition and enforcement of foreign judgments by international commercial courts”.
From para. 19, though we can’t see what specific effort the SPC will make in foreign judgment recognition and enforcement for the time being, at least it’s clear that the SPC supports local courts to recognize and enforce foreign judgments as much as possible in line with China’s current laws.
In terms of para. 20, we can see two breakthroughs: first, the expression “presumptive reciprocity” (推定互惠) appears in the official document for the very first time; second, it is proposed to recognize and enforce the judgments of foreign international commercial courts based on the principle of presumptive reciprocity.
These two breakthroughs will be analyzed in detail.
I. Breakthrough 1: “presumptive reciprocity”
The concept of “presumptive reciprocity” has not been clearly described in Chinese laws and regulations up to now.
However, Article VII of the Nanning Statement of the 2nd China-ASEAN Justice Forum in 2017, signed by the SPC, has some relevant descriptions, as follows:
If two countries have not been bound by any international treaty on mutual recognition and enforcement of foreign civil or commercial judgments, both countries may, subject to their domestic laws, presume the existence of their reciprocal relationship, when it comes to the judicial procedure of recognizing or enforcing such judgments made by courts of the other country, provided that the courts of the other country had not refused to recognize or enforce such judgments on the ground of lack of reciprocity.
In their article, Judges Zhang Yongjian (张勇健) and Yang Lei (杨蕾) of the SPC referred to the description in the Nanning Statement as “presumptive reciprocity”. According to the article: “[g]iven the limited number of countries having concluded such treaties with China, in the absence of relevant international treaties, Chinese courts can only determine whether to recognize and enforce foreign judgments or not based on the principle of reciprocity, as stipulated in the Civil Procedure Law (CPL) of China.” The reciprocity mentioned by authors can be classified into three categories: de facto reciprocity(事实互惠), de jure reciprocity (法律互惠), and presumptive reciprocity, and Chinese courts have long adopted the de facto reciprocity.
In China’s judicial practice, the de facto reciprocity exists only when “the foreign country has a precedent for the recognition of a Chinese judgment”, and the Chinese court may, in accordance with the principle of reciprocity, recognize the foreign judgment.
This means that if a foreign court refuses to recognize a Chinese judgment based on reciprocity, or on the fact that it has not handled any case of recognition and enforcement of Chinese judgments, then there is no reciprocity between China and that country, and China will not recognize the judgment of that country.
However, if Chinese courts adopt the presumptive reciprocity in the future, then China can recognize foreign judgments as long as relevant foreign courts do not refuse to recognize Chinese judgments based on reciprocity, even if they have not handled such cases.
To some extent, the presumptive reciprocity is a more liberal standard than the de jure reciprocity. Because, even if according to the law of the country where the judgment is rendered, a Chinese judgment may, under the same circumstances, not be recognized and enforced by the foreign court, as long as there is no precedent of denial in that country, the Chinese court may recognize the foreign judgment. In other words, Chinese courts do not need to ascertain foreign laws, but only consider whether foreign courts have refused to recognize Chinese judgments. However, it still remains unknown how the SPC will define the presumptive reciprocity.
In any event, if the presumptive reciprocity is indeed adopted by China, it will be a breakthrough for Chinese courts in this very field.
II. Breakthrough 2: “mutual recognition and enforcement of foreign judgments by international commercial courts”
In the aforesaid article, Judges Zhang and Yang also indicated "[t]he establishment of the China International Commercial Courts (CICC) has enabled China to further cooperation in the recognition and enforcement of judgments within the framework of SIFoCC, which the SPC has joined".
We believe that the description of “mutual recognition and enforcement of foreign judgments by international commercial courts” in the 2019 Opinions reflects the aforesaid proposal, i.e. the recognition and enforcement of judgments within the framework of SIFoCC.
We understand that the exact meaning of the description in the 2019 Opinions should be: for the judgments of foreign international commercial courts, the CICC will decide whether to recognize and enforce such judgments according to the principle of presumptive reciprocity.
This will surely be good news for international commercial courts in various countries.
We also believe that the SPC, by doing so, intends to promote the recognition and enforcement of the CICC judgments by foreign countries. Because it can be inferred that the SPC will encourage the Shanghai Pilot Free Trade Zone and Hainan Pilot Free Trade Zone to establish local international commercial courts respectively. According to Article 22 of the 2019 Opinions, it is proposed “to give full play to the modeling role set by the CICC to guide Shanghai Pilot Free Trade Zone, Hainan Pilot Free Trade Zone and relevant regions to establish international commercial dispute trial organizations”.
The SPC is likely to take the CICC and local international commercial courts in Shanghai and Hainan as “special regions” to open the door of recognition and enforcement of Chinese judgments.
III. Nature of the 2019 Opinions
Naturally, the next question is, will the 2019 Opinions have legal effect, and how will it work?
The 2019 Opinions is a judicial document of the Chinese court, and our previous post has introduced how will such documents work: “these opinions, though not legally binding, encourage judges to make decisions, or local courts to explore new mechanisms based on their attitudes. The SPC will sometimes formulate official judicial interpretation based on the judicial practice after these documents are published”.
As mentioned in another previous post, the 2019 Opinions is the second judicial policy document related to the Belt and Road Initiative (BRI) issued by the SPC, following the “Several Opinions on Providing Judicial Services and Safeguards for the Construction of the ‘Belt and Road’ by People’s Courts” (关于人民法院为“一带一路”建设提供司法服务和保障的若干意见) (“the 2015 Opinions”) in 2015.
The 2015 Opinions has a great impact on the work of Chinese courts in international litigation since then, including some breakthroughs in the recognition and enforcement of judgments. It is fair to believe that the 2019 Opinions will play a similar role.
Therefore, we can reasonably expect that the SPC will act accordingly pursuant to the provisions on recognition and enforcement of judgments in the 2019 Opinions.
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