Recognition and Enforcement of a Civil Judgment of a Foreign Court

· Source： Other Cases 

· Instrument Type： Ruling

· Procedural status： Other

· Judgment date：06-30-2017

· Type of Dispute： Special-Procedure Cause of Action 

Liu Li v. Tao Li et al. for Recognition and Enforcement of a Civil Judgment of a Foreign Court

Intermediate People's Court of Wuhan, Hubei Province

Civil Ruling
(No. 00026 [2015], civil and commercial, foreign-related, original, IPC, Wuhan, Hubei)
Applicant: Liu Li
Respondent: Tao Li
Respondent: Tong Wu
PROCEDURAL POSTURE 
After accepting an application of Liu Li for recognition and enforcement of a civil judgment of a foreign court against Tao Li and Tong Wu on October 19, 2015, this Court formed a collegial bench as legally required, and held two sessions to examine the application on December 25, 2015, and March 15, 2016, respectively. Liu Li and her attorney, Chen Guanlin, and Tao Li and Tong Wu and their attorney, Chen Hang, attended the sessions. The hearing of the case has been concluded.
BASIC FACTS 
Applicant Liu Li claims that: On September 22, 2013, she entered into an equity transfer agreement with the two respondents, under which the latter should transfer 50% of the shares of Jiajia Management Inc., an American company, to the applicant for 150,000 U.S. dollars. However, after Liu Li paid 125,000 U.S. dollars according to the agreement, the respondents disappeared with the money. Liu Li called the police, but they were nowhere to be found. Later, she lodged a lawsuit with the Los Angeles County Superior Court, CA, which decided in a judgment (No. EC062608) on July 24, 2015, that the respondents should refund 125,000 U.S. dollars to the applicant, with prejudgment interest (from September 25, 2013, to May 25, 2015) of 20,818 U.S. dollars and court costs of 1,674 U.S. dollars, totaling 147,492 U.S. dollars. The judgment has taken effect, but the respondents fail to comply with the judgment. The respondents, who now live in a condo located in Jianghan District, Wuhan, Hubei province, own property for enforcement. The American court's judgment No. EC062608 does not contravene the fundamental principles of Chinese law and the national interest and security and public interest of China. To protect the lawful rights and interests of the applicant, the applicant requests the court to: (1) recognize the legal force in the territory of the People's Republic of China of the judgment No. EC062608 of the Los Angeles County Superior Court, CA; (2) enforce the payment by the respondents to the applicant of 125,000 U.S. dollars with prejudgment interest (from September 25, 2013, to May 25, 2015) of 20,818 U.S. dollars and court costs of 1,674 U.S. dollars, totaling 147,492 U.S. dollars or 940,040.26 Chinese yuan (at the exchange rate on September 12, 2015), as well as post-judgment interest from May 25, 2015, to the end of the enforcement; and (3) order the respondents to assume the enforcement costs.
Respondents Tao Li and Tong Wu plead that: The judgment No. EC062608 of the Los Angeles County Superior Court, CA, has no legal force whatsoever in the territory of the People's Republic of China, and they received no notice of attending the legal proceedings in the American court. The Equity Transfer Agreement signed by the applicant and the respondents is true and legally binding, and the respondents should not refund the transfer price to the applicant. The application should be rejected.
This Court has found that: Respondent Tao Li and applicant Liu Li entered into an Equity Transfer Agreement on September 22, 2013, under which Tao Li should transfer to Liu Li 50% of the shares of Jiajia Management Inc., a company registered in California, United States of America. Liu Li paid a total of 125,000 U.S. dollars to the respondents on September 22 and 25, 2013. Respondent Tong Wu is the husband of respondent Tao Li. Tong Wu's bank account information as submitted by Liu Li shows that a total of 125,000 U.S. dollars entered his account between September 14, 2013, and October 16, 2013. On July 17, 2014, Liu Li lodged a lawsuit (case number EC062608) with the Los Angeles County Superior Court, CA, against the two respondents, alleging that they obtained 125,000 U.S. dollars by false equity transfer. On October 7, 2014, Rolan, an American service process company, issued an investigative report on the personal information and address of Tao Li and Tong Wu within the United States of America. The attorney hired by Liu Li in the United States of America posted the process to the address of the two respondents shown in the investigative report, but the two respondents could not be reached. On January 8, 2015, judge William D. Stewart of the Los Angeles County Superior Court, CA, issued an order of publication to serve the summons and notices related to the case by publication on SAN GABRIEL VALLEY TRIBUNE. The service by publication was made four times on SAN GABRIEL VALLEY TRIBUNE on January 15, 22 and 29 and February 5, 2015. On July 24, 2015, judge William D. Stewart of the Los Angeles County Superior Court, CA, issued a default judgment, since the court considered that the two respondents had received summons in due procedures but failed to appear in court to respond to the suit. The court decided that Tao Li and Tong Wu should, jointly and severally, repay Liu Li 125,000 U.S. dollars with prejudgment interest of 20,818 U.S. dollars (from September 25, 2013, to May 25, 2015, at the rate of 34.24 U.S. dollars per day) and court costs of 1,674 U.S. dollars, totaling 147,492 U.S. dollars. The attorney hired by Liu Li in the United States of America underwent the judgment registration and notification procedures on the date of the aforesaid judgment. A news report, “First Chinese Court Judgment Recognized and Enforced in the United States” (published on China Legal Journals, January 2010), states that an American court has recognized and enforced a civil judgment of the Higher People's Court of Hubei Province for the case of Hubei Gezhouba Sanlian Industry Co., Ltd. and Hubei Pinghu Tour Boat Co., Ltd. v. Robinson Helicopter Company, USA.
JUDGMENT'S REASONING 
In the opinion of this Court:
This case involves the recognition and enforcement of a judgment of a foreign court. Article 281 of the Civil Procedure Law of the People's Republic of China provides: “Where an effective judgment or ruling of a foreign court requires recognition and enforcement by a people's court of the People's Republic of China, a party may apply directly to the intermediate people's court of the People's Republic of China having jurisdiction for recognition and enforcement or apply to the foreign court for the foreign court to request recognition and enforcement by the people's court in accordance with the provisions of an international treaty concluded or acceded to by the People's Republic of China or under the principle of reciprocity.” Article 282 thereof provides: “After examining an application or request for recognition and enforcement of an effective judgment or ruling of a foreign court in accordance with an international treaty concluded or acceded to by the People's Republic of China or under the principle of reciprocity, a people's court shall issue a ruling to recognize the legal force of the judgment or ruling and issue an order for enforcement as needed to enforce the judgment or ruling according to the relevant provisions of this Law if the people's court deems that the judgment or ruling does not violate the basic principles of the laws of the People's Republic of China and the sovereignty, security and public interest of the People's Republic of China. If the judgment or ruling violates the fundamental principles of the laws of the People's Republic of China or the sovereignty, security or public interest of the People's Republic of China, the people's court shall not grant recognition and enforcement.” In this case, respondents Tao Li and Tong Wu own properties in Wuhan, and this Court, at the place of such properties and the place of habitual residence of the respondents, has jurisdiction over this case according to the law.
When applicant Liu Li lodged her application for recognition and enforcement with this Court, she also submitted the certified duplicate and Chinese version of the judgment No. EC062608 of the Los Angeles County Superior Court, CA, satisfying the form requirement for applying for recognition and enforcement of judgments of foreign courts. As United States of America and China have not concluded or jointly acceded to any international treaty on the mutual recognition and enforcement of judgments of foreign courts, her application should be examined under the principle of reciprocity. The evidence provided by the applicant proves that there is a precedent that an America court has recognized and enforced a civil judgment of a Chinese court. It may be determined that there is a reciprocal relationship between both sides in the recognition and enforcement of civil judgments. The aforesaid judgment of the Los Angeles County Superior Court, CA, is regarding a contractual relationship between the parties to an equity transfer, and recognizing and enforcing the civil judgment would not contravene the fundamental principles of the laws of China or the sovereignty, security, or public interest of China. The argument of the respondents that they received no notice of attending the suit should not be supported by this Court, because the aforesaid judgment clearly states that it is a default judgment, and the applicant has submitted to this Court supporting documents including an investigative report on the respondents, the court order of service by publication, and newspapers carrying the service of process by publication. It may be determined that the Los Angeles County Superior Court, CA, legally summonsed the two respondents. The argument of the respondents that they should not refund the transfer price for the Equity Transfer Agreement is true and legally binding should not be supported by this Court either, because this case is a case of judicial assistance, not involving any examination of the substantive rights and obligations of the parties, which, however, have been decided by the American court. Therefore, this Court should support Liu Li's application for recognition and enforcement of the aforesaid judgment of the American court. The applicant's claim for post-judgment interest from May 25, 2015, to the end of enforcement should not be supported by this Court, because it is outside of the procedures for applying for recognition and enforcement of judgments of foreign courts.
JUDGMENT 
After deliberation by the collegial bench, in accordance with paragraph 1(11) of Article 154, Article 281, and Article 282 of the Civil Procedure Law of the People's Republic of China and paragraph 1 of Article 543 and paragraph 1 of Article 546 of the Interpretation of the Supreme People's Court of the Civil Procedure Law of the People's Republic of China, this Court hereby rules:
The judgment No. EC062608 of the Los Angeles County Superior Court, CA, U.S.A., should be recognized and enforced.
The other claims of applicant Liu Li should be dismissed.
The application fee of 100 Chinese yuan should be assumed by respondents Tao Li and Tong Wu.
Presiding Judge: Zhao Qianxi
Judge: Yu Jie
Judge: Xiong Yanhong
June 30, 2017
Clerk: Xu Lei