China’s Supreme People’s Court Clarifies Procedures for Recognition and Enforcement of Foreign Court Decisions

On January 24, 2022, the Supreme People’s Court of China issued the Minutes of the Nationwide Courts Symposium on Trial of Foreign-related Commercial and Maritime Matters ("the Minutes", http://cicc.court.gov.cn/html/1/218/62/409/2172.html). The Minutes have answered a series of questions on trial of foreign-related commercial and maritime matters, and are an important practice guidance. The Minutes clarify among others the procedural matters of applications for recognition and enforcement of foreign court decisions (except relevant judgments in bankruptcy cases, intellectual property cases, unfair competition cases and monopoly cases).

Basic Principle: international treaties first, then the principle of reciprocity

Pursuant to the provisions of China’s Civil Procedure Law, when examining an application for recognition and enforcement of a legally binding judgment or ruling made by a foreign court, a People’s Court shall review such judgment or ruling according to international treaties concluded or acceded to by China or in accordance with the principle of reciprocity.

The Minutes now make it clear that when a People’s Court hears an application for recognition and enforcement of a foreign court judgment or ruling, it shall first examine whether that country has concluded or jointly participated in an international treaty with China. If there is an applicable international treaty, the case shall be handled in accordance with that international treaty. Where there is no relevant international treaty, or where there is an international treaty but the international treaty does not provide for the relevant matters, the provisions of the Minutes may be applied. People’s Courts shall examine the existence of reciprocity on a case-by-case basis.

According to the Minutes, a People’s Court may determine that a reciprocal relationship exists under any of the following circumstances:

• Under the law of the country in which such foreign ruling court is located, civil and commercial judgments rendered by Chinese People's Courts may be recognized and enforced by the courts of that foreign country;
• China has a reciprocal understanding or consensus with the country in which such foreign ruling court is located;
• The country where the foreign ruling court is located has made a promise of reciprocity to China through diplomatic channels or vice versa, and there is no evidence that foreign country has refused to recognize and enforce judgments and rulings made by a Chinese People’s Court because no reciprocal relationship exists.

Competent Court and Reporting Requirement

Applicants applying for recognition of foreign court judgments or rulings shall apply to the intermediate People’s Court of the respondent's domicile or the location of the respondent’s property. However, if the respondent has neither domicile nor property in China, the application may be submitted to the intermediate People's Court of the applicant's domicile in China.

Before making a ruling under the principle of reciprocity, the competent People’s Court has to report its envisaged handling opinion to the upper level high People’s Court for review. If the high People’s Court agrees, it shall report its review to the Supreme People’s Court of China for final review. The ruling shall be made only after the Supreme People’s Court has replied.

Application Time Limit

The time limit for applicant to apply for recognition of foreign court judgments or rulings is two years. It begins to run from the last day of the performance period specified in the judgement or ruling. Should the performance in installments be ruled, the time limit begins to run from the last day of each performance period specified. Should no period of performance be ruled, the time limit begins to run from the effective date of the judgment or ruling.

Application Documents

When applying for recognition and enforcement of foreign court judgments or rulings, the following documents have to be submitted:

• Application;
• The original judgment/ruling or a certified true copy;
• Documents evidencing that the judgment/ruling has become legally binding, if not already stated in the judgment/ruling;
• Documents evidencing the foreign court's lawful summons of the absent party in the case of a default judgment, if not already stated in the judgment/ruling.

Judgments/rulings and other documents submitted by the applicant in foreign language have to be accompanied by a Chinese translation stamped by a translation agency (licensed in China). If any document submitted by the applicant was made outside China, such document has to be notarized and legalized, or the relevant formalities specified under international treaties concluded between China and such country shall be followed.

The application shall contain the following items:

• The applicant and the respondent. If the applicant or respondent is a natural person, his or her name, gender, date of birth, nationality, residence and identity document number shall be contained. For a legal entity or an unincorporated organization, its name, domicile, and the name and position of the legal representative shall be contained;
• The name of the foreign court that rendered the judgment/ruling, the case number of the judgment/ruling, the commencement date of the proceedings and the date of rendering the judgment/ruling;
• Specific requests and reasons;
• In the case of an application for enforcement of a judgment/ruling, the status of the respondent's property and the location of the property shall be provided, as well as a description of enforcement of the judgment outside China;
• Other circumstances that need to be explained.

Preservation Measures

After the People’s Court accepts an application for recognition and enforcement of foreign court judgments or rulings, the property preservation measures may be applied for. However, the applicant has to provide security. Otherwise, the application for property preservation measures will be dismissed.

“Legally Binding Judgment or Ruling”

The People’s Court shall examine whether the foreign court judgment or ruling is a “judgment or ruling” under the Civil Procedure Law of China based on the substance of that judgment or ruling. Judgments, rulings, decisions, orders and other legal instruments issued by foreign courts in civil and commercial cases regarding substantive disputes, as well as legal instruments issued in criminal cases regarding civil damages, shall be deemed “judgments or rulings” under the Civil Procedure Law of China. However, preservation rulings and other procedural legal instruments issued by foreign courts do not belong to recognizable and enforceable “judgment or ruling”.

The People’s Court shall examine whether the foreign court judgment or ruling has become legally binding according to the law of the country where the judgment/ruling was rendered. Judgments and rulings that are subject to appeal or in the process of appeal are not “legally binding judgments and rulings”.

Upon examination, if the authenticity of the foreign court judgment or ruling cannot be confirmed, or the judgment or ruling has not yet become legally binding, the application for recognition and enforcement of such foreign court judgment/ruling will be dismissed.

Grounds for Non-recognition and Non-enforcement

After reviewing the legally binding judgment/ruling made by a foreign court in accordance with the principle of reciprocity, the People’s Court shall reject recognition and enforcement of it under any of the following circumstances:

• The foreign ruling court had no jurisdiction over the case under the laws of China;
• The respondent was not lawfully summoned or not given a reasonable opportunity to be heard or to argue, or the incapacitated party was not properly represented;
• The judgment/ruling was obtained by fraud;
• The People’s Court has already made a judgment on the same dispute or has already recognized and enforced a judgment or an arbitral award made by a third country on the same dispute;
• In the case of a foreign default judgment, there is a valid arbitration agreement between the parties to the dispute and the absent party has not expressly waived the arbitration agreement;
• The foreign judgment/ruling violates the basic principles of the laws of China or China’s sovereignty, security or public interests.

Moreover, if the award of a foreign court is damages, of which the amount clearly exceeds the actual loss, the People’s Court may rule that the excess is not recognized and enforced.