Thus Spoke Chinese Judges on Foreign Judgments Recognition and Enforcement: Insights from Chinese Supreme Court Justices on 2023 Civil Procedure Law Amendment (4)

Key Takeaways:

In the field of recognition and enforcement of foreign judgments (REFJ), the 2023 Civil Procedure Law (CPL) improves the rules with an open and inclusive attitude, aiming to enhance the handling of REFJ cases with transparency and standardization and to promote cross-border circulation of judgments.
The 2023 CPL, in Art. 300, for the first time systematically lays out the grounds for reviewing the REFJ cases.
Article 301 of the 2023 CPL adopts a hybrid approach for determining indirect jurisdiction, combining two models proposed during the drafting process.
Article 303 of the 2023 CPL introduces a reconsideration procedure as a legal remedy in REFJ cases, underscoring the legislature's commitment to procedural justice and ensuring fairness in the handling of such cases.

On 1 Sept. 2023, the Fifth Amendment to the PRC Civil Procedure Law (the ‘2023 CPL’) was adopted by China’s top legislature, the National People’s Congress’s Standing Committee. The 2023 CPL has made significant modifications to international civil procedures. Among others, major changes can be found in rules on international civil jurisdiction, recognition and enforcement of foreign judgments, and cross-border service of process.

We have provided a Pocket Guide to acquaint CJO readers with these salient developments in the 2023 CPL.

In December 2023, Judge Shen Hongyu and Judge Guo Zaiyu from the Fourth Civil Division of China’s Supreme People’s Court(SPC) published an article “Commentary and Interpretation of the Revised Provisions of the Foreign-Related Part of the Civil Procedure Law” (《民事诉讼法》涉外编修改条款之述评与解读) in “China Law Review”(中国法律评论)(No. 6, 2023), sharing their insights on the developments in the 2023 CPL.

The purpose of this series is to present the views of the SPC Judges, Judge Shen and Judge Guo, on certain key aspects, including rules on international civil jurisdiction, rules on cross-border service of process and taking evidence, and rules on recognition and enforcement of foreign judgments.

As the SPC judges pointed out, the 2023 CPL adopts an open and inclusive attitude, improves the rules on REFJ, makes the handling of such cases by Chinese courts more transparent and standardized, raises the expectations of the parties, and promotes the cross-border circulation of civil and commercial judgments.

1. Refusal grounds (Art. 300)

The CPL, in Art. 300, for the first time systematically stipulates the grounds for reviewing the REFJ cases.

In the drafting process, reference was made to the contents of bilateral treaties on judicial assistance concluded between China and other countries on REFJ and the “2019 Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters” (the “2019 Hague Judgments Convention”). The CPL also incorporated most of the specific conditions for Chinese courts to review judgments and rulings rendered by foreign courts set forth in Art. 46 of the “Conference Summary of the Symposium on Foreign-related Commercial and Maritime Trials of Courts Nationwide” (全国法院涉外商事海事审判工作座谈会会议纪要).

Chinese courts shall examine whether any of the following five refusal grounds exist.

A) To examine indirect jurisdiction, i.e., determining the law of which country should be applied to assess whether the judgment-making foreign court has jurisdiction.

B) To examine whether the foreign court guarantees the due process rights of the parties, and whether the foreign court deprives the parties of the right to be legally summoned, the right to be heard, and the right to representation, or falls under any other circumstance that manifestly violates the statutory procedures.

C) To examine whether the judgment was obtained by fraud.

D) To examine whether the Chinese court has already rendered a judgment on the same dispute or has ruled to recognize and enforce a judgment from a third-country court, and whether recognizing and enforcing the foreign court’s judgment would conflict with the res judicata effect of Chinese courts’ judgments or rulings.

E) To examine whether the public policy clause may apply. The court shall evaluate whether the foreign court’s effective judgment or ruling violates the basic principles of Chinese law or national sovereignty, security, and public interests.

2. Indirect Jurisdiction (Art. 301)

The CPL for the first time explicitly sets out the criteria for determining indirect jurisdiction in Art. 301.

During the amendment drafting process, there were two proposals as to which country’s law should be applied to assess indirect jurisdiction.

The first option is proposed to stipulate that the foreign court shall be deemed not to have jurisdiction over the case if: (1) the foreign court does not have jurisdiction over the case in accordance with its law; (2) the provisions of this Law on exclusive jurisdiction are violated; (3) the exclusive choice of court agreement of the parties is violated; and (4) there is a valid arbitration agreement between the parties.

The second one proposes that, instead of having a separate article on indirect jurisdiction, subparagraph 1 of the Article should read: “Where, under the laws of the People’s Republic of China, a foreign court may be found to have no jurisdiction over a case”.

The first proposal is to use the law of the country where the judgment was rendered as the criterion. To avoid it being too absolute, it has been appropriately adjusted to reflect an open and inclusive judicial stance.

The second proposal, drawing on the practices of Germany and other continental European countries with civil law traditions, considers the law of the requested country as the criterion (“mirror image” model). In this way, the principles of exclusive jurisdiction and preclusion of litigation jurisdiction through arbitration can be embodied in the test of indirect jurisdiction, and foreign courts can be prevented from abusing jurisdiction through long-arm statutes.

During the drafting process, the criteria for assessing indirect jurisdiction in Art. 301 of the amended CPL was finally formulated based on the combination of the above two proposals. Instead of the model of applying only the law of the country where the judgment was rendered or the “mirror image” model, which is based only on the law of the requested country, a hybrid approach combining these two models is adopted.

3. Legal Remedy (Art. 303)

The CPL introduces, for the first time in Art. 303, legal remedies in REFJ cases.

A Chinese court’s decision on whether to recognize and enforce foreign judgments has a significant impact on the substantive rights and obligations of the parties involved. This amendment formally establishes a reconsideration procedure and remedy mechanism for such cases, demonstrating the emphasis and guarantee of the legislature on procedural justice.

Photo by Jéan Béller on Unsplash

Contributors: Meng Yu 余萌

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