In “Mainland – Macao agreement on recognition and enforcement of judgment,” the Chinese Law Prof Blog discusses the “Arrangement Between the Mainland and the Macao Special Administrative Region on the Mutual Recognition and Enforcement of Civil and Commercial Judgments” set to go into effect on April 1, 2006.  Under this agreement, there will be very few grounds on which the courts of either China or Macao may decline to enforce legal judgments of the other.

The Chinese Law Prof notes that China has very few such agreements with other jurisdictions, and none with its major trading partners.  China does not yet have such an agreement even with Hong Kong, though it will soon. Under China’s agreement with Hong Kong, the two “countries” will enforce judgments from the other country if (and only if) the parties specifically agreed by contract that either Hong Kong or China would be the exclusive forum for their dispute resolution:

In short, the agreement will treat such choices essentially as arbitration agreements — and indeed, that’s pretty much what they are. The Hong Kong legal community is willing to help enforce the judgments of a forum to which the parties have voluntarily submitted their dispute, but won’t go any further. Macao, by contrast, has gone all the way to a full-faith-and-credit approach.

United States and European lawyers and companies often call us for help in getting their U.S. or European judgments enforced in China against Chinese companies.  A typical call usually goes something like this:

Caller:  I have a two million dollar judgment against Chinese company X in China, can you help me enforce it?

Me:  Is it a default judgment here in the United States?

Caller:  Yes.

Me:  Chinese courts do not enforce United States’ judgments and they don’t give any credence whatsoever to United States default judgments. Did you discuss this possibility with your U.S. lawyer before you sued here in the United States?

Caller:  [long silence] …. Yes.  He told me getting a judgment here couldn’t hurt?

Me:  Did your lawyer charge you to get it?

Caller:  Yeah.  I had to pay him and I had to pay all sorts of people to get that company served in China.

Me:  Sorry.

Bottom Line:  Don’t bring a lawsuit outside China against a Chinese company without first making sure there is some benefit in doing so.

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