China Dismisses Applications for Enforcing South Korean Judgments for Lack of Jurisdiction

Key Takeaways:

In June 2021, due to lack of jurisdiction, a Chinese court in Liaoning Province ruled to dismiss applications for enforcing three South Korean judgments in KRNC v. CHOO KYU SHIK (2021) Liao 02 Xie Wai Ren No. 6, No. 7, No. 8.
For applications for recognition and enforcement of foreign judgments in China, the applicant should file applications with the intermediate people’s court where the respondent is domiciled or where the enforceable property is located.
In dismissed cases, the applicants have the right to re-apply when the conditions are met.

On 1 June 2021, the Dalian Intermediate People’s Court, Liaoning, China (the “Dalian Court”) rendered three rulings to respectively dismiss applications for recognition and enforcement of three payment orders issued by the Seoul Central District Court (the “Seoul Court”) (See KRNC v. CHOO KYU SHIK (2021) Liao 02 Xie Wai Ren No. 6, No. 7, No. 8 ).

The Dalian Court held that the evidence provided by the applicant could not prove that the respondent’s executable property was located within its jurisdiction.

It should be noted that in dismissed cases, the applicants have the right to re-apply when the conditions are met.

I. Case overview

The applicant is KRNC, a South Korean company located in Seoul, South Korea.

The respondent is CHOO KYU SHIK, a South Korean citizen residing in Goyang, South Korea.

The Applicant applied to the Dalian Court for recognition and enforcement of three payment orders made by the Seoul Court, No. 2017 CHA 37733, No. 2015 CHA 47512, and No. 2015 CHA 47513 (collectively referred to as “the payment orders”).

In response to the payment orders, the Dalian Court rendered three rulings on 1 June 2021, (2021) Liao 02 Xie Wai Ren No.6 ((2021)辽02协外认6号), (2021) Liao 02 Xie Wai Ren No.7 ((2021辽02协外认7号) and (2021) Liao 02 Xie Wai Ren No.8 ((2021)辽02协外认8号) (collectively the “Chinese rulings”).

II. Case facts

On 24 July 2017 and 24 Sept. 2015, the applicant filed three applications for payment orders with the Seoul Court due to its disputes with the respondent. Based on such applications, the Seoul Court issued three payment orders.

The three payment orders became effective on 30 Sept. 2017 and 1 June 2016, respectively.

The respondent failed to fully repay the debts under the three payment orders.

Thereafter, the applicant found out that the respondent owned executable property in Dalian, China.

The applicant then applied to the Dalian Court in the place of the property of the respondent, to recognize and enforce the three payment orders rendered by the Seoul Court.

On 8 Apr. 2021, the Dalian Court accepted the three applications as three separate cases.

On 1 June 2021, the Dalian Court ruled on each of the three cases, dismissing the applicant’s all applications.

III. Court views

The court held that, in accordance with the PRC Civil Procedure Law (CPL), the applicant should file applications for recognition and enforcement with the intermediate people’s court where the respondent is domiciled or where the enforceable property is located. However, neither the domicile nor the property of the respondent is located within the jurisdiction of the Dalian Court.

1. As far as the place of respondent’s property is concerned

In this case, the applicant submitted a photo to prove that the Dalian Court had jurisdiction over the case.

According to the photo, the respondent owns a house in Dalian, and its real estate ownership certificate number is Liao Fang Quan Zheng Da Lian Shi Zi No. × × (辽房权证大连市字第××号). However, the applicant failed to provide the legal source of the photo or other valid evidence to prove the authenticity of the real estate information.

Therefore, the Dalian Court held that there was no valid evidence to prove that it has jurisdiction over the case.

2. As far as the domicile of the respondent is concerned

The applicant failed to prove that the respondent has a habitual residence within the jurisdiction of the Dalian Court.

In summary, the Dalian Court found that the applicant had failed to prove that the Dalian Court has jurisdiction over the case and therefore dismissed his application.

IV. Our comments

In this case, it should be noted that some Chinese judges may lack sufficient flexibility, and the parties should make full use of the right to apply for a court investigation.

1. Some Chinese judges may lack sufficient flexibility

The Chinese courts usually supervise judges in a strict manner to prevent them from breaking the law in trial activities. This kind of supervision is sometimes so demanding that the judges have to be rigid when making judgments and are not willing to exercise their discretion.

In this case, the judge could have taken the initiative to review the photo submitted by the applicant and determined the authenticity of the respondent’s real estate ownership certificate in the photo based on common sense. The judge could have also inquired with the respondent or initiative an investigation with the Dalian real estate registration department.

These are all the powers conferred upon judges under CPL. However, the judge, in this case, did not exercise these powers for lack of sufficient flexibility.

2. The parties may apply to the court for investigating real estate information.

In this case, the applicant had known the real estate ownership certificate number of the respondent, but it was very strange (and regrettable) that he did not apply to the court for investigating the real estate information.

Normally, in China, a party has no right to inquire about and verify others’ real estate with the real estate registration department. However, if a lawsuit is filed, the party has the opportunity to apply to the court to investigate such information.

According to the CPL, “where a litigant and his/her agent ad item are unable to gather evidence on their own due to objective reasons, or in the case of evidence deemed by the People’s Court to be necessary for the trial of a case, the People’s Court shall investigate and gather.”

Upon the court order, real estate registration departments can provide real estate information to the court.

In this case, the applicant should have applied to the Dalian Court to investigate the respondent’s real estate information as soon as the case was accepted by the Dalian Court. In this way, the applicant can find out whether the respondent owns the house shown in the photo in Dalian.

To sum up, given the judges’ insufficient flexibility in some cases, if you are involved in a lawsuit in China, you need to do more.

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