Article of the Day: Jie Huang on Recognition of Judgments In Hong Kong

In today’s article of the day, Conflicts Between Civil Law and Common Law in Judgment Recognition and Enforcement: When is the Finality Dispute Final?, 29 Wis. Int’l L. J. 70 (2011), Professor Jie Huang, of the Shanghai Institute of Foreign Trade’s School of Law, examines the difficulties involved in recognition and enforcement of Mainland Chinese judgments in Hong Kong. The culture clash is fascinating.

The basic problem, from the Mainland Chinese perspective, is that under Chinese law on the Mainland, there is a procedure for retrying cases even after they have gone to judgment. The basic idea is that the court, on its own motion or at the request of the procuratorate (either the Supreme People’s Procuratorate or a local people’s procuratorate) can retry the case even if the judgment is final. I don’t reprint the relevant sections of the law here, but you can find them in Articles 177 to 190 of the PRC Civil Procedure Law.

But the existence of this procedure causes problems for Mainland Chinese judgment creditors seeking recognition and enforcement of their judgments in Hong Kong, where finality of the judgment is a prerequisite to recognition and enforcement. In Chiyu Banking Corp. v. Chan Tin Kwun, [1996] 2 H.K.L.R. 395 (H.C.), the court refused to recognize and enforce a Mainland judgment where the defendant had asked the procuratorate to seek a retrial, and it was possible, under the provisions of Chinese law cited above, that the case would be retried. Later Hong Kong cases extend the principle to cases where a party has not asked the procuratorate to seek a retrial, on the grounds that there is no time limit on making such a request and the procuratorate can act at any time.

Huang attacks Chiyu on both doctrinal grounds and empirical grounds. On the empirical side, Huang presents statistics showing that only a vanishingly small percentage of cases are accepted for retrial in the first place (1% or less in recent years) and that substantially more than half of the cases that were retried were affirmed. Why should the Hong Kong courts, he suggests, treat all Mainland Chinese judgments as non-final when in practice a reversal after a retrial almost never happens?

On the doctrinal side, Huang asserts that Chiyu is based on an English case, Nouvion v. Freeman, that denied recognition and enforcement to a Spanish judgment that was summary in nature and that was not res judicata even under Spanish law. But under Chinese law, the mere fact that a request for a retrial could be made, or even that one had been made, does not render a judgment unenforceable. Only the actual grant of a retrial suspends enforcement. Huang also points out that the Hong Kong courts will recognize and enforce United States judgments, even though under Fed. R. Civ. P. 60, the court entering the judgment may in certain circumstances vacate it even after the time to appeal has expired.

I think there is much sense to Huang’s view on this, though I do think the reliance on the treatment given to US judgments may not be as straightforward as the article suggests. It’s true that Rule 60(b) provides various grounds for vacating a judgment. But some of those grounds must be asserted within a limited time, see Fed. R. Civ. P. 60(b)(1)-(3), and others (e.g., the judgment is void, Rule 60(b)(4), or the judgment has been satisfied or discharged, Rule 60(b)(5)) are grounds that would, in US law, permit a court to refuse recognition and enforcement regardless whether the court issuing the judgment in the first instance had power to vacate the judgment. (In other words, the Full Faith and Credit Clause, which Huang cites, does not require a state to recognize or enforce a void judgment of a sister state, or to enforce a judgment that has been satisfied). Still, Rule 60(b)(6) provides a residual basis, without a strict time limit, for vacating judgments, so Huang is right to point out a disparity between the Hong Kong treatment of US judgment and the Hong Kong treatment of Mainland Chinese judgments.

6 responses to “Article of the Day: Jie Huang on Recognition of Judgments In Hong Kong”

  1. Twofish

    I’m surprised by this article since I thought that the issue of finality had been settled legislatively. The Mainland Judgments (Reciprocal Enforcement) Bill passed in 2008 implements ‘The Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region Pursuant to Choice of Court Agreements between Parties Concerned’ signed in 2006. Under those ordinances a judgment that has been affirmed by certain courts is considered “final.”

    Also the issue of “final judgment” is not a civil/common law issue. The provision that allows a case to be reopened is uniquely PRC.

    1. Thanks for the comment, Twofish. I don’t know the answer to your point. I’ll try to correspond with the author of the article and see whether I can get a clarification, and I’ll do a little digging. I’ll leave a comment here if I learn anything. Simply looking at the title of the law your cite, is it possible it relates only to cases where the parties have entered into a choice of court agreement.

      I agree with you that the PRC provisions on reopening cases seems unique. The author analogizes it with Rule 60 of the Federal Rules of Civil Procedure, though for the reasons I give in the post, I am not sure that this is a successful analogy.

    2. Twofish, as I suspected, the statute applies only when the parties have chosen a Mainland court as the forum. See in particular section 5 of the statute, and the definitions of “chosen court” and “designated court” in section 2. So the statute, it seems to me, does not apply generally to Mainland judgments. I’ll be curious to know your thoughts.

    3. Jie Huang

      Thank you very much for discussing my Paper. I apologize that I did not discover this and reply to the posts earlier.

      1. Regarding whether the Mainland Judgments (Reciprocal Enforcement) Bill passed in 2008 solves all finality issues of Mainland judgments in Hong Kong, the answer is negative; because, as Ted pointed out, the Statute only covers a small number of judgments.

      Here is an incomplete statistics that I have found currently: totally two Mainland judgments (KFE HONG KONG CO., LTD v. EXTRACT GROUP LTD, HCA457/2010; FUSHAN CLOTHING COMPANY v. FIRST DRAGON FASHION (HONG KONG) LTD, HCCW41/2010) have applied to be recognized and enforced in Hong Kong. However, neither of them is enforceable in Hong Kong because no choice of Mainland court agreement exists. Totally five Hong Kong judgments have applied to be recognized and enforced in Mainland China. The results of JRE have not been released yet. The empirical evidence regarding Mainland-Hong Kong Arrangement shows that the scope of the Arrangement is too narrow. If any one has more empirical evidence regarding how the Arrangement is implemented in practice, I would be grateful if I can share with that.

      2. Thank you very much for pointing out that the finality issue is actually not a civil/common law issue. I agree with this. Finality is a difference between domestic laws of different regions in China. The Paper is part of my new book “Interregional Recognition and Enforcement of Civil and Commercial Judgments: Lessons for China from US and EU Law”, which may come out in 2013 by Hart Publishing. I will certainly move the finality from the distinction of civil/common law issue. Twofish, thank you again for the comment.

      3. Thank you for pointing out the weakness of the analogy between Mainland China and the US JRE law. Ted, do you know any judgment was vacated on the ground of FRCP Rule 60(b)(6)? Is there any statistics of the implementation of Rule 60 (b) in practice, for example, what percentage of judgments applied for vacating is in fact vacated in the US federal courts? I would be grateful to exchange views regarding this with you.

      Thank you again for your comments.

      1. Thank you for commenting on this post. You can find a good list of the most common situations where FRCP 60(b)(6) is applied in 11 Wright & Miller § 2864. They include: (1) breach of a settlement agreement that included a consent judgment; (2) fraud by the party’s lawyer or a third-party witness; and (3) (prior to the adoption of FRAP 4(a)(6) in 1991) the movant does not receive notice of the judgment in time to take an appeal. The discussion in Wright & Miller mentions other uncommon situations as well.

        The only statistics for Rule 60(b) cases that I know of are in John L. Costello, Summary Denials of Relief Under Procedural Rules of Preclusion are Deprivations of Due Process of Law, 2 Geo. Mason U. Civ. Rts. L. J. 215, 233 (1992), which go through 1990 and which focus on claims of attorney error. The Administrative Office of the US Courts may or may not be able to provide better and more current statistics.

        1. Jie Huang

          Thank you so much for this information.

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