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Memorandum of Guidance between Singapore and China Supreme Courts

24.09.2018 Corporate & Commercial

Nicholas Lum

Nicholas Lum Partner

Peter Huang

Peter Huang Associate

China and Singapore have taken another stride towards the mutual recognition and enforcement of judgments in their respective jurisdictions.

Background

China and Singapore have taken another stride towards the mutual recognition and enforcement of judgments in their respective jurisdictions. On 31 August 2018, the heads of the highest courts in China and Singapore - Mr Zhou Qiang, the President and Chief Justice of the Supreme People’s Court of China, and Mr Sundaresh Menon, the Chief Justice of the Singapore Supreme Court - signed the Memorandum of Guidance Between the Supreme People’s Court of the People’s Republic of China and the Supreme Court of Singapore on Recognition and Enforcement of Money Judgments in Commercial Cases (the “Memorandum”).

Main terms

The following points of the Memorandum are worth noting:

>  While the Memorandum is not legally binding, its purpose is to provide guidance on how the courts of China and Singapore may mutually recognise and enforce money judgments in commercial cases;

>  The Memorandum applies to money judgments in commercial cases, which also include judgment on costs;

>  Money judgments in commercial cases are not limited to international matters (matters with foreign element), but also include non-international cases (matters without foreign element);

>  The mutual recognition and enforcement should not amount to direct or indirect enforcement of foreign penal, revenue or public law;

>  Judgments to be enforced must be final and conclusive; 

>  Courts in one jurisdiction will not review the merits of a judgment from the other jurisdiction, or refuse enforcement on the ground that a foreign judgment contains an error of fact or law;

Where a Singapore judgment is being enforced in China:

>  The legal basis for recognition and enforcement is confirmed to be the principle of reciprocity

>  The Memorandum confirms that the legal basis for recognition and enforcement is the principle of reciprocity;

>  The recognition and enforcement does not include judgments relating to intellectual property rights cases, unfair competition cases or monopoly cases.

Where a Chinese judgment is being enforced in Singapore:

>  The Memorandum confirms that the legal basis for recognition and enforcement is the accrual of a judgment debt which gives rise to the obligation on the part of the debtor to pay. The legal obligation to pay the debt is separate from the underlying cause of action.

>  Apart from the main terms summarised above, the Memorandum also lays down very concisely the civil procedures to follow when applying for recognition and enforcement of judgment in the respective jurisdictions. These guidelines will no doubt be very helpful to any future litigants. The Memorandum also applies to judgments made in the Singapore International Commercial Court (SICC).

Ince’s comments

The signing of the Memorandum is no doubt another milestone in the judicial cooperation between the two jurisdictions. Although the Memorandum itself is not legally binding, its terms will certainly provide clarity in terms of the mutual recognition and enforcement of judgments between China and Singapore.

Prior to the signing of the Memorandum, any applicant will need to base its case on the principle of reciprocity when it comes to the enforcement of a Singapore Court judgment in China (for which please see Kolmar Group AG (Civil Ruling (2016) Su 01 Xiewairen No.3) ), or by referring to the relevant case law in Singapore (see Giant Light Metal Technology (Kunshan) Co Ltd v Aksa Far East Pte Ltd [2014] SGHC 16). The Memorandum will provide authoritative conceptual and practical support in future cases on recognition and enforcement proceedings in the two jurisdictions. From a practical point of view, the Memorandum also provides clarity and guidance to the respective courts hearing applications on recognition and enforcement in the first instance (which would be the Intermediate People’s Courts in China and the Singapore High Court).

Finally, as regards the future cooperation between the courts of the two jurisdictions in respect of mutual recognition and enforcement of judgments, we believe the next space to watch is the ratification by China of the Hague Convention on Choice of Courts Agreement (the “Convention”). China signed the Convention on 12 September 2017 and is now in the process of consultation prior to ratification. In Singapore, the Convention has come into effect from 1 October 2016 through the Choice of Court Agreements Act 2016. In a most recent development, the Singapore High Court has also handed down its first judgment on 19 June 2018 on enforcement of a foreign judgment under the application of the Convention (Ermgassen & Co Ltd v Sixcap Financials Pte Ltd [2018] SGHCR 8). No doubt, when the Convention is ratified by China in due course, the mutual recognition and enforcement of judgments between the two nations will be further strengthened, and we are optimistic this would facilitate a more conclusive legal environment for cross-border businesses between China and Singapore.

Article authors:

Nicholas Lum Peter Huang