In a world where business is conducted internationally and law firms operate within a global market, the resolution of commercial disputes often requires steps in more than one jurisdiction. One facet of this is the recognition and enforcement of foreign judgments by Australian courts. In a number of recent decisions, Australian courts have considered the requisite approach to enforcing judgments obtained in the People’s Republic of China (China). As well as stating the applicable legal principles, these decisions have considered specific issues that arise with respect to Chinese laws and procedures.
Foreign judgments can be enforced in Australia either at common law or pursuant to the statutory regime in the Foreign Judgments Act 1991 (Cth). The statutory regime applies where a country is designated a “jurisdiction of substantial reciprocity” under Schedule 1 of the Foreign Judgments Regulations 1992 (Cth). As China has not been designated a jurisdiction of substantial reciprocity, a plaintiff seeking to have a Chinese judgment enforced in Australia must do so via the common law procedure.
To have a foreign judgment enforced at common law, the following matters must be established;
The party seeking to enforce the judgment bears the burden of establishing these matters, although in some circumstances particular matters may be presumed if they are not contested.
Notwithstanding the satisfaction of the above matters, an Australian court may still refuse to enforce a foreign judgment in certain circumstances, such as where:
A plaintiff seeking to enforce a foreign judgment can rely on the judgment as creating an estoppel precluding the defendant from raising any defence that was or could have been raised in the foreign proceedings.
Liu v Ma  VSC 810
In Liu the plaintiff obtained judgment in China for money due for repayment of a loan. In considering whether to recognise the judgment, the Victorian Supreme Court observed that the most important requirement is that the foreign court had jurisdiction. The term “jurisdiction” does not refer to the jurisdiction of the foreign court under its own rules, but “international jurisdiction”, which means a competence that is recognised under Australian conflict of law rules. Relevant circumstances establishing such a competence include where the defendant is a subject of the foreign country, was resident in the foreign country when the action began, or has submitted to the forum by taking steps there in the character of a plaintiff, by voluntarily appearing or through a jurisdiction clause in a contract. Where the basis of jurisdiction is the defendant’s connection to the foreign country, the connection needs to be sufficiently ‘active’. The Victorian Supreme Court found that the defendants were subjects with a sufficiently active connection because they were natural born Chinese citizens holding Chinese passports, had been married in China and had substantial financial affairs or activities there. Accordingly, the court granted the application and recognised the judgment.
Suzhou Haishun Investment Management Co Ltd v Zhao  VSC 110
In Suzhou Haishun the plaintiff obtained judgment for the recovery of money lent to the defendant under three separate loan agreements. The plaintiff applied to have the judgment enforced by the Victorian Supreme Court. Cameron J held that jurisdictional competence was established by clauses in the loan agreements submitting the parties to the jurisdiction of the Suzhou Court in China. However, the defendant argued that the judgment should not be enforced as there had been a denial of natural justice. She claimed she had not been made aware of the Chinese proceedings until after the judgment had been entered. Cameron J rejected this submission and recognised the judgement, finding that reasonable attempts had been made to locate her address, a representative who attended court in China had clearly been in contact with her, and in any event Chinese civil procedure allowed service by public announcement where the defendant’s location is unknown. By contrast, in Xu v Wang  VSC 269 Cameron J declined to recognise a Chinese judgment where the applicant had chosen to commence proceedings by public announcement, because the plaintiff in fact knew how to contact the defendant, having already commenced proceedings against him in Australia. Enforcing the judgment would have been a denial of natural justice and an abuse of process.
Bao v Qu; Tian (No 2)  NSWSC 588
In Bao, the plaintiff received a Chinese judgment on an unpaid debt and sought to enforce the judgment in New South Wales. Rothman J found that the Chinese court had competence because the defendants had submitted to its jurisdiction by voluntarily appearing in the proceedings, including by commencing an appeal. However, the defendants alleged that the Chinese court had been misled as to the value of the unpaid debt which the defendants claimed to have partly repaid. Rothman J held that this matter could, and should, have been raised in the Chinese proceedings and that the defendants were impermissibly attempting to challenge the merits of the foreign judgment. The defendants also argued that the judgment was penal in nature because under Chinese civil procedure there was a requirement to pay double interest if the debt remained unpaid after a certain date. The judge found no evidence that the imposition of double interest was a public sanction. Where a defendant has disregarded the plaintiff’s rights an award of punitive damages is not contrary to public policy even if the amount awarded far exceeds what an Australian court would award. Therefore, the court was prepared to enforce the judgment including the interest awarded to the plaintiff.
These decisions show that Australian courts are prepared to recognise and enforce Chinese monetary judgments where the common law requirements for doing so are satisfied, the most significant of which is establishing the jurisdictional competence of the Chinese court. This does not require showing any equivalence between the jurisdictional rules of the Chinese court and the Australian court, but rather that the jurisdictional competence comes within one of the categories enumerated in Liu. The fact that Chinese proceedings are commenced by methods particular to Chinese civil procedure, such as public announcement, is no bar to enforcement, as long as there has not been a denial of natural justice. Further, an award of punitive damages for disregard of a plaintiffs private rights is not a penal sanction and does not prevent that part of the judgment being enforced.
Underlying these decisions are competing demands that the courts are attempting to balance. On the one hand, the courts recognise the practical reality that business is international in scope and that legal services, including the services offered by courts and other adjudicative bodies, operate in a global market. It is therefore essential to facilitate dispute resolution processes that involve steps in more than one jurisdiction. On the other hand, there is the need to ensure that “global shopping for legal redress” does not result in unfairness to any party or undermine the integrity of the courts’ processes. This is not to say that there is anything inherently unfair in a plaintiff electing to bring proceedings in the most favourable jurisdiction, but courts must be mindful of particular circumstances that may result in unfairness. When it comes to the enforcement of Chinese monetary judgments, the recent case law demonstrates that a suitably careful and nuanced approach is being adopted by the Australian courts.
 Bao v Qu; Tian (No 2)  NSWSC 588 at .
 But see Liu v Ma  VSC 810 at  expressing concern that this “may be an incautious way to proceed”, at least in relation to the central issue of jurisdiction.
 Many of these grounds are summarised in Xu v Wang  VSC 269 at .
 Bao v Qu; Tian (No 2)  NSWSC 588 at .
 Compare Suzhou Haishun at  where the plaintiff undertook not to seek to recover interest on interest.
 Xu v Wang  VSC 269 at .