9 October 2017

A US Court Judgment Enforced in China – What Does it Mean for You?

One of the commonly discussed advantages of international commercial arbitration over litigation in the cross-border context is the enforcement issue. For the purpose of swifter enforcement of foreign arbitral awards, the vast majority of countries signed the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

On contrary, there is no relevant international treaty of such scale for the enforcement of foreign court judgements. Normally, the special legal basis, such as agreement on judicial cooperation between two or more countries, needs to be relied upon in order to get a court judgment recognized and enforced in another country. There are quite many countries that do not have such an agreement with China. This includes, among others, US, Germany or the Netherlands.

Interestingly, however, recently the Chinese court in Wuhan enforced the US court judgement rendered by the Los Angeles Superior Court of California in the Liu Li v Tao Li and Tong Wu case.  It did so despite the fact that there is no agreement between China and US providing for mutual recognition and enforcement of such judgements. The court in Wuhan found, however, that the reciprocity in recognizing and enforcing the court judgments between China and US was established because of an earlier decision of the US District Court of the Central District of California recognizing and enforcing the Chinese judgement rendered by the Higher People’s Court of Hubei in the Hubei Gezhouba Sanlian Industrial Co., Ltd et. al. v Robinson Helicopter Co., Inc. case.

Interestingly, similar course of action was taken earlier in 2016 when the Chinese Nanjing Intermediate People’s Court enforced the Singaporean judgement relying on the reciprocity principle in the Kolma v SUTEX Group case.

How much does it tell us?

Should we now feel safe when opting for own courts in the dispute resolution clauses in the China-related deals? – despite the fact there are no relevant agreements between China and our country? The recent moves of the Chinese courts are, indeed, interesting developments changing the dispute resolution landscape in a desirable direction and increasing the chances for enforcing the foreign commercial court judgements. Yet, as of today, one should not see them as the universal door-openers for the foreign court judgements in similar situations. Accordingly, rather careful approach is recommended and the other dispute resolution methods securing the safer way of enforcement, like arbitration, should be kept in mind. The further changes remain to be seen.

LEGAL DISCLAIMER - This article, as well as all the content of our website, does not provide or offer legal or other advice. You should not rely on it as legal advice. We do not accept any liability to any person who does rely on the content of this website. COPYRIGHT - All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher or the author.

Monika Prusinowska - Legalmondo

Monika Prusinowska

Arbitration, Litigation.

Other posts

Monika Prusinowska - Legalmondo

China – Dispute Resolution Methods

Read more »

Related topics

graf - legalmondo

Switzerland – An excellent choice for arbitration

Read more »

Punitive damages – The Court of Cassation opens the door in Italy

Read more »
graf - legalmondo

Switzerland – Secure the enforcement of your claim and seize your debtor’s assets

Read more »

Latest news from the blog

Mexico – Amendments to Industrial Property Law

Read more »
sadr - iran - legalmondo

Iran – New Regulations on Transaction of Hard Currencies

Read more »

USA – Tax Law changes on foreign groups subsidiaries

Read more »