The Kolmar V. Sutex case on reciprocity in foreign judgments enforcement in China: a welcome development or still on the wrong track?

• Author: The Kolmar V. Sutex case on reciprocity in foreign judgments enforcement in China: a welcome development or still on the wrong track?
• Pages: 202-217

FRONTIERS OF LAW IN CHINA

VOL. 13 JUNE 2018 NO. 2

DOI 10.3868/s050-007-018-0014-4

FOCUS

RECOGNITION AND ENFORCEMENT OF JUDGMENTS BETWEEN CHINA, JAPAN

AND SOUTH KOREA IN THE NEW ERA

THE KOLMAR V. SUTEX CASE ON RECIPROCITY IN FOREIGN JUDGMENTS

ENFORCEMENT IN CHINA: A WELCOME DEVELOPMENT OR STILL ON THE

WRONG TRACK?

ZHU Lei*

Abstract In December 2016, the Nanjing Intermediate People’s Court in China issued

its ruling in the Kolmar v. Sutex case, where a monetary judgment from Singapore was

recognized and enforced against a local textile company. The case confirms that once a

foreign country has taken the initiative, Chinese courts will follow up to enforce

judgments from that country reciprocally. This is the doctrine of de facto reciprocity

adopted by some Chinese courts. The paper surveys the judicial practice of Chinese

courts and finds that this area of law is full of confusion and uncertainties due to the lack

of applicable rules. Recent developments suggest that China may move away from this

approach and adopt a relaxed version of reciprocity, which is worthy of close attention.

Keywords recognition and enforcement of foreign judgment, reciprocity, de facto

reciprocity, obligation doctrine

INTRODUCTION .................................................................................................................... 203

I. THE LEGAL FRAMEWORK....................................................................................... 204

A. Chinese Legislation on the Principle of Reciprocity......................................... 204

B. The Gomi Akira Case from the SPC .................................................................. 205

II. JUDICIAL PRACTICE AFTER THE GOMI AKIRA CASE............................................... 207

A. Refusal of Enforcement without Adequate Reasoning...................................... 207

B. Bypassing the Issue of Reciprocity.................................................................... 208

C. Treaty as the Sole Basis — Misapplication of the Law .....................................210

D. De facto Reciprocity — Lack of Consistency.................................................... 211

* (朱磊) Lecturer in Law, Institute of International Law, Wuhan University, Wuhan 430072, China; Ph.D.

in EU Competition Law, Law School, Bangor University, Wales. Contact: leizhulawyer@126.com

This article is funded by a research project (Grant No. 17SFB2044) granted by Ministry of Justice of

China and supported by the Fundamental Research Funds for the Central Universities.

2018] THE KOLMAR V. SUTEX CASE ON RECIPROCITY IN FOREIGN JUDGMENTS ENFORCEMENT IN CHINA 203

E. Implications of the Kolmar Case....................................................................... 212

III. THE DE FACTO RECIPROCITY AS AN ARBITRARY PRECONDITION ......................... 213

CONCLUSION........................................................................................................................ 214

INTRODUCTION

In December 2016, the Nanjing Intermediate People’s Court in eastern China,

recognized and enforced a judgment from Singapore.1 The facts of the case are

straightforward. Kolmar Group AG, a global petrochemicals company based in

Switzerland, had disputes over a sales contract with Sutex Group Ltd., a textile company

incorporated in Nanjing. They reached a settlement agreement over the dispute but it

proved to be futile. Kolmar filed a complaint in Singapore High Court based on a choice

of court clause in the settlement agreement. Being served with the documents, Sutex’s

representative was absent. In October 2015, a default judgment was made by the

Singapore High Court in favor of Klomar and ordered Sutex to pay 350,000 USD.

Kolmar filed an application to recognize and enforce the judgment in Nanjing

Intermediate People’s Court where Sutex has its headquarter and assets.

In the judgment, the Court essentially followed a two-step approach. The first issue

the Court had to address was the legal basis for recognition and enforcement of

judgments (hereinafter referred to as “REJ”), which rests on treaty or reciprocal

relationship. This is the precondition for any REJ proceeding in China, without which the

court will simply strike out an application without examining the merits of the case. On

this issue, China and Singapore do not have any treaty on REJ. However, the Court

pointed out, as a result of a decision by Singapore High Court which recognized and

enforced a Chinese judgment in January 2014,2 a reciprocal relationship therefore did

exist.

Then it examined whether the Singaporean judgment fulfills all the conditions for

REJ prescribed in the Civil Procedure Law of China. On this issue, the Court concluded

that “after examination, the judgment in question is not in conflict with the basic

principles of Chinese law, national sovereignty, security or public interest.”3 Therefore,

in December 2016, the Court held that the Singaporean judgment would be recognized

and enforced in China.

This case has attracted much attention. It is regarded as a landmark case because for

the first time a Chinese court confirms the existence of a reciprocal relationship between

1 Kolmar Group AG v. Sutex Group Ltd., (2016) Su 01 Xie Wai Ren No. 3.

2 Giant Light Metal Technology (Kunshan) Co., Ltd. v. Aksa Far East Pte. Ltd., [2014] SGHC 16.

3 Kolmar Group AG v. Sutex Group Ltd., (2016) Su 01 Xie Wai Ren No. 3, para. 5.