Tuesday, 16 May 2017

The PRC Enforces a Foreign Judgment

For a long time it has been virtually impossible to have a foreign judgment enforced in the People’s Republic of China (“PRC”).  The PRC civil procedure law does not allow for enforcement unless the PRC is obligated to under a treaty or on the basis of reciprocity: see Article 282 of the PRC Civil Procedural Law.  The PRC has entered into treaties regarding judgments, all of which are bi-lateral, with thirty countries, including Hong Kong, but Canada is not among them.  The PRC has until now never enforced a judgment on the basis of reciprocity.  Some countries – such as Japan – have refused to enforce a PRC judgment because the PRC have not enforced their judgments. 

For the first time, in December 2016, a PRC court recognized and enforced a foreign judgment on the basis of reciprocity.  The Nanjing Intermediate People’s Court enforced a judgment of the Singapore High Court in the Kolmar Group AG case.  A Swiss company had successfully sued a Nanjing company in the High Court of Singapore, as per the jurisdiction selection clause of an agreement between them, and obtained a default judgment for US$350,000. The Swiss company applied to the Chinese Court for enforcement of that judgment on grounds of reciprocity.  The Singapore court had enforced a judgment of the Jiangsu Suzhou Intermediate People’s Court in 2014[1].  There is no treaty for enforcement of judgments between Switzerland and the PRC. Thus it is clear that the Chinese court’s decision to allow enforcement was based on reciprocity.  What remains unclear whether the Chinese courts will require that the originating jurisdiction have already enforced a Chinese judgment, or whether it is enough that the law of that originating jurisdiction would permit enforcement.     

This distinction is important for Canadian judgment creditors.  As far as I know, no Canadian court has ever enforced a PRC judgment.  But nor , as far as I know, has a Canadian court refused to enforce one at all, let alone refused  on grounds other than the established defences to enforcement, e.g. the originating court lacked jurisdiction, lack of notice or other breach of natural justice, fraud or the judgment was not final.    Given Canada’s comparatively liberal rules about enforcement of foreign judgments, one can expect that eventually a Canadian court will enforce a PRC judgment.    Canadian judgment creditors may have to wait until a Canadian court does enforce a PRC judgment before they will be able to enforce in the PRC.  American judgment creditors will be more encouraged, in that an American court has enforced a PRC judgment.   

Even if the Chinese courts follow the narrower concept of reciprocity, the Nanjing court’s ruling nonetheless signifies a big step forward for enforcement of foreign judgments, and is to be celebrated.

[1] Giant Light Metal Technology (Kunshan) Co Ltd. v. Aksa Far East Pte Ltd.  [2014] SGHC 16

Friday, 28 April 2017

SCC Grants Leave in Hague Child Abduction Convention Case

            The Supreme Court of Canada has granted leave to hear an appeal relating to the Hague Convention on the Civil Aspects of International Child Abduction.   
            The father of the children in question, a permanent resident of  Germany, obtained an order in Ontario under the Convention for the children to move to Germany, on the grounds that Germany, where they were  born and lived until 2013, is their “habitual residence”.   The children had gone to Canada on a temporary basis for educational reasons.   The father had sued in Germany first; an appeal court there determined that Germany lacked jurisdiction as the children were not German citizens and were resident in Canada at the time. He then sued in Ontario.
            The appeal is brought by the Children’s Lawyer from an order of the Ontario Court of Appeal for them to go to Germany, over the children’s objections. 
             Issues to be addressed include the meaning of “habitual residence” in the Convention, and whether it should be determined having regard only for the best interests of the child or also with regard to the intentions of the care givers.   As well, what weight ought to be given to the preferences of the children?  There are also Charter issues, i.e. whether interpretation the Convention should be in a manner consistent with child’s s. 7 Charter rights and right of child who is a Canadian citizen to remain in Canada under s. 6(1).

The appeal might not be heard because it has become moot.  The children in question returned to Canada after the leave application was filed, as the result of the mother obtaining an order for custody from a court in Germany.

Thursday, 30 March 2017

Two Year Limitation Period Applies to Enforcement of Foreign Judgments: OCA

The Ontario Court of Appeal has at last made clear that a two year limitation period applies to proceedings for recognition and enforcement of foreign judgments.   Strathy C.J.O., writing for a unanimous court in Independence Plaza 1 Associates v. Figliotini [2017] O.J. No. 243, also ruled that the period begin when an appeal from the foreign judgment is dismissed, or if there was no appeal, when the time for bringing an appeal expires. 

Before Figliotini, there was uncertainty about whether a limitation period applies, which I commented on in my July 29, 2016 post.   Section 16 (2) of the Limitations Act, 2002, S.O. 2002, c. 24 says that there is no limitation period for a “proceeding to enforce an order of a court, or any other order that may be enforced in the same way as an order of a court”.  But does that extend to foreign court orders?   The Court of Appeal had not previously ruled on this provision, but had ruled, in Lax v Lax (2004), 70 O.R. (3d) 520 that the corresponding provision in the predecessor statute (the Limitations Act, R.S.O. 1990, ch. L 15 s. 45) did not include  foreign judgments.    In 2010 in Commission de la Construction du Quebec v Access Rigging (2010) 104 O.R. (3d) 313 a trial court had ruled that s. 16(2) does not extend to foreign judgments.    However, more recently other judges cast doubt on this.  In PT ATPK Resources v. Diversified Energy 2013 ONSC 5913 Justice Newbould held there was no reason to exclude foreign judgments from the scope of s. 16(2), and that comity is a reason to include them.  In SA Horeca Financial v Light 2014 ONCA 811, a summary judgment motion judge also disagreed with Access RIgging, and on a motion to the Court of Appeal to lift a stay of enforcement of a judgment in that case, Justice Weiler J.A. mentioned that judge’s views without disagreeing with him.

In Figliotini,  the Court analyzed the issue in depth, and gave several reasons why s. 16 (2) does not apply to foreign judgments.  Here are the main ones:  One, at common law, a foreign judgment cannot be directly enforced here; the judgment creditor must first obtain a judgment for recognition and enforcement.   As such, a foreign judgment is not an order that “may be enforced in the same way as an order of a court”.  

Two, a reason to apply a limitation period to a foreign judgment but not to a domestic judgment is that to enforce the former, one must first obtain a judgment enforcing that foreign judgment, and in that proceeding the judgment debtor may raise defences such as fraud and denial of natural justice.    The reasons why enforcement of a domestic judgment is not subject to a limitation period is that no proceeding is needed to enforce it, and the underlying claim has already passed a limitations hurdle.  

Three, to exempt foreign judgments from the limitation period is inconsistent with the purposes of limitation periods, which are to ensure that people are not exposed to claims for an unreasonably long time, and to ensure that plaintiffs bring their claims before evidence is lost.  Problems with the preservation and reliability of evidence are especially pronounced for foreign judgment debtors. 

As for when the limitation period starts, the fact a foreign judgment is considered final (a requirement for enforcement) even before the time for an appeal has run out does not have any bearing on limitations.   The test under the Limitations Act, 2002 is not when the judgment (or order) is final, but when it is discovered.     One element of a claim being discovered  is when “a proceeding would be an appropriate means to seek to remedy [the loss]” (s. 5(1) (a) 4).  A proceeding to enforce a foreign judgment would not be appropriate, Strathy C.J.O wrote, until the appeal period has expired or all appeals have been exhausted.    The Court did not say whether judgments from which leave to appeal must be obtained would be treated any differently.