Due to the independence of the judiciary in each country or region, an award or a judgment rendered in one jurisdiction does not necessarily mean that it can be naturally enforced in other jurisdictions. Therefore, when choosing a dispute resolution forum, the very first consideration should be whether the award or judgment made by this forum can be enforced in the jurisdiction where the parties' property is located.
The stance of Chinese courts towards the recognition and enforcement of foreign judgments
1. The process
Cases of recognition and enforcement of foreign judgments will be heard by the defendant's local court. The decision from the local court is final, therefore parties to a case in which recognition and enforcement are rejected have no right of appeal.
2. The criteria
In general, an applicant who applies to Chinese courts for recognition and enforcement of foreign judgments needs to prove the following facts:
- According to the laws of China, the relevant case can be heard in a foreign country;
- The foreign court that has made the judgment has proper jurisdiction over the case;
- The procedures for making the judgment or ruling by the foreign court are in compliance with the laws of the country, and there are no acts that seriously violate procedural justice such as making judgments or rulings without proper service or without permitting the right to be heard;
- The judgment has come into effect according to the laws of the foreign court;
- The judgment has been served on the defendant; and
- Reciprocity - the court of the country has recognised and enforced the judgments and rulings made by the Chinese court.
The stance of Chinese courts towards the recognition and enforcement of foreign-related arbitral awards
In the case of arbitration, it is primarily an economic dispute by nature and not made by the judiciary of a particular country, therefore there are fewer factors involving national sovereignty and national policies to be considered in the recognition and enforcement of an arbitral award.
In addition, under the New York Convention, an arbitral award made in the territory of one signatory state can be recognised and enforced in other signatory states. Therefore, since China is a signatory to the New York Convention, foreign arbitral awards, in a sense, are more easily recognised and enforced by Chinese courts than foreign judgments.
As mentioned above, the recognition and enforcement of foreign judgments or arbitral awards involve many complex factors that may be governed by international treaties and the domestic laws of different jurisdictions.
Therefore, it is recommended that when choosing a dispute resolution body in the course of entering into a commercial contract, the parties should take full consideration of some factors such as the possibility of enforcing the rendered judgment or arbitral award at the domicile of the contracting parties and in the location of the parties' main property.
It would be worthwhile to seek advice from the professionals regarding applicable laws and relevant procedures considering that there will be issues of recognition and enforcement at some point in the future.