On June 30, 2017, the local court in Wuhan, China (“Wuhan Court”) made a verdict ordering the recognition and enforcement of a commercial judgment rendered by LA Superior Court of USA (“LA Court”). This is the first time for a China court to recognize and enforce a commercial judgment from a U.S. court.
This dispute involved an equity transfer agreement. Though a judgement has been made in favour of the plaintiff, the defendant did not comply with the U.S. Judgment after it became effective. The plaintiff, therefore, applied to the Wuhan Court to have foreign Judgment enforced since the defendant had assets available for enforcement in Wuhan, China.
The grounds for Wuhan Court made the above verdict is as follow:
First U.S commercial judgment enforced in China
1. The procedural requirement is met
The Plaintiff had submitted a certified copy of the U.S. judgment and a Chinese translation, which satisfied the procedural requirement for applying for recognition and enforcement of a foreign judgment;
2. Reciprocal relationship exists
The Plaintiff had submitted evidence that precedent exists of U.S. courts (which we will elaborate in another separate blog) recognizing and enforcing civil judgments made by China courts, thereby confirming a reciprocal relationship between the two states;
3. China’s Principles not violated
The U.S. Judgment aimed to resolve an equity transfer dispute between the two parties, which was not in violation of the basic principles of PRC law and did not damage national sovereignty, national security and public interests;
4. The judgement was made following judicial procedures
Although the foreign judgment was made in the absence of the defendant, the evidence submitted by the Plaintiff certified that the LA Court had issued summonses to the defendant. The evidence included an investigation request lodged by the Plaintiff, an LA Court order requiring the summonses to be served by public notice and the notice as issued in newspapers;
5. Not a substantial examination
Since the verdict was made to offer judicial assistance, the PRC court’s did not conduct a substantial examination of both parties’ rights and obligations. As a result, the Wuhan Court did not uphold the defendant’ arguments that the foreign judgment was flawed.
Obviously, the above-mentioned verdict sets an example for how to deal with similar matters, though in China, judgments made by local courts do not have the binding force as under case law system. But at least it demonstrates that it is possible to successfully apply to a China court for the recognition and enforcement of a foreign judgment.
Source: Sophie Mao from ChinaLawHelp.com