Chengdu International Commercial Court was established
On April 22, 2022, Chengdu International Commercial Court was officially established. It is the third international commercial court in China after the establishment of the Suzhou International Commercial Court and the Beijing International Commercial Court, and exercises centralized jurisdiction over the first instance proceeding of all foreign-related civil and commercial cases that should have been heard by intermediate people’s courts within Sichuan Province.
The Chengdu International Commercial Court is an internal division of the Chengdu Intermediate People’s Court, and has three professional panels consisting of 14 judges and 7 judicial assistants.
Nomura Holdings，Inc．v JC Capital Limited Re Recognition and Enforcement of a HKIAC award
(2020) Hu 74 Recog. HK No. 1
Significance: The case concerns the recognition and enforcement of a HKIAC award when there were related parallel proceedings in PRC.
[Summary of Facts]
In November 2011, Nomura Holdings, Inc. as the limited partner (“Nomura”), JC Capital Limited as the limited partner (“JC”) and Shanghai Jiuyou Equity Investment Fund Partnership (L.P.) as the general partner (“Jiuyou”) signed a Limited Partnership Agreement, establishing Shanghai Jiuyou Quanxing Equity Investment Partnership (L.P.) (“Partnership”). In December 2017, Nomura brought an arbitration based on the arbitration clause in the Limited Partnership Agreement alleging that JC failed to contribute capital and Jiuyou did not declare dividend. The HKIAC rendered an arbitration award that, inter alia, Nomura was entitled to the investment returns or equivalent damages; JC was in breach of the Limited Partnership Agreement and should be removed as a partner; and Jiuyou should provide financial disclosure about the Partnership to Nomura (“Award”). Nomura sought recognition and enforcement of the Award at Shanghai Financial Court.
The Shanghai Financial Court held that the Award should be recognized and enforced.
First, whether there is a conflict between the Award and the ruling already in force in the Mainland.
In relation to the issue of JC’s partnership, JC argued that the Award contradicted an effective judgment made by the Shanghai No. 1 Intermediate People’s Court ((2018) Hu 01 Civil First 599), which held that JC was entitled to designate liquidators and can designate members of the liquidation group as it was the registered partner of the Partnership. The Shanghai Financial Court disagreed: JC’s partnership formed the foundation of its participating in the compulsory liquidation but its identity as a partner was not a fact determined by the Shanghai No. 1 Intermediate People’s Court. Further, in the arbitration proceedings, JC had advanced the same argument, which was considered by the HKIAC Arbitration Tribunal. Thus, the fact that JC was allowed to nominate liquidators did not contradict the Award that JC should be removed as a partner.
In relation to the issue of Nomura’s right to information, JC argued that the Shanghai Xuhui Basic People’s Court had rendered an effective judgment on the same issue. The Shanghai Financial Court disagreed and held that the Shanghai Xuhui Basic People’s Court made it clear in its judgement ((2018) Hu 0104 Civil First 9147) that the causes of action in that case was limited to the Partnership Enterprise Law of PRC. Nomura might pursue its right to information as provided in the Limited Partnership Agreement by arbitration. Accordingly, the learned Judges of the Shanghai Financial Court held that the basis of claim, the basis of decisions and the obligors were different and thus there was no conflict.
Second, whether the arbitral award in question was contrary to the public interest. The Shanghai Financial Court held that the legal relationship in the present case was a civil legal relationship between equal parties, and the award made by the HKIAC was limited to the interests of the parties to the contract. The enforcement of the Award did not violate the foreign exchange management policy of the Mainland. Thus, the recognition and enforcement of the Award would not undermine the public interests of Mainland society.
Han Kun Comments: The core difficulty here is that the parties to the Award and the mainland court judgments are the same and the causes are related. Thus, there is possibility that the Award contradicts the Mainland judgments and may violate the public interest. Upon hearing the case, the Shanghai Financial Court analyzed the difference between the Award and the mainland judgments in terms of the basis of the claim, the basis of the decision and the obligors, and held that the related cases were not homogeneous, and therefore, there was no conflict between the recognition and enforcement of the Award and the litigation cases that had been or were being conducted in the mainland.
This case provides a useful reference to the judicial practice of the Arrangement of the Supreme People's Court on Reciprocal Enforcement of Arbitral Awards between the Mainland and the HKSAR in the sense that, connected cases with the same parties involved do not necessarily result in an arbitral award being unable to be recognized and enforced. Parties and attorneys can still explore the differences in multiple aspects such as the basis of claims and legal references.
ONC Lawyers v Flower World Travel Limited Re Recognition of a judgment of the High Court of the Hong Kong SAR
(2019) Min 01 Recog. HK No. 4
Significance: The case concerns recognition of a default judgment rendered by a Hong Kong court against a Mainland defendant, and was awarded the second prize in the first “Outstanding Achievements of the People’s Courts in Judicial Cooperation With Hong Kong and Macau” released by the SPC.
[Summary of Facts]
In May 2016, ONC Lawyers entered into an Engagement Letter with Flower World Travel Limited (“Flower World”), according to which Flower World engaged ONC Lawyers to provide legal services, but subsequently Flower World failed to make payment as agreed. Therefore, ONC Lawyers initiated a proceeding against Flower World before the High Court of the HKSAR on June 30, 2017 (Case No.: No. 1558 of 2017), and the High Court entrusted the Fujian Higher People’s Court to assist in serving court documents to the defendant on October 9, 2017. On February 26, 2018, the Court of First Instance of the High Court of the HKSAR rendered a final judgment, ordering Flower World to pay an amount of HK $2031767.3 and corresponding interest to ONC Lawyers. However, Flower World still failed to fulfill its legal obligations. Therefore, ONC Lawyers applied for recognition of the judgment rendered by the Court of First Instance of the High Court of HKSAR in accordance with the Arrangement of the Supreme People's Court between the Mainland and the HKSAR on Reciprocal Recognition and Enforcement of the Decisions of Civil and Commercial Cases under Consensual Jurisdiction (the “Arrangement”).
Upon review, the Fuzhou Intermediate People’s Court held that (i) the Engagement Letter provides that the Hong Kong court shall have exclusive jurisdiction over the dispute; (ii) according to the certificate issued by Hong Kong court, the judgment “No.1558 of 2017” issued by the Court of First Instance of the High Court of the HKSAR is final and came into force on February 26, 2018, which is a final judgment referred to in Article 2 of the Arrangement; and (iii) according to the Reply of the Fujian Higher People’s Court on Assistance in Service of Court Documents, the Hong Kong court has duly issued summons and served the defendant in the proceeding. Therefore, the Fuzhou Intermediate People’s Court issued a verdict recognizing the judgment made by the Hong Kong court.
Han Kun Comments: Judgments of the courts in the Mainland and Hong Kong cannot be directly recognized and enforced in each other’s jurisdictions. According to the Arrangement that is currently in force, the following conditions should be satisfied for an application for recognition of a judgment rendered by a Hong Kong court with a court in the Mainland: (i) the dispute must be arising from civil or commercial contracts, (ii) the contracting parties must agree in writing that the Hong Kong court shall have exclusive jurisdiction over the dispute; (iii) the judgment only involves payment of money; (iv) the judgment is final.
In this case, the Fuzhou Intermediate People’s Court properly applied the provisions of the Arrangement, and recognized a default judgment rendered by a Hong Kong court where the judgment in dispute fully complied with the above-mentioned conditions and the Hong Kong court has duly issued summons and served the defendant with the assistance of the Mainland court before the hearing.
This case is awarded the second prize in the first “Outstanding Achievements of the People’s Courts in Judicial Cooperation With Hong Kong and Macau” released by the SPC, and is referential for the adjudication of similar cases. The case also reflects the SPC’S promotion and encouragement of the mutual recognition and enforcement of civil and commercial judgments between the Mainland and Hong Kong.