Good news for the creditors with a US judgment!

Now, American civil/commercial judgments are highly likely to be recognized and enforced in China.

This post was first published in CJO GLOBAL, which is committed to providing consulting services in China-related cross-border trade risk management and debt collection.

Maybe you are the one, who has been told many times by lawyers, especially some American lawyers, that China will definitely not enforce American judgments.

But, that is wrong.

In our article “Can Foreign Judgments Be Enforced in China?”, we divide the countries/regions into four groups. For the countries and regions in Groups 1 ~ 3, it is very likely to have their judgments recognized and enforced by Chinese courts.

The US is in Group 2, which means the judgments rendered in the US have already been recognized in China based on reciprocity.

The following 2 cases are good examples.

I. The two cases

On 12 September 2018, Shanghai First Intermediate People’s Court made the ruling (2017) Hu 01 Xie Wai Ren No.16([2017]沪01协外认16号) which recognized the judgment rendered by the eastern division of the United States district court for the Northern District of Illinois (hereinafter referred to as the “Shanghai case”).

The “Shanghai case” is the second time that a Chinese court has recognized U.S. judgments within 15 months. Prior to this, on 30 June 2017, Wuhan Intermediate People’s Court in Hubei Province of China made a ruling on case No.(2015) E Wu Han Zhong Min Shang Wai Chu Zi No. 00026（[2015] 鄂武汉中民商外初字第00026号）(hereinafter referred to as the “Wuhan case”). This ruling recognized a U.S. civil judgment from the Los Angeles Superior Court, California (No. EC062608).

These are two landmark cases, for the “Shanghai case” and the “Wuhan case” suggest that China and the United States have established a comprehensive reciprocal relationship. To be specific, the “Wuhan case” indicates that Chinese courts may recognize a judgment from a U.S. state court on the basis that U.S. federal courts have previously recognized Chinese judgments. The “Shanghai case” indicates that a judgment from a U.S. court in one state, be it a federal court or a state court, can be recognized and enforced by Chinese courts, on the basis that U.S. courts, be it federal courts or state court, have previously recognized Chinese judgments. The combination of these two cases shows that any judgment whether rendered by any U.S. Court, be it federal court or state court, may be recognized and enforced in China.

II. Our advice

Since these two cases, we have not yet found any case in which a Chinese court refused to enforce a US monetary judgment.

Well, to be more precise, we have not found any more applications for enforcing a US monetary judgment submitted to the Chinese courts.

In fact, that’s a matter of public awareness. We believe that most people do not realize that the US judgment can already be enforced in China.

The truth is that common American commercial judgments are likely to be recognized and enforced in China, such as disputes involving finance, investment, trade, product liability, and consumer rights.

For a more detailed discussion on how to enforce U.S. judgments in China, please read an earlier post “Enforcing Judgments in China While Litigation in Another Country/Region”.

We also recommend that you arbitrate in the United States and then enforce the arbitral award in China, as the enforceability of arbitral awards is more predictable, thanks to New York Convention.

That being said, however, if you have already got a US judgment, or you prefer to turn to the US courts, then you need to know that China actually can enforce US judgments now.

The Cross-border Trade Dispute 101 Series (‘CTD 101 Series’) provides an introduction to China-related cross-border trade dispute, and covers the knowledge essential to cross-border trade dispute resolution and debt collection.

Photo by Brijender Dua on Unsplash

Contributors: Meng Yu 余萌

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