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Foreign Court Judgments In China1

Posted on: February 10, 2020

Frequently, a litigant that receives a judgment from a court in one country will need to enforce it within the territory of another country. Therefore, when dealing with Chinese contracts and litigation involving Chinese parties or assets, it is important to understand whether China recognizes and enforces a foreign judgment, and if not what can be done to better prepare for litigation.

Who can apply for recognition and enforcement of foreign judgments? According to Article 265 of the PRC Law of Civil Procedure, the parties to a judgment and the foreign court who made the judgment can apply for recognition and enforcement of the judgment. A foreign court is applying, it shall be either based on an international agreement that the PRC has entered into, or in accordance with the footer-social-linkscalled principle of reciprocity.

Principle of reciprocity hereby means that a Chinese court shall examine whether there is precedent of recognition and enforcement of judgments from the other between the foreign country and China. If no such precedent exists, application by a foreign court recognition and enforcement of its judgments will be rejected. When the parties to a judgment submit an application, the Chinese court will still check the relevant international agreement and precedent of recognition and enforcement. Thus, in effect, a precedent of recognition and enforcement or an international agreement between the foreign country and China shall be in existence in order to have judgments from that foreign country recognized and enforced in China.

If the foregoing conditions are satisfied, the Chinese court will further substantially examine the judgment in accordance with Article 266 of the PRC Law of Civil Procedure. In case that the judgment violates basic principles of the laws of the PRC or it conflicts with the state sovereignty, security or social public interests, it will not be recognized or enforced. Due to these thresholds, large international companies doing business in China have to turn to alternatives to settle their disputes.

China has not entered into an agreement regarding the recognition and enforcement of foreign judgments with the US, and therefore recognition and enforcement of a US judgment in China is impossible. If the either party submits the case to a Chinese court, the Chinese court will judge the entire case from its own view and the US judgment will be of limited importance and influence.

Principle of reciprocity hereby means that a Chinese court shall examine whether there is precedent of recognition and enforcement of judgments from the other between the foreign country and China. If no such precedent exists, application by a foreign court recognition and enforcement of its judgments will be rejected. When the parties to a judgment submit an application, the Chinese court will still check the relevant international agreement and precedent of recognition and enforcement. Thus, in effect, a precedent of recognition and enforcement or an international agreement between the foreign country and China shall be in existence in order to have judgments from that foreign country recognized and enforced in China.

If the foregoing conditions are satisfied, the Chinese court will further substantially examine the judgment in accordance with Article 266 of the PRC Law of Civil Procedure. In case that the judgment violates basic principles of the laws of the PRC or it conflicts with the state sovereignty, security or social public interests, it will not be recognized or enforced. Due to these thresholds, large international companies doing business in China have to turn to alternatives to settle their disputes.