Guiding Case No. 235 In re S Shipping Co., Ltd.
(Recognition of UK Commercial Court Judgments)

Keywords: civil; recognition of foreign judgments; reciprocity, examination of an individual case, de facto reciprocity, de jure reciprocity

Key Points of Judgment

When the people's court examines an application or request for recognition and enforcement of a civil judgment or ruling entered by a foreign court and determines whether there is reciprocity, the relevant foreign court's prior recognition and enforcement of a civil judgment or ruling entered by a Chinese people's court shall not constitute a jurisdictional prerequisite. If, according to the laws of the relevant foreign country, the civil judgment or ruling entered by a Chinese people's court may be recognized and enforced by the court of the foreign country, and there is absent documented refusal precedents to recognize and enforce the judgment or ruling entered by the Chinese people's court on the ground that there is no reciprocity, it may be determined that there is reciprocity between China and such foreign country in recognition and enforcement of civil judgments and rulings.

Basic Facts

On March 5, 2010, S Shipping Co., Ltd. (hereinafter referred to as "S Shipping Company") concluded three time charter parties with [REDACTED]hua (Hong Kong) Ships Company, according to which three ships were chartered to [REDACTED]hua (Hong Kong) Ships Company. On March 25, 2010, [REDACTED]hua Logistics Holding (Group) Co., Ltd. (hereinafter referred to as "[REDACTED]hua Logistics Company") issued three letters of guarantee to S Shipping Company, so as to provide guarantee for the performance of the aforesaid time charter parties concluded by [REDACTED]hua (Hong Kong) Ships Company. The three letters of guarantee stipulated that laws of the U.K. shall be applicable and any lawsuit shall be filed to the England and Wales High Court of Justice in London for trial. Due to delay in payment of the chartered freight by [REDACTED]hua Ships Company, S Shipping Company filed a lawsuit with the England and Wales High Court of Justice against [REDACTED]hua Logistics Company according to the stipulations of the letters of guarantee. [REDACTED]hua Logistics Company responded to the lawsuit in court. On March 18, 2015, the England and Wales High Court of Justice entered a judgment (No. 718 [2015], EWHC (Comm)) in favour of S Shipping Company. Afterwards, the England and Wales High Court of Justice assessed the amount of claims and legal fees, and issued orders on April 27, 2015 and October 3, 2016, issued the Final Cost Certificate on November 1, 2016, and issued a correction order on May 17, 2018. [REDACTED]hua Logistics Company refused to accept the aforesaid orders and certificate and appealed to the British Court of Appeal. On October 7, 2016, the British Court of Appeal entered a judgment (No. 982 [2016], EWCA Civ) to dismiss the appeal filed by [REDACTED]hua Logistics Company. The British Court of Appeal afterwards issued orders on October 7, 2016 and May 8, 2017. [REDACTED]hua Logistics Company failed to perform the obligations determined in the effective judgment. S Shipping Company thus requested that the Chinese court should recognize the aforesaid judgments entered by the England and Wales High Court of Justice and the British Court of Appeal as well as a series of orders issued by them. [REDACTED]hua Logistics Company contended that China and the U.K. have not concluded or acceded to any international treaties related to mutual recognition and enforcement of rulings and judgments entered by each other's courts, nor have they established corresponding reciprocity.

Judgment

On March 17, 2022, the Shanghai Maritime Court entered a civil ruling (No. 1 [2018], Assistance in Recognition of Foreign Judgments, 72, Shanghai) to recognize [2015] EWHC 718 (Comm) entered by the England and Wales High Court of Justice as well as the Interlocutory Orders dated 27 April 2015 and October 3, 2016, the Final Cost Certificate issued on November 1, 2016, and the correction order issued on May 17, 2018 under the same case; and the judgment (No. 982 [2016], EWCA Civ) entered by the British Court of Appeal as well as the orders issued on October 7, 2016 and May 8, 2017 under the same case.

Reasons for Judgment

This case involves an application for the recognition of a civil judgment entered by a foreign court. In accordance with the provisions of Article 289 of the Civil Procedure Law of the People's Republic of China (2021 Amendment), the people's court shall examine an application or request for the recognition and enforcement of an effective judgment or ruling entered by a foreign court in accordance with an international treaty concluded or acceded to by the People's Republic of China or under the principle of reciprocity. As China and the U.K. have not concluded or acceded to any international treaty on mutual recognition and enforcement of civil judgments and rulings entered by each other's courts, the principle of reciprocity shall be the basis for examining whether the judgments entered by the British courts should be recognized.

The principle of reciprocity is the embodiment of the principle of equality and mutual benefit in the private international law. The Civil Procedure Law of China does not limit the principle of reciprocity to a foreign court's prior recognition and enforcement of a civil judgment or ruling entered by a Chinese court. Of course, if there has been a precedent of a foreign court's recognition and enforcement of a civil judgment or ruling entered by a Chinese court, it may be naturally determined that there is de facto reciprocity in the recognition and enforcement of civil judgments or rulings entered by each other's courts between China and such foreign country. However, even if there is absent documented refusal precedents of the recognition and enforcement of a civil judgment or ruling entered by a Chinese court, if, according to the laws of the country where the foreign court that has entered the judgment is located, the conditions for recognition and enforcement of a judgment or ruling entered by a court of another country are substantially the same as or more lenient than those as prescribed by the Chinese laws, it may be determined that the civil judgment or ruling entered by a Chinese court may be recognized and enforced by the court of such country under the same circumstances. Under this premise, if there is absent documented refusal precedents where a court of such country has refused to recognize and enforce a civil judgment or ruling entered by a Chinese court on the ground of nonexistence of reciprocity between China and the country, it may be determined that there is de jure reciprocity between China and the country.

In this case, as the applicant S Shipping Company produced no evidence that there was any precedent where a British court has recognized and enforced a civil judgment or ruling entered by a Chinese court, it failed to prove de facto reciprocity between the U.K. and China in the recognition and enforcement of civil judgments and rulings entered by each other's courts. However, in view of the practice of the British courts, where a judgment or ruling entered by a foreign court seeks recognition and enforcement in the U.K., a new lawsuit is required to be filed with a British court according to the common law rules in the U.K. and on the basis of the judgment or ruling entered by the foreign court; if the conditions for recognition and enforcement are met, the British court will enter a judgment in substantially the same form as the original judgment, which will then be enforced under the enforcement procedure provided by the British laws. This is also a common practice in common law countries. Under the British laws, the existence of a relevant treaty is not necessary for the recognition and enforcement of a judgment or ruling entered by a foreign court. There is no evidence proving that there are legal barriers to the recognition and enforcement of a judgment or ruling entered by a Chinese court in the British courts, nor is there any evidence proving that a British court has refused to recognize and enforce a judgment or ruling entered by a Chinese court on the ground of nonexistence of reciprocity between China and the U.K. Therefore, it may be determined that there is de jure reciprocity between China and the U.K. The judgments involved entered by the British courts did not violate the basic principles of the laws of the People's Republic of China or harm the sovereignty, security, and public interest of the People's Republic of China.

In conclusion, although China and the U.K. have not concluded or acceded to any international treaty on mutual recognition and enforcement of civil judgments and rulings entered by each other's courts, the judgments involved entered by the British courts may be recognized according to the principle of reciprocity.

After the judgments entered by the British courts were recognized in the ruling of this case, the England and Wales High Court of Justice recognized two judgments entered by the people's courts in Hangzhou City, Zhejiang Province in December 2022.

Legal Provisions

Article 299 of the Civil Procedure Law of the People's Republic of China (Article 289 of the Civil Procedure Law of the People's Republic of China (2021 Amendment) applied in this case)