Thoughts on The Chinese Decision On Recognizing a US Judgment
Posted on September 6, 2017
If you haven’t read Dr. Jie Huang’s important report on a Chinese court’s unprecedented recognition of a US commercial money judgment, read it now. This is a big deal. I have just a few comments on the development.
First, the service of process in the US decision was, apparently, service by publication. I assume for the moment that the service was valid under California law. In cases of service by publication, the service provisions of the Hague Service Convention does not apply, because there is no occasion to transmit a document abroad for service. (The default judgment provisions may apply, however). Still, it’s welcome news that the Chinese court apparently treated the question of service as one to be decided under the law of the forum. I don’t necessarily recommend aggressive use of service by publication, since it is the one method of service perhaps most likely to cause foreign courts to raise due process-type concerns.
Second, I think this is a very heartening sign about the Chinese courts and about US strategy in private international law. One of the things the United States has done very well historically is to give judicial assistance to litigants in other countries without requiring reciprocity. The theory has been that liberal US practice would encourage liberalization abroad, but it has not always been easy to see this in action. We see it in action here, though: the Chinese court cited one of several US decisions recognizing Chinese decisions as a basis for concluding that the US courts would give reciprocal treatment to Chinese decisions. This is just how reciprocity is supposed to work, and it goes to show that however some politicians today see the world, making the first move in a cooperative game is not just for suckers.
Third, it’s probably too soon to change strategies when doing business with Chinese firms or nationals. An agreement to arbitrate is often a good solution when doing business in China (though there are special considerations that you have to consider to ensure enforcement of an arbitral award in China, which I won’t cover here), and people who really know about Chinese law say that sometimes litigation in Chinese courts may be a reasonable option. Now we see that when enforcement will have to be in China, litigation in a US court may be a reasonable option, too, but remember that as of today, n=1.