Recognition And Enforcement Of Chinese Court Judgments Continues In The U.S.

Forbes

30-07-2025

There are rising tensions between the United States and China following heavy tariffs, expanded sanctions and export controls, and strong threats by the current Administration. Both the Executive and Legislative Branches of the U.S. government have taken measures in 2025 to restrict access to U.S. markets by Chinese companies and increase scrutiny on cross-border transactions, citing national security concerns. Whether U.S. protectionism and skepticism toward the Chinese government will impact decisions from U.S. courts remains to be seen. One area of interest is in cases seeking recognition and enforcement of Chinese court judgments in the U.S. Over the last 15 years, U.S. courts have trended towards recognizing and enforcing Chinese money judgments, and rejecting attacks on the impartiality of the Chinese judicial system. Chinese courts, in turn, have enforced U.S. money judgments based on the principle of reciprocity. Changes in the approach of U.S. courts toward Chinese courts could disrupt this delicate balance.
In the U.S., the recognition of foreign money judgments is governed by state law; the vast majority of the states have either adopted the 2005 Uniform Foreign-Country Money Judgments Recognition Act (the 'Act'), or rely on the Act's predecessor. Under the Act, a foreign judgment will typically be recognized unless: (1) the judicial system that rendered the judgment is not compatible with due process requirements in the United States; (2) the foreign court did not have personal jurisdiction over the defendant; or (3) the foreign court did not have subject matter jurisdiction – and eight discretionary grounds. Uniform Foreign-Country Money Judgments Recognition Act, § 4(b) (2005). Generally, the party resisting recognition of a foreign judgment bears the burden of establishing that a ground for nonrecognition applies.
The first time a U.S. court recognized a Chinese court money judgment was in July 2009 in Hubei Gezhouba Sanlian Industrial Co., Ltd. v. Robinson Helicopter Co., Inc. , 2009 WL 2190187 (C.D. Cal. July 22, 2009), aff'd 425 F. App'x 580 (9th Cir. 2011). The case involved two Chinese companies who purchased helicopters from California company, Robinson Helicopter Co. After two of the helicopters crashed in China, the Chinese companies secured a money judgment in the amount of approximately $900,000 ordered by the Hubei Higher People's Court. When Robinson did not pay, the Chinese companies sought to enforce the judgment in California federal court. The district court granted Robinson's motion for summary judgment on the grounds that the statute of limitations had expired before the Chinese court accepted the case. On appeal, the U.S. Court of Appeals for the Ninth Circuit reversed, finding that the Chinese action was not barred by the statute of limitations and 'there was no basis for finding that enforcement of the PRC judgment would violate California's public policy against stale claims.'
Since the Hubei case, U.S. courts have generally elected to enforce Chinese court judgments, rejecting arguments criticizing China's legal process. Three recent cases demonstrate this trend. In Shanghai Yongrun Investment Management Company, Ltd. v. Xu , 2021 WL 1716424 (N.Y. Sup. Ct., N.Y. Cnty. Apr. 30, 2021), rev'd 203 A.D.3d 495 (N.Y. App. Div. 2022), Kashi Galaxy Venture Capital defaulted under an equity transfer agreement with Shangai Yongrun Investment. Shanghai Yongrun secured a money judgment for RMB 64,078,417.03 in the Beijing No. 1 Intermediate People's Court against Kashi Galaxy and its controller. Because defendants had no assets in China, Shanghai Yongrun sought to enforce the judgment in New York. Xu moved to dismiss the complaint on the basis that the judgment 'was rendered under a system which does not provide impartial tribunals or procedures compatible with the requirements of due process of law' and the New York state court granted the motion but was reversed on appeal. The Appellate Division, First Department found that defendants were afforded an opportunity to be heard, representation by counsel, and a right to appeal in the underlying proceeding, and therefore 'the basic requisites of due process were met.' The case was remanded for discovery and is ongoing.
In another New York case, the appellate court affirmed the denial of a summary judgment motion where the basis for defendant's motion was that the Chinese judicial system did not comport with the requirements of due process. In Huizhi Liu v. Guoqing Guan , 225 A.D.3d 749 (2d Dep't March 20, 2024), both the trial court and appellate court found that defendant's submission of the United States Department of State's 2018 Country Report on Human Rights Practices was insufficient to condemn China's judicial process and decline to enforce the 17.6 million RMB judgment from the People's Court of Zhuhai City, Xiangzhou District for defendant's breach of contract.
Similarly, the defendant in Tianzhu Coal Co. v. Ju , 83 Misc. 3d 1270(A) (N.Y. Sup. Ct., Nassau Cnty. Aug. 12, 2024) opposed enforcement of a RMB 90,966,600 money judgment by the Gansu Province Lanzhou Intermediate People's Court on the grounds that the judgment was a form of political retaliation against him by a corrupt judicial system. Defendant submitted affidavits from various experts criticizing China's legal and political systems. The New York court nevertheless concluded that defendant had failed to establish a lack of due process or impartial tribunals in China, and ordered defendant to pay the judgment.
In the last 15 years, the few instances where a Chinese judgment was not recognized were based on procedural issues or lack of subject matter jurisdiction, not arguments relating to due process in the Chinese judicial system. See, e.g. , Beijing Zhong Xian Wei Ye Stainless Decoration Ctr. v. Guo , 2020 WL 2404938 (N.Y. Sup. Ct., N.Y. Cnty. May 7, 2020); Chen v. Sun , 2016 WL 270869 (S.D.N.Y. Jan. 21, 2016).
It remains to be seen if the trend toward recognition and enforcement of Chinese court money judgments will continue under the new political environment. One published decision has been issued since the new Trump Administration began. In Northeast Securities Co., Ltd. v. Que Wenbin , 2025 WL 1636410 (Cal. Ct. App. Sixth Dist. June 10, 2025), as modified on June 30, 2025, a Chinese company commenced a lawsuit in California state court to enforce a money judgment for RMB 294,836,133.74 entered by the High People's Court of Jilin Province for loan repayment. Defendants opposed enforcement on the basis that there were defects in the service process in the proceedings before the Chinese court. Both the California trial and appellate courts rejected defendants' arguments. Because the case was focused on service and not the Chinese judicial system at large, we have yet to see how courts will react to a direct attack on the Chinese courts under the current Administration.
If the U.S. government continues to focus on China as an economic and political competitor or enemy, plaintiffs seeking to enforce Chinese court money judgments may experience more robust opposition from counterparties, and increased skepticism from U.S. courts regarding the Chinese judicial process. This, in turn, could have collateral impact on litigants seeking to enforce U.S. judgments in China.