International Arbitration
April 2017
Chinese court enforces a foreign
judgement for the first time on the
basis of reciprocity
Introduction
China has for the longest time been known
for adopting one of the most restrictive
reciprocity systems in the world. A view
widely accepted by even Chinese scholars,
this approach has made it almost impossible
to recognise foreign judgments in China.
China’s refusal to recognise foreign
judgments unless there is a convention or
treaty obligation or “reciprocity” practice,
has led to certain countries responding
adversely to the enforcement of Chinese
decisions.
In 2003 and 2015 respectively, the Japanese
Courts refused to recognise judgments
rendered by the Chinese Courts for lack of
reciprocity on the basis that the Chinese
Courts refused to recognise Japanese
judgments.1 Whilst the civil procedure laws
in China allow for the recognition and
enforcement of foreign court judgments on
the principle of reciprocity,2 there was no
statutory or judicial interpretation on what
the principle of reciprocity entails or when
it is to be applied, until recently.
submitted to the High Court of Singapore.
The Nanjing based company failed to comply
with the terms of settlement agreement.
Consequently, the Swiss company commenced
proceedings in the High Court of Singapore.
A decision was issued by the High Court of
Singapore sometime in October 2015 against
the Nanjing based company. The Swiss company
therefore applied to the Chinese Court to
recognise and enforce the Singapore judgment
even though there is no treaty or bilateral
agreement which allows for the mutual
recognition and enforcement of each other's
judgments.
In a ground breaking decision, the Court
held that in the absence of a treaty on the
recognition and enforcement of judgments, it
could apply the principle of reciprocity in
this matter on the basis that the Singapore
Court had previously in 2014 enforced a
judgment issued by the Jiangsu Suzhou
Intermediate People’s Court in Giant Light
Metal Technology (Kunshan) Co Ltd v Aksa Far
East Pte Ltd.4
Going Forward
Kolmar Group AG Case3
For the first time in December 2016, the
Nanjing Intermediate People’s Court
recognised and enforced a judgment rendered
by the High Court of Singapore based on the
principle of reciprocity. A Swiss company
had a dispute over a sales agreement with a
Nanjing based textile company. The dispute
was resolved by parties entering into a
settlement agreement. The settlement
agreement provided for all disputes to be
Whether a precedent has indeed been set
is still unknown but many welcome this
decision and are hopeful that it will be
persuasive in the enforcement of foreign
judgments in China. With the growth of
cross-border transactions and trade, the
decision of the Chinese Court will
increase the confidence of foreign
entities conducting business in China
and with Chinese companies. Parties
looking to enforce foreign judgments are
now likely to stand a better chance of
enforcing the judgments without having
to recommence litigation process afresh
in China.
Will all Foreign Judgments be enforced?
Whilst there may be reasons for foreign
companies to rejoice, the Chinese Court’s
decision does not guarantee the recognition
and enforcement of all foreign judgments.
The reality may be far from it. The Chinese
Courts can recognise and enforce foreign
judgments only if there is an international
convention or treaty, or if reciprocity
applies. The Courts must also be satisfied
that these do not contravene Chinese law,
state sovereignty, security or public
interest. Therefore, these restrictions on
the enforceability of foreign judgments
limit the countries whose judgments may be
recognised and enforced.
Countries that do not have bilateral
treaties or arrangements with China, are not
members of an international convention which
allows for the recognition and enforcement
of foreign judgments, do not practise the
principle of reciprocity and have not had
the opportunity of enforcing a Chinese
judgment may never have their judgments
recognised and enforced in China. In such
circumstances, arbitration may still be the
preferred choice since it would be much
easier enforcing an arbitral award under the
New York Convention which China has
ratified.
Parting Thoughts
The Nanjing Court’s decision may start
the ball rolling for the enforcement of
foreign judgments in future. However,
there still remain some unresolved
issues. Apart from foreign judgments not
falling within the ambit of the Chinese
civil procedure law, it is unknown if
other Courts in China will take the
Nanjing Court’s lead when deciding on
whether or not to enforce a foreign
judgment on the basis of reciprocity.
Further, the Singapore Court is not the
first to have recognised and enforced a
Chinese judgment. Despite countries such
as the United States having enforced
Chinese judgments in the past, the
Chinese Courts have yet to enforce a
United States judgment on the basis of
reciprocity. In light of the Nanjing
Court’s decision, it would be interesting
to see when and whether the Chinese
Courts will reciprocate and accord these
other countries the judicial courtesy of
enforcing their judgments.
Notes:
1
Osaka High Court, Judgment 9 April 2003, Hanrei
Jiho No. 1841, at 111; Hanrei Taimuzu No.1141, at
270;
http://tendensha.co.jp/saiban/271125hanketsu.pdf
2
Article 282 of The PRC Civil Procedural Law
3
(2016）苏01协外认3号
4
[2014] SGHC 16
Futher information
If you would like further information on any
issue raised in this update, please contact:
Ik Wei Chong
Partner/Managing Director, Asia
E:[email protected]
Natasha Rai
Associate, Clasis LLC,Singapore
E:[email protected]
Samuel Yang
Senior Associate, Shanghai
E:[email protected]
2