July 5, 2007
Enforcement of US judgments in China
An occasional topic of discussion on the Chinalaw list is whether US (or other foreign) judgments can be enforced in China. I finally decided to investigate this relatively systematically a while ago and came up with this short research note. The basic finding is that there is no record of the kind of judgments people are most interested in - contested judgments in cases involving money - being enforced.
I recently put the question again to members of the Chinalaw list to see if there was any new information about US judgments being enforced in China that met the above conditions; apparently the answer is no. But I did get a note from Graeme Johnston of Herbert Smith about a very interesting German case, which I reproduce below with his kind permission:
Whilst only indirectly relevant to the question of enforcement of US judgments in China, there is an interesting recent German judgment (Beschluss vom 18.5.2006, Az. 20 Sch 13/04, IHR 2007) which could conceivably open the door for a comity-minded Chinese court to grant enforcement of German judgments on the basis of reciprocity.
The issue before the Berlin court in that case concerned an application for enforcement of an award rendered by an arbitral tribunal with a seat in Shanghai in circumstances where a Chinese court had previously refused to enforce the arbitral award in China on the ground that the relevant arbitration agreement was invalid. The Berlin court denied enforcement of the award under the New York Convention on the ground that the Chinese judgment as to invalidity ought to be recognised and given effect in Germany. In considering the requirement of reciprocity under German civil procedure law, the Berlin court found that there was no evidence either way as to whether Chinese courts will enforce German judgments. Since the principle of reciprocity also exists in Chinese civil procedure law, the Berlin court considered that Chinese courts cannot be expected to first recognise German judgments. Nevertheless, the German court ruled that the Chinese judgment should be recognised and that enforcement of the arbitral award should therefore be denied.
The answer would have been different (according to a previous German Supreme Court decision) if the Berlin court had been presented with evidence of non-enforcement of a German judgment by a Chinese court. The Berlin court's decision is liable to the critique that the court apparently did not make significant inquiries into enforcement of foreign judgments in China (no expert evidence and no inquiries through official channels). Instead, it simply relied on some authors' views that such enforcement was possible without apparently considering other authors' more sceptical views.
However, it does open up the possibility for a German judgment creditor wishing to enforce in China to rely on the fact that a German court has now recognised a Chinese judgment, thereby removing any real justification for the Chinese court to hold that there is no reciprocity between Germany and China.
As regards US and other foreign judgments rendered in jurisdictions which lack a bilateral enforcement treaty with China, I rather doubt that the Chinese courts are ready to adopt such a generous approach to the meaning of the Chinese law concept of reciprocity as that which the German courts have adopted in interpreting the equivalent German law concept (i.e. "in the absence of evidence of non-enforcement, assume enforceability"). So, the key for a judgment creditor in such cases would be to find an example of a judgment from the relevant jurisdiction (if there is one!) enforcing a Chinese judgment. Further questions may still foreseeably arise however as to whether enforcement under the non-Chinese regime is equivalent to that under the Chinese regime (for example, in common law jurisdictions such as England it is possible to enforce judgments from countries with which the UK has no enforcement treaty, but the process/rules are not as favourable to the judgment creditor as in cases where there is such a treaty). Plenty of scope for argument and confusion in practice, I fear.
I am grateful to my colleague at Gleiss Lutz, Dr Marcel Barth, for drawing the Berlin case to my attention and helping me to understand it (as I do not read German) but responsibility for the speculations above rests solely on my shoulders, not his.
TrackBack URL for this entry:
Listed below are links to weblogs that reference Enforcement of US judgments in China: