Friday, 26 October 2018

New Development in Enforceability of Foreign Judgments in the PRC

Oct. 26, 2018

In my last post (Sept. 27, 2018) I described some recent developments regarding the enforcement of foreign judgments in the People’s Republic of China (“PRC”), and enforcement of PRC judgments in Canada, which suggest improved prospects for enforcement of foreign judgment in the PRC.

In that same vein, a new Memorandum of Guidance (“MOG”) between the Supreme People’s Court of the People’s Republic of China and the Supreme Court of Singapore should simplify the recognition and enforcement of Singapore judgments in the PRC, and vice versa.     The MOG, which was signed in August 2018, sets out the requirements for enforcement, which include requirements familiar to the common law such as that the judgment be final, that the court rendering it had jurisdiction over the case, and that the judgment not be enforcement of a penal or tax law.  There are also familiar defences, e.g. that the defendant did not get notice of the proceeding in which the judgment was rendered, or that the judgment was obtained by fraud, or that enforcement would be contrary to public policy.  The MOG also sets out procedures for an application to enforce the foreign judgment.  

The MOG applies only to monetary judgments (i.e. not injunctions) and only to judgments in commercial cases, excluding intellectual property and competition law.  

In general, judgments from many countries have not been enforceable in the PRC.   PRC courts will not enforce foreign judgments unless there is a treaty with the other country or unless there is reciprocity in enforcement, i.e. that the foreign court has enforced PRC judgments. 

Singapore and the PRC have recognized judgments from each other in the past.   In 2016 a court in Jiangsu Province in the PRC recognized a Singaporean judgment in the Kolmar Group case (discussed in my Sept. 27 post) on the basis that a Singaporean court had previously recognised a judgment from a court in Jiangsu Province.   The extent of the reciprocity remains unclear, however.  The Jiangsu court ruling did not say whether the Jiangsu, PRC court would have found reciprocity if that previously recognized judgment had been from a court somewhere else in the PRC.

On its face, this MOG appears to be intended to ease the enforcement of Singaporean judgments in the PRC and vice versa.  What else could be its purpose? Unfortunately, it is not clear how much of a change the MOG portends.   The MOG clearly states it is not a treaty, and does not have legal effect.   The MOG states that “in the absence of a relevant treaty, [a Singaporean judgment] may be enforced [by the PRC courts] on the basis of reciprocity according to the Civil Procedure Law [of the PRC]”.   The parties could have included in the MOG a declaration about reciprocity as between the two countries, but chose not to do so.

Nonetheless, the MOG is surely at least a small step toward liberalizing enforcement of foreign judgments.