DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
KING & WOOD MALLESONS
KING & WOOD MALLESONS PREPARED CHINESE VERSION AND PROVIDED ADVICE IN RESPECT OF PRC LAW.
DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
MUTUAL RECOGNITION AND ENFORCEMENT OF CIVIL AND COMMERCIAL JUDGMENTS WITH THE PRC COURTS
In 2004 the People’s Republic of China (the “PRC”) and the United Arab Emirates (the “UAE”) entered into the Agreement on Judicial Assistance in Civil and Commercial Matters (the “Agreement”), pursuant to which either Party’s judgments in civil and commercial matters may be enforced in the other Party’s courts.
The Dubai International Financial Centre (the “DIFC”) Courts issue this Guide on the mutual enforcement of monetary judgments issued by the courts in the PRC and the UAE, in order to provide practical guidance for parties that seek recognition and enforcement of monetary judgement under the Agreement.
As this Guide involves PRC laws, the DIFC Courts have instructed King & Wood Mallesons to draft the parts that involve PRC law. The Chinese version of the Guide is translated and finalised by King & Wood Mallesons.
This Guide has no legally binding effect. It does not constitute a treaty or legislation, is not binding on the judges of either Party and does not supersede any existing laws, judicial decisions or court rules. It is not intended to be exhaustive and is not intended to create or alter any existing legal rights or relations. It is not reviewed, commented nor endorsed by any PRC courts.
The DIFC Courts form part of the legal system of the UAE. This Guide only applies to the DIFC Courts. The Guide pertains to civil and commercial disputes which are connected to the Dubai International Financial Centre or where the parties have agreed that the DIFC Courts should have exclusive jurisdiction.
The DIFC Courts consist of the Small Claims Tribunal, the Court of First Instance and the Court of Appeal. They were established by Dubai Laws No. 9 and 12 of 2004 and operate as a common law court which applies legal procedures of the highest international standards. The Courts’ internationally renowned judiciary is selected from common law jurisdictions around the world and includes three Emirati judges equally conversant in civil and common law.
Application of the Laws
In accordance with Article 17 of the Agreement, PRC courts (not including the courts in Hong Kong, Macau and Taiwan) and DIFC Courts shall mutually recognise and enforce judgments pursuant to their respective national laws.
The approach of the PRC courts to the enforcement of the DIFC Courts’ judgments is based on the Agreement and the Civil Procedure Law of the People’s Republic of China (2012 Second Amendment) (the “Civil Procedure Law”) and the Judicial Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China (the “Judicial Interpretation of the Civil Procedure Law”, effective from February 4, 2015). Under Articles 281 and 282 of the Civil Procedure Law，a foreign judgment can be recognised and enforced upon an application to a PRC court in accordance with international treaties and / or agreements which the PRC is a party to, or upon the principle of reciprocity.
The approach of the DIFC Courts to the recognition and enforcement of the PRC courts’ judgments is based on common law principles. Where a foreign court with jurisdiction has determined that a sum is due from one party to another, a legal obligation arises for the debtor to pay that sum. The creditor may bring a claim against the debtor to enforce that debt.
The Requirements for Enforcement of the DIFC Courts’ Judgments in PRC Courts
The DIFC Courts’ judgment shall be recognised and enforced by the PRC Courts unless it falls within the limited grounds provided in Article 21 of the Agreement. These grounds are:
The judgment is not final and conclusive or is unenforceable;
The judgment has been issued by a court with no competent jurisdiction;
The judgment supports a claim that is in violation of the constitutional laws and principles, sovereignty, national security or public policy of the PRC;
The judgment violates PRC laws on litigation representative(s) of person(s) lacking in legal capacity.
The judgment issued is a judgment in default where the absent party was not duly summoned in accordance with DIFC laws;
Where the application for the recognition and enforcement of a DIFC judgment is made when a PRC court with competent jurisdiction is still in the process of hearing a matter that involves the same parties and the same subject matter that was commenced at the PRC court earlier in time before it was commenced at the DIFC Courts; or when a PRC court has recognized a third-party country’s final judgement on a matter involving the same parties and the same subject matter.
In respect of paragraph 10 (b) above, the DIFC Courts are deemed to have jurisdiction to adjudicate disputes relating to immovable property if the immovable property is located within the geographical area under the jurisdiction of the DIFC Courts, pursuant to Article 18 of the Agreement.
In respect of paragraph 10 (b) above, the DIFC Courts have jurisdiction on matters other than immovable property in the following situations pursuant to Article 19 of the Agreement:
The Defendant has his domicile or residence in the territory of the DIFC at the time of the commencement of the suit; or
The Defendant, at the time of commencement of the suit, owns industrial or commercial premises or subsidiaries, or engages in commercial activities in the DIFC district, and the litigation relates to these activities.
By an express or implied agreement between the Plaintiff and the Defendant, the contractual obligations giving rise to the litigation shall be or have been performed in the territory of the DIFC; or
The infringing act, which is a non-contractual tortious liability, is committed within the geographical area under the jurisdiction of the DIFC; or
The Defendant has expressly or impliedly accepted the jurisdiction of the DIFC Courts.
The Requirements for Enforcement of the PRC Courts’ Judgments in the DIFC Courts
The DIFC Courts shall apply rules similar to the guidelines set out above to determine whether a party may apply for recognition and enforcement of a judgment issued by a PRC court.
In accordance with the DIFC rules on conflict of laws, for the DIFC Courts to enforce judgments made by a PRC court, the PRC court must have jurisdiction on the matter in dispute. The DIFC Courts will usually consider the PRC courts to have jurisdiction under the following situations:
At the time of the commencement of the suit, the Defendant has domicile or residence in the area under the jurisdiction of the PRC court of first instance.
The Defendant, at the time of commencement of the suit, owns industrial or commercial premises or subsidiaries, or engages in commercial activities in the area under the jurisdiction of the PRC court of first instance, and the litigation relates to those activities; or
According to the express or implied agreement between the Plaintiff and the Defendant, the contractual obligations giving rise to the litigation shall be or have been performed in the geographical area under the jurisdiction of the PRC court of first instance; or
The infringing act, which is a non-contractual tortious liability, is committed within the geographical area under the jurisdiction of the PRC court of first instance; or
The Defendant has expressly or impliedly accepted the jurisdiction of the PRC Courts.
Where the above requirements by the DIFC Courts are satisfied, a PRC court judgment will not be recognized and enforced only on the following grounds:
The judgment is not final and conclusive or unenforceable;
The judgment has been issued by a Court with no competent jurisdiction;
The judgment supports a claim that is in violation of any law in force in the DIFC, or the constitutional laws and principles, sovereignty, national security, or public policy of the UAE;
The judgment violates DIFC laws on litigation representative(s) of person(s) lacking in legal capacity.
The judgment issued is a default judgment where the absent party was not duly summoned in accordance with PRC laws;
Where the application for the recognition and enforcement of a PRC judgment is made to a DIFC Courts and when a DIFC Courts, which has competent jurisdiction, is still in the process of hearing a matter that involves the same parties and the same subject matter that was commenced at the DIFC Courts earlier in time before it was commenced at the PRC court with competent jurisdiction; or when a DIFC Courts has recognised a third-party country’s final judgment on a matter involving the same parties and the same subject matter.
According to Article 23 of the Agreement, the DIFC Courts will not examine the substantive merits of a PRC court’s judgment. The judgment will not be refused recognition and enforcement on the ground of error in a finding of fact or law. If the relevant party has legal obligations to carry out the PRC court’s judgment, such obligations will receive recognition from the DIFC Courts and will be enforceable in the DIFC Courts.
The Procedure for Enforcement of the DIFC Courts’ Judgments in the PRC Courts
According to Article 22 of the Agreement, procedures relating to recognition or enforcement of a judgment shall be subject to the laws of the Party which the judgment is enforced against. For example, the relevant PRC laws shall be applied in a procedure for recognition and enforcement of DIFC Courts’ judgments in the PRC.
Pursuant to Article 546 of the Judicial Interpretation of the Civil Procedure Law, for a DIFC Courts’s judgment to be legally valid for recognition and enforcement in PRC, a party must first apply to the PRC court for recognition. After reviewing the DIFC Courts’s judgment, if the PRC court decides to recognize the judgment, it will be enforceable under relevant provisions of the PRC Civil Procedure Law.
According to Article 547 of the Judicial Interpretation of the Civil Procedure Law and Article 239 of the Civil Procedure Law, the statute of limitations for applications to the PRC courts for recognition and enforcement of judgments of the DIFC Courts is two years. The limitation period will commence from the last day of performance as provided for in the judgment; if the judgment requires performance by instalments, the limitation period will commence from the last day of the un-performed instalment; if the judgment does not stipulate the date of performance, the limitation period will commence from the day the judgment becomes effective. Where a party only applies for recognition without applying for enforcement at the same time, the two year limitation period for enforcement shall be recalculated from the day when the decision issued by the PRC Courts on the recognition application comes into force.
According to Article 281 of the Civil Procedure Law, when applying to the PRC Courts for recognition and enforcement of the DIFC Courts judgments, a party shall apply to the relevant Intermediate People’s Court in PRC at the Respondent’s place of residence or where the Respondent’s assets are located.
According to Article 543 of the Judicial Interpretation of the Civil Procedure Law and Article 24 of the Agreement, to apply to the PRC courts for recognition and enforcement of a judgment of the DIFC Courts, the applicant shall submit the following documents:
A written application in Chinese language, together with an original copy of the legally valid judgment issued by the DIFC Courts and a Chinese translation of the judgment;
Unless it is provided for in the judgment per se, a document issued by the court which made the legally valid judgment certifying that the judgment is final and conclusive and enforceable.
In case of a judgment in default, documents showing that the Respondent had been duly summoned, such as, but not limited to, copies of court summons, proof of service
A document to establish that the party who lacks legal capacity in litigation has been duly represented.
The documents listed in paragraph above shall be notarized by a local notary and attested to by the Chinese embassy in UAE before being submitted to the PRC courts.
According to Article 26 of the Agreement, an application for recognition and enforcement of a court judgment may be submitted directly by the Claimant to the competent court of the requested party. According to Article 548 of the Judicial Interpretation of the Civil Procedure Law, upon an application by a party to recognise and to enforce a judgment of the DIFC Courts, the PRC Courts shall form a collegiate bench to review the judgment of the DIFC Courts. The PRC courts will be responsible for serving the Claimant’s application to the Respondent. The Respondent may submit its opinions. The PRC courts can issue a decision in default if the Respondent does not respond to the application. The decision by the PRC courts will be legally valid upon service.
According to Article 23 of the Agreement, the PRC Courts will not review the merits of the judgment which has been determined by the DIFC Courts. It will confine itself to deciding whether the situations under Article 21 of the Agreement exist. These situations have been listed in paragraph 15 above.
According to Article 27 of the Agreement, the DIFC Courts’ judgment which has been granted recognition or enforcement shall have the same legal effect in the territory of the PRC as judgments rendered by the PRC courts.
The Procedure for Enforcement of the PRC Courts Judgments in the DIFC Courts
The procedure for enforcing a PRC Court judgment in the DIFC Courts is similar.
To enforce a PRC court’s judgment in the DIFC Courts, a party must furnish a Claim Application to the DIFC Courts, which shall contain the salient points of the claim and relief including the amount of the judgment debt. A certified copy of the judgment must be exhibited together with the Claim Application.
After issuing a judgment, the PRC court will serve an original copy of the judgment sealed with the court’s seal to the parties. The judgment can be used by the parties to bring a claim for enforcement before the DIFC Courts. If the parties so require,, the parties may apply to the court which issued the legally effective judgment to issue a copy of the judgment. Upon review, the PRC court will issue a copy of the judgment sealed with the seal of the PRC court or issue a duplicate with the corresponding documents certifying the duplicate.
Under Rule 9.52 of the Rules of the DIFC Courts 2011, there is no requirement to obtain the permission of the DIFC Courts before serving proceedings. However, it remains open for the Respondent to challenge the jurisdiction of the DIFC Courts.
If, following service of the application documents, the Respondent does not respond to the claim, the Claimant will be entitled to obtain a judgment in default under Part 13 of the Rules of the DIFC Courts 2011.
If the Respondent acknowledges service, the Claimant must file and serve Particulars of Claim, setting out a concise statement of the facts relied on in support of the claim. The Particulars of Claim should contain a statement that the PRC Courts had jurisdiction on the grounds set out in paragraph 14 above.
In most cases, the Claimant will be entitled to apply to obtain a judgment by summary procedure without trial under Part 24 of the Rules of the DIFC Courts 2011, unless the debtor can satisfy the Court that it has a real prospect of establishing at trial one of the grounds set out in paragraph 19 above. Applications for summary judgment are dealt with swiftly and do not require oral testimony from witnesses.
If the claim before the PRC Court is successful, the judgment creditor will then have the same rights and benefits as a judgment rendered by the DIFC Courts. The judgment creditor will be entitled, if necessary, to enforce performance according to the procedural rules of the DIFC Courts, including the issuance of:
Third party debt orders, which require third parties who are indebted to the judgment debtor to pay the sum owed to the judgment creditor;
Charging orders, which impose charges over the judgment debtor’s property in favour of the judgment creditor;
Orders for possession of land;
Orders for sale of land or other property over which the judgment creditor has the benefit of a charge;
Orders requiring judgment debtors to provide information about their assets;
Orders appointing enforcement officers to seize and to sell the judgment debtor’s goods;
Orders appointing receivers;
Orders for committal for contempt of court;
Orders relating to insolvency procedures.
Further information about the PRC Courts can be obtained:
By visiting the website of the PRC Courts at http://www.chinacourt.org/index.shtml
Further information about the DIFC Courts can be obtained below:
By visiting the website of the DIFC Courts at https://www.difccourts.ae/ ;
Dr. Michael Hwang, SC
Chief Justice of the DIFC Courts
Mr. Shao Zili
Co-Chairman of King & Wood Mallesons China Management Committee
Agreement between The People’s Republic of China and the United Arab Emirates on Judicial Assistance in Civil and Commercial Matters
The Courts of the Contracting Party where immovable property is situated shall be competent to determine the rights connected with such property.
In matters other than immovable property, the Courts of a Party shall have jurisdiction in the following cases:
Subject to the provisions of this Agreement, the Court of the Contracting Party requested to recognize or execute a decree shall, when examining the grounds of jurisdiction exercised by the Courts of the other Contracting Party, be bound by the facts stated in that decree and on which jurisdiction is based, unless the said decree had been passed in absentia.
A decree shall not be recognized or executed in the following cases:
Procedures relating to recognition or execution of a decree shall be subject to the laws of the Requested Party.
The request of recognition or execution of a decree shall be accompanied by the following:
Application for recognition and enforcement of court decrees and settlements may be submitted directly by the party to the case to the competent court of the Requested Party.
The court decrees which have been granted recognition or enforcement shall have the same effect as those rendered by the courts of the Requested Party in the territory of that Party.
Civil Procedure Law of the People’s Republic of China
Where the Defendant refuses to be present in court upon being served a summons and without a proper reason, or leaves the courtroom halfway without the consent of the court, the judgment in default may be made.
The timeframe for application for enforcement shall be two years. The provisions of the applicable laws on suspension and termination of limitation of action shall apply to suspension and termination of limitation period for application for enforcement.
The period stipulated in the preceding paragraph shall commence from the last day of the performance period stipulated in the legal document; where the legal document stipulates performance in phases, the period shall commence from the last day of each stipulated performance period; where the legal document does not stipulate the performance period, the period shall commence from the effective date of the legal document.
Where a judgment or ruling made by a foreign court which has come into legal effect requires ratification and enforcement by a People’s Court of the People’s Republic of China, the parties concerned may submit an application directly to an intermediate People’s Court of the People’s Republic of China which has jurisdiction for ratification and enforcement, or the foreign court may, pursuant to the provisions of the international treaty concluded or participated by the country and the People’s Republic of China or in accordance with the principle of reciprocity, request for ratification and enforcement by the People’s Court.
For a judgment or ruling made by a foreign court which has come into legal effect for which ratification and enforcement is applied or requested, where a People’s Court concludes, upon examination pursuant to the international treaty concluded or participated by the People’s Republic of China or in accordance with the principle of reciprocity, that the basic principle of the laws of the People’s Republic of China or the sovereignty, security or public interest of the State is not violated, the People’s Court shall rule on ratification of the validity; where there is a need for enforcement, an enforcement order shall be issued and enforced pursuant to the relevant provisions of this Law. Where the People’s Court deemed that the basic principle of the laws of the People’s Republic of China or the sovereignty, security or public interest of the State is violated, the judgment or ruling made by the foreign court shall not be ratified and enforced.
Interpretations of the Supreme People’s Court on Application of the “Civil Procedural Law of the People’s Republic of China
A petitioner applying to a People’s Court for acknowledgement and enforcement of a judgment or ruling of a foreign court, which has come into legal effect, shall submit a petition form, and attach the original copy of the judgment or ruling of the foreign court which has come into legal effect, or a certified error-free duplicate copy and Chinese translation thereof. Where the judgment or ruling of a foreign court is made in the absence of a litigant, the applicant shall also submit proof document that the foreign court has issued legitimate summon, except where the judgment or ruling has specifically stated so.
Where an international convention concluded or participated by the People’s Republic of China stipulates on the documents to be submitted, such provisions shall prevail.
Where a judgment or ruling of a foreign court which has come into legal effect or a foreign arbitral award requires enforcement by a court in the People’s Republic of China, the litigants shall first apply to a People’s Court for acknowledgement. Upon examination, where the People’s Court rules on acknowledgement, the judgment or ruling or arbitral award shall be enforced pursuant to the provisions of Part 3 of the Civil Procedural Law.
Where a litigant applies for acknowledgement without simultaneously applying for enforcement, the People’s Court shall only conduct examination on whether to acknowledge and make a ruling thereto.
The provisions of Article 239 of the Civil Procedural Law shall apply to the period for a litigant’s petition for acknowledgement and enforcement of a judgment or ruling of a foreign court which has come into legal effect or a foreign arbitral award.
Where a litigant applies for acknowledgement without simultaneously applying for enforcement, the period for petition for enforcement shall be re-computed with effect from the date on which the ruling of acknowledgement come into legal effect.
Amendments to the PRC Constitution
The fourth paragraph of Article 10 of the Constitution, which reads, “No organization or individual may appropriate, buy, sell or lease land or otherwise engage in the transfer of land by unlawful means”, is revised to read, “No organization or individual may appropriate, buy, sell or otherwise engage in the transfer of land by unlawful means. The right to the use of land may be transferred according to law.”
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