For the first time, a Chinese court has recognised a commercial decision of an English court
Recently, the Shanghai Maritime Court ruled to recognise a commercial decision made by the British High Court. This is the first time that a Chinese court has recognised the validity of a commercial judgment of an English court in accordance with the principle of reciprocity. It is also the first case in which a Chinese court has tried a case of recognition and enforcement of a foreign court's judgment with reference to the Minutes of the National Forum on Foreign-related Commercial and Maritime Adjudication Work (the "Minutes"), which is of great significance.
In 2010, a Norwegian shipping company ("Shipowner") leased three oversized bulk carriers to another shipping company (the "Charterer"), whose liability was guaranteed. The Shipowner filed a lawsuit against the guarantor in the English court to recover its losses and the English court ordered the guarantor to pay damages of US$37 million (the "English Court Judgment").
In order to enforce the English court judgment, the Shipowner filed a lawsuit in the Shanghai Maritime Court to apply for recognition of the judgment. One of the core issues was whether the relationship between China and the UK constituted a reciprocal relationship to recognise and enforce court judgments, including whether there was precedent for recognition and enforcement of Chinese court judgments by English courts, and whether there were precedents for refusing to recognise and enforce Chinese court judgments. The Shanghai Maritime Court also considered in the alternative whether the action could be admitted in advance of a decision of the English court based on the principle of reciprocity. In response the Shanghai Maritime Court held that although the expression "recognise" of the Chinese court's judgment and its preservation ruling appeared in Spliethoff's Bevrachtingskantoor BV v Bank of China Ltd  EWHC 999 (Comm) it could not be regarded as "recognition" in the sense of "recognition and enforcement of foreign court judgments", and the case did not constitute a precedent for the Recognition and Enforcement of Chinese court judgments.
When the Civil Procedure Law stipulates the principle of reciprocity, it does not limit it to the fact that the relevant foreign court must first recognise the civil and commercial judgment of the Chinese court, and the civil and commercial judgment made by the Chinese court can be recognised and enforced by the foreign court to consider that there is reciprocity between the two parties. Accordingly in the absence of precedent for recognition and enforcement of Chinese court judgments by English courts, the Shanghai Maritime Court applied the "legal reciprocity" standard and ruled on the recognition of English court judgments based on the principle of reciprocity.
The Shanghai Maritime Court's recognition of the English court judgment is the first time a Chinese court has recognised and allowed enforcement of a foreign court judgment. The key to determining whether there is a reciprocal relationship between China and the UK is whether the civil and commercial judgments rendered by the people's courts can be recognised and enforced by the English courts under English law. The recognition and enforcement of foreign court judgments in England and Wales is based primarily on common law. In Adams v. Cape Industries plc  Ch.433 the English courts made it clear that a foreign court's judgment can be recognised and enforced by an English court if:
- The foreign courts have international jurisdiction;
- Foreign courts have domestic jurisdiction under foreign domestic law;
- The judgment is final, certain and conclusive;
- The judgment is related to the performance of monetary debts;
- The substantive content and jurisdiction of the judgment was not obtained fraudulently; and
- The recognition or enforcement of the foreign judgment does not violate public policy or natural justice.
The Shanghai Maritime Court held that as long as the civil and commercial judgments made by Chinese courts can be recognised and enforced by foreign courts, there is a reciprocal relationship between the two parties.
This case is a substantial change in the criteria for determining reciprocal relations in judicial practice in China’s courts. Moving forward as between China and the UK, the courts will no longer refuse to recognise and enforce foreign judgments because there is no precedent for recognition and enforcement and that there is no reciprocity.
The case set a precedent for Chinese courts to recognise and enforce English court judgments in judicial practice and laid a strong foundation moving forward for judicial assistance between Chinese and British courts and that more foreign judgments will be recognised and enforced in China based on "reciprocity of law" in the future.