China Justice Observer

中国司法观察

Is Interim Relief Available When Enforcing Foreign Arbitral Awards/Judgments in China?

Sat, 18 Jan 2020
Categories: Insights
Contributors: Meng Yu 余萌

 

In terms of recognition and enforcement of foreign arbitral awards/judgments, is interim relief available for the parties concerned? What is the prevailing attitude of Chinese courts towards the application of interim measures?

i. Interim measures are NOT available before the filing of a lawsuit or the application for arbitration in a foreign country;

ii. Interim measures are NOT available during the foreign litigation or arbitration;

iii. Interim measures are NOT available after obtaining a foreign effective judgment or arbitral award but before the application for recognition and enforcement with a Chinese court.

iv. Interim measures are NOT available after the application for recognition and enforcement with a Chinese court but before the Chinese court rules for the applicant.

v. Interim measures are AVAILABLE, if the Chinese court rules to recognize and enforce the foreign judgment or arbitral award.

However, in the case of the foregoing i-iii, if there is a treaty or reciprocal relationship between China and that foreign country, it can be handled according to the treaty or the reciprocal relationship.

I. Case: Chinese court refuses to grant property preservation order

The applicant Korea Line Corporation (“Korea Line”) applied to the Haikou Maritime Court of China for recognition and enforcement of the arbitral award made by the arbitrator of the London Maritime Arbitrators Association against the respondent Hainan Airlines Group Limited (“Hainan Airlines”).

While Haikou Maritime Court was examining the foreign arbitral award (that is, before the ruling of recognizing the foreign arbitral award was made), Korea Line applied to the court for the preservation of Hainan Airlines’ property.

On 17 April 2017, Haikou Maritime Court made a civil ruling “[2016] Qiong 72 Xie Wai Ren No. 1” ([2016]琼72协外认1号), dismissing the application for property preservation.

Haikou Maritime Court held that:

(1) The ruling should be based on international treaties or reciprocity

When the court reviews the application of recognition and enforcement of the foreign arbitral award, it will fall within the scope of international judicial assistance if the party requests for property preservation. Therefore, the court should act based on international treaties concluded or acceded to by China, or the reciprocal relationship between China and the country making the arbitral award.

In this case, the court should act based on the international treaty to which China and the country making the arbitral award, i.e. the UK acceded, or the reciprocal relationship (if applicable) between China and the UK.

Upon examination, the court found that the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) to which China and the UK both acceded didn’t provide for the property preservation during the judicial review. In addition, China and the UK have not signed relevant international treaties or established reciprocity therefor.

(2) The ruling should be based on China’s domestic laws

China’s existing laws do not specifically provide for property preservation during the examination of recognition and enforcement of foreign arbitral awards. The preservation stipulated in China’s Civil Procedure Law (CPL) applies only to litigation and arbitration in China, not to those in foreign countries, nor to international judicial assistance.[1]

In summary, Haikou Maritime Court held that there was no legal basis for Korea Line’s request of preserving Hainan Airlines’ property during the court’s examination for the arbitral award. Therefore, Haikou Maritime Court refused to grant the property reservation order.

II. Judge’s interpretation: interim measures for the enforcement of foreign arbitral awards in China

Judge Wu Yonglin (吴永林), presiding judge of the collegial panel in this case, wrote an article about his interpretation thereto. [2] The article was posted on the website (http://hsfy.hicourt.gov.cn/) of the Haikou Maritime Court and its revised version was published in Beijing Arbitration (北京仲裁) (No. 1, 2019)3[2]

Judge Wu believes that before the application for and during the process of the foreign arbitration, as well as before the Chinese court recognizes the foreign arbitral award, the Chinese court is not obliged to take preservation measures for the parties concerned in China.

In China’s civil litigation, property preservation includes pre-litigation/arbitration preservation, preservation during litigation/arbitration, and preservation during enforcement.

According to the CPL, pre-arbitration preservation and preservation during arbitration are only applicable to domestic arbitration (including foreign-related arbitration), excluding the application of property preservation before the foreign arbitration process or during the process thereof.

Specifically speaking, in the absence of a judicial assistance treaty provided therefor, the Chinese court is not obliged to take preservation measures against the property of the Chinese party in order to guarantee the enforcement of foreign arbitral awards (and judgments) which have not yet been recognized by China.

III. My comments: Applying by analogy the sad rule to interim measures for the enforcement of foreign judgments in China

Judge Wu Yonglin’s opinion also applies by analogy to foreign litigation.

According to the CPL, preservation before and during the litigation are only applicable to China’s domestic lawsuits. There are no provisions in Chinese law that Chinese courts should take preservation measures in China by the application of the parties concerned made before or during the foreign litigation.

Besides, according to Chinese laws, the Chinese court is not obliged to take preservation measures in China for the parties concerned before the recognition of a foreign arbitral award/judgment. The rationale behind this is that foreign judgments and arbitral awards are not effective in China until they are recognized by Chinese courts.

Therefore, before and during the foreign litigation, as well as before the foreign judgment is recognized by the Chinese court, if the parties concerned apply for property preservation to the Chinese court, the Chinese court will probably not support such application, absent international judicial assistance treaties or established reciprocal relationship between China and the relevant countries.

 


[1] 中国《民事诉讼法》
第一百条第一款:人民法院对于可能因当事人一方的行为或者其他原因,使判决难以执行或者造成当事人其他损害的案件,根据对方当事人的申请,可以裁定对其财产进行保全、责令其作出一定行为或者禁止其作出一定行为;当事人没有提出申请的,人民法院在必要时也可以裁定采取保全措施。
第一百零一条第一款:利害关系人因情况紧急,不立即申请保全将会使其合法权益受到难以弥补的损害的,可以在提起诉讼或者申请仲裁前向被保全财产所在地、被申请人住所地或者对案件有管辖权的人民法院申请采取保全措施。申请人应当提供担保,不提供担保的,裁定驳回申请。
第二百七十二条 当事人申请采取保全的,中华人民共和国的涉外仲裁机构应当将当事人的申请,提交被申请人住所地或者财产所在地的中级人民法院裁定。

[2] 《大韩海运株式会社与海航集团有限公司财产保全案——申请承认与执行外国仲裁裁决司法审查期间财产保全的处理》,http://www.hkhsfy.gov.cn/showdata.aspx?id=5069&classid=40&subclassid=82

[3] 吴永林.承认与执行外国仲裁裁决司法审查期间财产保全问题研究——对大韩海运株式会社申请承认与执行伦敦海事仲裁员协会裁决案的批判性思考[J].北京仲裁,2019(01):46-59.

 

Cover Photo by Florian Klauer(https://unsplash.com/@florianklauer) on Unsplash

 

Contributors: Meng Yu 余萌

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