Apart from judgments dealing with divorce and custodial issues, only a small number of published cases have been identified involving attempts to enforce monetary judgments entered in China in U.S. courts. A recent decision from the Central District of California is a landmark in the recognition of Chinese decisions.

By Ge Yan, Partner, Cross Border Dispute Resolution

 

In a 15 year products liability dispute (Hubei Gezhouba Sanlian Industrial Co. Ltd.  vs. Robinson Helicopter Company Inc.), the Central District of California found that the plaintiffs were entitled to the issuance of a domestic (U.S.) judgment in the amount of the PRC judgment with interest. This judgment was originally made in the PRC and recognized in the U.S. marking a landmark in recognition of judgments from China abroad. The case stemmed from a helicopter accident (March of 1994) which was the result of production defects of that particular type of helicopter (R-44).

With respect to foreign money judgments, the general principles of comity and recognition of foreign awards have been codified in the U.S. as the Uniform Foreign Money Judgments Recognition Act (“UFM-JRA”), which has been adopted by the majority of U.S. states. "Foreign money judgments" under the UFM-JRA refers to any judgment granting or denying recovery of a sum of money rendered in a jurisdiction outside the U.S. and its territories.  In states adopting the UFM-JRA, such as in California and codified in the California Code of Civil Procedure, a foreign judgment is subject to a limited scope inquiry prior to a determination as to whether it is entitled to be recognized. A defendant challenging recognition of a foreign judgment may not retry issues of liability or damages, but rather is limited to due process-type defenses enumerated in the statute.
 

Legal Requirements Under UFM-JRA
 

A. Mandatory Conditions

Other than a final, conclusive foreign judgment, the three mandatory requirements for recognition of a foreign judgment are all due process-type considerations:
(1) the foreign court must have rendered its judgment under a system that provides impartial tribunals or procedures compatible with the requirements of due process; (
(2) the foreign court must have had personal jurisdiction over the defendant; and
(3) the foreign court must have had subject matter jurisdiction over the controversy.
 

B. Discretionary Conditions
The discretionary factors a court may consider include:
(1) The Defendant Received Sufficient Notice of the Proceedings
(2) The Judgment Was Not Obtained by Fraud
(3) The Judgment Is Not Repugnant to the Enforcing Court’s Public Policy
(4) The Judgment Is Not in Conflict with Another Final and Conclusive Judgment
(5) The Judgment Is Not Inconsistent with an ADR Agreement Between the Parties
(6) Where Jurisdiction Is Based on Personal Service Alone, the Foreign Tribunal Was Not a Seriously Inconvenient Forum
(7) Does the Foreign Court Reciprocally Recognize Judgments From the U.S.?
 

In the Sanlian case, the district court found that service was proper, the PRC judgment was final, conclusive, and enforceable under the laws of the PRC and involved the recovery of a sum of money. As California’s UFM-JRA applied and no exceptions to recognition were presented, the plaintiffs were entitled to a domestic judgment.

Because the principles governing recognition of foreign judgments in the U.S. are relatively uniform without regard to the nation where the judgment originated, however, one can look to authority under the UFM-JRA pertaining to recognition of judgments entered in any country for guidance of equal weight in assessing whether a judgment from China will be granted recognition and enforcement under any given set of facts.

While cases under the UFM-JRA abound, cases specifically addressing recognition of foreign judgments entered in China are still relatively few. Based on developments in the legal system in China, and especially in the People’s Republic of China, over the past two decades, it is increasingly likely that a U.S. court evaluating whether to recognize a judgment entered in China would conclude that the system of justice in China comports with traditional western notions of due process, and thus that element would likely not to be a bar to recognition in a U.S. court. If the Chinese judgment otherwise meets the due-process type requirements of the UFM-JRA, there is nothing unique about judgments from China that should interfere with their recognition and enforcement in any U.S. court under the same analysis as a judgment entered in England or Canada, as demonstrated in the Sanlian case.