Enforcement of Judgments 2021

Last Updated August 03, 2021

China

Law and Practice

Authors



Jingtian & Gongcheng is widely recognised as one of China’s top-tier firms across multiple practice areas. Founded in 1992, Jingtian & Gongcheng is one of China’s first partnership law firms and has ten offices across China, located in major cities including Beijing, Shanghai, Shenzhen, Guangzhou and Hong Kong. The firm has developed a renowned dispute resolution team consisting of 143 professionals (including 54 partners) with a strong expertise in litigation and arbitration, advising domestic and multinational corporations on complex disputes, and advocating before courts and arbitral tribunals, both locally and internationally. The dispute resolution team is committed to, and capable of, providing its clients with pragmatic and efficient solutions to domestic and multi-jurisdictional disputes arising from or relating to trade, investment, corporate governance, real estate, construction, banking and finance, securities, energy, manufacturing, intellectual property, etc.

In China, the common approaches to identifying the assets of another party for enforcement purposes include: (1) search on publicly available databases; (2) authorised search by an attorney with a search order issued by the court; (3) search by the court; and (4) the court ordering the debtor to provide an asset status report.

Search on Publicly Available Databases

A party seeking enforcement may run a proprietary search of another party’s assets on publicly available databases, which are usually run by the governmental authorities. Some of these databases are accessible online.

The types of assets that can be found through this approach include intellectual property (such as trade marks, patents and copyrights), shareholdings in companies, real estate (depending on the local requirements), etc.

Authorised Search by an Attorney with a Search Order

An attorney may, acting on behalf of his or her client who is seeking enforcement, apply to the court for a search order during an enforcement proceeding, with which the attorney may obtain records in relation to the debtor’s assets that are otherwise unavailable through public searches, such as deposits in a bank, certain real estate, etc.

However, in the absence of a uniform rule on attorneys’ search orders at the national level, attorneys may sometimes find it difficult to obtain a search order from the court.

Search by the Court

The court may also decide to search the assets of the debtor in the enforcement proceeding directly, either on its own initiative or upon request of the applicant. Chinese courts have developed a powerful “network-enforcement enquiry system”, which is widely connected to networks of major banks, real estate administration, market regulation administration, vehicles administration, securities regulators, etc, allowing the courts to search the assets of a debtor in the enforcement proceeding easily and remotely. Of course, the court may also search the debtor’s assets on site after obtaining a search order from the president of the court, pursuant to Article 248 of the PRC Civil Procedure Law (amended in 2017, CPL).

Asset Report Order

The court may, either on its own initiative or upon request of the applicant, order the debtor in the enforcement proceeding to provide an asset status report in writing. The requested debtor may be imposed penalties or even detention measures for failure to provide such report or providing an untruthful report.

Under the framework of the CPL, a judgment refers to the court’s determination of the substantive issues of a case and its adjudication of the claims brought to it. Apart from judgments, courts may also issue rulings on procedural issues of a case, decisions on special procedures such as imposing fines or judicial detention measures, orders (eg, search order, payment order, etc) or mediation statements, etc, which may also be enforceable. A judgment must be final and effective to be enforceable.

Civil judgments may be classified into judgments requiring the performance of certain obligations and judgments that confirm the status of a certain legal relationship.

Depending on the completeness of the claims addressed, civil judgments may be classified into full judgments and partial judgments. A court may issue a partial judgment first, in respect of part of the facts that are clear, according to Article 153 of the CPL.

Depending on the nature of the matter resolved, civil judgments may be classified into contentious and non-contentious judgments. The latter result from non-contentious cases such as request for declaration of death or lack of civil competence, which are regulated by Chapter 15 (Special Procedures) of the CPL.

Judgments ordering performance of certain obligations (including payment of money, specific performance, etc) or ordering prohibitions/injunctions are generally enforceable, except that certain types of performance cannot be enforced by virtue of their nature. For example, a minor cannot be forced to be taken under custody against his or her will by a designated custodian in the enforcement procedure of a divorce judgment.

A court may also render a default judgment if, for example, the defendant, after being served with a notice of the proceeding, refuses to appear before the court without any justified cause. Default judgments are also enforceable.

A prevailing party to a civil proceeding may initiate an enforcement procedure by submitting an application to the competent court, if the judgment becomes final and the judgment debtor fails to perform the judgment.

The procedure for enforcing a domestic judgment is as follows:

The applicant shall submit an application to the court of first instance, or the court of the same level at the place where the judgment debtor’s assets are located. The application shall include the following:

  • a summary of the judgment;
  • the subject matter of the enforcement;
  • the remedy that is being sought before the enforcing court;
  • reasons for applying for enforcement; and
  • a description of the judgment debtor’s assets, if available.

Apart from the above application, the applicant shall also submit the following to the court altogether:

  • an original copy of the judgment; and
  • the identity proof of the applicant and authorisation documents.

The time limit for applying for enforcement is two years starting from one of the following, according to Article 239 of the CPL:

  • the last day of the period of performance set forth in the judgment;
  • the last day of each period of performance, if the performance is required in phases by the judgment; or
  • the effective date of the judgment, if the judgment does not provide the period of performance.

The enforcing court must notify the judgment debtor of the enforcement proceeding that it shall perform the judgment within a designated period. If the judgment debtor still fails to perform the judgment within the designated period, the enforcing court will take compulsory measures to enforce the judgment by:

  • requiring the judgment debtor to report the status of its assets;
  • searching the judgment debtor’s bank accounts;
  • freezing and transferring the judgment debtor’s deposits;
  • seizing, freezing, auctioning and selling the assets of the judgment debtor;
  • searching the judgment debtor’s residence or a place where the assets may be located;
  • prohibiting the judgment debtor (in the case of a natural person) or the judgment debtor’s legal representative, responsible persons and/or actual controller (in the case of a juridical person) from leaving China or consuming expensive goods or services (such as taking flights or high-speed trains, living in star hotels, etc); and/or
  • recording the non-performing judgment debtor on the “blacklist” (list of dishonest persons that are subject to enforcement) which will be made publicly available.

The court may also impose enforcement measures on the judgment debtor before giving any advance notice, if the court deems this necessary.

Costs

An official application fee (calculated in proportion to the judgment amount in accordance with the applicable progressive fee schedule) is levied by the court for enforcing domestic judgments. The fee does not need to be prepaid by the applicant of the enforcement proceeding, and will be borne by the judgment debtor, according to Measures on the Payment of Litigation Costs issued by the State Council (effective in 2007; “Measures on the Payment of Litigation Costs”).

Security for costs is not required in the enforcement procedure.

The applicant may also need to pay attorney’s fees if it retains an attorney during the enforcement procedure.

Time

The timeframe for the enforcement procedure varies from case to case. There is no statutory time limit within which the court must make its decision, but if the court fails to take enforcement measures within six months upon receipt of a written application, the applicant can apply for enforcement to a higher people’s court, pursuant to Article 226 of the CPL. The higher court can order the enforcing court to implement the enforcement within a certain period, or it may decide to enforce the judgment itself or order another court to enforce the judgment.

Courts can search the deposits, bonds, stocks, vehicles, real estate, fund shares and other assets of the judgment debtor, according to Article 242 of the CPL. Such search can be conducted on site or through the courts’ “network-enforcement enquiry system”. Courts may also issue a search order to the applicant’s attorney to assist with identifying the defendant’s assets. See 1.1 Options to Identify Another Party’s Asset Position for detailed approaches to identifying the judgment debtor’s assets.

Judgments must be final and effective to be enforceable. The enforcing court will review whether the judgment sought to be enforced is final. The enforcing court may find that a judgment is not final and therefore unenforceable, for example, if the case is pending appeal.

A judgment debtor or an interested party (who is not a party to the judgment being enforced) can challenge the enforcement procedure it deems flawed by submitting a written objection to the enforcing court, pursuant to Article 225 of the CPL. The enforcing court must examine and decide on the written objection within 15 days. The judgment debtor or interested party may, if it is dissatisfied with such decision, file an application for review with a higher court within ten days of receiving the decision.

In practice, the title of the assets sought to be enforced may be unclear or disputed. In such circumstances, the right holder who is not a party to the judgment being enforced may also submit a written objection to the enforcing court to claim rights over the assets being enforced. The enforcing court must examine and decide on the written objection within 15 days. If the alleged right holder or parties to the judgment being enforced are dissatisfied with such decision, they may file an application for retrial of the judgment being enforced or another lawsuit contesting the enforcement.

Besides the above, an enforcement proceeding shall be suspended in any of the following circumstances, according to Article 256 of the CPL:

  • the applicant requests that the enforcement period be extended;
  • a third party raises an objection to the rights over the assets being enforced based on reasonable grounds;
  • a party who is a natural person has deceased and a successor has yet to be ascertained to assume that party’s obligations;
  • a party that is a juridical person or organisation has been terminated and a successor has yet to be determined; or
  • other circumstances deemed appropriate by the court.

An enforcement proceeding shall be terminated in any of the following circumstances, according to Article 257 of the CPL:

  • the applicant withdraws its application;
  • the legal document on which the enforcement is based has been revoked;
  • a natural person who is subject to enforcement has deceased, leaving no assets to be enforced and no successor;
  • the party asking for alimony, allowance or child support has deceased;
  • a natural person who is subject to enforcement is unable to repay a loan due to financial hardship, without source of income and the ability to making a living; or
  • other circumstances deemed appropriate by the court.

Although the PRC laws have not expressly provided that certain types of judgments are unenforceable, in practice, judgments that do not contain any matter for enforcement cannot be enforced.

Since 1 January 2014, the Supreme People’s Court (“SPC”) has required all Chinese courts to publish their judgments on an online platform run by the SPC, ie China Judgments Online (wenshu.court.gov.cn).

Other than certain types of judgments such as those involving divorce, custody of minors, etc, the publication of which is not appropriate, judgments are generally posted online within seven business days of taking effect.

Judgments will not be removed from China Judgments Online even if they have been fully performed or enforced.

In China, a party seeking to enforce a foreign judgment may request a competent intermediate people’s court to recognise and enforce such judgment directly. Alternatively, the foreign court may also request the Chinese court to recognise and enforce such judgment, according to Article 281 of the CPL. As a procedural issue, a foreign judgment must be recognised before it is enforced, but in practice an application usually covers both recognition and enforcement.

The application for recognition and enforcement of a foreign judgment shall be filed with the Chinese court within two years staring from one of the following, according to Article 547 of the SPC Interpretation on the Application of the PRC Civil Procedure Law (amended in 2020; “SPC Interpretation on CPL”) and Article 239 of the CPL:

  • the last day of the period of performance set forth in the judgment;
  • the last day of each period of performance, if the performance is required in phases by the judgment; or
  • the effective date of the judgment, if the judgment does not provide the period of performance.

As a general rule, after receiving such request, the court will review whether there is a treaty governing the legal assistance in civil or commercial matters concluded between China and the state where the judgment was made. If the answer is yes, the court will decide on the request pursuant to the provisions of such treaty. If not, the court will decide on the request pursuant to the principle of reciprocity.

The principle of reciprocity is not further defined or clarified in the PRC laws. In China’s judicial practice, the finding of a reciprocal relationship between China and another state largely depends on the fact that the two states have previously recognised and enforced the judgments made by the other state. In fact, the Chinese courts will apply a relatively stringent standard of review when finding a reciprocal relationship. For example, in most if not all cases, a Chinese court would not apply the principle of reciprocity to recognise or enforce a foreign court’s judgment or ruling if the foreign state involved has no precedent of recognising or enforcing a judgment made by a Chinese court.

As an exception to the above rule, a foreign judgment concerning divorce can be enforced by a Chinese court in the absence of a treaty or reciprocal relationship, provided that such judgment is legally effective, pursuant to Article 544 of the SPC Interpretation on CPL.

As explained in 3.1 Legal Issues Concerning Enforcement of Foreign Judgments, the procedures required to enforce a foreign judgment are largely the same, but the standard of review adopted by courts may vary depending on the origin of the foreign judgment sought to be enforced.

It is worth noting that the enforcement of judgments made by courts of the Hong Kong Special Administrative Region (“Hong Kong SAR”), the Macau Special Administrative Region (“Macau SAR”) and Taiwan Region in Mainland China is subject to the following special legal frameworks, tailored for enforcement of judgments between different jurisdictions within one country:

  • Mainland–Hong Kong Arrangement: Arrangement Concerning Mutual Recognition and Enforcement of Civil and Commercial Judgments by the Courts of the Mainland and of the Hong Kong SAR Pursuant to Choice of Court Agreements between the Parties Concerned (effective in 2008);
  • Mainland–Macau Arrangement: Arrangement Concerning Mutual Recognition and Enforcement of Civil and Commercial Judgments by the Courts of the Mainland and of the Macau SAR (effective in 2006); and
  • The SPC Provisions on Recognition and Enforcement of Civil Judgments by the Courts of Taiwan Region (effective in 2015).

Recent Developments

Under the currently effective Mainland–Hong Kong Arrangement, judgments made by courts of Hong Kong SAR that may be enforced in Mainland China include monetary judgments on disputes arising out of civil or commercial contracts that provide a court of Hong Kong SAR with exclusive jurisdiction.

In June 2017, the SPC and the Department of Justice of Hong Kong SAR entered into the Arrangement on Reciprocal Recognition and Enforcement of Civil Judgments in Matrimonial and Family Cases by the Courts of the Mainland and of the Hong Kong SAR, allowing for mutual recognition of civil judgments in matrimonial and family cases. However, this arrangement has not come into force as of July 2021.

In January 2019, the SPC and the Department of Justice of Hong Kong SAR entered into the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters between the Courts of the Mainland and of the Hong Kong SAR, aimed at further expanding the scope of judgments that may be enforced, though this new arrangement has not come into force as of July 2021.

In May 2021, the SPC and the government of Hong Kong SAR signed the Record of Meeting of the SPC and the Government of the Hong Kong SAR on Mutual Recognition of and Assistance to Bankruptcy (Insolvency) Proceedings between the Courts of the Mainland and of the Hong Kong SAR, which effects a cooperation mechanism for mutual recognition and assistance in bankruptcy cases.

The procedures required for enforcing judgments made by courts of Hong Kong SAR, Macau SAR and Taiwan Region in Mainland China are largely the same as procedures for enforcing foreign judgments.

Generally, Chinese courts may refuse recognition or enforcement of a foreign judgment if:

  • the foreign court making the judgment lacked jurisdiction over the case;
  • the defendant failed to receive a proper notice of the proceedings;
  • it violates the principles of PRC laws, or the sovereignty, national security or social and public interests of China;
  • it is a declaratory judgment that does not contain any matters for enforcement (but can be recognised);
  • in the absence of applicable international conventions or bilateral treaties, the reciprocal relationship is not found;
  • there is a conflicting domestic or foreign judgment; or
  • the judgment is not final.

A foreign judgment must be recognised before it is enforced in China.

Once a foreign judgment has been recognised by a Chinese court, the procedure for its enforcement is largely similar to the enforcement procedure applicable to domestic judgments. The applicant must submit the following documents to the competent court:

  • a written application for recognition and enforcement;
  • legalised copies of the identity and authorisation documents of the applicant with a Chinese translation;
  • a legalised copy of the foreign judgment with a Chinese translation; and
  • a description of the judgment debtor’s assets, if available.

Documents originating from outside the PRC (for example, a foreign judgment, or the certificate of incorporation of an applicant incorporated outside the PRC) must be notarised by a local notary in the country where the documents were generated and certified by a Chinese consulate or the Chinese embassy in that country.

Costs

An official application fee (calculated in proportion to the judgment amount in accordance with the applicable progressive fee schedule) is levied by the court for recognition and enforcement of foreign judgments. The fee shall be prepaid by the applicant of the enforcement proceeding, and will be borne by the judgment debtor, according to Measures on the Payment of Litigation Costs. Security for costs is not required.

Attorney’s fees, notarisation fees, translation fees, etc may be incurred for the recognition and enforcement process.

Time

The timeframe for recognition and enforcement of foreign judgments varies from case to case. There is generally no statutory time limit within which the court must make its decision. In practice, statistics show that recognition and enforcement of foreign judgments take an average of about two years to complete.

As mentioned above, a foreign judgment must be recognised before it can be enforced in China.

Once a foreign judgment has been recognised by a Chinese court, the procedure for its enforcement is largely similar to the enforcement procedure applicable to domestic judgments. The approaches to challenging the enforcement of domestic judgments are also applicable to foreign judgments. See 2.5 Challenging Enforcement of Domestic Judgments for detailed approaches to and grounds for challenging the enforcement of domestic judgments.

PRC laws distinguish among the following three types of arbitration proceedings, to which different legal frameworks may apply:

  • domestic arbitration, referring to an arbitration seated in Mainland China and involving domestic parties and domestic subject matter;
  • foreign-related arbitration, referring to an arbitration seated in Mainland China and involving one or more “foreign-related elements” (as elaborated below), such as a foreign party, a foreign subject matter, etc; and
  • foreign arbitration, referring to an arbitration seated outside Mainland China.

“Foreign-related elements” refer to the criteria outlined in Article 1 of the SPC Interpretation on Several Issues Relating to Application of the PRC Law on the Application of Laws to Foreign-related Civil Relations (I) (amended in 2020), including the following circumstances:

  • one of the parties concerned or both parties concerned are foreign citizens, foreign juridical persons or other organisations or stateless persons;
  • the habitual residence of one of the parties concerned or of both parties concerned is outside Mainland China;
  • the subject matter is outside Mainland China;
  • the legal fact that causes the civil relation to form, change or terminate occurs outside Mainland China; or
  • there is any other circumstance which can be identified as a foreign-related civil relation.

In terms of enforcement, awards made in domestic arbitration and foreign-related arbitration are subject to similar and more straightforward rules, while awards made in a foreign arbitration are governed by a separate legal framework.

Therefore, for the purpose of this section, 4. Arbitral Awards, an award made in a domestic arbitration is referred to as a “domestic award”, an award made in a foreign-related arbitration is referred to as a “foreign-related award”, and an award made in a foreign arbitration is referred to as a “foreign award”.

Please note, however, that arbitral awards made in Hong Kong SAR, Macau SAR and Taiwan Region, as separate jurisdictions in one country, are treated as foreign awards, and their recognition and enforcement are governed by special arrangements (to be elaborated in 4.2 Variations in Approach to Enforcement of Arbitral Awards). Therefore, for the purpose of this section, 4. Arbitral Awards, the term “foreign awards” shall also include awards made in Hong Kong SAR, Macau SAR and Taiwan Region.

The enforcement of domestic and foreign-related awards is subject to the following legal framework:

  • the PRC Arbitration Law (amended in 2017; the “Arbitration Law”);
  • the CPL; and
  • judicial interpretations and guidelines, such as the SPC Interpretation on the Application of the PRC Arbitration Law (amended in 2008), the SPC Interpretation on CPL, and the SPC Provisions on Several Issues Concerning the Review of Cases of Enforcement of Arbitral Awards by People’s Courts (effective in 2018; “SPC Provisions on Enforcement of Arbitral Awards”).

The enforcement of foreign awards is subject to the following legal framework:

  • the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”);
  • the CPL;
  • judicial interpretations and guidelines, such as the SPC Interpretation on CPL, and the SPC Notice on Implementing the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Acceded to by China (effective in 1987); and
  • special arrangements governing the recognition and enforcement of awards made in Hong Kong SAR, Macau SAR and Taiwan Region.

As mentioned above, domestic and foreign-related awards are subject to similar and more straightforward enforcement rules, while foreign awardsare governed by a separate legal framework.

Domestic and Foreign-Related Awards

Both domestic and foreign-related awards can be enforced directly upon an application to the competent court in China. The jurisdiction, time limitation, standard of review, process and documentation requirements will be discussed in the following paragraphs.

Foreign Awards

As compared to domestic and foreign-related awards, which can be enforced directly upon application, a foreign award must be recognised by a competent Chinese court before it is enforced, according to Article 546 of the SPC Interpretation on CPL.

Moreover, depending on the origin of the foreign awards sought to be enforced, foreign awards are also treated differently in terms of their recognition and enforcement.

China acceded to the New York Convention in 1986, and ratified the New York Convention in 1987, with certain reservation on its application, including:

  • reciprocity reservation – China will apply the New York Convention only on the basis of reciprocity to the recognition and enforcement of arbitral awards made in the territory of another contracting state; and
  • commercial reservation– China will apply the New York Convention only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under the PRC laws.

As China resumed the exercise of sovereignty over Hong Kong SAR and Macau SAR in 1997 and 1999, respectively, the New York Convention with the reservation made by China would also apply to the Hong Kong and Macau SARs since 1997 and 2005, respectively.

An application for enforcing an award of an arbitration seated in another contracting state of the New York Convention (“Convention Award”) will be reviewed in accordance with the New York Convention which has been implemented into PRC laws.

Arbitral awards made in Hong Kong SAR, Macau SAR and Taiwan Region are not considered Convention Awards, and therefore their recognition and enforcement in Mainland China are not governed by the New York Convention. Rather, their recognition and enforcement shall be governed by special arrangements, ie:

  • Mainland–Hong Kong Arrangement: Arrangement Concerning Mutual Enforcement of Arbitral Awards Between the Mainland and the Hong Kong SAR (effective in 2000), supplemented by the Supplementary Arrangement of Supreme People's Court on Reciprocal Enforcement of Arbitral Awards between the Mainland and the Hong Kong SAR (effective in 2020);
  • Mainland–Macau Arrangement: Arrangement Concerning Mutual Enforcement of Arbitral Awards Between the Mainland and the Macau SAR (effective in 2008); and
  • The SPC Provisions on Recognition and Enforcement of Arbitral Awards Issued in Taiwan Region (effective in 2015).

According to the Arbitration Law, certain types of disputes are subject to mandatory jurisdiction of the courts or administrative authorities and cannot be adjudicated by arbitration, including for example those concerning marriage, adoption, custody, fostering and succession, and administrative disputes subject to jurisdiction of administrative authorities. Consequently, even if the parties choose to resolve any of the above disputes by arbitration, the resultant award may not be enforced.

Further, Article 3 of the SPC Provisions on Enforcement of Arbitral Awards provides that an award may be refused for enforcement, either partially or entirely, in any of the following circumstances:

  • the right holder or debtor is unclear;
  • the amount to be paid is unclear, or the calculation method is insufficient to yield a specific amount;
  • the subject to be delivered is unclear or cannot be specified;
  • the standard, subject or scope of specific performance is unclear; or
  • for an award requiring performance of the contract, the award is unclear as to the rights and obligations to be performed, or the method or period of performance, etc, making the award unenforceable.

More grounds for refusal of enforcement of domestic awards and foreign-related awards are outlined in Article 237 and Article 274 of the CPL, respectively. It is worth noting that the grounds for refusal of enforcement of foreign-related awards largely resemble those set out in Article V of the New York Convention, ie, grounds for refusal of enforcement of foreign awards.

Domestic Awards

Article 237 of the CPL provides that a domestic award may not be enforced in any of the following circumstances:

  • the parties failed to enter into an arbitration clause in the contract, or have not subsequently reached an arbitration agreement in writing;
  • matters proposed for arbitration are beyond the scope of the arbitration agreement or the competence of the arbitral tribunal;
  • the composition of the arbitral tribunal or the procedure for arbitration is inconsistent with the legal procedure;
  • the evidence underlying the award was falsified;
  • the counterparty concealed evidence that was sufficient to affect the impartiality of the award;
  • the arbitrator(s) committed acts of malpractice for personal benefits and perverted the law when adjudicating the case; or
  • the enforcement of the award would be contrary to social and public interests.

Foreign-Related Awards

Article 274 of the CPL provides that a foreign-related award may not be enforced in any of the following circumstances:

  • the parties failed to enter into an arbitration clause in the contract, or have not subsequently reached an arbitration agreement in writing;
  • the respondent was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings, or the respondent was unable to make representation due to any reason that was not attributable to the respondent;
  • the composition of the arbitral tribunal or the arbitration procedure was inconsistent with the arbitration rules;
  • matters proposed for arbitration were beyond the scope of the arbitration agreement or the competence of the arbitral tribunal; or
  • the enforcement of the award would be contrary to the social public interest.

Foreign Awards

For a Convention Award, an exclusive list of grounds for refusal of recognition and enforcement is provided in Article V of the New York Convention, which is also implemented into PRC laws. Recognition and enforcement may be refused if the counterparty can establish one of the following grounds:

  • there was not an effective arbitration agreement;
  • a party was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings;
  • the award was made beyond the terms of reference of the tribunal;
  • the composition of the tribunal or the arbitral procedure was not in accordance with the parties’ arbitration agreement or the laws where the arbitration took place; or
  • the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

Recognition and enforcement of a foreign award may also be refused if the requested court finds that:

  • the subject matter of the difference was not capable of settlement by arbitration under the PRC laws; or
  • recognition or enforcement of the award would be contrary to the public policy of the PRC.

The courts will only find a violation of public policy as a last resort, if the award is contrary to the fundamental principles of law, social and public interests or good morals, and from 1998 to 2020 only invoked such ground in refusing a handful of Convention Awards.

For the enforcement of awards made in Hong Kong SAR, Macau SAR and Taiwan Region in Mainland China, the grounds for refusal are set out in Article 7 of Mainland–Hong Kong Arrangement, Article 7 of Mainland–Macau Arrangement and Article 14 of the SPC Provisions on Recognition and Enforcement of Arbitral Awards Issued in Taiwan Region. Such grounds for refusal largely resemble Article V of the New York Convention.

Domestic and Foreign-Related Awards

A party to a domestic award or foreign-related award may apply to an intermediate court at the place of the award debtor’s residence or assets. Under certain circumstances provided by the laws, the intermediate court may also designate a primary court to review the application.

An application for the enforcement of a domestic or foreign-related award shall be submitted within two years from:

  • the last day of the period of performance set forth in the award;
  • the last day of each period of performance, if the performance is required in phases by the award; or
  • the effective date of the award, if the award does not provide the period of performance.

Such period may be interrupted or restarted according to the provisions of the CPL.

Foreign Awards

A foreign award must be recognised by a competent Chinese court before it is enforced, according to Article 546 of the SPC Interpretation on CPL. Moreover, only the party to the foreign award is eligible to seek recognition and enforcement of such award.

The party seeking recognition and enforcement of a foreign award shall submit an application to the intermediate people’s court where:

  • the award debtor has its registered domicile or place of residence, if the counterparty is a natural person;
  • the award debtor’s principal place of business is located, if the award debtor is a juridical person; or
  • the award debtor’s asset is located, if neither of the above is applicable.

If none of the above is applicable, but the foreign award is related to a court proceeding in the PRC, such court shall have jurisdiction to review the application for enforcement of the award. If such court is a primary court, then its superior intermediate court shall assume jurisdiction; if such court is a higher people’s court or SPC, it may decide to review the application on its own or refer the application to an intermediate court.

The party seeking recognition and enforcement shall submit the following documents to the court when filing an application for recognition and enforcement:

  • a written application for recognition and enforcement;
  • legalised copies of the identity and authorisation documents of the applicant with a Chinese translation;
  • an original or legalised copy of the arbitral award with a Chinese translation;
  • an original or legalised copy of the arbitration agreement with a Chinese translation; and
  • a description of the award debtor’s assets to be enforced.

An application for the recognition and enforcement of a foreign award shall be submitted within two years from:

  • the last day of the period of performance set forth in the award;
  • the last day of each period of performance, if the performance is required in phases by the award; or
  • the effective date of the award, if the award does not provide the period of performance.

Such period may be interrupted or restarted according to the provisions of the CPL.

If a party applies only for the recognition of a foreign award without applying for its enforcement at the same time, the time limitation for enforcement restarts on the date when the court’s decision on the application for recognition takes effect.

Internal Court Reporting System

China maintains a pro-arbitration legal framework and has established a court reporting system for decisions to refuse enforcement of arbitral awards.

Before deciding to refuse to enforce an arbitral award, the lower court must report its decision to a higher court for review and approval. Before refusing to enforce a domestic award, approval from the higher people’s court is sufficient. Before refusing to enforce a foreign award or foreign-related award, final approval from the SPC is needed.

The purpose of this mechanism is to ensure that every decision to refuse the enforcement of an arbitral award is fully and seriously examined.

Costs

An official application fee (calculated as a proportion of the judgment amount in accordance with the applicable progressive fee schedule) is levied by the court for enforcement of domestic or foreign awards. The fee does not need to be prepaid by an applicant applying for enforcement of a domestic award, whereas it will have to be prepaid by an applicant applying for enforcement of a foreign award. In either case, the fee will be borne by the award debtor, according to Measures on the Payment of Litigation Costs.

Security for costs is not required in the enforcement procedure.

The applicant may also need to pay attorney’s fees if it retains an attorney during the enforcement procedure.

Time

The timeframe for the enforcement procedure varies from case to case. There is no statutory time limit within which the court must implement the enforcement, but if the court fails to take enforcement measures within six months from receiving a written application, the applicant can apply for enforcement to a higher people’s court. The higher court can order the enforcing court to complete the enforcement within a certain time, or it may decide to enforce the judgment itself or order another court to enforce the award.

A party may challenge the arbitral award by (i) applying for refusal of enforcement with the enforcing court, within 15 days after receiving the notice of enforcement, or (ii) applying to set aside the award.

Courts shall also suspend or terminate enforcement of domestic or foreign-related awards based on the same grounds for suspension and termination of an enforcement proceeding of judgments. See 2.5 Challenging Enforcement of Domestic Judgments for the grounds for suspension and termination of an enforcement proceeding of judgments.

In addition, courts shall also suspend enforcement of domestic or foreign-related awards, according to Article 7 of the SPC Provisions on Enforcement of Arbitral Awards, if:

  • the other party has filed an application to set aside the domestic or foreign-related award with the court, which has been accepted by the court; or
  • the other party or an interested party has filed an application for refusal of enforcement and provided security.

For most foreign awards, the enforcing court has discretion to suspend the enforcement proceedings when challenge proceedings are pending.

The enforcing court will terminate the enforcement proceeding of an arbitral award if it has been set aside.

Application for Refusal of Enforcement

Depending on the types of arbitral award, a party to the enforcement proceeding may apply for refusal of enforcement pursuant to the following:

  • domestic awards: Article 237 of the CPL;
  • foreign-related awards: Article 274 of the CPL;
  • Convention Awards: Article V of the New York Convention; and
  • awards made in Hong Kong SAR, Macau SAR and Taiwan Region: special arrangements providing for grounds of refusal, which largely resemble Article V of the New York Convention.

See 4.3 Categories of Arbitral Awards Not Enforced for detailed grounds of refusal.

An interested party that is not a party to the enforcement proceeding may also apply for refusal of enforcement of domestic or foreign-related awards, according to Article 9 of the SPC Provisions on Enforcement of Arbitral Awards, if all of the following criteria are met:

  • the award was obtained from an arbitration proceeding that was initiated maliciously or fraudulently, and that has damaged the third party’s legitimate rights and interests;
  • the enforcement of the subject matter involved has not been completed; and
  • the application for refusal of enforcement is filed within 30 days from the date on which such interested party becomes aware or should have become aware that the court has taken enforcement measures against the subject matter.

The enforcing court may decide not to enforce a domestic or foreign-related award, upon its review of the interested party’s application, if it finds that:

  • the applicant has the relevant rights or interests;
  • the rights or interests claimed by the applicant are lawful and truthful;
  • the parties to the arbitration case have falsified their legal relationship and the facts of the case; and
  • the outcome of the award is erroneous in part or in its entirety, damaging the legitimate rights and interests.

Application for Setting Aside

A domestic award may be set aside upon a party’s application to the intermediate people’s court at the place of the arbitration institution making such award, in any of the following circumstances, pursuant to Article 58 of the Arbitration Law (similar to Article 237 of the CPL, providing for grounds of refusal of enforcement):

  • there was not an arbitration agreement;
  • matters decided in the award are beyond the scope of the arbitration agreement or the competence of the arbitral tribunal;
  • the composition of the arbitral tribunal or the procedure for arbitration is inconsistent with the legal procedure;
  • the evidence underlying the award was falsified;
  • the award debtor concealed evidence that was sufficient to affect the impartiality of the award;
  • the arbitrator(s) committed acts of malpractice for personal benefits and perverted the law when adjudicating the case; or
  • the enforcement of the award would be contrary to social and public interests.

According to Article 70 of the Arbitration Law, a foreign-related award may be set aside by the court in any of the circumstances provided by paragraph 1 of Article 258 of the CPL (now revised as paragraph 1 of Article 274 of the CPL). Please note that paragraph 1 of Article 274 of the CPL provides grounds for refusal of enforcement of foreign-related awards, including:

  • the parties failed to enter into an arbitration clause in the contract, or have not subsequently reached an arbitration agreement in writing;
  • the respondent was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings, or the respondent was unable to make representation due to any reason that was not attributable to the respondent;
  • the composition of the arbitral tribunal or the arbitration procedure was inconsistent with the arbitration rules; or
  • matters proposed for arbitration were beyond the scope of the arbitration agreement or the competence of the arbitral tribunal.
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Jingtian & Gongcheng is widely recognised as one of China’s top-tier firms across multiple practice areas. Founded in 1992, Jingtian & Gongcheng is one of China’s first partnership law firms and has ten offices across China, located in major cities including Beijing, Shanghai, Shenzhen, Guangzhou and Hong Kong. The firm has developed a renowned dispute resolution team consisting of 143 professionals (including 54 partners) with a strong expertise in litigation and arbitration, advising domestic and multinational corporations on complex disputes, and advocating before courts and arbitral tribunals, both locally and internationally. The dispute resolution team is committed to, and capable of, providing its clients with pragmatic and efficient solutions to domestic and multi-jurisdictional disputes arising from or relating to trade, investment, corporate governance, real estate, construction, banking and finance, securities, energy, manufacturing, intellectual property, etc.

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