Judge Shen Hongyu (沈红雨) of China’s Supreme People’s Court (SPC), who participated in the policymaking concerning the recognition and enforcement of foreign civil and commercial judgments in China, focused on three issues: whether foreign courts have jurisdiction; whether foreign courts ensure that the parties are properly notified and enjoy the right to be heard; the reciprocal relationship between China and the country where the judgment is rendered.
This post is an introduction to the article titled “Research on Some Difficult Problems in Recognition and Enforcement of Foreign Civil and Commercial Judgments” (外国民商事判决承认和执行若干疑难问题研究) to reflect an SPC judge’s thoughts on the recognition and enforcement of foreign civil and commercial judgments. This article was published in “Journal of Law Application” (法律适用) (No. 5, 2018), the author of which is Shen Hongyu, Judge of the SPC’s 4th Civil Division. According to related reports, Judge Shen Hongyu was involved in the drafting of the SPC's “Judicial Interpretation on the Recognition and Enforcement of Foreign Civil and Commercial Judgments” (最高人民法院关于承认与执行外国法院民商事判决的司法解释).
1. The review model on foreign civil and commercial judgments in Chinese courts
The system of recognition and enforcement of foreign civil and commercial judgments has only been established in principle by the PRC Civil Procedure Law (CPL), which only requires that the review model be determined according to international treaties and reciprocal relationships.
According to the bilateral judicial assistance treaties in civil and commercial matters currently signed by China, the conditions for Chinese courts to recognize and enforce foreign judgments mainly include:
i. The foreign judgment is already legally effective or enforceable;
ii. The judgment-making foreign court is a court of competent jurisdiction;
iii. The losing party’s litigation rights are guaranteed;
iv. There are no inconsistent judgments;
v. The foreign judgment is not obtained through fraud.
It can thus be seen that Chinese courts only conduct formal review on foreign civil and commercial judgments, that is, the courts only adopt formal review based on the conditions for recognition required by the law, while do not examine in substance whether the fact-finding and application of laws in the foreign judgment are correct and reasonable.
2. Chinese courts review the competence of foreign courts.
The competence of judgment-making foreign courts is a prerequisite for Chinese courts to recognize and enforce the foreign judgments.
The author believes that Chinese courts should examine whether foreign courts have jurisdiction pursuant to Chinese jurisdiction rules, which include the following:
(1) Foreign civil and commercial judgments must not violate Chinese exclusive jurisdiction rules.
Exclusive jurisdiction means that Chinese courts have dominant and exclusive jurisdiction over certain foreign-related civil and commercial cases. Chinese laws do not recognize that other countries have jurisdiction over such cases.
In accordance with the CPL, these cases include:
i. Disputes arising from performance of contracts related to Sino-foreign equity joint ventures, Sino-foreign contractual joint ventures or Sino-foreign cooperation and development of natural resources, shall be subject to the jurisdiction of Chinese courts;
ii. Disputes arising from immovable property shall be subject to the jurisdiction of the people's court at the location of the immovable property;
iii. Disputes arising from harbor operations shall be subject to the jurisdiction of the people's court at the location of the harbor;
iv. Disputes over succession shall be subject to the jurisdiction of the people's court of the place where the decedent had his domicile upon his death, or where the principal part of his estate is located
(2) The choice of foreign court agreements between parties must comply with Chinese laws.
The consensual jurisdiction rules in Chinese law mainly include:
i. Parties to a dispute over a contract or other proprietary rights and interests may, through written agreement, choose the court in the location of the defendant’s domicile, where the contract is performed or signed, in the location of the plaintiff’s domicile, in the location of the subject matter, or in other place which has practical connections with the dispute to exercise jurisdiction.
ii. After the court accepts the case, if a party raises no objection to jurisdiction and responds to the action, the people's court accepting the case shall be deemed to have jurisdiction.
iii. Where a business operator uses standard-form terms to enter into a jurisdictional agreement with a consumer, but fails to take reasonable measures to bring the consumer's attention to it, the people’s court shall uphold the claim by the consumer claims that the jurisdictional agreement is invalid.
(3) Chinese courts have neither rendered judgments on the same dispute nor recognized and enforced the judgments on the same dispute rendered by courts of other countries and regions.
(4) The parties did not reach a written agreement for arbitration with respect to the same dispute.
3. Chinese courts review whether the judgment-making foreign court ensures due process and sufficiently guarantees the parties' litigation rights.
When examining whether the foreign civil and commercial judgment has guaranteed the parties’ rights to due process, Chinese courts mainly focus on the following five issues:
(1) On the legal criteria for determining whether the service procedure is legal
The author considers that Chinese courts should determine whether the service is legal according to the law of the country where the judgment is rendered.
On one hand, most of the bilateral treaties on judicial assistance signed by China provide that whether a proper notification is served is determined pursuant to the law of the country where the judgment is rendered.
On the other hand, for court judgments originating from other countries that do not have treaty relationships with China, Chinese courts should also determine whether the judgment is properly served according to the law of the country where the judgment is rendered. However, such service procedure should not go below the minimum standard for proper notification required by Chinese laws.
(2) Service to China must not violate the CPL’s compulsory provisions regarding service
i. Service within China should be conducted pursuant to treaties or through diplomatic channels. In addition, no foreign agency or individual may serve documents within the territory of China without the permission of Chinese competent authorities.
ii. When acceding to the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters (The Hague Service Convention), China explicitly opposed service by post.
(3) Whether the legal notification method should include service by public notice
The CPL stipulates that when it is not possible to serve upon exhaustion of all kinds of service methods, the service by public notice can be adopted. Therefore, the author believes that if the law of the country where the judgment is rendered allows the service by public notice and the conditions applied are basically similar to those of Chinese laws, then the Chinese court should confirm the legality of the service by public notice.
(4) Whether the foreign court's service should be accompanied by the corresponding translation based on the nationality of the losing defendant
The author believes that in terms of the service conducted in accordance with a bilateral judicial assistance treaty or the Hague Service Convention, it should be determined whether translation should be provided pursuant to the requirements of the international treaty. However, if the foreign court conducts the service within the territory of that foreign country, it shall be determined according to the laws of that country.
(5) Where even if the judgment-making foreign court has a flaw in the notification procedure, the parties have already appeared in court to respond to the case, which means that the parties have actually enjoyed the right of defense, the Chinese court cannot refuse to recognize and enforce the foreign judgment on the ground of inadequate notice.
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Lin Haibin also contributes to the post.
For more information on Recognition and Enforcement of Foreign Judgments in China, please feel free to download our CJO newsletter vol.1 no. 1.