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As China¡¯s ¡°going global¡± strategy advances, companies are increasingly conducting business abroad, navigating complex legal environments and facing a rising number of disputes. Although international arbitration has become a preferred method for resolving cross-border commercial disputes, litigation in foreign courts is sometimes inevitable, and the legal systems of different countries and regions vary significantly.

But both foreign court decisions in civil and commercial law, as well as arbitral awards, must undergo specific legal procedures to be recognised and enforced in China.

Foreign court judgments. The legal basis for recognising and enforcing foreign court judgments in China is outlined in the 2023 revised Civil Procedure Law, the Interpretation of the Supreme People¡¯s Court on the Application of the Civil Procedure Law, and the Minutes of the National Symposium on the Foreign-related Commercial and Maritime Trial Work of Courts, among other laws, regulations and judicial guiding opinions.

It also includes bilateral judicial agreements signed by China that provide for mutual recognition and enforcement of court judgments and arbitral awards. Recognition and enforcement of foreign civil and commercial judgments in China follow specific principles and review procedures, including:

The principle of reciprocity requires Chinese courts to assess whether a foreign country recognises and enforces Chinese court judgments before deciding to recognise and enforce judgments from that country. This principle aims to ensure equal treatment of Chinese judgments abroad. However, under the Belt and Road Initiative, China¡¯s judicial policy on reciprocity has seen significant progress. Article 44 of the minutes provides a clear legal framework for determining reciprocity. Chinese courts no longer require a precedent of the foreign country recognising Chinese judgments. Instead, they adopt a ¡°presumption of reciprocity¡± approach, where reciprocity can be presumed if the two countries have reached mutual understanding or consensus through diplomatic channels, or if there is evidence of diplomatic commitments to reciprocity.

According to Chinese law, parties seeking the recognition and enforcement of foreign court judgments must apply to the intermediate people¡¯s courts having jurisdiction. The court will review the judgment¡¯s legality, including whether it has taken effect and whether the service of process is legally compliant. Articles 300 and 301 of the Civil Procedure Law, along with article 46 of the minutes, detail the grounds on which recognition and enforcement of foreign judgments may be refused. These provisions clearly delineate the circumstances under which Chinese courts may exercise their discretion to deny such recognition and enforcement.

Foreign arbitral awards. As a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Convention, China has established clear legal grounds and extensive judicial practice for recognising and enforcing foreign arbitral awards.

In 1987, the Supreme People¡¯s Court issued a notice implementing the New York Convention, incorporating its obligations into China¡¯s judicial framework. Subsequently, the Civil Procedure Law formally outlined the procedures for recognising and enforcing foreign arbitral awards.

Arbitral awards made in Hong Kong and Macau are subject to judicial review under the Arrangements and Supplemental Arrangements of the Supreme People¡¯s Court for the Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region, or the Arrangement between the Mainland and the Macau Special Administrative Region on Reciprocal Recognition and Enforcement of Arbitral Awards.

Chinese laws and judicial interpretations provide guidance on applying for the recognition and enforcement of foreign commercial arbitral awards in China. This includes specifying the targets of such applications, time limits for filing, competent courts for accepting applications, and the jurisdictional scope.

In recent years, Chinese courts have demonstrated a more proactive and open attitude towards recognising and enforcing foreign arbitral awards, with an increasing number being upheld. This trend has not only boosted international confidence in China¡¯s judicial environment but also provided crucial legal protection for Chinese enterprises conducting business abroad.

Latin American judgments and arbitral awards. Currently, Cuba, Argentina, Brazil and Peru have signed bilateral judicial assistance treaties or agreements with China concerning civil and/or commercial matters.

These treaties typically cover evidence collection, service of process, and mutual recognition and enforcement of court judgments and arbitral awards. However, the details and scope of enforcement ¨C such as procedures, types of judgments eligible for recognition and enforcement, and grounds for refusal ¨C differ among the agreements.

Additionally, 19 Latin American countries are signatories to the New York Convention, enabling mutual recognition and enforcement of arbitral awards with China under the convention¡¯s provisions.

Key takeaway

By understanding and mastering China¡¯s legal framework for recognising and enforcing foreign court judgments and arbitral awards, businesses can better address overseas legal challenges, safeguard their legitimate rights, and support their international development.

At the same time, companies should take preventive measures in daily operations: by carefully designing contract terms when conducting overseas business, seeking professional legal advice in cross-border disputes, and preserving relevant evidence in potential conflicts to enhance their overall ability to handle foreign legal disputes.

Lei Ting is a partner at Global Law Office. He can be contacted by phone at +010 6584 6698 and by email at leiting@glo.com.cn
Wu Ziyu is an associate at Global Law Office. She can be contacted by phone at +010 6584 6555 and by email at wuziyu@glo.com.cn