by Wendy WU  Youyou Shi

On June 30, 2017, the Wuhan Intermediate People’s Court issued a ruling recognizing and enforcing a civil judgment issued by the Los Angeles Superior Court, which was the first time that a Chinese’ court has recognized and enforced an effective judgment made by a U.S. court based on the principle of reciprocity.

Case Facts

The plaintiff brought an action in the Los Angeles Superior Court against two defendants alleging that the defendants had defrauded her of USD 125,000 by means of a fake share transfer transaction. The defendants failed to appear, and after serving the summons by public notice, the court entered a default judgment in favor of the plaintiff on July 24, 2015. In October 2015, citing a judgment of the U.S. District Court for the Central District of California, in which this court enforced a monetary judgment awarded by the High People’s Court of Hubei Province against Robinson Helicopter Company, an aircraft manufacturer based in California, the plaintiff applied to Wuhan Intermediate People’s Court to recognize and enforce the U.S. Judgment.

Legal Provisions

The Civil Procedure Law of the P.R.C.

Article 281   If a legally effective judgment or written order made by a foreign court requires recognition and execution by a people's court of the People's Republic of China, the party concerned may directly apply for recognition and execution to the Intermediate People's Court of the People's Republic of China, which has jurisdiction. The foreign court may also, in accordance with the provisions of the international treaties concluded or acceded to by that foreign country and the People's Republic of China or with the principle of reciprocity, request recognition and execution by a People's Court.

Article 282   In the case of an application or request for recognition and execution of a legally effective judgment or written order of a foreign court, the People's Court shall, after examining it in accordance with the international treaties concluded or acceded to by the People's Republic of China or with the principle of reciprocity and arriving at the conclusion that it does not contradict the primary principles of the law of the People's Republic of China nor violates State sovereignty, security and social and public interest of the country, recognize the validity of the judgment or written order, and, if required, issue a writ of execution to execute it in accordance with the relevant provisions of this Law; if the application or request contradicts the primary principles of the law of the People's Republic of China or violates State sovereignty, security and social and public interest of the country, the people's court shall not recognize and execute it.

Ruling of the Court

Since China and the U.S. have not concluded or acceded to any international treaty regarding recognition and enforcement of civil judgments, this Court shall decide whether to support the plaintiff’s claim based on the principle of reciprocity. The plaintiff had submitted evidence to prove the U.S. had precedent to recognize and enforce a civil judgment of the Chinese court, and thus it is determined that a reciprocal relationship regarding recognition and enforcement of civil judgments exists between China and the U.S. Also, recognition of this U.S. judgment does not contradict the primary principles of the law of the P.R.C. or violate State sovereignty, security and social and public interest of our country. Thus, Wuhan Intermediate People’s Court made the ruling to recognize and enforce the judgment of the Los Angeles Superior Court.

Principle of Reciprocity

So far, China has not acceded to the Hague Convention on The Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters and mainly applies the principle of reciprocity with respect to recognition and enforcement of foreign civil and commercial judgments. According to a reply made by the Supreme Court in 1995, the reciprocal relationship should be based on factual reciprocity, i.e., precedents exist between China and a foreign country which recognize and enforce the judgment made by each other’s courts.

On December 9, 2016, Nanjing Intermediate People’s Court made a similar ruling in which this court recognized the reciprocal relationship between China and Singapore based on the fact that the Singapore High Court once enforced a judgment made by Suzhou Intermediate People’s Court, and accordingly enforced a court made by the Singapore High Court.

It can be inferred that our application of the principle of reciprocity with respect to recognition and enforcement of foreign civil and commercial judgments is actually premised on the fact that the court of the foreign country concerned has already had precedent(s) to recognize and enforce the judgment of a Chinese court. Such premise has great limitations, in particular with regard to protection of Chinese citizen’s interests in cases where the said citizen requests recognition and enforcement of a foreign judgment.

For parties to international civil and commercial activities, the advisable dispute resolution method is still international arbitration in view of the great limitations of the principle of reciprocity. After all, the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards has greatly unified and simplified the procedures in enforcement of foreign arbitral awards made by a contracting party. Although the rulings of Wuhan Intermediate People’s Court and Nanjing Intermediate People’s Court are both welcome developments, it remains unknown whether such rulings shall have any effects on other courts in China.