International Law

Federal Court Enforces Chinese Judgment Against American Company

The Central District of California has held that a money judgment of $6.5 million against Robinson Helicopters issued by a Chinese court is enforceable under California's Uniform Foreign Money Judgments Recognition Act. (UFMJRA) Download the decision here.

What makes this case significant? The lack of treaty obligations regarding the recognition of judgments between China and the United States and the valueless nature of an American judgment in the Chinese legal system. One expects this decision to be of great interest to Chinese plaintiffs with Chinese judgments against American corporate defendants, especially those located in the state of California. Other states that have enacted the UFMJRA, including New York, may also be within consideration..

The decision appears, on brief review, to be specific to a curious set of facts with a lengthy history, intensively reviewed. Nonetheless, one might compare to the attempt to enforce an American judgment against a Chinese defendant in a Chinese court. Don Clarke at Harvard wrote about this very subject in 2004, the abstract of which reads:

Whether the judgments of United States courts can and will be enforced in China is a question that will be increasingly asked as economic ties grow between the two countries. At present, at least, the answer is straightforward: U.S. judgments will not be enforced. Chinese law requires the existence of a treaty or de facto reciprocity in order to enforce a foreign judgment; neither exists between the United States and China. Research reveals specific cases in which enforcement was refused and no cases in which enforcement was granted. Thus, the best alternative for litigants seeking the assistance of Chinese courts is to obtain an arbitration award in a New York Convention member country - China is a member itself - or to litigate in Chinese courts.

The imbalance between the ability of Chinese judgment holders in America and American judgment holders in China is very disturbing, and should become the target of lawmakers. I must confess to less than adequate knowledge of American lawmaking activity regarding reciprocity of judgments between China and the United States and invite those more knowledgeable to contribute their comments below.

Full post as published by Asia Business Intelligence on August 24, 2009 (boomark / email).