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Singapore – Court Enforces Chinese Judgement.

10 September, 2013

 

A possible breakthrough in judgment enforcement between Singapore and China recently took place in the courts of Singapore. After listening to both sides in a trial, the High Court ruled that Singapore-based Aksa Far East was liable to pay US$190,000  to China-based Giant Light Metal Technology (Kunshan). This amount had been awarded to Giant Light in a Chinese civil suit in Jiangsu Province in  2010.

 

Facts and judgment

 

In 2003, the parties signed a Contract under which Aksa (the defendant) would supply Giant Light (the plaintiff) with generator sets originating from England (the Contract). There was a clause in the Contract stating that any dispute or controversy arising out of or relating to the Contract which could not be resolved by the two parties through consultation, should be submitted to arbitration. The plaintiff alleged that the defendant breached its obligations under the Contract and commenced proceedings in the People’s Republic of China (PRC) Court, from which the defendant chose to abstain. The PRC Court held the defendant liable and awarded the plaintiff with the refund of US$190,000 and compensation of RMB7,088. The judgment was subsequently served on the defendant in Singapore. The defendant did not pursue an appeal against the PRC judgment. Following the defendant’s refusal to pay the sums awarded under the PRC judgment, on 10 February 2012 the plaintiff issued proceedings in the Singapore High Court. The defendant’s application to stay proceedings pursuant to section 6 of the International Arbitration Act (IAA) – which states that if a party to an arbitration agreement brings a claim concerning a dispute in relation to a contract between the parties during performance, the other party may apply to court to stay proceedings – was rejected by the High Court. It held that a claim referring to a debt arising from a PRC judgment and not from a dispute emanating from the Contract does not fall within the terms of the arbitration agreement. Section 6 IAA was therefore inapplicable. The fact that the defendant did not argue lack of jurisdiction or any procedural irregularity regarding the PRC judgment allowed the High Court to conclude that the PRC judgment was final and that the claimant was entitled to claim the debt arising from the judgment from the defendant in Singapore.

 

What now?

 

This decision may be considered by some as light at the end of the tunnel for judgment-enforcement between China and Singapore. Even though Chinese court judgments are currently not registrable under the Reciprocal Enforcement of Foreign Judgments Act – meaning that in order to enforce a Chinese judgment in Singapore, there is a need for a trial to determine the merits of the foreign judgment – this case highlighted Singapore’s willingness to enforce Chinese judgments. On the other hand, there currently appears to be little chance of a foreign judgment being recognized or enforced by Chinese courts, unless there is a treaty obligation or “reciprocity” in practice between China and the foreign jurisdiction concerned. The small number of successful applications for judgment enforcement in China reveals that the Chinese courts are not yet adept at adducing reasons for supporting their decisions. However, in a previous case, such as the German Zueblin Case1, where the Berlin Court took the initiative in recognizing a Chinese judgment, shows that foreign courts endeavour to make decisions in an attempt to win back reciprocal treatment by Chinese courts in future cases where judgment recognition and enforcement might be needed in PRC. In the current case, it will be interesting to see whether Chinese courts will decide to repay Singapore judicial courtesy and bridge the judgment enforcement gap between the two countries.

 

1German Zueblin International Co. Ltd v. Wuxi Walker General Engineering Rubber Co., Ltd, The Court of Appeal of Berlin, 18 May 2006, document number 20 S ch 13/ 04. It is a case about the recognition by a German court of a Chinese judgment for the first time.

 

Clyde & Co

 

 

For further information, please contact:

 

Ik Wei Chong, Partner, Clyde & Co
ikwei.chong@clydeco.com

 

Andrew Rourke, Partner, Clyde & Co
andrew.rourke@clydeco.com

 

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