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Recognition and Enforcement of Chinese Monetary Judgments in Australia based on Chinese Citizenship
The Australian common law does not require reciprocity for recognizing and enforcing foreign judgments. Therefore, although Chinese courts have never recognized and enforced an Australian monetary judgment, Australian courts have recognized and enforced Chinese judgments. Thus far, there have been two Chinese judgments recognized and enforced in Australia (both in the State of Victoria). In both cases, the Australian judges considered whether the Chinese courts had international jurisdiction based on the defendants’ citizenship/nationality.
The first case is Liu v Ma.[1] The plaintiff sought to recognize and enforce a default Chinese judgment (worth RMB 3,900,000) against the defendants. The defendants defaulted in the Australian judgment recognition and enforcement (hereinafter ‘JRE’) proceedings. By applying Australian law, the Supreme Court of Victoria held that the Chinese court had international jurisdiction over the defendants because they were born in China and held a Chinese passport, they had substantial activities or financial affairs in China, and Chinese law does not recognize dual nationality.
The second case, Suzhou Haishun Investment Management Co Ltd v Zhao & Ors, was rendered recently on 27 February 2019.[2] It is a summary judgment but, in contrast to Liu, the defendant thoroughly argued her case in the Australian JRE court. The plaintiff sought to recognize and enforce three Chinese judgments (worth RMB 20,000,000). The plaintiff brought Chinese proceedings against a Ms. Zhao and her company where she was the director and the sole shareholder. A few days before the Chinese proceeding was commenced, Ms. Zhao was informed that the plaintiff intended to sue her, and she left China with no intention to return. However, Ms. Zhao was still registered to an address in the Chinese court’s jurisdiction under the hukou system (China’s system of household registration). She possessed a Chinese identity card and held a Chinese passport. The plaintiff tried various ways to serve Ms. Zhao but was unsuccessful. Finally, the service was conducted by public announcement. Ms. Zhao defaulted in the Chinese proceedings. But at the first hearing, a man purporting to be an employee of Ms. Zhao’s company appeared before the Chinese judge. This man was asked by the Chinese judge whether he knew Ms. Zhao, to which he responded that she was ‘the boss.’ Although this man did not hold Ms. Zhao’s power of attorney, he nevertheless indicated that he had with him documents verifying that Ms. Zhao was diagnosed with depression which explained why she could not attend the hearing. The Chinese court held that Ms. Zhao was aware of the proceedings and service by the public announcement was effective. Chinese judgments were rendered against Ms. Zhao and her company. Her company had no assets in China, so the plaintiff went to Australia to locate Ms. Zhao. The Australian court held that service by the public announcement was legal according to Chinese Civil Procedural law and there was no denial of natural justice. The Australian court also held that the Chinese court had international jurisdiction. First, because the parties submitted to the Chinese court by a choice of court clause in the loan contracts. Second, Ms. Zhao was a citizen of China, possessed a Chinese passport, held an identity card and submitted to the jurisdiction of the Chinese Court by agreement, so it is not necessary to decide whether she was considered by Chinese law to be domiciled in China.
Although the defendant’s citizenship is not a ground for Australian courts to exercise direct jurisdiction, it remains to be ground in the Australian JRE proceedings to determine whether a foreign court has international jurisdiction. In Independent Trustee Services Ltd v Morris,[3] the plaintiff applied to enforce a UK judgment in Australia on the ground that the defendant had an active UK citizenship. The defendant was a UK citizen and held a UK passport issued in 2003 and current until 2013, and he used this passport to travel to Australia. The Supreme Court of New South Wales found that the defendant’s citizenship was not some relic of an early stage of his life but was an active part of his present situation on which he had relied for international travel and for other purposes. It held that the UK judgment should be recognized and enforced because citizenship of a foreign country means allegiance to the foreign country, and it is a recognized ground of international jurisdiction on which the effectiveness of foreign judgments is accepted under the common law. However, even the judge deciding Morris acknowledges the ‘absence of citation in the English authorities of any case in which this ground of jurisdiction has been contested and upheld after argument’.[4] Liu cites the English case Emanuel v Symon[5], which found that a foreign court has international jurisdiction if the defendant is a subject of the foreign country in which the judgment has been obtained. However, this is a dictum rather than a holding. As Dicey, Morris and Collins The Conflict of Laws indicates there is no actual decision in English common law which supports that the courts of a foreign country might have jurisdiction over a person if he was a subject or citizen of that country. Private International Law in Australia by Reid Mortensen and et al also considers active citizenship is a dubious ground of international jurisdiction.
The cases involving Chinese citizenship and Hukou are more complicated. First, the fact that China does not recognize dual citizenship does not mean China is necessarily a Chinese citizen’s domicile. A Chinese citizen automatically loses his/her Chinese citizenship only when a Chinese citizen has obtained foreign citizenship and resides overseas.[6] It is not uncommon that a Chinese citizen may reside overseas under a foreign permanent residency visa. Second, these groups of Chinese citizens still maintain a registered address in China (Hukou). This is because every Chinese citizen must have a Hukou even if s/he resides abroad. This Hukou may enable them to receive Chinese pension and voter registration. Third, under Chinese civil procedure law, a Chinese court has jurisdiction on a Chinese citizen when his or her Hukou is in its jurisdiction,[7] even if the Chinese citizen (defendant) is not present in China when the initiating process is commenced. If all other service methods are not successful, people’s courts can use a public announcement to effect service. The question is whether Australian courts recognize and enforce the consequent Chinese default judgment based on the defendant’s citizenship. I would suggest Australian courts to be cautious to follow Liu and Zhao regarding the issue of citizenship. The classical grounds for international jurisdiction are presence and submission. Service by a public announcement is hard to establish international jurisdiction on a defendant who is neither present nor submitted. Citizenship as a ground of international jurisdiction has been doubted by three English High Court judges[8] and rejected by the Irish High Court.[9] Additionally, Liu is a default judgment, so the citizenship issue has not been contested, and the defendant in Zhao submits to Chinese court by a choice of court clause.
[1] Liu v Ma & anor [2017] VSC 810.
[2] Suzhou Haishun Investment Management Co Ltd v Zhao & Ors [2019] VSC 110.
[3] Independent Trustee Services Ltd v Morris [2010] NSWSC 1218.
[4] Ibid, para 28.
[5] Emanuel v Symon[1908] 1 KB 302.
[6] Art. 9 of the Chinese Nationality Law, http://www.mps.gov.cn/n2254996/n2254998/c5713964/content.html.
[7] Under the Hague Service Convention, service on Hukou may not be upheld if the defendant can demonstrate that his habitual residence is different. If a Chinese citizen leaves its Hukou address and resides in another address continuously for more than one year, the latter address becomes his habitual residence and the court in that address also has jurisdiction.
[8] Blohn v Desser [1962] 2 Q.B. 116, 123; Rossano v Manufacturers’ Life Insurance Co Ltd [1963] 2 Q.B. 352, 382–383; Vogel v RA Kohnstamm Ltd [1973] Q.B. 133; see also Patterson v D’Agostino (1975) 58 D.L.R. (3d) 63(Ont). Dicey, Morris and Collins The Conflict of Laws (15th ed) 14-085.
[9] Rainford v Newell-Roberts [1962] I.R. 95.
A King without Land – the Assignee under the Commission’s Proposal for a Regulation on the law applicable to the third-party effects of assignments of claims
Professor Dr. Robert Freitag, Friedrich-Alexander-University Erlangen, has kindly provided us with his thoughts on the proposal for a Regulation on Third-Party Effects of Assigment:
Article 14 para. (1) of Regulation Rome I subjects the relationship between assignor and assignee under a voluntary assignment of a claim to the law that applies to the contract between the assignor and assignee. Pursuant to recital (38) of the regulation, the relevant law is to govern the “property aspects of an assignment, as between assignor and assignee”. It is a much debated question whether article 14 para. (1) of Regulation Rome I also applies to the third-party effects of assignments, i.e. to “proprietary effects of assignments such as the right of the assignee to assert his legal title over a claim assigned to him towards other assignees or beneficiaries of the same or functionally equivalent claim, creditors of the assignor and other third parties” (for this definition see article 2 lit. (2) of the Commission’s 2018 proposal for a Regulation of the European Parliament and of the Council on the law applicable to the third-party effects of assignments of claims, COM(2018)096 final). Read more
The Italian Supreme Court rules on the effects of the opposition to a European Order for Payment
In case of opposition to a European Order for Payment, Article 17 (1) of Regulation (EC) No 1896/2006 (latest consolidated version) states: “the proceedings shall continue before the competent courts of the Member State of origin unless the claimant has explicitly requested that the proceedings be terminated in that event. The proceedings shall continue in accordance with the rules of: (a) the European Small Claims Procedure laid down in Regulation (EC) No 861/2007, if applicable; or (b) any appropriate national civil procedure”.
Moreover: 1) the transfer to civil proceedings is governed by the law of the State where the order has been issued, 2) this law must not prejudice the claimant’s position in the subsequent proceedings, and 3) the claimant is to be informed both of the opposition and of any transfer to civil proceedings.
Recital 24 of Regulation (EC) No 1896/2006 makes it clear that the opposition leads “to an automatic transfer of the case to ordinary civil proceedings”, adding that “the concept of ordinary civil proceedings should not necessarily be interpreted within the meaning of national law”.
The effects of the opposition in the CJEU’s case-law
The CJEU in turn has consistently stressed, on the one hand, that Article 17 produces only said effects and, on the other hand, that the transfer to ordinary civil proceedings is automatic (13 June 2013, Case C-144/12, Goldbet, para. 31; see also 4 September 2014, Joined Cases C-119/13 and C-120/13, eco cosmetics, para. 38).
In Flight Refund (10 March 2016, Case C-94/14), the Court sketched a slightly different scenario when holding that “the proceedings automatically continue […] in the Member State of origin of the order […]”, but further confirming that the continuation occurs “in accordance with the rules of ordinary civil procedure […]” (para. 52; emphasis added).
No national provisions for the transfer: how to fill the gap according to the Italian Supreme Court
What seems definite from the foregoing is that, if the claimant were not to request the termination of the proceedings, the opposition triggers the transfer to ordinary national civil procedure (or to the European Small Claims Procedure) under the law of the Member State of origin.
But, what if the lex fori does not provide rules as to the transfer?
An answer comes from the Italian Supreme Court (Corte di Cassazione) in a recent judgment (31 January 2019 no 2840). Although the Corte di Cassazione has reasoned under the initial version of the Regulation (EC) No 1896/2006, it infers from this latter certain principles which may be also applied to the latest version.
The Italian Court holds, in fact, that the continuation of the proceedings is not a matter left to national law, but it is directly governed by the Regulation through the reference to the national provisions that apply to ordinary civil proceedings.
The Member State has to apply the ordinary, normal form of national proceedings which apply to the disputed claim as if the claimant resorted directly to them.
In case the national legal order lacks rules to govern the transfer and determine the specific ordinary civil proceeding triggered by the opposition, the Corte di Cassazione puts forward the following solution.
First, the judge who issued the order is entitled not only to inform the claimant of the opposition, but also to give him a term to bring the action under the ordinary procedural rules. Second, the claimant may choose, among the ordinary civil proceedings, those that better suit the claim for which he resorted to the European procedure.
The Regulation does not allow the judge to lead the transfer, especially by determining the national rules governing the ordinary proceeding.
On the contrary, a national rule in case the claimant does not comply with the term to bring the action exists whereby the proceeding is extinguished (Article 307 (3), Italian Code of Civil Procedure).
A new “choice” for the claimant
The Italian Supreme Court finds in the Regulation the ground for providing the claimant with a sort of “choice of proceedings”.
Recalling the emphasis that both the Regulation and the CJEU put on the automatism in the “continuation/transfer” to the ordinary civil proceeding, what automatically comes out from the judgment of the Corte di Cassazione seems such “choice of proceedings” rather than the very “continuation/transfer”.
Moreover, on closer inspection, since the would-be ordinary proceeding is extinguished if the claimant makes the term to bring the action expire, the real “choice” lies between the continuation or the termination of the whole proceeding.
Perhaps the “choice” is not well founded in the Regulation, but…
The Italian Supreme Court’s effort to counterweigh the lack of national provisions is certainly worthwhile. As is it that to forge the transfer regime in compliance with the Regulation.
However, just reasoning with the Regulation in mind, one may wonder whether the aforementioned “choice” is actually well founded.
According to the Italian Supreme Court, the Regulation entitles the claimant to “explicitly” choose what national proceeding is to be applied. Furthermore, even though the claimant has not explicitly requested under the Regulation to terminate the proceedings following the debtor’s opposition, he is again requested, this time under Italian law, to possibly reveal such willingness by making the term expire without bringing the action.
Where is in the Regulation the room for such “choices”? Actually, where is the room for “choices” other than that to explicitly oppose to the transfer?
These doubts increase under the latest version of the Regulation.
Pursuant to Article 7 (4), the claimant may indicate to the court “which, if any, of the procedures listed in points (a) and (b) of Article 17(1) he requests to be applied to his claim in the subsequent civil proceedings”, unless he indicates to the court that “he opposes a transfer to civil proceedings […] in the event of opposition by the defendant”.
Article 17, which gives the claimant the alternative between the European Small Claims Procedure and any appropriate national civil procedure, adds that where the claimant has not indicated one of these procedures (or he has requested the application of the European Small Claims Procedure to a claim that does not fall within the scope of Regulation (EC) No 861/2007), “the proceedings shall be transferred to the appropriate national civil procedure” (para. 2; emphasis added).
Consequently, the Appendix 2 to the Application for a European Order for Payment (form A) puts in the claimant’s hand the option to request: 1) the discontinuance of the proceedings, or 2) the continuation in accordance with the rule of the European Small Claim Procedure, if applicable, or 3) the continuation in accordance with any appropriate national civil procedure.
Once again, where is the room for “choices” other than that to explicitly oppose to the transfer, or to request that the proceedings be continued under the European Small Claim Procedure or under the appropriate national civil procedure? Moreover, may the judgment as to the “appropriateness” of the national civil procedure be left to the claimant? May it be left to him even when the request to apply the European Small Claim Procedure is ungrounded because the claim falls outside the scope of Regulation (EC) No 861/2007? Who decides about the lack of “appropriateness”? Accordingly, what happens in case the claimant brings an action for civil proceedings that are not “appropriate” or suitable for the claim he sought to satisfy through the European Order for Payment procedure?
…the “choice” logically is the best way not to prejudice the claimant
All things considered, a room in the Regulation (EC) No 1896/2006 seems to unfold more for further judge’s burdens than for further claimant’s “choices” when it comes to governing the transfer under Article 17 in absence of specific national provisions.
However, it’s worth recalling that Article 17 (3) provides that “where the claimant has pursued his claim through the European order for payment procedure, nothing under national law shall prejudice his position in subsequent civil proceedings”.
It goes without saying that the claimant is not prejudiced, but fully protected, if he may even choose the national civil proceedings after the debtor’s opposition and benefits from a second choice between continuing or terminating the whole proceeding.
What about the defendant?
Despite being inclined to safeguard the claimant, the Regulation pays close attention also to the rights of the defendant.
Therefore, it should not be underestimated, as a concluding remark, that “[i]n the European order for payment, the defendant shall be informed that […] where a statement of opposition is lodged, the proceedings shall continue before the competent courts of the Member State of origin in accordance with the rules of ordinary civil procedure […]” (Article 12 (4)(c)).
It is debatable whether, from the defendant’s standpoint, the “accordance” with the rules of ordinary civil procedure may also include – in the silence of the Regulation and in absence of national rules governing the transfer – the “accordance” with the claimant’s choice of the national procedure that the defendant may eventually undergo.
The doubts increase if one considers that, unlike the claimant, who would benefit from a series of choices, the defendant has only two means (except for the remedies) to impinge on the procedural destiny of the disputed claim (to pay the amount or to oppose the order), which both result in the European procedure’s closing.
Ultimately, the idea that the claimant may choose the national civil proceeding and profits from a second choice between continuing or terminating the whole proceeding seems to unbalance the position in which the Regulation has placed the claimant and the defendant after the order has been issued.
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Last minute registration welcome: “The HCCH 2019 Judgments Convention: Cornerstones – Prospects – Outlook”, 9 and 10 June 2023, University of Bonn
Just a quick note to assure you that last minute registration is welcome. All information is available here.
Friendly reminder: Lecture on Private International Law and Voices of Children, organized in cooperation with ConflictofLaws.net
This is a friendly reminder to our co-organised event on next Thursday, free admissions can be registered here.
Online event
When making decisions, adults should think about how their decisions will affect children. Recent years have witnessed, in private international law cases and legislation, the protection of children is increasingly mingled with gender, indigenous issues, refugees, violence, war, surrogacy technology, etc. This is evidenced by the US Supreme Court 2022 judgment Golan v. Saada, the Australian case Secretary, Department of Communities & Justice v Bamfield, the 2023 German Constitutional Court decision, the Chinese Civil Code, the Australia Family Law (Child Abduction Convention) Amendment (Family Violence) Regulations 2022, and developments at the Hague Conference on Private International Law (HCCH Children Conventions) and the United Nations (Convention on the Rights of the Child and its additional Protocols).
On this International Children’s Day, let us join this CAPLUS webinar in cooperation with conflictoflaws.net and American Society of International Law Private International Law Interest Group to hear voices of children in private international law.
Recent Article from Uniform Law Review
Just late yesterday, Uniform Law Review published an interesting article that is of significance and relevance to comparative law and conflict of laws. It is titled EE Clotilde, “The reception of OHADA Law in anglophone Cameroon: appraisals and proposals” The abstract reads as follows:
This article assesses the extent to which the law under the Organisation pour l’Harmonisation en Afrique du Droit des Affaires (OHADA) has been received in anglophone Cameroon after 26 years of existence, with specific focus on the Fako judicial division.1 With regard to the tenets of qualitative research, it is observed that, from the viewpoint of the legal reception technique, it is indisputable that OHADA law has been infused into the English-speaking legal system in Cameroon through legal techniques of transposition. Through the use of interviews and questionnaires as our research tools, it is revealed that this reception remains limited because most judicial actors still find it difficult to implement legislation that they have not yet mastered. Linguistic issues and the difficulties faced in accessing the Common Court of Justice and Arbitration based in Ivory Coast in Abidjan on OHADA-related matters are serious obstacles to its effective implementation. This situation has been worsened by the poor articulation of clichés that tend to radically oppose OHADA law compared to common law principles. This article tries to deconstruct the ideas received as it shows some of the similarities in the substantive law under the two systems and consequently advocates on this basis the idea that efforts be made to familiarize common law jurists with the content of OHADA law. The article recommends that linguistic issues be tackled by OHADA lawmakers right from the stage of legal drafting by using drafting techniques that will reduce the feeling that the common law is being neglected. For uniform acts yet to be translated, the translation process should associate experts in comparative law to enable the use of appropriate legal language in translation from French into English. Only such efforts will entice the common law African countries that are still hesitating to join OHADA law and, by so doing, will render investment in Africa more attractive.