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Enforcing China Court Judgments Overseas. Yeah, It’s Possible.

Posted in Legal News

When it comes to enforcing US court judgments in China, the law has been clear and remains clear. China won’t do it. Not now. Not later. Maybe not ever. For more on this, check out the following.

Case closed.

But what about taking a Chinese court judgment and getting that enforced outside of China? The clear answer on whether that can be done is maybe.

I thought of this the other day when I read an article on how a Singapore court — maybe for the first time — had enforced a China judgment. The Straits Times noted that this enforcement of a Chinese judgment by a Singapore court was “believed to be a first.” Singapore does not have any agreement with China to enforce Chinese court judgments, but, presumably, the courts there can choose to do so on a case by case basis.

In this instance, the Singapore court heard testimony from both sides on the merits of the case and then enforced the judgment. In other words, it did not semi-automatically enforce the judgment simply through registration; it instead made its own (presumably expedited) factual determination that the China judgment was worth enforcing.

I mention this Singapore case as a segue to writing about a case that my firm handled a few years ago and to at least somewhat refute the prevailing view out there that “US courts will never enforce a Chinese judgment.” United States courts — with or without a treaty — may enforce foreign judgments.

Generally, if someone has a legitimate foreign court judgment based on the merits (as opposed to having been granted due to the failure of a party to show up), the holder of a foreign judgment may bring an action in a US court seeking to have that foreign judgment given effect in the United States. Almost all US states look to the Uniform Foreign Money Judgments Recognition Act to determine how to treat a foreign judgement. Just by way of a quick and dirty example, here is Washington State’s statute incorporating this act. There are a whole slew of possible reasons for a US Court to reject the enforcement of a foreign judgment, but generally, in my experience they usually will be enforced.

But for some reason, there is the view that US courts will not enforce China court judgments because China does not enforce US judgments and because China courts are just not well respected. I half disagree and I have a case to support the disagreement part.

A few years ago, a US company came to us with a Chinese judgment it had received against a Chinese company. This US company wanted us to domesticate the Chinese judgment (convert it to an American judgment) so that they could try seizing US assets of the Chinese company. The US company had not been successful in seizing assets of the Chinese company in China and it figured that it should try  in the United States. We were successful in convincing a California State Court judge to enforce the Chinese judgment.

Here’s the half part though. Our California case was against a Chinese company and I have to believe that had it been a Chinese company seeking to enforce a Chinese judgment against an American company, the American company would have been well positioned to argue about the unfairness of Chinese courts.

Not saying that one Singapore case and one California case a make a trend, but I am saying that it is wrong to just assume that Chinese judgments have no value in countries without judgment enforcement agreements with China. Rather, it would seem that enforcement of China judgments is on a case by case basis.

Anyone have their own China judgment enforcement story?

  • damjand

    Having worked on that California case with you, it is notable that the time between the judgment in China and the domestication of the judgment in the U.S. has to be measured in years, not months. It’s still much better to be careful on the front-end of the transaction when you have an opportunity to screen your Chinese partner and establish safety precautions for your own position, than it is to try and solve a problem after it occurs.

  • Rick Church

    Does the inability to domesticate a US judgement in China follow with an investor complaint/judgement on a Chinese company that went public in the US? Would the SEC have any better success in applying a judgement in China?