Thursday, 27 September 2018

B.C. Court Enforces Chinese Judgment, Opening Door – a little -- to Enforcement of Canadian Judgments in the PRC

Sept. 27, 2018

Until recently, Canadian judgments have not been enforceable in the People’s Republic of China (“PRC”).  PRC courts do not enforce foreign judgments unless there is an enforcement treaty, or unless the foreign country’s courts have previously enforced judgments of PRC courts (the principle of reciprocity).      There is no such treaty between the PRC and Canada (1), and until recently no Canadian court had enforced a PRC court judgment.

In Wei v Mei  [2018] B.C.J. No. 163 the B.C. Supreme Court declared enforceable a judgment for about RMB25,000,000 (CDN$5,000,000) issued by the Intermediate People’s Court of Tangshan City in Hebei Province to enforce a loan agreement.   The B.C. Court applied the usual test for enforcement.  There was no issue about the Chinese court’s jurisdiction, in that all parties lived in Tangshan City, the loan agreement was made there, and the defendants attorned to the jurisdiction of the Chinese court by defending the proceeding there.  The B.C. Court received expert evidence that the Chinese judgment was final.  There was no possibility of appeal because the judgment was a consent order.    

Wei v Mei brings us a lot closer to enforcement of judgments in the PRC, but for several reasons it is still too early to say that Canadian judgments are now enforceable.   One, the B.C. court has not yet actually enforced the PRC judgment (the Court needs to determine exactly how much is owing  first (2)).    Two,  the PRC courts may construe the principle of reciprocity narrowly, such that only B.C. court judgments can be enforced, and that judgments from other Canadian courts remain unenforceable until those courts have enforced a PRC judgment.  In two of the few cases where PRC courts have enforced foreign judgments based on reciprocity, the province of the enforcing court was the same as the province of the court whose judgment the foreign court had enforced.   In 2016 in the Kolmar Group AG case (3), the PRC court, specifically the Intermediate People’s Court of Nanjing in Jiangsu Province, enforced a Singaporean judgment because the Singaporean courts had previously enforced a judgment issued by a PRC court. That court was another court in the same province, Jiangsu, but it is not known whether this was a factor in the enforcing court’s decision.  In 2017 in the Liu Li v Li  case (4) the Intermediate People’s Court of Wuhan, Hubei Province, enforced a judgment of the Los Angeles Superior Court in California (a state court) on the grounds that in 2009 the U.S. District Court for the Central District of California (a federal court) in Hubei v Robinson Helicopter (5) enforced a judgment from a PRC court.  The District Court’s ruling was affirmed on appeal.  That PRC court was in the same province, Hubei, as the court that enforced the U.S. judgment. Apparently the PRC court did not mention this fact in its ruling (6).  In the PRC, there is no stare decisis.
In recent articles, two judges of the Supreme People’s Court of China expressed two very different views about reciprocity.   Jianli Song hinted that there is no reciprocity until the highest court of the foreign country has recognized a PRC judgment (7), while Hongyu Shen  called for a relaxation of the reciprocity requirement (8).   The first judge did also say that on the whole, enforcement of foreign judgments in the PRC will likely become easier over time.  

Apart from reciprocity there are other prerequisites for enforcement in the PRC which include not only ones similar to those found in Canadian law (9), but also a rule that enforcement will be refused if it would violate basic principles of Chinese law, or state sovereignty or the public interest.   For example, the PRC courts have refused to enforce judgments from Macau for gambling debts because the PRC is not in favour of gambling (9).   As well, Judge Song stated that politics can have an impact, citing as an example that the PRC courts might refuse to enforce Taiwanese judgments because to do so might be inconsistent with the PRC’s One China Policy.     This presumably means that if a serious dispute arose between Canada and the PRC, that might impact the enforcement of Canadian judgments. 

Even if a foreign judgment meets all the requirements for enforcement, there is the possibility of the case being re-tried on the merits.    Using a procedure called the trial supervision procedure,  a party or the court itself can re-open a case and have it re-tried, on the merits, even after a final and binding judgment, if a Court believes a mistake was made at the original trial.  This procedure might apply to foreign judgments as well as domestic Chinese judgments but I am not aware of any past instance of that.

In short, it appears that we are getting closer to being able to enforce a Canadian judgment in the PRC, but there are risks specific to the PRC to consider. 

1.       The PRC has judgment enforcement treaties with 36 countries, including France, Italy, and Russia.
2.      There were outstanding issues about how much of the judgment had been paid, about the correct interest rate (the creditor claimed 60%, which runs afoul of Canada’s laws regarding usury), when interest would begin to accrue, and about the denomination (currency) of the judgment.    
3.      Case of Application by Kolmar Group AG and Jiangsu Textile Industry (Group) Import and Export Co for Recognition and Enforcement of Civil Judgment by Foreign Court (2016) Su 01 Xie Wai Ren no. 3)
4.      Application to Recognize and Enforce a Foreign Civil Judgment by Liu Li v Tao Li and Tong Wu (2015 E Wuhan Zhong Min Shang Wai Chu Zi No. 00026)
5.      Hubei Gezhouba Sanlian Industrial Co. et al v Robinson Helicopter Company  2009 Westlaw 2190187, aff’d 580 US Court of Appeals, 9th Cir. 2011)
6.      Suni Gong, The Chinese Court’s Enforcement of a U.S. Civil Judgment  Transnational Notes Blog post dated April 17, 2018
7.      Song, Jianli,  Recognition and Enforcement of Foreign Judgments In China:  Challenges and Developments   Aug. 30, 2018  ttp://
 8.      Hongyu Shen, Belt and Road Initiative and the Enforcement and Recognition of Foreign Judgments 2017 Vol. 15 cited in Gong’s article, ibid note 6
9.      Such as the requirements that the judgment must be final and binding in the home jurisdiction,  and that the court that issued the judgment had jurisdiction over the case.

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