The Case
On 29 July 2021, the Shanghai No. 1 Intermediate People’s Court (Shanghai Court), in judgment (2019) Hu 01 Xie Wai Ren No. 22（2019沪01协外认22号）recognised a monetary judgment by the Singapore High Court (OS number S59/2014). Significantly, this is possibly the first time that any Chinese court has explicitly mentioned that de jure reciprocity exists between China and Singapore in terms of recognition and enforcement of each other’s judgments.
Background
The applicant before the Shanghai Court is a BVI-registered company whereas the respondent is registered in Singapore. Both appeared to be in solar power business. In 2014, the applicant sued the respondent in Singapore over various borrowing transactions that totalled close to USD 198 million. The Singapore High Court entered a judgment in favour of the applicant (Singapore Judgment). The respondent subsequently appealed (CA 109/2018). However, as it failed to pay by 7 August 2019 an amount ordered by the Singapore Court of Appeal, that appeal was dismissed for abuse of process.
The applicant then applied to the Shanghai Court for recognition and enforcement of the Singapore Judgment.
Disputes
The applicant relied upon Article 281 and Article 282 of China’s Civil Procedure Law and the Memorandum of Guidance between the Supreme People’s Court of the People’s Republic of China and the Supreme Court of Singapore on Recognition and Enforcement of Money Judgments in Commercial Cases (MOG) to support its application.
In turn, the respondent argued, among others:
- that a Chinese court has already rendered a different binding judgement on the matters under application for recognition; its argument was that the various borrowings in the Singapore Judgment were part of a larger sum of money that was the subject matter of multiple agreements signed as part of a corporate reorganisation process;
- that the Singapore High Court lacked jurisdiction because those multiple agreements referred to above all required disputes to be heard by a Chinese court;
- that the Singapore Judgment was against public policy in China; this was because if the Singapore Judgment were to be recognised, some companies in China would fall into the hands of a foreign company that has already gone into bankruptcy liquidation (among other reasons); and
- that China and Singapore has not signed any judicial assistance treaty and that the MOG is not binding.
Reasoning
In giving its judgment, the Shanghai Court provided the following reasons:
For (1), broadly speaking, the Shanghai Court found that the borrowing transactions dealt with in the Singapore Judgment did not overlap or completely overlap those dealt with in the other agreements (and accordingly the Chinese judgment).
For (2), the Shanghai Court found the Singapore High Court to have jurisdiction because the respondent is registered in Singapore and had never raised any objection to jurisdiction when it appeared in Singapore proceedings. The respondent was also not party to those various agreements which were raised as defence.
For (3), the Shanghai Court opined that the Singapore Judgment, which was about repayment of outstanding sums, was not against China’s public policy. Although a Chinese court has concluded otherwise on similar disputes between the parties, this was because courts in China and Singapore applied laws of different countries when hearing the disputes.
Most importantly, for (4), the Shanghai Court wrote in the judgment (translated from Chinese):
“On the one hand, China’s Supreme People’s Court and the Supreme Court of Singapore have signed the MOG which specifies that Chinese courts can recognise and enforce Singapore court judgments based on reciprocity and that Singapore courts can recognise and enforce Chinese judgments according to common law rules. This indicates that there exists de jure reciprocity between China and Singapore and that Chinese civil and commercial judgments rendered under equivalent conditions can be recognised and enforced in Singapore. On the other hand, the Singapore High Court has previously recognised and enforced a Chinese judgment, and a Chinese court has also recognised and enforced a Singapore judgment, which means that de facto reciprocity exists between China and Singapore. Therefore, it can be concluded that there is reciprocity between China and Singapore.“
Analysis
Traditionally, Chinese courts have been taking a strict approach to reciprocity such that only de facto reciprocity counts when it comes to the recognition and enforcement of foreign judgments. In recent times, however, a relaxation in attitude can be discerned. The Nanning Statement (南宁声明), a non-binding consensus adopted by judicial representatives of China and various ASEAN countries in June 2017, mentions that where there is no treaty between two countries, the court addressed will “presume” the existence of a reciprocal relationship, provided the courts of the other country have not refused to recognise or enforce the judgments from the country of the court addressed on the ground of lack of reciprocity. This concept of presumptive reciprocity was later affirmed in 2019 by the Supreme People’s Court in its Several Opinions on Requiring People’s Courts to Further Provide Judicial Services and Guarantees for the Construction of the “Belt and Road” Initiative (关于人民法院进一步为“一带一路”建设提供司法服务和保障的意见 法发〔2019〕29号).
One may thus argue that the explicit mentioning of de jure reciprocity by the Shanghai Court signals a further relaxation from the de facto reciprocity approach.
On the other hand, it may be wise not to read too much into this judgment. First, the judgment is not given by the Supreme People’s Court. As such, its value as a “precedent” is unclear unless for example, the judgment is later included as one of the “model cases” by the Supreme People’s Court. Second, as de facto reciprocity already exists between China and Singapore, de jure reciprocity is arguably just the “icing on the cake”. It remains to be seen whether other courts in China will follow this de jure reciprocity approach proposed by the Shanghai Court and if so, what test they would use. The Shanghai Court appeared to have adopted the “equivalent conditions” test.
For more detailed analysis on reciprocity, read ABLI’s publication Asian Principles for the Recognition and Enforcement of Foreign Judgments – Principle 5 Reciprocity.
For the foreign judgments recognition and enforcement regimes in China and Singapore, read ABLI’s publication Recognition and Enforcement of Foreign Judgments in Asia.
