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Recognition and Enforcement of Foreign-Related Civil and Commercial Judgments in China ( Part 3 )

Published: 11 May 2022

Introduction

By October 2021, China had entered into bilateral judicial assistance agreements with 39 countries on civil and commercial matters, 38 of which had come into effect, 34 of which stipulated the conditions for recognition and enforcement of judgments issued by foreign courts. In addition, Chinese courts have recognized and enforced commercial judgments of courts in Singapore and the United States under the principle of reciprocity. Judgments of Chinese courts have also been recognized and enforced by courts in Germany, Singapore, the United States, Israel and other countries. From 2018 to 2020, Chinese courts accepted 1,301 applications for recognition and enforcement of civil and commercial judgments by foreign courts, and concluded 1,226 cases, of which 1,142 were recognized and enforced, involving more than 30 countries.[1]

Content

  1. Enforcement Procedure

Application

According to Article 16 of the Provisions of the Supreme People’s Court on Several Issues Concerning the Enforcement Work of the People’s Courts (for Trial Implementation)(2020 Amendment), an enforcement case accepted by a people's court shall meet the following conditions:

(1) The legal instrument to be enforced upon application or to be transferred for enforcement has taken effect;

(2) The enforcement applicant is the right holder, the successor or the person succeeding to the rights determined in the effective legal instrument;

(3) The legal instrument to be enforced upon application contains the content of performance, and the subject matter of enforcement and the judgment debtor are specific;

(4) The obligor fails to perform its/his/her obligation within the time limit determined in the effective legal instrument;

(5) The case is under the jurisdiction of the people’s court which enforces the instrument upon application.

Where the application meets the above conditions, the people’s court shall register the case within seven days, or render a ruling not to accept the case if the application fails to meet any of the conditions within seven days.

  1. Jurisdiction

According to Article 231 of the Civil Procedure Law, legally effective civil judgments and orders, as well as the property part of criminal judgments and orders, shall be executed by the people’s court of first instance or the people’s court at the same level where the property to be  executed is located.

Accordingly, enforcement courts are optional in applying for enforcement of recognized foreign judgments in China. The execution court may be either the people’s court making the recognition ruling or the people’s court at the same level where the property subjected to execution is located.

  1. Enforceable Property

The people’s courts can attach, seize or freeze all transferrable properties subjected to execution The properties subject to execution include:

(1) Income, bank deposits, cash, financial products, securities;

(2) Land use rights, houses and other immovables;

(3) Movables such as instruments for transportation, machinery and equipment, products and raw materials;

(4) Creditor’s rights, equity, investment rights, fund shares, beneficial rights of trust, intellectual property rights and other property rights.

Properties prohibited from execution as stipulated by laws, regulations and judicial interpretations shall not be executed.

Conclusion

With the deepening of the Belt and Road Initiative, the establishment of the China International Commercial Court and the continuous innovation of foreign-related judicial measures, the number of foreign-related civil cases accepted by the people’s courts has been constantly increasing. The research shows that, in the typical cases of recognition and enforcement of foreign court judgments by Chinese courts in the recent four years, most of the courts upheld the applications from the applicants, that is, recognize and enforce the relevant judgments made by foreign courts. We can see that the people’s courts recognize and enforce the judgments of foreign courts in a high rate.

In addition, in recent years, Chinese courts have adopted the modern, information-based and integrative detection and control system with other advanced technical means to monitor the status of the property of the party against whom execution is sought. If there is no available property for execution, compulsory measures on restraining high-value consumption and exiting from the country may be imposed. These measures also have very positive effects on the enforcement of foreign court judgments, demonstrating the international image of Chinese courts as fair, efficient and authoritative judicial bodies, and providing a solid judicial guarantee for the creation of creditable and trustworthy international business environment. For example, in the case of GaoXingda, which was heard by Shanghai No.1 Intermediate People’s Court in 2019, the subject matter of execution was more than 30 million yuan. During the execution procedure, the court froze the 39.83% equity of Shanghai Hongqiao Datong Yang Commercial Building Co., Ltd. held by He Jianhua, which created positive conditions for the parties to negotiate a settlement of transnational disputes, fully protected the legal rights of the creditor and won the praise of the foreign party.

[1] China New, shttps://www.chinanews.com.cn/gn/2021/10-27/9596195.shtml.

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Fang (Helen) Liu

Firm: Tiantai Law Firm
Country: China

Practice Area: Cross Border M&A

  • F6/A,North Star Huibin Plaza,
    No.8 Beichen East Road,
    ChaoYang District, Beijing


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