The Nanjing Intermediate Court recently recognised a judgment of the Singapore Commercial Court, despite the absence of a recognition agreement between Singapore and China.
Should this be seen as a step towards better recognition of foreign decisions in China? Desirable but still uncertain. At present, the recognition of foreign decisions in China must be distinguished according to the nature of the decision:
Recognition of decisions rendered by foreign courts
The principle is that foreign court decisions may be recognized and enforced in China if there is an agreement to that effect between China and the third country where the decision was issued, or in accordance with the principle of reciprocity.
However, this principle is of delicate application. Indeed, even in the presence of a recognition agreement, the Chinese courts reserve the right to assess whether the foreign decision is in accordance with the essential principles or the social interest of the People’s Republic of China.
In practice, this makes it extremely difficult to obtain recognition of a foreign decision on Chinese territory. To a certain extent this observation must be tempered in the case of decisions rendered by the courts of Macao and Hong Kong on the basis of more favourable recognition agreements.
Recognition of international arbitral awards
China is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. As a result, arbitral awards made in one of the member countries of this Convention may therefore be subject to recognition and enforcement in China.
In general, China is in compliance with its obligations under the Convention. Thus, for example, only a few Chinese courts have jurisdiction to hear applications for recognition of foreign arbitral awards. A welcome measure to limit the protectionist reflexes that some local courts may have.
In conclusion, it is therefore easier to obtain recognition and enforcement of an arbitral award than a foreign court decision. The law applicable to the contract and the jurisdiction clause will therefore have to be carefully chosen.