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The Third Time! Chinese Court Recognizes U.S. Judgment

Sun, 10 Jul 2022
Categories: Insights

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In 2020, Ningbo Intermediate People’s Court of China ruled in Wen v. Huang et al. (2018) to recognize and enforce a US judgment, marking the third time that American monetary judgments have been enforced in China.

Key takeaways:

  • In Wen v. Huang et al. (2018) Zhe 02 Xie Wai Ren No.6, Ningbo Intermediate People’s Court of China ruled in 2022 to recognize and enforce a judgment rendered by Stanislaus County Superior Court in California, USA, marking the third time that American monetary judgments have been enforced in China.
  • The Ningbo Court held that, based on the evidence submitted by the Applicant, a reciprocal relationship existed between China and the United States for the mutual recognition and enforcement of civil judgments.
  • The Ningbo court recognized and enforced the US Judgment in full, but dismissed the applicant’s claim for overdue interest.

So far, China has recognized and enforced U.S. court judgments three times respectively in 2017, 2018, and 2020.

On 23 Sept. 2020, Ningbo Intermediate People’s Court of Zhejiang Province (the “Ningbo Court”) issued a civil ruling, [2018] Zhe 02 Xie Wai Ren No.6 ((2018)浙02协外认6号) to recognize and enforce the judgment rendered by Stanislaus County Superior Court in California, USA (“Stanislaus County Superior Court”) (See Wen v. Huang et al. (2018) Zhe 02 Xie Wai Ren No.6).

It marks the third time for the Chinese court to recognize and enforce the U.S. monetary judgment.

Prior to this case, the Chinese court recognized and enforced a U.S. monetary judgment for the first time in June 2017, in the case No. (2015) E Wu Han Zhong Min Shang Wai Chu Zi No. 00026 ([2015] 鄂武汉中民商外初字第00026号) (hereinafter referred to as the “Wuhan Case”).

In September 2018, the Chinese court recognized and enforced a U.S. monetary judgment for the second time in the case No. (2017) Hu 01 Xie Wai Ren No.16 ([2017]沪01协外认16号) (hereinafter referred to as the “Shanghai case”).

For a detailed discussion, please read an earlier post “Chinese Courts Recognized and Enforced a U.S. Judgment for the Second Time“.

As we concluded in another earlier post “Debt Collections in China: Enforce Your US Judgment in China and You Will Have a Surprise!”, now American civil/commercial judgments are highly likely to be recognized and enforced in China. In this post, the case of Wen v. Huang et al. further supports this conclusion.

I. Case overview

The Applicant is Wen Xiaochuan, a Chinese citizen.

There are two Respondents, Huang Kefeng (a Chinese citizen) and WBV International LLC (a company incorporated in California, USA). Huang is the sole shareholder of the California company.

The Applicant applied to the Ningbo Court for recognition and enforcement of the judgment No. 2018177 rendered by the Stanislaus County Superior Court (the “U.S. Judgment”).

On 23 Sept. 2020, the Ningbo Court issued a civil ruling, (2018) Zhe 02 Xie Wai Ren No.6, to recognize and enforce the U.S. Judgment.

II. Case facts

In January 2013, the Respondent, Huang Kefeng, invested in and established WBV International LLC in California, US, and the Applicant assisted the Respondent in the investment. Afterwards, the Applicant and its holding company, WalGroup, LLC, had disputes with the Respondents over the investment and house leasing.

On 28 Dec. 2015, the Applicant and its holding company filed a lawsuit against the Respondents in the Stanislaus County Superior Court.

The Respondents did not make any defense after receiving the writ of summons, and statement of claim, etc.

On 14 Jan. 2016, the Applicant applied to the court for trial in absentia, entrusting the lawyers to serve the application documents on the respondents, and issued a proof of service.

On 23 Aug. 2016, the Stanislaus County Superior Court entered a default judgment, No. 2018177, ordering the Respondents to indemnify the Applicant in the total amount of USD 155,748.

Thereafter, the Applicant applied to Ningbo Intermediate People’s Court of Zhejiang Province for recognition and enforcement of the U.S. Judgment.

On 7 Dec. 2018, the Ningbo Court accepted the application.

On 23 Sept. 2020, the Ningbo Court made a ruling recognizing and enforcing the U.S. Judgment.

III. Court views

The Ningbo Court held that:

1. Jurisdiction

The domicile and property of the Respondent, Huang Kefeng, are both in Ningbo, Zhejiang Province, so the Ningbo Court has jurisdiction over this case.

2. Procedural requirements

The Applicant submitted a certified copy of the US Judgment with the Chinese translation when filing the application for recognition and enforcement with the Ningbo Court. Therefore, the application meets the procedural requirements for the recognition and enforcement of foreign judgments.

3. Reciprocity

Because the United States and China have not concluded any international treaties related to mutual recognition and enforcement of civil judgments, such an application shall be examined on the basis of the principle of reciprocity.

The Ningbo Court held that, based on the evidence submitted by the Applicant, the United States has a precedent of recognition and enforcement of civil judgments rendered by Chinese courts, and thus it can be concluded that a reciprocal relationship existed between China and the United States for the mutual recognition and enforcement of civil judgments.

4. Public Interests

The U.S. Judgment was made with respect to the contractual relationship between the Applicant and the Respondents concerning the equity investment and lease warranty. Therefore, the Ningbo court concluded that the U.S. Judgment is not against the basic principles of Chinese laws, national sovereignty, security or social and public interests.

5. Finality

The U.S. judgment is clearly documented as a default judgment.

In addition, after the U.S. judgment was rendered, the applicant’s attorney in the United States filed a notice of judgment registration on 26 Aug. 2016.

6. Overdue interest

The Applicant asked the Ningbo Court to order the Respondents to pay the overdue interest for the period from 24 Aug. 2016, the day after the U.S. Judgment was rendered, to the end of judgment enforcement by the Chinese court.

The Ningbo Court held that the US Judgment could be recognized and enforced, but the claim for overdue interest did not fall within the scope of the application for recognition and enforcement of the foreign court judgment, so such claim was dismissed.

IV. Our comments

This case marks the third time for the Chinese court to recognize and enforce the U.S. court judgment. The previous two cases are as follows:

1. Wuhan case

On 30 June 2017, the Wuhan Intermediate People’s Court in Hubei Province of China made a ruling on case No. (2015) E Wu Han Zhong Min Shang Wai Chu Zi No. 00026([2015] 鄂武汉中民商外初字第00026号). This ruling recognized a U.S. civil judgment from the Los Angeles Superior Court, California (No. EC062608).

For the judge opinions in this case, see an earlier post, “Thus Spoke the Chinese Judge Who First Recognized and Enforced a US Court Judgment.”

3. Shanghai case

On 12 September 2018, Shanghai First Intermediate People’s Court made the ruling (2017) Hu 01 Xie Wai Ren No.16([2017]沪01协外认16号) which recognized the judgment rendered by the eastern division of the United States district court for the Northern District of Illinois. See the post “The Door Is Open: Chinese Courts Recognized and Enforced a U.S. Judgment for the Second Time”.

In our article “Can Foreign Judgments Be Enforced in China?”, we divide the countries/regions into four groups. For the countries and regions in Groups 1 – 3, it is very likely to have their judgments recognized and enforced by Chinese courts.

The US is in Group 2, which means the judgments rendered in the US have already been recognized in China based on reciprocity.

The Chinese court’s permission for recognition and enforcement of the U.S. judgment for the third time in this case proves our foregoing opinions.

 

 
 
Photo by NISCHAL MALLA on Unsplash

 

 

Contributors: Guodong Du 杜国栋 , Meng Yu 余萌

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