Litigation in China: how to win and enforce — a new method?

For international companies with business in China, the legal dispute is one of their greatest fears. Even if you win an arbitration or court judgment, you may find you cannot enforce it. The problem of enforcement is arguably the greatest challenge facing China’s civil system. What is the point of spending a year fighting a case, winning arbitration overseas or litigation on shore and then finding that not only does the loser ignore the demand to pay, but the enforcement authorities ignore the problem? You may have won on the law, but you have nothing to show for it except a large legal bill.

The REJA, or more accurately the “Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters” was signed in 2006 between the Supreme People’s Court of the People’s Republic of China and the HKSAR Government, and finally became effective in August 2008. It provides a legal basis for PRC courts to enforce judgments from Hong Kong, which is extremely significant. It effectively allows common law courts to enforce in China.

China has very few reciprocal enforcement arrangements with foreign countries. Since China did, however, sign the New York Convention on international arbitration, international disputes have tended to be referred to arbitration, which can in theory be enforced in China under Chinese legislation transposing the New York Convention. That has not been the case for court judgments. China has no such treaty with any common law country, which is why the REJA is so significant….

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