On 15 July 2022 Associate Justice Harrison of the NSW Supreme Court handed down a decision enforcing a judgment of the People’s Republic of China (Chinese Judgment), ordering that the defendant pay:

1. The plaintiff US$1,946,707.99 and €112,053.71
2. Interest of US$838,860.47 and €84,811.00 to the plaintiff, and
3. The plaintiff’s costs on an ordinary basis (in AU$).

Summary of the Chinese Judgment

The initial Chinese proceedings were commenced on 7 April 2009, in the Shanghai Pudong New Area People’s Court (Chinese Court) by Tianjin Yingtong Material Co Ltd against three defendants, with one being Katherine Young, the defendant in this matter.

In these proceedings, the plaintiff sought payment of US$1,955,840 and €112,053 plus interest. These amounts were sought to satisfy alleged contractual obligations owed by the defendants to the plaintiff. A discussion of these obligations is not relevant in this article except the fact that these obligations emerged from multiple import agreements, entered into by the parties, and including a supplementary agreement where Ms Young was guarantor for all the defendants for obligations and liabilities owed to the plaintiff.

The Chinese Judgment was entered on 29 March 2010. The Chinese Court ordered that:

1. The two other defendants (excluding Katherine Young) should pay the plaintiff US$1,955,840 and €112,053
2. The two other defendants (excluding Katherine Young) should pay the plaintiff an overdue fine
3. That Katherine Young “shall assume joint and several liability for the above payment obligations of the other two defendants”, and
4. If all of the defendants failed to make these payments, the interest would be calculated according to China’s civil procedure legislation.

In the matter before Associate Justice Harrison, the plaintiff was Tianjin Yingtong Materials Co Ltd and the defendant was Katherine Young. The plaintiff sought to enter in NSW the decision of the Chinese Judgment in US dollars, Euro and Australia dollars.

Australia’s common law principles of enforcing a foreign judgment

Her Honour noted the common law principles governing the enforcement of foreign judgments in Australia. The Foreign Judgment Regulations 1992 (Cth) list the approved foreign jurisdictions which may have judgments registered under the Foreign Judgments Act 1991 (Cth). China is not a prescribed jurisdiction.

Instead, for a foreign judgment to be “recognised and enforced at common law”, four conditions must be satisfied, per the judgment of Rothman J in Bao v Qu; Tian (No 2) [2020] NSWSC 588 at [26], with consideration given to the commentary in Nygh’s Conflict of Laws in Australia (LexisNexis, 10^th ed, 2020):

1. The foreign court must have exercised jurisdiction of the requisite type over the defendant
2. The judgment must be final and conclusive
3. There must be identity of parties between the judgment debtors and the defendants in any enforcement action, and
4. The judgment must be for a fixed, liquidated sum.

Submissions from the parties

The plaintiff submitted that the common law principles above were established and the judgment is prima facie enforceable.

The defendant rejected the plaintiff’s submissions on numerous fact-based arguments. These largely related to allegations of fraud on the part of the plaintiff, and a denial of natural justice on the part of the Chinese Court. These are both grounds that limit the enforcement of foreign judgments.

Judgment of Harrison AsJ and the importance of this decision

There are specific parameters required for an allegation of fraud to be upheld in relation to the enforcement of a foreign judgment. These parameters are the same as those that apply to domestic judgments.

Her Honour found that the allegations of fraud must fail because the defendant’s allegations of fraud were available to and considered by the Chinese Court at the time of the Chinese Judgment. Therefore, “the defendant’s claim of fraud does not disentitle the plaintiff from registering the Chinese judgments in this court”.

Her Honour further found that the defendant’s allegations of a denial of natural justice were “unsubstantiated”. Thus, the Chinese Judgment is to be registered because “none of the matters raised by the defendant’s defence… defeat the registration of the Chinese Judgment”.

Further information / assistance regarding the issues raised in this article is available from the author, Patrick Kaluski, Partner or your usual contact at Moray & Agnew.