Litigation on the rise in China

Posted on: October 3rd, 2016

In a recent article for FraudNet (the ICC specialist fraud and asset recovery taskforce of which we are the UK member), we commented on the rise of Chinese-related disputes (https://icc-ccs.org/talkfraud/chinese-related-disputes-on-the-rise-steven). This theme has been echoed in The Lawyer magazine, which has just published a report on the performance of 30 leading Chinese law firms by revenue. It also analysed the revenue generated from litigation and found that litigation had been a strong driver for growth in the last 2 years. In 2015, according to statistics from the Supreme People’s Court, the number of cases handles by all courts in China increased by 21% from 13.8 million to 16.7 million, with the total sum claimed increasing from RMB 2.90 trillion to RMB 4 trillion.

Although there is no reciprocal enforcement treaty between England and China (and now Hong Kong judgments can no longer be registered in England), it should not be thought that Chinese Judgments cannot be enforced in England. That was a common perception when it came to enforcement of judgments from certain other jurisdictions, but PCB Litigation has been at the forefront of enforcing judgments in England from places like Russia, where there are no reciprocal enforcement treaties. Provided a Chinese Judgment meets certain basic criteria (including that the Chinese Court had jurisdiction over the defendant and that there was no breach of the rules of natural justice), enforcement can be pursued in England.

Further, where there is a real risk that the defendant will dissipate assets and either the defendant resides in England or the assets are in England, orders against the defendant freezing his assets can be obtained in support of Chinese proceedings. When served on banks and other third parties holding the assets, such orders have the effect of ensuring the assets are not dissipated pending enforcement. They also require the defendant to provide disclosure of assets and not to deal with those assets pending enforcement.

Accordingly, it is apparent that a host of tools are available in the English courts to Chinese (and other) claimants wishing to preserve and recover assets.