The disruption of supply chains experienced during the pandemic and the Ukraine crisis has forced many countries to reconsider international trade.  For a populous country like China where self-sufficiency is hardly a viable option, regional trade, on the basis of stronger relations with its neighbors, is more crucial than ever.  In fact, last Friday (i.e., March 25), during a phone conversation with South Korean President-Elect Yoon Suk-yeol, Chinese President Xi Jinping reportedly said that China is ready to work with South Korea to, among other goals, ensure the “stability and smoothness” of supply chains as well as strengthen regional cooperation.

Against this backdrop, China’s release of a Typical Case in early 2022—a special year that marks the 30th anniversary of the establishment of China–South Korea diplomatic relations—to highlight China’s recognition and enforcement of a South Korean judgment is worth noting (the “2022 Typical Case”).  What messages does this release send to courts inside and outside China?

The Typical Case & Its Significance

Released in February 2022 by China’s Supreme People’s Court, the 2022 Typical Case has only three paragraphs, the first two of which summarize the facts and results as reported in a ruling rendered by the Intermediate People’s Court of Qingdao City, Shandong Province (the “Qingdao Intermediate Court”), in March 2019.  The third and last paragraph is titled “Typical Significance” and shows why a ruling made by an intermediate court—which is on the third level of China’s four-tier court system, with the Supreme People’s Court and provincial high courts being on the first two levels, respectively—three years ago is now selected as a Typical Case.  As explained below, all Typical Cases have high referential value for all courts in China.

The 2022 Typical Case concerns a simple dispute between two individuals over a lump sum borrowed in 2009.  The borrower did not repay the loan and at one point, took up residence in China.  The lender brought suit in the Suwon District Court of South Korea, which rendered a ruling to order the borrower to repay the loan plus interest.  The lender then applied to the Qingdao Intermediate Court for the recognition and enforcement of the South Korean court’s judgment as the borrower’s property was primarily in China.

Since China and South Korea have not concluded or jointly acceded to an international treaty on mutual recognition and enforcement of judgments, the Qingdao Intermediate Court reviewed the lender’s application in accordance with the principle of reciprocity, as so authorized by Chinese law.  The court finally approved the application because (1) in 1999, the Seoul District Court of South Korea recognized a civil judgment of the Intermediate People’s Court of Weifang City, Shandong Province, China (therefore, there was a basis for Chinese courts to do the same in reciprocity regarding civil judgments of South Korean courts); and (2) the recognition and enforcement of this specific judgment rendered by the Suwon District Court “does not violate the basic principles of Chinese law or national sovereignty, security, and social and public interests”.

The Supreme People’s Court stated the significance of this Typical Case in the “Typical Significance” section, which includes the following content:

Based on the principle of reciprocity, this case recognized and enforced the judgment of a South Korean court, actively maintaining the reciprocal relationship between China and South Korea and promoting the recognition and [enforcement] of judgments between the two countries.  This [case] has a positive effect on the promotion of economic and trade cooperation and exchanges between the two countries and the enhancement of confidence of market players participating in the “Belt and Road” [Initiative].

A Clear Message to Courts Inside China: Follow Suit

The release of the 2022 Typical Case sends a clear message to courts in China: do the same when handling a similar case in the future.  Why?

As I explained in SINOTALKS.COM In Brief No. 4, Typical Cases are another category of representative cases that the Supreme People’s Court can release to guide Chinese courts’ adjudication.  They are not as important as Guiding Cases, which are China’s de facto binding precedents (see SINOTALKS.COM In Brief No. 2) and the only category of cases in China that can be cited in judgments of cases showing similarity.  However, because Typical Cases are ranked immediately below Guiding Cases in China’s fledgling “Search for Similar Cases” system and essentially reflect the views of the Supreme People’s Court regarding legal issues addressed by the Typical Cases (or they would not have been selected as Typical Cases), Chinese judges are likely to follow the same views in similar subsequent cases. 

Therefore, it is highly likely that Chinese judges will follow the 2022 Typical Case to recognize and enforce a foreign country’s civil judgment based on the principle of reciprocity, as long as legal requirements are met.  In fact, they should feel even more compelled to do so because there are in total two Typical Cases upholding this approach.  In May 2017, prior to the release of the 2022 Typical Case, the Supreme People’s Court released another Typical Case to highlight China’s recognition and enforcement of a Singaporean court’s civil judgment based on the principle of reciprocity.  For more information about this case, see SINOTALKS.COM In Brief No. 5.

A Subtle Message to Courts Outside China: The Ball is in Your “Court”

All the developments send a subtle message to courts outside China: in the absence of a bilateral or multilateral treaty that allows a foreign country and China to mutually recognize and enforce each other’s judgments, if the courts of the foreign country wish their civil judgments to be recognized by Chinese courts, they can consider taking the initiative to recognize a Chinese court’s civil judgment.  Then, based on the two Typical Cases discussed above regarding how South Korean and Singaporean civil judgments were recognized and enforced in China, Chinese courts are likely to recognize and enforce the civil judgments of the foreign country in reciprocity. 

Is there any way to increase this likelihood so that the foreign courts can secure China’s recognition and enforcement of their civil judgments?  The approach taken by the Seoul District Court of South Korea in 1999, when it recognized a Chinese civil judgment, seems to have proven effective.  As noted by the Supreme People’s Court in the “Typical Significance” section of the 2022 Typical Case, the Seoul District Court of South Korea took a rather bold step:

The [Seoul District] Court stated in its judgment confirming the effective judgment of a Chinese court: if [the Seoul District Court] recognizes the judgment of the Chinese court on the basis of a reciprocal relationship, but Chinese courts still refuse to recognize South Korean court judgments on the grounds that [China] has no reciprocal relationship with South Korea, [courts in South Korea] will no longer continue to maintain [the position] that there is a reciprocal relationship between the two countries.

This statement by the Seoul District Court seems intended to convey a cautionary message towards courts in China.  Yet, it is interesting that it is noted by the Supreme People’s Court in the 2022 Typical Case.

As demonstrated by the developments discussed in this article, there seems to be a trend within the Chinese court system towards recognition of foreign courts’ civil judgments.  If this trend continues, it will likely result in greater confidence on the part of foreign parties in having business relationships with Chinese counterparties.  This will provide further encouragement to the development of China-related projects, including the Belt and Road Initiative.

---

^† The citation of this article is: Dr. Mei Gechlik, China & South Korea: Stronger Judicial Ties on the 30th Anniversary of Their Bilateral Diplomatic Relations, SINOTALKS.COM, In Brief No. 9, Apr. 6, 2022, https://sinotalks.com/inbrief/2022w13-english.  This article was first published on LinkedIn on March 30, 2022, https://www.linkedin.com/pulse/china-south-korea-stronger-judicial-ties-30th-dr-mei-gechlik.

The original, English version of this article was edited by Nathan Harpainter.  The information and views set out in this article are the responsibility of the author and do not necessarily reflect the work or views of SINOTALKS.COM.