21 February, 2017
In what some commentators consider to be a milestone decision, in December 2016, the Nanjing Intermediate People's Court in Jiangsu Province issued a judgment for the recognition and enforcement of a default judgment granted by the High Court of Singapore given in October 2015, in favour of Kolmar Group AG, a Swiss company, against a Nanjing based textile company, based on the principle of reciprocity.
There are very few reported decisions in the PRC for the recognition and enforcement of foreign judgments; the earlier judgments all demonstrated a trend of the PRC Courts' unwillingness to recognise and enforce foreign judgments. For example, the application of Gomi Akira in 1994 to the Dalian Court to recognise and enforce a Japanese judgment, and the application of the Russian National Symphony Orchestra, and that of Oliver Otto Dufek, to the Beijing Court in 2004 and 2010 respectively, to recognise and enforce English judgments, were all refused. Those judgments were short and even though the non-existence of a bilateral treaty and/or the lack of reciprocity were given as reasons for the Courts' decisions, there were little or no discussion or explanation about what the principle of reciprocity actually means.
There are, however, a few examples of the PRC Courts recognising and enforcing a foreign bankruptcy judgment where there exists a bilateral treaty between China and the jurisdiction in which the judgment was obtained, such as the application of B&T Ceramic Group to the Foshan Court in 2000 in respect of an Italian bankruptcy judgment, and the application of Antoine Montier to the Guangzhou Court in 2005 in respect of a French bankruptcy judgment.
In the Kolmar Group case, even though there is a Treaty between the PRC and Singapore on civil and commercial judicial assistance, the Treaty is silent on the recognition and enforcement of judgments. However, the Nanjing Court cited a 2014 judgment of the High Court of Singapore, in which the Singapore Court recognised a Chinese judgment (incidentally, also from Jiangsu Province), and held that such a decision had established the ground of reciprocity such that the Nanjing Court was willing to grant the application on this basis.
Could this decision from the Nanjing Court be an example for future cases? Will Courts in other cities in the PRC follow the Nanjing Court's decision? The answer is nobody knows, but this is undoubtedly a positive development. Let's not forget that one of the conditions for a PRC Court to recognise and enforce a foreign judgment is that it does not "violate the basic principles of PRC law or Chinese national sovereignty, security and public interest".
Given the uncertainties surrounding the enforceability of foreign judgments, for a number of years now, lawyers have been advising their foreign clients to use institutional arbitration instead, due to the relative ease with which arbitration awards could be recognised and enforced by the PRC Courts. Whilst one may not immediately rejoice at the Kolmar Groupdecision, it is certainly a move in the right direction.
