Enforcement of foreign awards in China : 5 mistakes you should avoid

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Enforcement of foreign awards in China : 5 mistakes you should avoid

Since 1987, the United Nations Convention on Recognition and Enforcement of Foreign Arbitral Awards (known as “New York Convention”) has the force of law in China, which has recognized and enforced many foreign arbitral awards.

However, when you have a lengthy and costly arbitration finally wrapped up with an arbitral award against a PRC party in a favour of you, the last thing you would ever expect is to spend another (averagely) 21 months before a Chinese court and your Chinese lawyer keeps coming to you with new requests of documents and other things.

This can be avoided if more attentions are paid to the below five common mistakes.

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Mistake 1: Go to the court where the property of the defendant is located

This is a typical beginner’s mistake. It is indeed what is provided by the fine prints of the PRC Civil Procedural Law as well as the practice in the developed coastal areas. But that is not the case for other parts of the large country, where the judicial system internally designated a few courts to deal with foreign related matters. For example, in a central China province with 18 intermediary courts, only 3 can deal with foreign related matters.

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Mistake 2: Get translation from a “Good” translator.

As most “to-go" Chinese lawyers for foreigners are based in modern cities like Shanghai and Beijing, they usually work with nearby translators. However, in practice, it is an undocumented practice that each court has its own designated translator in its own city that are only disclosed upon checking with the court.

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Mistake 3: “Duly authenticated original award or a duly certified copy thereof”produced in the “place of arbitration”

When it comes to the nationality of the award, even the PRC Supreme People’s Court has been swinging between the “seat of the arbitration institution” and the “place of arbitration”, since the Chinese judicial system considers arbitral awards being rendered by the institution. Although it has been improving, there are a still lot of confusions in the minds of judges at the lower courts. If legalized in the “wrong” Chinese Embassy, the applicant has to re-legalize the documents

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Mistake 4: “There is no corruption” or “there are too many corruptions” or “Guangxi is decisive”

Corruption might not be uncommon China, but severely fought due to recent campaign of the Chinese authorities. Like anywhere else in the world, “Guanxi” (connections) may play an important role in everything. However, such possible and remaining practices cannot prevail over the observance of the lawfulness and the procedures provided for in relevant laws and regulations.

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Mistake 5: “Mission accomplished”

Getting a favourable award, a favourable SPC’s reply, a court decision recognising the award, or even a ruling to enforce the award is never mission accomplished. As the traditionally faced serious difficulties in enforcing judicial decisions, there have been the “difficult enforcement” (执行难). According to the SPC Report on Enforcement Work (2016), in 40% – 50% of the cases there are no property for enforcement, which means in those cases the enforcement proceedings do not allow a realization of the decisions in the award. Another obstacle is made of the huge caseload that PRC courts must handle. Therefore, an efficient attorney in China shall keep up the spirit until the end of the proper enforcement of the proceedings, and shall do her/his best endeavour to assist the court to find the property of the defendant to allow the courts to save time from the “finding property work" and to focus on the realization.

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Why ASIALLIANS?

We are here to help you overcome the difficulties.

Our arbitration and enforcement experts have been working in the field of enforcement for the last 15 years gathering experience with awards from various countries issued under various arbitration regimes and against Chinese defendants from various regions in China. We have gathered a wealth of theoretical and practical know-how that will optimize your chances of getting your award enforced. After assessing the strengths and weaknesses of your award, we determine an efficient enforcement strategy and take the lead in implementing it consistently from the very beginning and until you get your money.

For over 20 years the founding partners of ASIALLIANS have advised their clients in Asia and developed strong expertise in every field of local practices.

In China, ASIALLIANS offers unique services integrating the resources of Wang Jing & Co, a PRC law firm with a team of more than 20 partners and 100 lawyers across the country to appear before any Chinese court from the lower basic people’s court towards the Supreme People’s Court. Such lawyers have also extensive experience in the field of international arbitration, as counsels or arbitrators.

A network of 10 offices and teams, not including our offices in Hong Kong and Taipei, are ready to bring your case before the judicial institution which shall have jurisdiction over your award.