Recognition and enforcement of a court judgment in China: what are the difficulties?
The volume of trade in goods and services between Belarus and China is gradually growing, and at the same time the number of disputes arising between business entities of the two countries is increasing. As a result, there are a large number of requests for assistance in resolving disputes with Chinese counterparties. However, resolving such disputes has a number of difficulties and features.
In the practice of recognition and enforcement of a foreign court decision in China, the following case occurred. The defendant in the claim was a large Chinese agricultural holding company (hereinafter referred to as the Holding). The Chinese company that entered into an agreement with the plaintiff has the same transcription of the name as the said Holding, but consists of different Chinese characters. To conclude the transaction, translations of documents and an extract from the unified state database of the operating Holding were presented. As it turned out, the deal was concluded by a fraudulent company created for these purposes with an identical name. And such cases are not isolated.
Let's consider problematic issues that often arise during litigation, as well as ways to prevent them.
1. Carefully check the Chinese counterparty
It is important to check the defendant's registration details, information about major suppliers, customers, bank accounts, financials, signatories, etc. General registration data, information about the founders of the company and changes in its activities can be obtained from an extract from the commercial register of China.
2. Use Chinese in your documents
Particular attention should be paid to the language of the agreement and its annexes, as well as documents that will be provided to the competent authority when resolving disputes. Despite the fact that the language of contracts with Chinese counterparties is not fixed anywhere in the legislation, we recommend in practice that documents be translated into Chinese. Language is also important for any notifications from the Chinese side and compliance with the claim procedure.
3. Notify the debtor at the proper address.
In practice, Chinese courts often refuse to recognize decisions of foreign courts due to failure to comply with the proper procedure for notifying the Chinese side. In accordance with Art. 78, 80 of the Civil Procedure Code of the People's Republic of China, a notice is considered proper if the notice is delivered to an authorized person or, if this is difficult, sent to the actual legal address of the debtor.
4. Compliance with the procedure for recognition and execution of a decision does not guarantee success
In accordance with Part 1 of Art. 18 of the Treaty on Legal Assistance in Civil and Criminal Cases between the Republic of Belarus and the People's Republic of China (hereinafter referred to as the Treaty), in order to recognize and enforce the decision, the applicant submits to the court of Belarus that made the decision a petition for its recognition and execution. The Belarusian court forwards the petition to the court of the Chinese counterparty (through the Ministry of Justice of the Republic of Belarus and the Ministry of Justice of the PRC). The applicant may also file a petition directly with the debtor's court.
The documents specified in the Agreement must be attached to the application.
Recognition and enforcement of a court decision is carried out by a Chinese court in accordance with the laws of the People's Republic of China, and the said decision is considered only for compliance with the requirements of the Treaty.
5. The PRC court refused to recognize the decision: what to do?
If the PRC court refused to recognize the decision of the Belarusian court, the plaintiff has several options:
- apply again to the Belarusian court with a new claim. However, this option requires financial and time costs and does not guarantee recognition of the decision in the PRC upon repeated application;
- initiate new proceedings on an identical claim in a court of another state, if the rules of jurisdiction allow this, obtain a new decision and apply to the Chinese court for recognition of the decision and its enforcement. In this case, it may be advisable to apply to the court of the jurisdiction whose decisions are most often recognized and enforced in Chinese courts;
- initiate a new case on an identical claim in a Chinese court and obtain a decision under Chinese law in favor of the plaintiff by a national court.
Conclusion:
The issuance of a court decision against a Chinese company does not mean that it will actually be executed on the territory of the PRC and the resident company will receive what is due to it in the case won. To reduce the risk of refusal to recognize and enforce a decision in the PRC, you need to carefully approach the dispute already at the pre-trial stage of its settlement, including following the recommendations set out in the article.