When different judicial systems clash on disputes involving foreign commercial judgments recognised and enforced in mainland China the outcomes have always been tricky, even under the confines of bilateral treaties. But recent progress may allow greater certainty, writes Edward Chin
FOLLOWING STELLAR ECONOMIC GROWTH in the past four decades, China’s legal system has been under rapid reformation to keep up with change, not only in order to lockstep with major international trade accomplishments, but to successfully and transparently address the complex area of cross-border commercial disputes. Given that China is a signatory to the New York Convention, the enforcement of arbitral awards has been viewed as the most accessible method for foreign parties to enforce their rights to a contract in Chinese courts – subject to an arbitration agreement.
Yet arbitration is not the only option for resolving commercial disputes in China, and some parties have chosen to take proceedings directly into the Chinese courts. However, unfamiliarity and scepticism have surrounded these experiences for many foreigners, which then leaves the option of litigating the matter in their local courts and then attempting to get this foreign judgment recognised and enforced in Chinese courts.
In the past, this recognition and enforcement approach was seen as too unpredictable, even for countries – or in some cases, special administrative regions within China – that had signed bilateral treaties with China where both jurisdictions mutually agreed to recognise and enforce their judgments subject to satisfying the criteria in the treaty.
However, recent developments are encouraging. On 31 December 2021, the Supreme People’s Court (SPC) issued the Memorandum of the National Court’s Symposium on Foreign-related Commercial and Maritime Trials 2021 (the memo of meeting 2021), which clarified the practice of recognition and enforcement of foreign judgments (REJ) in China.
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