Developing Chinese Private International Law for Transnational Civil and Commercial Litigation: The 2024 New Chinese Civil Procedure Law

Abstract

On 1 September 2023, the Standing Committee of the National People’s Congress amended the Chinese Civil Procedure Law which will come into effect on 1 January 2024 (‘the 2024 CPL’). The 2024 CPL brings significant changes to the entire procedure of transnational civil and commercial litigation in China covering jurisdiction, service of process, the taking of evidence abroad, and the recognition and enforcement of foreign judgments. It is critical for foreign states, courts, and parties which conduct business in China to understand this new legal development and to prepare for the changes. Adopting comparative-law and empirical research methods, this commentary aims to explain the new provisions for transnational civil litigation in the 2024 CPL and how they may be implemented in practice.

1 Introduction

On 1 September 2023, the Standing Committee of the National People’s Congress, the paramount legislative body in China, amended the Chinese Civil Procedure Law which will come into effect on 1 January 2024 (hereinafter ‘the 2024 CPL’).¹ The 2024 CPL brings significant changes to the entire procedure of transnational civil and commercial litigation in China covering jurisdiction, service of process, the taking of evidence abroad, and the recognition and enforcement of foreign judgments. On the same date, the Standing Committee of the National People’s Congress also enacted the Foreign State Immunity Law (hereinafter ‘FSI Law’) which unprecedentedly adopts restrictive foreign state sovereign immunity.² The 2024 CPL as lex generalis will apply to lawsuits against a foreign state where lex specialis, the FSI Law, does not provide a provision thereon.³ It is therefore critical for foreign states, courts, and parties which conduct business in China to understand the new legal development and to prepare for the changes.

This paper will compare the 2024 CPL with the conventions administered by the Hague Conference on Private International Law (hereinafter ‘HCCH’) such as the Choice of Court Convention,⁴ the Judgments Convention,⁵ the Service Convention,⁶ and the Evidence Convention.⁷ It has also conducted extensive empirical research into the enforcement status of all foreign monetary and bankruptcy judgments that the Chinese courts have decided to recognize and enforce. It aims to explain the new provisions for transnational civil litigation in China and how they may be implemented in practice.

It has five parts. Section 2 answers why and how the 2024 CPL and the FSI Law expand the jurisdiction of the Chinese courts. It covers the basic jurisdiction rule, choice of court agreements, exclusive jurisdiction, and jurisdiction concerning foreign sovereignty. Section 3 analyses the use of lis alibi pendens and forum non conveniens to fine tune parallel proceedings between a Chinese court and a foreign court. Section 4 is devoted to the service of process and the taking of evidence abroad. It suggests that Chinese courts should liberalize restrictions on foreign parties conducting service and the taking of evidence in China. Section 5 focuses on the recognition and enforcement of foreign judgments in China and presents the results of the empirical research. Section 6 concludes the paper.

2 Expanding the Jurisdiction of Chinese Courts

2.1 Basic Jurisdiction Rule

Article 276 of the 2024 CPL provides a basic jurisdiction rule for foreign-related civil disputes except for those relating to personal status.⁸ Compared with its predecessor (Art. 272 of the 2022 CPL),⁹ it expands the people’s court’s jurisdiction with regard to two aspects.

Firstly, Article 272 of the 2022 CPL is limited to ‘contract and other disputes over property rights and interests’, which improperly excludes non-property-related cases such as personality rights and the right to personal data. Therefore, Article 276 of the 2024 CPL removes the limitations and applies to all foreign-related civil disputes except for those on personal status. Personal status cases refer to divorce, adoption, maintenance, inheritance, and other cases concerning personal relationships and status. These cases are neither contract, tort, nor property; none of the connecting factors in Article 276 of the 2024 CPL is applicable.

Secondly, under Article 272 of the 2022 CPL, a court at the place where the consequence of the tort occurs may not have jurisdiction if it is not in the location of the subject matter of the action, the defendant’s distrainable property, or the defendant’s representative. This creates challenges for the Chinese courts in exercising jurisdiction in internet tort or pollution cases where the activity of the tort may take place abroad but its consequence occurs in China. This is also inconsistent with the jurisdiction provision for non-foreign-related cases where the courts in either the place where the tort occurred or its consequence have jurisdiction over the tort in question.¹⁰ Filling the gap, the 2024 CPL authorizes a people’s court to exercise jurisdiction when there is an appropriate connection between the foreign-related dispute and China.¹¹ An ‘appropriate connection’ also appears in Article 301 of the 2024 CPL to determine whether a foreign court has indirect jurisdiction in the proceedings on the recognition and enforcement of foreign judgments.¹² The 2024 CPL does not define the meaning of ‘an appropriate connection’. An appropriate connection should have a broader scope than ‘an actual connection’, which is a term used in Article 529 of the CPL 2022 Judicial Interpretations to limit party autonomy in making choice of court agreements.¹³ It also goes beyond ‘the closest connection’ provided by the Chinese Law on the Application of the Law on Foreign-Related Civil Relations.¹⁴

The term ‘appropriate connection’ was adopted by the Supreme People’s Court to determine the Chinese courts’ jurisdiction in a series of recent patent disputes.¹⁵ In Conversant v. ZTE, the Court held that an appropriate connection should include the location of the subject matter, the implementation of the patent, and the place where the contract was concluded and performed.¹⁶ In Oppo v. Sharp, the Court expanded the scope of an ‘appropriate connection’ to the place where the patent was granted and implemented, the place where the patent was concluded and negotiated, the place where the patent licensing contract was performed, and the place of distrainable or other enforceable property, etc.¹⁷ If any of these places is located in China, an appropriate connection is established.¹⁸ In Nokia v. Oppo, the Court further extended the list by including the place of the reasonably expected location of the performance of the contract and the main place where the patent was granted and implemented.¹⁹

An appropriate connection may also include the place where the tort occurred and its consequence, the place of the defendant’s representative office, and choice of court agreements. For example, a lawsuit on a bill of exchange issued abroad may be heard in a people’s court if the place where the bill is to be paid is in China. An appropriate connection may cover the place where a vehicle, ship, or aircraft first arrives after an accident or the place at the end of a voyage. Examples are a tort action on the railway, road, water, or air transport accident that occurred abroad but after the accident where the vehicle or ship first arrived or landed is in China; claims for damages caused by a collision at sea or by any other maritime accident which occurred abroad if the vessel first docks in China after the accident; a lawsuit instituted for the expenses of maritime salvage which occurred abroad when the salvaged ship first docked after the disaster at a Chinese port and a general average claim where the ship first docked or the voyage ends in China.

2.2 Choice of Court Agreement

The pertinent question is whether the court chosen by the parties must have an actual connection to the dispute in question.²⁰ Neither the Choice of Court Convention nor the Judgments Convention imposes such a requirement.²¹ However, Articles 35 and 272 of the 2022 CPL require that the chosen people’s court shall have an actual connection with the dispute. Article 272 of the 2022 CPL has been amended by the 2024 CPL, allowing the parties to make use of a written choice of court agreement to choose a Chinese court that has no connection with the dispute.²² This unprecedented amendment lays down a critical foundation for China to ratify the Choice of Court Convention. Nevertheless, the 2024 CPL does not allow the parties to choose a foreign court without having a connection with the dispute.

Moreover, Article 35 of the 2024 CPL has not been amended; it states that the people’s court chosen by the parties in non-foreign-related disputes shall have an actual connection with the disputes. Consequently, the parties in foreign-related cases can enjoy more party autonomy than those in domestic cases. This imbalance should be resolved in the next CPL amendment.

2.3 Exclusive Jurisdiction

The increase in exclusive jurisdiction grounds also extends the jurisdiction of the peoples’ courts. Article 273 of the 2022 CPL provides that actions brought for disputes arising from the performance of contracts in China for Sino-foreign equity joint ventures, Sino-foreign contractual joint ventures, or Chinese-foreign cooperative exploration and development of natural resources shall fall under the exclusive jurisdiction of the Chinese courts. This exclusive jurisdiction ground is intact in the 2024 CPL. Notably, the China Foreign Investment Law, effective on 1 January 2020, repealed the Chinese Law on Sino-Foreign Equity Joint Ventures and the Law on Sino-Foreign Contractual Joint Ventures.²³ The China Foreign Investment Law does not distinguish between Sino-foreign equity joint ventures and contractual joint ventures.²⁴ Enterprises established under the Law on Sino-Foreign Equity Joint Ventures and Sino-Foreign Contractual Joint Ventures can continue to operate within five years of the effective date of the China Foreign Investment Law.²⁵ If they do not change their organizational structure according to the Chinese Company Law and the Chinese Partnership Enterprise Law during this period, they will not be registered from 1 January 2025 onwards.²⁶ Therefore, from 2020 onwards, Sino-foreign equity joint ventures and Sino-foreign contractual joint ventures have started to phase out in China. Notably, the China Foreign Investment Law and the China Partnership Enterprise Law allow for the establishment of Sino-foreign partnership enterprises.²⁷ If the Chinese courts have exclusive jurisdiction concerning contracts for Sino-foreign equity joint ventures and Sino-foreign contractual joint ventures, it is unclear why they do not have exclusive jurisdiction for contracts concerning Sino-foreign partnership enterprises in China. Around the year 2025, the CPL is likely to be amended once again in order to delete the exclusive jurisdiction ground of performing contracts for Sino-foreign equity joint ventures and Sino-foreign contractual joint ventures in China.

The 2024 CPL adds two additional grounds of exclusive jurisdiction. Both are often related to Chinese administrative proceedings and implicate China’s national interest in strategic industries.²⁸

The first ground is litigation due to the establishment, dissolution, and liquidation of legal persons or non-incorporated organizations established in China, and the validity of resolutions made by such organizations.²⁹ This ground is limited to organizations only established (sheli, 设立) in China.³⁰ The term ‘establish’ should be understood as either ‘establish a principal office’, or if not, ‘register’ in China by referring to the term ‘domicile’ under Article 3 of the 2022 CPL Judicial Interpretations. This interpretation is also based on the UNCITRAL Model Law on Cross-Border Insolvency.³¹ The Model Law divides insolvency proceedings into main and non-main proceedings.³² The former refers to proceedings ‘taking place in the State where the debtor has the center of its main interests’.³³ Without contradictory evidence, the centre of the debtor’s main interests is presumed to be ‘the debtor’s registered office, or habitual residence in the case of an individual’.³⁴ A foreign non-main proceeding means a foreign proceeding, other than a foreign main proceeding, taking place in a state ‘where the debtor carries out a non-transitory economic activity with human means and goods or services’.³⁵ In cases where determining the principal office is difficult, China's exclusive jurisdiction should preferably be limited to legal persons or non-incorporated organizations registered in China. This can facilitate the recognition and enforcement of foreign judgments in China and avoid extending exclusive jurisdiction to non-main proceedings. For example, in January 2023, the No. 1 Intermediate People’s Court in Beijing recognized a German judgment appointing a bankruptcy administrator to dispose of an insolvent German company’s assets in China.³⁶ In 2013, the Wuhan Intermediate People’s Court recognized another German judgment appointing a bankruptcy administrator for assets owned by a German company in China.³⁷

The second newly added exclusive jurisdiction ground is litigation on the validity of intellectual property rights granted in China.³⁸ Disputes on other aspects of intellectual property rights are not subject to the exclusive jurisdiction of the Chinese courts.

The exclusive jurisdiction based on these two newly added grounds should be limited to cases where the subject matter of the proceedings is based on laws that specifically relate to these grounds. If the object of the proceedings does not concern these grounds, the Chinese courts should exercise caution when claiming exclusive jurisdiction over the proceedings.³⁹

Admittedly, there will be difficult or borderline cases. An example would be proceedings on royalties in an intellectual property licensing agreement. Whether the Chinese courts have exclusive jurisdiction over the proceedings would depend on whether the validity of the patent is the object of the proceedings. A further example is a proceeding based on general contract law with the issue concerning intellectual property therein being incidental, where it is debatable whether the Chinese courts can exercise exclusive jurisdiction over the case as a whole.⁴⁰

2.4 Jurisdiction on Foreign Sovereignty

The FSI Law symbolizes that China has made a historic decision to abolish the absolute state immunity theory and to adopt the restrictive state immunity theory. The former means that a state enjoys complete immunity from being sued or having its assets seized or enforced by a foreign court.⁴¹ China had consistently applied the absolute sovereign immunity theory in litigation in China and abroad.⁴² Under the FSI Law, restrictive state immunity means that foreign states and their assets should enjoy immunity from the jurisdiction of the Chinese courts, except as otherwise provided by this law. The FSI Law applies to foreign states, government agencies, and organizations or individuals that are authorized by foreign states to conduct activities based on this authorization.⁴³

This crucial reform reflects China’s transformed ideology concerning sovereignty and security. China was a strong follower of absolute state immunity because of its humiliating history of being a semi-colonial society before the establishment of the People’s Republic of China. Therefore, China strongly supported the view of sovereign equality, whereby states should not exercise jurisdiction over each other. However, China gradually realizes that sovereign equality should not equalize with absolute state immunity.⁴⁴ In 2005, it signed the United Nations Convention on Jurisdictional Immunities of States and Their Property which adheres to the restrictive sovereign immunity theory and makes distinctions ‘between acts performed in the exercise of sovereign power or acta de jure imperii (immune) and acts of a commercial or private law nature or acta de jure gestionis (non-immune)’.⁴⁵ Today, China is the second-largest economy in the world based on GDP.⁴⁶ With the expansion of the Belt and Road Initiative, Chinese multinational companies have increasingly encountered disputes with host states.⁴⁷ Although investor-state disputes can often be resolved by investor-state arbitration, the FSI Law opens up the possibility for Chinese companies to bring litigation in China against a foreign investment host state when investment arbitration is not available.

The main circumstances where a foreign state may lose sovereign immunity at the people’s courts include an explicit or implied submission or conducting commercial activities in China.

2.4.1 Explicit Submission

Article 4 of the FSI Law provides that if a foreign state explicitly accepts the jurisdiction of the people’s courts in respect of a particular matter or case by any of the following means, that foreign State shall not enjoy immunity from the jurisdiction of the people’s courts in respect of an action brought in respect of that matter or case:

• (1) International treaties;

• (2) A written agreement;

• (3) When written documents are submitted to the people’s court hearing the case;

• (4) When written documents are submitted to China through diplomatic channels or other means;

• (5) Other means of the explicit acceptance of the jurisdiction of the people’s courts.

Currently, there are no international treaties or diplomatic documents concluded by China where a state explicitly accepts the jurisdiction of the Chinese courts. However, this situation may change with more international organizations having their headquarters in China.

The author is not aware of any written agreement concluded by a state which has explicitly accepted the jurisdiction of the Chinese courts. Notably, Article 277 of the 2024 CPL allows the parties to choose the people’s courts to resolve their civil and commercial disputes. Therefore, in the Belt and Road Initiative, Chinese companies and a foreign state (or an organization or individual representing this state) can conclude a choice of court agreement favouring a people’s court. If the agreement has been validly concluded, the foreign state would be considered to have explicitly submitted to the people’s court.

‘To submit written documents to the people’s court hearing the case’ under Article 3 of the FSI Law should be read in conjunction with Articles 5 and 6. The written documents include a plaintiff’s or a third party’s pleading, a defendant’s response to substantive issues in the case, or the defendant’s cross-claim.⁴⁸

2.4.2 Submission by Procedural Conduct

According to Article 5 of the FSI, a foreign state shall be deemed to accept the jurisdiction of the people’s courts in respect of a particular matter or case under any of the following circumstances:

• (1) When a lawsuit is filed before a people’s court as a plaintiff;

• (2) When participating as a defendant in a lawsuit accepted by a people’s court by responding on the merits of the case or filing a counterclaim;

• (3) When participating as a third party in a lawsuit accepted by a people’s court;

• (4) When a lawsuit is filed before a people’s court as a plaintiff (or as a third party) and it is counterclaimed based on the same legal relationship or facts of the original lawsuit or claim.

If a foreign state can prove that it could not have known the facts according to which immunity could be asserted before entering into the above-mentioned forms of procedural conduct, it may request immunity within a reasonable time after it becomes aware or should have become aware of the facts in question.⁴⁹ The FSI Law is silent on how to determine a reasonable time and whether a foreign state becomes aware or should have become aware that immunity could be asserted.

Article 6 excludes three procedural forms of conduct from an implied submission to the people’s courts. The first is to submit defences on jurisdiction.⁵⁰ Such defences are not on the merits, so they should not be considered as an implied submission. The second exception is when a representative of a foreign state agrees to appear in court as a witness.⁵¹ Appearing as a witness does not necessarily mean that the foreign state is involved as a party to the proceedings. The final exception is when a foreign state agrees to apply Chinese law in a specific matter or a lawsuit.⁵² This is because a choice of law does not determine jurisdiction.

2.4.3 Commercial Activities

When a foreign state conducts commercial activities with organizations, individuals, or other countries, and when activities take place in China, the state shall not enjoy sovereign immunity in disputes arising from this commercial activity.⁵³ Moreover, even if this commercial activity takes place outside of China, as long as it has a direct impact on China, this foreign state shall lose sovereign immunity in disputes arising from this commercial activity.⁵⁴ It is unclear how the people’s court would determine a direct impact. A broad interpretation would expand the Chinese courts’ jurisdiction to commercial activities remotely related to China.

Commercial activities refer to acts of a commercial nature that do not involve the exercise of sovereign power, such as transactions concerning goods or services, investments, and loans.⁵⁵ In determining whether an act is a commercial activity, the people’s courts shall take into account the nature and purpose of the act in question.⁵⁶

Adopting the restrictive sovereign immunity theory is a double-edged sword. Although the FSI Law enables people’s courts to exercise jurisdiction over a foreign state when the requirements under the Law have been fulfilled, this will also mean that China cannot defend itself by resorting to absolute sovereign immunity before foreign courts. Therefore, we must wait and see how people’s courts will implement the FSI Law and how the Law may protect China’s sovereignty and security in foreign courts.

3 Fine Tune Parallel Proceedings Between a Chinese Court and a Foreign Court

Parallel proceedings may occur when a Chinese court and a foreign court both have jurisdiction over a dispute. Before the enactment of the 2024 CPL, parallel proceedings were addressed by Articles 530 and 531 of the CPL 2022 Judicial Interpretations in China. In the context of the recognition and enforcement of foreign judgments, they are regulated by Article 6 of the Choice of Court Convention and Article 7.2 of the Judgments Convention. Article 6 of the Choice of Court Convention requires a non-chosen court to suspend or dismiss proceedings when an effective exclusive choice of court agreement favouring another court exists. Article 7.2 of the Judgments Convention provides that the recognition and enforcement of a foreign judgment may be postponed or refused if proceedings between the same parties on the same subject matter are pending before a court of the requested state which was seised earlier in time than the court of origin, and a close connection exists between the dispute and the requested state.⁵⁷ In contrast, Article 531 of the CPL Judicial Interpretations does not consider whether an exclusive choice of foreign court agreement exists, whether the Chinese court has accepted the case before the foreign court, or whether a close connection exists between the dispute and the Chinese court. It rather focuses on safeguarding the jurisdiction of the Chinese courts: as long as a Chinese court has jurisdiction to hear the case under Chinese law, the Chinese proceedings should proceed even if the same dispute has been accepted by a foreign court earlier in time. Compared with Article 531 of the CPL 2022 Judicial Interpretations, a more nuanced approach to fine tune parallel proceedings between a Chinese court and another court is desirable. This is because parallel proceedings will increase the costs of litigation and lead to inconsistency and uncertainty in dispute resolution. Moreover, treating foreign courts with comity in parallel litigations may also assist in the ultimate recognition and enforcement of Chinese judgments abroad.

The 2024 CPL adds three provisions to address the insufficiency of Article 533 of the CPL 2022 Judicial Interpretations and narrows the differences between the Choice of Court Convention and the Judgments Conventions, on the one hand, and Chinese law, on the other. These provisions are: Articles 280 and 281 which address lis alibi pendens and res judicata; and Article 282 which regulates forum non conveniens.⁵⁸

3.1 Lis Alibi Pendens

The lis alibi pendens rule contains two parts: case acceptance (shouli, 受理) under Article 280 and trial suspension (the staying of proceedings) under Article 281 of the 2024 CPL. Firstly, when a party files a lawsuit before a foreign court, and the other party brings the same dispute to a Chinese court, or when a party files a lawsuit on the same dispute before both Chinese and foreign courts, the general principle is that the Chinese court can accept the case if it has jurisdiction concerning the dispute according to the 2024 CPL.⁵⁹ However, if the parties have concluded an effective exclusive choice of court agreement favouring a foreign court without violating the exclusive jurisdiction of the Chinese courts, China’s sovereignty, security, or social public interest, the Chinese court may not accept the case.⁶⁰ If the court has already accepted the case, it should then dismiss it.⁶¹ The rule on case acceptance applies regardless of whether the Chinese or foreign court has accepted the case earlier in time.

The second part is a trial suspension rule. After a Chinese court has accepted the case according to the case acceptance rule, if a party files a written application arguing that a foreign court has accepted the case earlier in time than the Chinese court, the Chinese court may stay the proceedings on the same dispute in China.⁶² If the foreign court does not take the necessary measures to try the case or cannot render a decision within a reasonable period of time, the Chinese court may resume proceedings upon a party’s written application.⁶³ Therefore, the trial suspension rule rightly addresses the so-called ‘Italian Torpedo’ problem. The term ‘Italian Torpedo’ refers to the strategy of bringing a case before a court in a country (e.g. Italy) that suffers from long delays in judicial proceedings as an attempt to hinder the resolution of the dispute in potential parallel proceedings in other countries.⁶⁴ Compared with Article 533 of the CPL 2022 Judicial Interpretations, the 2024 CPL adopts a more balanced approach by acknowledging the proceedings before a foreign court that accepts the case earlier in time and allowing a Chinese court to try the case if the foreign court does not proceed within a reasonable period of time.

Nevertheless, the Chinese court shall not stay the proceedings even if a foreign court has accepted the case earlier in time when either of the following two exceptions exists: (1) the parties have concluded a choice of court agreement favouring the Chinese courts or the case belongs to the exclusive jurisdiction of the Chinese courts; (2) it is more convenient for the Chinese courts to hear the case.⁶⁵ Notably, the first exception does not require the parties to conclude an exclusive choice of court agreement favouring the Chinese courts. The 2024 CPL does not provide any criteria to determine whether it is ‘more convenient for the Chinese courts to hear the case’. The Chinese Supreme People’s Court should publish judicial interpretations for clarification. The potential criteria may include access to evidence; the applicable law; and the involvement of Chinese state interests such as sovereignty, security, and the social public interest.

Moreover, China distinguishes between the lis alibi pendens rule in transnational litigation and that in a domestic trial. The latter is provided by Article 36 of the 2024 CPL: when two or more people’s courts have jurisdiction over a lawsuit, the plaintiff may proceed with the lawsuit before one of these people’s courts; if the plaintiff files the lawsuit at two or more people’s courts that have jurisdiction thereover, the people’s court that has first admitted the case on the docket (li’an, 立案’) shall have jurisdiction.⁶⁶ Two important differences exist. Firstly, the critical point in time for the lis alibi pendens rule in the domestic trial is which court has first admitted the case on the docket, while the time of the case’s acceptance is the critical point in time for transnational litigation. The Chinese litigation stage can be divided into a party initiating a case by suing (qishu, 起诉), the case filing division at a Chinese court which accepts the case (shouli, 受理), after which the case filing division will decide whether to admit the case on the docket (li’an, 立案), and then the trial division will start with the service of process subsequently followed by the trial.⁶⁷ Secondly, in transnational litigation, the Chinese court that accepts the case later in time may still move to trial regardless of whether a party has proved the existence of an exclusive choice of court clause favouring a foreign court.⁶⁸ However, this discretionary authority does not exist in non-foreign-related cases. The domestic lis alibi pendens rule provides that if a people’s court finds that a case has already been admitted on the docket by another people’s court earlier in time, it should not admit the case; if it has already admitted the case, it shall then transfer the case to the court that has admitted it earlier in time.⁶⁹

3.2 Forum Non Conveniens

After a people’s court accepts a case, a defendant may challenge the court’s jurisdiction based on forum non conveniens. The forum non conveniens test under the 2024 CPL contains five factors with important differences compared with its predecessor in the 2022 CPL Judicial Interpretations.⁷⁰

(1) The basic facts of the dispute have not occurred in China and it is obviously inconvenient for the Chinese courts to try the case and for the parties to participate in the proceedings.⁷¹ Compared with its predecessor in the 2022 CPL Judicial Interpretations, the 2024 CPL lowers the threshold of the forum non conveniens test in two respects.⁷² Firstly, it only requires the basic facts of the dispute, instead of the major facts, to have taken place in China. Secondly, besides considering the inconvenience for the court to try the case as under the 2022 CPL Judicial Interpretations, it also takes into account the inconvenience for the parties participating in the proceedings. The parties’ difficulties may include difficulties in accessing legal aid in a foreign country and obtaining a visa to travel abroad. Referring to the CPL 2022 Judicial Interpretations, an obvious inconvenience for the Chinese courts to try a case may include the difficulty of proving foreign law and accessing evidence and witnesses, etc.

Factors (2) and (3) requires the case having no choice of court agreement favouring a Chinese court and no violation of the exclusive jurisdiction of the Chinese courts. Both factors are contained in the 2022 CPL Judicial Interpretations.

(4) The case does not involve the sovereignty, security, or the social public interest of China. This factor is limited to the interests of China rather than including those of Chinese organizations or individuals as was the case under the CPL 2022 Judicial Interpretations.⁷³ In forum non conveniens cases, the plaintiffs are often Chinese parties. Therefore, these cases would inherently involve the interests of Chinese organizations or individuals. By not allowing the courts to consider the interests of Chinese organizations or individuals, the 2024 CPL further lowers the threshold of the forum non conveniens test.

(5) It is more convenient for a foreign court to hear the case. Different from the CPL 2022 Judicial Interpretations, the 2024 CPL does not indicate that the Chinese court should determine whether a foreign court has jurisdiction over the case.⁷⁴ This may involve two interpretations. Firstly, whether a foreign court has jurisdiction is already included in the determination of whether the foreign court’s adjudication is more convenient. Therefore, it is redundant to repeat this condition. Secondly, it is unnecessary for the Chinese court to determine whether a foreign court would have jurisdiction under the first paragraph of Article 282 of the 2024 CPL. The second interpretation should be preferred because the consequence of the Chinese forum non conveniens proceedings should not depend on whether the foreign court will exercise jurisdiction.

The second interpretation is further substantiated by the second paragraph of Article 282 of the 2024 CPL, which stipulates that if a foreign court declines to exercise jurisdiction, fails to take the necessary steps to hear the case, or cannot conclude the trial within a reasonable period of time following a Chinese court’s dismissal, the Chinese court shall accept the case if the party decides to bring it once again.⁷⁵ This provision serves as a remedy for plaintiffs who do not succeed in forum non conveniens proceedings within China. Notably, in China, an action instituted in a people’s court for the protection of civil rights is generally three years from the day when the obligee knows or should have known that his or her right has been infringed.⁷⁶ This statute of limitations will start to run from the date when a foreign court declines to exercise jurisdiction or when the plaintiff has become aware or should have become aware of the undue delay in the foreign court.

However, it is crucial to acknowledge that this remedy may prove to be too belated and financially burdensome for the plaintiff, particularly if the plaintiff can prove the foreign court’s consistent delay in concluding a trial. Hence, the Chinese courts may assess a plaintiff’s undue delay argument when determining the convenience of foreign adjudication under the first paragraph of Article 282 in the 2024 CPL.

4 Service of Process and the Taking of Evidence Abroad

Service of process is a critical procedural step in initiating litigation.⁷⁷ It aims to transmit judicial or extrajudicial documents to inform a party, often a defendant, that litigation is pending within a reasonable period of time so as to give that party the opportunity to choose for itself ‘whether to appear or default, acquiesce or contest’.⁷⁸ Service of process safeguards a party’s right to be heard, which is ‘[t]he fundamental requisite of due process of law’.⁷⁹ Service of process against a foreign defendant who has no domicile in China may be conducted in China or abroad.⁸⁰ The 2024 CPL significantly extends the circumstances for service of process in China against a foreign defendant.⁸¹

Transnational litigation may also involve the taking of documentary, witness, or other evidence abroad. Although the taking of evidence abroad does not necessarily occur in every transnational litigation, just like service of process it also requires strict compliance with the procedural due process of law to afford a defendant’s right to a fair trial, a plaintiff’s right to justice, and comity towards the country where a witness or other evidence is located.⁸²

4.1 Service of Process

Similar to the 2022 CPL, the 2024 CPL allows for the service of process to a defendant who does not have a domicile in China through conventions, diplomatic channels, Chinese embassies or consulates, and by postal means.⁸³ However, it introduces important amendments in five key aspects.⁸⁴

Firstly, the 2024 CPL significantly expands the group of local agents.

One controversial amendment in the 2024 CPL pertains to the service of process on the agent ad litem of a party, irrespective of whether this agent is authorized to accept such service.⁸⁵ Conversely, the 2022 CPL only mandated service on the agent ad litem when this agent was authorized by the party to accept the service of process. After the 2024 CPL enters into force, when a foreign party designates an agent ad litem in a case, this agent is deemed to be eligible to receive service on behalf of its principal. The sole limitation lies in the fact that the agent ad litem cannot accept service of process beyond the specific case for which it has been entrusted.

Another debatable amendment concerning the local agent is that service of process can now be carried out on a foreign defendant’s (1) wholly-owned enterprise, (2) representative office, (3) branch, or (4) other business agents authorized to receive service of process in China.⁸⁶ It is important to note that a foreign defendant’s wholly-owned enterprise, representative office, and branch in China are considered to be agents to receive service of process even for disputes that are not related to their business activities, without the need for specific authorization. This is a departure from the 2022 CPL, where a foreign defendant’s wholly-owned enterprises and branches were not eligible to receive service on behalf of the defendant without specific authorization.

Secondly, service of process on a foreign defendant can also be effectuated by serving its co-defendant, provided that the co-defendant is a Chinese legal entity or organization established by the defendant which also serves as its legal representative or the primary person in charge.⁸⁷ This provision does not exist in the 2022 CPL. It is based on the presumption that effective service on the defendant’s legal entity or organization can inform the defendant of pending litigation. This can simplify the service of process and enhance its efficiency.

Thirdly, different from the 2022 CPL, the 2024 CPL allows for service of process on a foreign legal entity or organization by serving its legal representative or primary person in charge in China.⁸⁸ In China, service of process does not establish the jurisdiction of a court; therefore, this provision is distinguishable from tag jurisdiction under US jurisprudence.⁸⁹ However, the 2024 CPL does not define the scope of the primary person in charge. It is also unclear whether this individual needs to be present in China for a certain duration, whether his or her presence is related to the dispute, and whether he or she should establish a domicile in China. The Chinese courts should be cautious in allowing service on a foreign individual who is merely in transit in China for purposes unrelated to the dispute and who has not established a legal domicile in China.

Fourthly, the service of process in a foreign country must adhere to the law of that country. Similar to the 2022 CPL, the 2024 CPL continues to uphold this principle concerning service by post.⁹⁰ Moreover, the 2024 CPL goes further by mandating that digital service needs to comply with the law of the jurisdiction where the recipient is located.⁹¹ Digital service must be delivered in such a way that can confirm the recipient’s receipt thereof.⁹² Furthermore, in contrast to the 2022 CPL, the 2024 CPL permits alternative methods of service based on agreements between the parties, unless this is against the law of the jurisdiction where the recipient is located.⁹³

Last but not least, the 2024 CPL has reduced the period for a public announcement, which serves as the last resort for service when other methods have failed to reach the intended recipient.⁹⁴ Service is considered successful upon the conclusion of the public announcement period.⁹⁵ Notably, the revised timeframe for a public announcement is now 60 days, as opposed to the three-month period stipulated in the 2022 CPL.⁹⁶

4.2 The Taking of Evidence Abroad

A general principle for the taking of evidence abroad is laid down in the 2022 CPL, which provides that the taking of evidence abroad can be conducted between people’s courts and foreign courts according to conventions ratified by China, diplomatic channels, or based on the principle of reciprocity.⁹⁷ Article 284 of the 2024 CPL further provides three methods for the taking of evidence abroad in addition to conventions and diplomatic channels provided that the law of the country where the evidence is located does not prohibit these methods.⁹⁸ For a party or witness having Chinese nationality, the 2024 CPL permits the Chinese embassy or consulate in the country where the party or witness resides to collect the evidence on the parties’ behalf.⁹⁹ Moreover, the process of obtaining evidence abroad may also employ methods agreed upon by the parties, such as using instant messenger tools, thereby offering greater flexibility in the collection of evidence.¹⁰⁰ These methods also apply to cross-examining a party or a witness by another party, its lawyer, or the Chinese court subject to the condition that the law of the country where the party or the witness is located allows for this.

4.3 Restrictions on Service and the Taking of Evidence in China for Foreign Proceedings

With the instigation of new methods for service of process and the taking of evidence abroad, the 2024 CPL can better facilitate litigation brought in China against a foreign defendant. To a significant extent, the new methods will likely decrease the need to resort to the Hague Service Convention and the Hague Evidence Convention. This is because, with the wider group of local agents determined by law, a large part of service of process on a foreign defendant can be conducted on their agents in China. When service of process needs to be conducted abroad, the parties may enter into agreements on the methods of service. In these circumstances, the parties do not need to abide by the Hague Service Convention. Similarly, under the 2024 CPL, in practice the taking of evidence abroad via the Evidence Convention only applies to cases where the foreign defendants or witnesses do not voluntarily collaborate with the Chinese court’s proceedings.

In contrast to the liberalized methods for service of process and the taking of evidence abroad, the 2024 CPL does not make it easier for foreign courts to conduct service of process and the taking of evidence in China. Article 294 of the 2024 CPL is identical to Article 284 of the 2022 CPL and they expressly prohibit conducting service or collecting evidence within China for foreign proceedings unless the competent Chinese authorities consent to this—either pursuant to an official request from a foreign Central Authority under an international treaty or an application from a party to a dispute.¹⁰¹

For example, in terms of collecting evidence in China for foreign proceedings, Article 294 of the 2024 CPL only provides three avenues and all are much more restrictive than those for the taking of evidence abroad.

The first paragraph of Article 294 provides that a foreign judicial authority can obtain evidence within China through the Hague Evidence Convention or other international judicial assistance treaties that China has ratified. China made a reservation when signing the Hague Convention that it would not be bound by Articles 16–22, portions of which would grant consular officials the right to oversee the taking of evidence.¹⁰² This only leaves the Letter of Request procedure in Articles 1–14 of the Hague Evidence Convention for the taking of evidence from Chinese nationals in China (Article 15 only deals with foreign nationals located in China). A Letter of Request must be submitted by the Central Authority of a contracting state (e.g., the Australian Commonwealth Attorney-General’s Department to the Ministry of Justice of China in Beijing).¹⁰³ It is unclear whether China would allow the presence of the parties and their representatives by video link while the Chinese witness is giving evidence in China. The Letter of Request process usually takes 6–12 months.¹⁰⁴ Article 8 of the Hague Evidence Convention provides that ‘[a] Contracting State may declare that members of the judicial personnel of the requesting authority of another contracting state may be present at the execution of a Letter of Request’. This means that judicial personnel from the requesting state may be present by video link when a witness in another contracting state is giving evidence. However, China has not made a declaration under Article 8, which means that China has no obligation to allow a foreign judge to be present by video link during the execution of the Letter of Request in China, even if permission has been given to execute the Letter of Request. Similarly, the service of foreign proceedings in China also needs to comply with the Hague Service Convention or other bilateral treaties that China has ratified or by diplomatic channels. China has made a reservation opposing service by means of postal channels,¹⁰⁵ as well as service by judicial officers or other competent persons of the state of destination either entrusted by judicial officers of the state of origin or by other competent persons of the state of destination.¹⁰⁶ Consequently, the Central Authority of the Hague Service Convention is often the only channel for the service of foreign process to a party in China, which is a lengthy process.¹⁰⁷

The taking of evidence and the service of foreign proceedings in China can also be conducted by a foreign embassy or consulate accredited to China, but this is only permitted if the witness or party is a foreign national located in China.¹⁰⁸ This is consistent with the reservation made by China to the Hague Evidence Convention that it will not be bound by Articles 16–22, portions of which would grant consular officials the right to oversee the taking of evidence.¹⁰⁹

The last method for the taking of evidence and the service of foreign proceedings in China is to seek approval from the competent Chinese authorities (i.e. the Supreme People’s Court or the Ministry of Justice of China). The 2024 CPL does not provide any penalties for violating Article 294. However, penalties may be derived from Article 81 of the Chinese Exit and Entry Administration Law, which applies to foreigners who engage in activities such as service of process and taking of evidence not corresponding to purposes of their visa permission in China.

Three reasons may help to understand why China has liberalized the service of process and the taking of evidence abroad concerning foreign parties while maintaining the Chinese restrictions on service and the taking of evidence for foreign proceedings. Firstly, under the 2024 CPL, service and the taking of evidence by digital means or according to the parties’ agreements in a foreign country must comply with the law of that country. Therefore, the Chinese legislator may be of the opinion that allowing these methods does not harm the interests of the foreign country where the foreign party is located. Secondly, by extending the group of local agents, allowing service by a foreign defendant on its co-defendant, or in the case that the foreign defendant is an organization, service can take place on the legal representative or the primary person in charge in China, so that in each case service will take place in China. These methods decrease the need for service abroad. Thirdly, service of process and the taking of evidence in China are considered to be part of judicial sovereignty and must be conducted by the state.¹¹⁰ However, allowing service to be made upon local agents who are not authorized by the party to receive service for an issue unrelated to the agents’ business is rather dubious. Service of process concerns the due process right of the party who is to be served.¹¹¹ The party who conducts such service should be required to prove that the service can be ‘reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action’.¹¹² Service on the legal representative or the primary person in charge who is present in China should not violate the due process right of the individual to be served. For example, if this individual is fraudulently induced to enter China for the sole purpose of being served, such service should be declared null and void.

Moreover, the imbalance between the facilitation of Chinese proceedings against foreign defendants and the restrictions on foreign proceedings against Chinese defendants also leads to the question of reciprocity. Article 293 of the 2024 CPL provides that service of process and the taking of evidence can also be conducted according to reciprocity. If a foreign country allows the Chinese courts to serve a defendant in that country using postal channels, digital methods, or methods agreed upon by the parties, this would constitute de jure reciprocity for China. The 2024 CPL has shifted from de facto to de jure reciprocity in the recognition and enforcement of foreign judgments¹¹³; arguably, de jure reciprocity should also apply to other judicial assistance methods such as service of process and the taking of evidence abroad.

5 Recognition and Enforcement of Foreign Judgments

Similar to the 2022 CPL, the 2024 CPL provides that a creditor of an effective foreign judgment can directly apply to an intermediate people’s court to recognize and enforce this judgment according to treaties ratified by China or according to the principle of reciprocity.¹¹⁴ The intermediate people’s court then refers to the court located in the judgment debtor’s domicile or in the place where the debtor’s assets are located.¹¹⁵

5.1 De jure Reciprocity: From Resistance to Acceptance

The 2024 CPL does not define what is meant by reciprocity. Before the enactment of the 2024 CPL, in January 2022, the Minutes of the National Court’s Symposium on Foreign-related Commercial and Maritime Trials (hereinafter ‘Minutes’) formally permitted the recognition and enforcement of foreign judgments according to de jure reciprocity.¹¹⁶ Judicial practice in China before the issuance of the Minutes demonstrated that reciprocity, as referred to in the pre-2024 CPL, was limited to de facto reciprocity.¹¹⁷

De facto reciprocity is established when a foreign country recognizes or enforces Chinese judgments in practice.¹¹⁸ It requires ‘actual precedents’ demonstrating that Chinese judgments have been recognized and enforced in the foreign country in the past.¹¹⁹De facto reciprocity was formally adopted by the Supreme People’s Court in Gomi Akira v. Dalian Fari Seafood Ltd.¹²⁰ The recognition and enforcement of a Japanese judgment in this case was rejected by the Court because neither a treaty nor reciprocity existed between China and Japan. The Court understood reciprocity as requiring actual precedents that Chinese judgments were recognized and enforced by the Japanese courts.¹²¹

Determining de facto reciprocity may be controversial. In Spliethoff’s Bevrachtingskantoor BV v. Bank of China Limited, Carr J of the Commercial Court of England and Wales held that ‘judgments in China […] fall to be recognized by this court’.¹²² This case was considered by many commentators to be the first case where a UK court had recognized Chinese judgments so that de facto reciprocity should be considered as being offered by the United Kingdom to China.¹²³ However, in Spar Shipping v. Grand China Logistic, the Shanghai Maritime Court held that Spliethoff’s Bevrachtingskantoor BV was not a case where Chinese judgments were recognized in the sense of judgment recognition and enforcement, so de facto reciprocity was not established between the United Kingdom and China.¹²⁴ The Court stated three reasons for this. Firstly, Spliethoff’s Bevrachtingskantoor BV did not involve proceedings to recognize and enforce a foreign judgment. It was a proceeding brought by Spliethoff’s Bevrachtingskantoor BV (hereinafter ‘SBV’) against the Bank of China Limited (hereinafter ‘BOC’) to enforce refund guarantees issued by BOC. The guarantees were provided in support of two shipbuilding contracts between SBV as the buyer and Rongcheng Xixiakou Shipyard Co. Ltd. and another Chinese company as the sellers of the two ships. The UK proceedings in Spliethoff’s Bevrachtingskantoor BV had not been brought by the sellers (the victorious parties in the Chinese proceedings) in order to recognize Chinese judgments in the United Kingdom, which meant that recognition had not occurred. Secondly, if Spliethoff’s Bevrachtingskantoor BV is considered to be a case where Chinese judgments were recognized, the sellers’ right to litigation would be deprived because they did not participate in the English proceedings. Thirdly, the Shanghai Maritime Court held that English law was unclear as to whether recognizing a foreign judgment when it was used as a defence (which was what BOC did in the UK proceedings) should be distinguished from recognition made in proceedings initiated only for recognition of foreign judgments. Therefore, Spliethoff’s Bevrachtingskantoor BV was not a case where an English court had recognized Chinese judgments, and it did not establish de facto reciprocity between the United Kingdom and China. The Shanghai Maritime Court’s view is questionable. This is because Carr J relied on section 32 of the Civil Jurisdiction and Judgments Act 1982¹²⁵ and rule 51 of Dicey & Morris,¹²⁶ both of which support the view that the recognition of a foreign judgment can take place when the judgment is used as a defence in the United Kingdom. Moreover, it is doubtful whether the buyers’ right to litigation would be deprived simply because they were not parties to the English proceedings. The Shanghai Maritime Court seemed to require that the parties to the proceedings to recognize a foreign judgment must be the same as those in the judgment-rendering proceeding. This ignores the fact that other parties (e.g. a judgment creditor’s guarantor) may have an interest in seeking the recognition, although not the enforcement, of the judgment.

The Minutes resolve controversies surrounding de facto reciprocity by shifting to de jure reciprocity. In contrast to de facto reciprocity, de jure reciprocity does not require ‘actual precedents’ where Chinese judgments have been recognized and enforced in a foreign country.¹²⁷De jure reciprocity exists when one of the following circumstances occurs:

Firstly, de jure reciprocity can be established according to foreign law.¹²⁸ In Spar Shipping, the Shanghai Maritime Court held that, although de facto reciprocity was not established, de jure reciprocity was constituted between China and the United Kingdom as three elements had been satisfied: (1) the existence of a treaty is not a precondition for recognition and enforcement of foreign judgments in the United Kingdom, (2) there is no legal or factual barrier in English law for the recognition and enforcement of Chinese judgments, and (3) there is no indication that English courts have ever refused to recognize and enforce Chinese judgments due to the lack of reciprocity.¹²⁹ Consequently, the Shanghai Maritime Court recognized and enforced the relevant English judgments. Different from the United Kingdom, whose common law for recognition and enforcement of foreign judgments does not require reciprocity, the German Code of Civil Procedure does require reciprocity—namely, the recognition and enforcement of a German judgment in another state do not encounter significantly greater difficulties than the recognition and enforcement of a comparable foreign judgment in Germany.¹³⁰ Accordingly, in 2021, the Saarbrücken Regional Court refused to recognize a Chinese judgment because recognition and enforcement reciprocity for German judgments in China was not guaranteed.¹³¹ Despite this individual case, the German Code of Civil Procedure should be considered as offering de jure reciprocity for Chinese judgments. This is because in early 2006 the Berlin Court of Appeal recognized and enforced a Chinese judgment.¹³² The slow development of reciprocal treatment for foreign judgments from the Chinese side was the reason why the Saarbrücken Regional Court held that China did not guarantee reciprocity for German judgments.

Secondly, de jure reciprocity can be established where there is a mutually beneficial understanding or consensus between China and a foreign country.¹³³ This has already occurred with Singapore through the China-Singapore Memo¹³⁴ and with the ASEAN countries through the Nanning Consensus.¹³⁵

Thirdly, de jure reciprocity can be established if a foreign country has made a reciprocal commitment to China through diplomatic channels or vice versa, and there is no evidence to suggest that the foreign country has refused to recognize and enforce a Chinese judgment on the ground that there is no reciprocity.¹³⁶ Making a reciprocity commitment by diplomatic channels differs from establishing reciprocity through consensus because the former can be unilateral whereas the latter is always bilateral or multilateral. Establishing de jure reciprocity through diplomatic channels has not occurred so far.

Notably, the Minutes establish a court review mechanism for the existence of reciprocity between China and a certain foreign country. An intermediate people’s court should submit its opinion to the higher people’s court in the same jurisdiction for review before making a ruling on the existence of reciprocity; the higher people’s court, if it agrees with the lower court’s opinion, should submit its opinion to the Supreme People’s Court for review.¹³⁷ The intermediate people’s court can only make a ruling after the Supreme People’s Court has responded.¹³⁸ Switching from de facto to de jure reciprocity will significantly facilitate the recognition and enforcement of foreign judgments in China.

5.2 Defences Against Recognition and Enforcement of Foreign Judgments

According to Article 300 of the 2024 CPL, people’s courts should reject the recognition and enforcement of a foreign judgment when any of the following five circumstances exist: (1) the foreign court that rendered the judgment had no jurisdiction to hear the case; (2) the judgment debtor had not been lawfully summoned, or even if he or she was lawfully summoned, he or she had not been given a reasonable opportunity to present his or her case and exchange arguments, or parties without legal capacity had not been properly represented; (3) the foreign judgment was obtained by fraudulent means; (4) a Chinese court has rendered a judgment on the same dispute, or a Chinese court has recognized a third-state judgment on the same dispute; or (5) the foreign judgment violates the fundamental principles of Chinese laws or national sovereignty, security, and social and public interests.¹³⁹

This section will focus on the defences of jurisdiction and competing judgments because the 2024 CPL explains their meanings.¹⁴⁰ Other defences (e.g. proper service, fraud, and the public policy exception) are certainly very serious defences against the recognition and enforcement of foreign judgments. Three reasons may explain why they are mentioned in the general framework of defences against the recognition and enforcement of foreign judgments (i.e. Article 300 of the 2024 CPL) but without further explanation. Firstly, the 2024 CPL has made important amendments to the service of process on foreign defendants.¹⁴¹ The remaining key issue for judgment recognition and enforcement proceedings is which law—the law of the judgment-rendering foreign court or the law of the Chinese requested court—should be applied to determine whether the service of process leading to the judgment has been made according to due process of law. This is an applicable law issue and may not need to be specified in the civil procedure law. Secondly, public policy is considered to be an unruly horse.¹⁴² It is a deliberate decision by the Chinese legislators not to define it in the civil procedure law. The contours of the public policy exception should be left to the judiciary. Thirdly, different from due process and the public policy exception, fraud is a new concept that is not yet ripe for a definition in the 2024 CPL. Internationally, the definition of fraud under the Hague Judgments Convention is inconsistent with that of the Choice of Court Convention.¹⁴³ Among the common law countries, there are also hot debates as to whether fraud litigated in a judgment-rendering court can be relitigated and used as a defence in the requested court.¹⁴⁴ The meaning of fraud should be clarified by a judicial interpretation issued by the Supreme People’s Court based on the problems encountered when implementing the 2024 CPL.

5.2.1 Jurisdiction of the Foreign Judgment-Rendering Court

The Chinese courts need to identify the connections with the foreign judgment-rendering court that are sufficient for the judgment to be recognized and enforced in China.¹⁴⁵ These connections are the so-called indirect jurisdiction filters.¹⁴⁶ Typical examples of these filters are Articles 5 and 6 of the Judgments Convention. Indirect jurisdiction is different from direct jurisdiction which determines the jurisdiction of the foreign court under the foreign law.¹⁴⁷

Article 301 of the 2024 CPL addresses the indirect jurisdiction of the foreign judgment-rendering court. It provides that the people’s court shall determine that the foreign judgment-rendering court has no jurisdiction when that foreign court has no jurisdiction according to the foreign law or, although it has jurisdiction according to the foreign law, it has no appropriate connection with the case.¹⁴⁸ The foreign judgment-rendering court will also have no jurisdiction if it violates the exclusive jurisdiction of the Chinese courts or an exclusive choice of court agreement concluded by the parties.¹⁴⁹

Notably, the 2024 CPL applies both foreign law and Chinese law to determine whether the foreign judgment-rendering court has jurisdiction over the case. The law of the foreign judgment-rendering court will be applied to determine its jurisdiction in the first place. However, whether the foreign court has a appropriate connection with the case and whether an exclusive choice of court agreement exists should be determined by the 2024 CPL. Moreover, the exclusive jurisdiction of the people’s courts should also be determined according to the 2024 CPL.¹⁵⁰ This departs from the choice of law rule adopted by the Minutes providing that the lack of jurisdiction of the foreign judgment-rendering court should be determined exclusively according to Chinese law.¹⁵¹ This is also different from the draft CPL Amendment for public consultations, which allows a Chinese court to apply the law of the foreign judgment-rendering court to determine whether the latter has jurisdiction.¹⁵² Both approaches are problematic because they would give too much deference to the foreign court or they would disregard the foreign law that the foreign court relied upon when exercising jurisdiction.

Referring to Article 5 of the Hague Judgments Convention, China should consider further developing its indirect jurisdiction rules based on Article 301 of the 2024 CPL. China may replicate direct jurisdiction rules as its indirect jurisdiction rules as was done by the United States, Germany, Brazil, etc.¹⁵³ This is because, among the 33 bilateral treaties containing judgment recognition and enforcement provisions concluded by China so far, 13 provide for indirect jurisdiction rules, which are largely similar to the direct jurisdiction rules in China.¹⁵⁴ The remainder contain no provision on indirect jurisdiction.¹⁵⁵ The China-Singapore Memo, which is the most recently concluded international judicial assistance instrument other than treaties by China, lists indirect jurisdiction grounds for Singapore but not for China.¹⁵⁶

The majority of the indirect jurisdiction grounds contained in Article 5 of the Judgments Convention correspond to relevant Chinese direct jurisdiction rules.¹⁵⁷ A typical example is that a defendant is subject to the jurisdiction of a court where he or she habitually resided or it was his or her principal place of business when becoming a defendant in the proceedings in question.¹⁵⁸ Nevertheless, serious discrepancies exist between Article 5 of the Judgments Convention and the 2024 CPL, which can be grouped into three categories.

The first category is where the Chinese direct jurisdiction rules are narrower than the indirect jurisdiction rules under the Convention. For example, according to Article 5.1(a) of the Judgments Convention, if the person against whom recognition or enforcement is sought habitually resided in the state of origin at the time when the person became a party to the proceedings in the court of origin, the judgment is eligible for recognition and enforcement. This applies to both defendants and third parties to the proceedings.¹⁵⁹ However, under the Chinese CPL, a third party’s habitual residence does not give a court jurisdiction.¹⁶⁰

The second category is where the Chinese direct jurisdiction rules are broader than the indirect jurisdiction rules of the Judgments Convention. For example, Article 272 of the Chinese CPL provides that in an action concerning contract or property, the action may be brought if the defendant has distrainable property within the territory of China, regardless of any connection between the property and the dispute. If this ground can be applied as an indirect jurisdiction ground, it means that the Chinese requested court would consider a foreign judgment-rendering court to have jurisdiction if distrainable property can be found within the jurisdiction of that court.

The third category is where Chinese law provides specific direct jurisdiction bases while the Judgments Convention offers general indirect jurisdiction bases. For example, Article 5.1(g) of the Judgments Convention provides that the judgment concerning contractual obligations should be delivered by a court ‘in which performance of that obligation took place, or should have taken place, in accordance with (i) the agreement of the parties, or (ii) the law applicable to the contract, in the absence of an agreed place of performance […]’. The direct jurisdiction ground under Article 24 of the Chinese CPL is equivalent to the indirect jurisdiction ground in Article 5.1(g) of the Judgments Convention. However, the CPL also provides for specific direct jurisdiction grounds for certain types of contracts: for example, besides the domicile of the defendant, disputes involving negotiable instruments will fall within the jurisdiction of the court of the place of payment.¹⁶¹ Accordingly, although the place where a negotiable instrument is issued constitutes a place of performance, it does not constitute a jurisdictional basis for disputes involving negotiable instruments. This is different from the general rule provided by Article 5.1(g) of the Judgments Convention.

Overall, the above differences give rise to the possibility that a foreign judgment may be entitled to be recognized and enforced under Chinese law but not under the Judgments Convention, and vice versa. We will have to wait and see whether the Chinese legislators will adopt the same indirect jurisdiction rules as the Judgments Convention, which would lead to another amendment of the CPL.

5.2.2 Competing Judgments

Competing judgments may occur in three circumstances.

The first case of competing judgments is between a judgment rendered by a people’s court and that rendered by a foreign court. The 2024 CPL does not require that the two judgments should involve the same parties, although they should concern the same dispute.¹⁶² The term ‘same dispute’ is also used in the Mainland China-Hong Kong Judgment Arrangement¹⁶³ and is considered ‘not [to] be very different from the same “subject matter” in the Judgments Convention’, focusing on the ‘central or essential issue’ of the two judgments.¹⁶⁴ In contrast, the Judgments Convention requires that the two judgments should involve the same parties but should not necessarily concern the same cause of action.¹⁶⁵ Moreover, Chinese law does not consider whether the contents of the foreign judgment contradict the contents of the Chinese judgment, while the Judgments Convention does consider this aspect.¹⁶⁶ That said, neither require the judgment of the requested court (i.e. the Chinese court) to be rendered earlier in time in order to obtain priority.¹⁶⁷ Therefore, in practice, it may be more likely for recognition and enforcement to be refused under Chinese law than under Article 7(e) of the Judgments Convention.

The second case of competing judgments is between a judgment rendered in a foreign state (i.e. the court of origin) and another judgment in a third foreign state. The Judgments Convention requires three conditions for priority to be given to an inconsistent judgment rendered in a third state.¹⁶⁸ Firstly, the third-state judgment should have been rendered earlier in time compared to the judgment of the court of origin. It does not consider which court was first seised. Secondly, both judgments must involve the same parties and the same subject matter. The term ‘same subject matter’ is considered to be less restrictive than the ‘same cause of action’ as contained in Article 9(g) of the Choice of Court Convention.¹⁶⁹ Thirdly, the earlier judgment must be eligible for recognition and enforcement in China, irrespective of whether or not the recognition and enforcement proceedings have been commenced. In contrast, Chinese law adopts different requirements: both judgments must concern the same dispute but may not necessarily be between the same parties, and the third-state judgment must already be recognized and enforced by a people’s court.¹⁷⁰ Therefore, the Judgments Convention gives priority to judgments rendered earlier in time, while Chinese law gives priority to judgments recognized and enforced earlier in time.

Thirdly, competition may also occur between a foreign judgment and a forthcoming Chinese judgment. The 2024 CPL has two provisions to address the res judicata of the foreign judgment. Article 281 of the 2024 CPL addresses the situation where a foreign judgment has been fully or partially recognized by a people’s court, and a party brings a lawsuit on the recognized part of the foreign judgment. In this situation, the people’s court shall not accept the lawsuit.¹⁷¹ If the lawsuit has been accepted, the people’s court shall dismiss it.¹⁷²

Article 302 of the 2024 CPL regulates a different situation where a party applies to a Chinese court to recognize and enforce a foreign judgment, but a case concerning the same dispute is still ongoing (shenli, 审理) in China (the proceedings may be in a second Chinese court). The proceedings should then be stayed pending the proceedings to recognize and enforce the foreign judgment.¹⁷³ If the foreign judgment is held to be recognizable and enforceable in China, the proceedings on the same dispute should be dismissed.¹⁷⁴ If the foreign judgment is not recognizable and enforceable in China, the proceedings on the same dispute should be resumed.¹⁷⁵ This provision addresses the situation where a foreign court has rendered a judgment earlier in time than a Chinese court. It is distinct from the Judgments Convention because it does not consider which court is first seised. Moreover, the 2024 CPL gives priority to the judgment recognition and enforcement proceedings rather than the trial proceedings which were commenced first. This is distinct from Article 533 of the CPL Judicial Interpretations. For example, in Americhip, Inc. v. Dean et al., the recognition and enforcement of a New Zealand judgment was rejected because the same dispute was already being heard in proceedings before another Chinese court according to Article 533 of the CPL Judicial Interpretations.¹⁷⁶ Notably, in Americhip, Inc., the proceedings on the recognition and enforcement of the judgment and the trial proceedings were initiated by the same party.¹⁷⁷ The application of Article 533 of the CPL Judicial Interpretations improperly disregards the res judicata created by the foreign judgment and may lead to inconsistency between the existing foreign judgment and a forthcoming Chinese judgment on the same dispute.

5.3 Compulsory Enforcement

According to the respected treatise, Conflict of Laws in the People’s Republic of China, ‘“recognition” involves a decision not to permit litigation of a specific issue or factual dispute that was previously decided in another court […]. “[e]nforcement” involves the jurisdiction’s exercise of its judicial powers to compel compliance with a judgment rendered in another jurisdiction’.¹⁷⁸ ‘Enforcement’ can be further divided into two stages: voluntary enforcement and compulsory enforcement. The proceedings to seek compulsory enforcement are separated from the proceedings to recognize and enforce a foreign judgment. After a people’s court has issued a decision to recognize and enforce a foreign judgment, the parties concerned must comply with that decision.¹⁷⁹ When a judgment debtor fails to voluntarily carry out its obligations according to the judgment, a judgment creditor can apply for compulsory enforcement.¹⁸⁰

5.3.1 Empirical Study

Up to 10 September 2023, there had been 63 cases in total concerning the recognition and enforcement of foreign judgments on the grounds of reciprocity or judicial assistance treaties ratified by China in civil or commercial matters.¹⁸¹ Of these, 26 were successful cases where the Chinese courts decided to recognize and enforce foreign judgments while 3 were partially successful cases (the Chinese courts recognized compensatory damages but rejected punitive damages); the recognition and enforcement of foreign judgments were rejected in the remaining 34 cases.¹⁸² The findings of extensive research on whether the 29 judgments were actually enforced are shown in Table 1.

Table 1 Enforcement status of foreign judgments in China

The (partially) successful enforcement group includes both voluntary and compulsory enforcement cases. Among the 9 judgments, 3 were to appoint insolvency administrators and with no or limited enforcement contents. For example, in the case of In re DAR, real property owned by the German insolvent company had already been fully paid for and been occupied by the company associated with the creditor before the German insolvency judgment was recognized in China.¹⁸³ As this real property was the only property owned by the insolvent company in China, there was no other property to be collected or debt to be paid by the insolvency administrator.¹⁸⁴ Another 3 judgments in this group were rendered against the same party.¹⁸⁵ The plaintiffs, when applying for US judgments to be recognized and enforced in China, successfully requested the Guangzhou Intermediate People’s Court to preserve a significant amount of the defendant’s assets in China in order to pay the judgment debts.¹⁸⁶

Importantly, the cases in this group do not necessarily mean that the judgment creditors will have their foreign judgment completely satisfied. For example, Establissements A. Chollet & Test Rite International Co., Ltd. v. Daoming Optics & Chemical Co., Ltd. involved three companies: A in France, B in Taiwan, and C in Mainland China.¹⁸⁷ B bought products from C and sold them to A. Due to the products being defective, A initiated a lawsuit in France against B, where B brought a claim against C as a guarantor. The French court terminated the sales contract between A and B. Consequently, B was ordered to return 200,000 USD to A and took the products back from A; and C was ordered to carry out both obligations on behalf of B. Additionally, B was ordered to compensate A by paying 3,000 Euros and C was ordered to compensate B by paying 4,000 Euros. Upon A’s and B’s application, the Jinhua Intermediate People’s Court (hereinafter ‘Jinhua Court’) decided to recognize and enforce the French judgment.¹⁸⁸ After compensating B by paying 4,000 Euros, C brought a compulsory enforcement proceeding against both A and B, requesting the court to order A to return the products to C and that B should be jointly liable for their return.¹⁸⁹ The Jinhua Court dismissed the proceedings because it had no jurisdiction concerning compulsory enforcement against A and B who were both not registered in China and the products were located in France.¹⁹⁰ Thereafter, the second compulsory enforcement proceeding was brought by A and B against C.¹⁹¹ A and B requested C to directly return 200,000 USD to B because A and B had settled their dispute. The Jinhua Court dismissed the second proceeding for two reasons. Firstly, the French judgment required C to compensate A rather than B. Therefore, B had no right to request C for compensation. Secondly, since A and B had settled their dispute, A had lost its creditor’s right against C.

Establissements raises intriguing enforcement questions. Firstly, A and B had submitted to the jurisdiction of the Jinhua Court when they applied for the recognition and enforcement of the French judgment. The pertinent question was whether the jurisdiction of the Jinhua Court also covered compulsory enforcement measures concerning all obligations in the judgment. This question is critical considering that the parties involved in international commercial transactions often simultaneously have the roles of rights holders and obligors. If the Jinhua Court had jurisdiction to enforce all obligations in the judgment, it could administer the settlement between A and B, which would pave the way for A to transfer the creditor’s right against C to B in the second compulsory enforcement proceeding.¹⁹² Consequently, B would have legal standing under Chinese law to apply for compulsory enforcement measures against C. Article 235 of the 2024 CPL gives compulsory enforcement jurisdiction to the court of first instance in the trial proceedings or the court located in the place of the obligator’s assets. ‘The court of first instance in the trial proceedings’ should be extended to cover the court which renders a decision to recognize a foreign judgment. Although the trial procedure is not the same as the procedure for the recognition and enforcement of the judgment, their differences do not change the fact that after recognition, a foreign judgment essentially becomes a Chinese judgment and can be enforced accordingly. If jurisdiction to recognize a foreign judgment is separated from the jurisdiction for its compulsory enforcement, a party would be allowed to pick and choose its rights of enforcement under the judgment and to shield itself from its obligations. Secondly, the Jinhua Court is not located in France where the products are held by A and to be collected by C; however, it is located in the domicile of C which bears the obligation to compensate A. The problem is that the French judgment did not explicitly make collecting the products a condition for advancing the compensation, so the Jinhua Court could not therefore link the two obligations and order simultaneous performance. Since C was legitimately concerned that it might lose the products while being ordered to compensate A and B, it should have applied to the French court to clarify the relationship between making compensation and collecting the products in the judgment. C could also request enforcement against A to facilitate it to collect products in France.¹⁹³

In the group of unsuccessful compulsory enforcement of Table 1, all of the compulsory enforcement proceedings had been closed due to the debtors having no assets for enforcement. Kolmar Group AG v. Jiangsu Textile Industry (Group) Import & Export Co., Ltd. is a very famous case in China because it is the first case in China where a foreign monetary judgment has been recognised based on the principle of de facto reciprocity.¹⁹⁴ Although the Chinese court decided to recognize and enforce the Singaporean judgment, the debtor did not voluntarily fulfil the obligations under the judgment. Consequently, the creditor applied to the Chinese court for compulsory enforcement, and the court docketed the case on 21 December 2016. On 24 January 2017, the same court made a civil ruling¹⁹⁵ and accepted another Chinese company’s application to reorganize the debtor due to the latter’s insolvency. On 8 December 2017, the court made a series of civil rulings¹⁹⁶ approving the merger and reorganization plan of the debtor and terminating the insolvency proceedings. On 28 December 2017, the creditor withdrew its application for the compulsory enforcement of the judgment.¹⁹⁷ From the publicly available documents, the relationship between the judgment creditor and the Chinese company which merged with the judgment debtor is unknown. However, if the judgment creditor had received the payment from the insolvency reorganization proceedings, the Chinese Judgment Enforcement Decision would have contained this information.¹⁹⁸ Similarly, in B&T Ceramic Group s.r.l’s application for recognition of a bankruptcy judgment regarding E.N.Group s.p.a, the French judgment debtor’s share had been transferred to a third Chinese company. The Chinese court held that a compulsory enforcement order could not be made and suggested that the judgment creditor should bring a case against the Chinese company that received the share.¹⁹⁹ Therefore, foreign judgment creditors should consider applying for interim measures to preserve the judgment debtors’ assets including account receivables before the proceedings to recognize and enforce the judgment are commenced.²⁰⁰ After the foreign judgment is recognized but before the commencement of the compulsory enforcement proceedings, if the judgment creditors discover that urgent situations such as the transfer of assets by the debtors may render the recognized judgment unenforceable or difficult to enforce, they may also apply to the enforcement court for interim measures to preserve the assets.²⁰¹

The group containing an unknown enforcement status in Table 1 includes three circumstances. (1) The foreign judgments have been voluntarily enforced by judgment debtors so compulsory enforcement decisions are not necessary.²⁰² (2) The judgment creditors have not applied for compulsory enforcement and the foreign judgments remain outstanding.²⁰³ (3) The judgment creditors have applied for compulsory enforcement, but the relevant compulsory enforcement decisions are not available to the public, so the status of the enforcement remains unknown.²⁰⁴

As a conclusion, although the empirical study only covered 29 foreign judgments, which is a relatively small number, it exhausts all foreign judgments that the Chinese courts have decided to recognize and enforce so far. It reflects the fact that a substantial percentage of foreign judgments that the Chinese courts have decided to recognize and enforce may not have been enforced in China. ‘Effectively resolving enforcement difficulties’ and ‘legally ensuring that parties who have won their cases promptly realize their rights’ have been recognized as difficult challenges and urgent issues at the Fourth Plenary Session of the 18th Central Committee of the Communist Party of China.²⁰⁵ Against this background, in 2022 a draft Civil Compulsory Enforcement Act was published for public consultations.²⁰⁶ This draft contains 17 chapters including 207 articles covering monetary and non-monetary claims as well as protective measures.²⁰⁷ Hopefully, this draft, when enacted into law, can enhance the compulsory enforcement system in China.

5.3.2 Compulsory Enforcement Against Foreign Sovereignty

Losing sovereign immunity to the jurisdiction of a Chinese court in litigation does not mean that the foreign state also surrenders its assets in China as a result of the compulsory enforcement by the Chinese court after the recognition and enforcement proceedings have come to an end.²⁰⁸

However, a foreign state will lose immunity if it has explicitly waived its immunity against these compulsory enforcement measures by a convention or written agreement, has identified assets for enforcement, or the assets are for commercial purposes and are related to the litigation.²⁰⁹ The following assets are not for commercial purposes: (1) assets for diplomatic missions, (2) assets for military use, (3) assets managed by central banks, (4) not-for-sale cultural heritage or archives, (5) not-for-sale scientific, cultural, and historical exhibitions, or (6) other assets determined by the Chinese courts.²¹⁰

6 Conclusion and Prospects

The 2024 CPL has made laudable progress in harmonizing Chinese law with the Choice of Court Convention and the Judgments Convention. Typical examples are the abolishment of the actual connection requirement in choice of Chinese court agreements made by the parties²¹¹ and shifting from de facto reciprocity to de jure reciprocity in the recognition and enforcement of foreign judgments.²¹² The new lis alibi pendens and forum non conveniens rules in the 2024 CPL also treat foreign courts with more comity compared with the existing Chinese law.²¹³

However, ratifying international conventions may not be the key driving force for the 2024 CPL amendment. According to the Chinese Ministry of Justice, the 2024 CPL aims to improve the efficiency of foreign-related civil and commercial proceedings in China, and to ‘better protect legitimate rights of litigants and strongly safeguard China’s sovereignty, security, and development interests’.²¹⁴ The expansion of the people’s courts’ jurisdiction²¹⁵ and broadening the scope of local agents for service of process on foreign defendants²¹⁶ both provide evidence of the pro-plaintiffs (who are often Chinese parties) trend in the 2024 CPL. Maintaining the restriction on service and the taking of evidence in China for foreign proceedings²¹⁷ can also be explained by this trend. Although private international law may reflect ‘potentially foreign affairs in a private-law key’,²¹⁸ the development of Chinese civil procedure law should equally protect a Chinese plaintiff’s right to justice and a foreign defendant’s right to the due process of law.

Appendix

See Table 2.

Table 2 Enforcement status of foreign civil and commercial judgments that Chinese courts decided to recognize and enforce