In a landmark ruling issued by the Tel Aviv District Court on 6 October 2015, the Israeli court ruled, for the first time, that a judgement issued by a local Chinese court in a commercial dispute is enforceable in the judicial system of the State of Israel (the Judgement).
The precedential Judgement was given in the case of Jiangsu Overseas Group Co. Ltd V. Isaac Reitman (the Enfacement Procedure). The Plaintiff, a company specializing inter alia in overseas placement of manpower for engineering and constructions projects, contracted with the Defendant, an Israeli citizen engaged in the local placement of foreign manpower, for the recruitment and placement of Chinese construction workers for construction projects in Ukraine (the Contract). The Plaintiff had dispatched manpower to Ukraine according the Contract, however the cooperation between the parties failed and the workers were repatriated to China. Several Claims were filed by the Plaintiff against the Defendant in Nanjing and Nantong cities in China; the former claim was concluded in an ‘Accord and Satisfaction’ (compromise agreement); the latter claim was decided by the Nantong Court that ruled against the Defendant. This judgement by the Nantong Court was the subject of the Enfacement Procedure in Israel.
The main controversy reviewed and decided by the Tel Aviv District Court span around the Reciprocity Requirement under Section 4 of the Israeli Law on Enforcement of Foreign Judgements, TASHICH – 1958 (the “Enforcement Law”). According to this Section 4, “a foreign judgement shall not be enforced in Israel if such foreign judgment was issued in a state, which laws prevent the enforcement of Israeli Judgments in the said country”.
Since, as of the day of publication of the Judgement, the courts of China have never reviewed a petition for the enforcement of an Israeli Judgement in China, the Tel Aviv District Court debated on a theoretical question of whether a Chinese court would have enforced an Israeli judgment, had such enforcement application came to its doorstep.
While deliberating on the theoretical question, the Tel Aviv Court based its ruling on various precedents, concepts and assumptions including, inter alia, the general approach of the Israeli Supreme Court that supports the promotion of cooperation between the Israeli Judicial Systems and foreign judicial systems; the concept of burden of proof on the litigant that opposes the enforcement; the fact that there is no international treaty on the enforcement of monetary foreign judgements to which both Israel and China are parties; and most importantly – the mere requirement to proof a ‘reasonable potential’ of enforcement of an Israeli judgement by the relevant foreign state, rather than the need to prove a de-facto enforcement.
After hearing several experts on the Chinese Law, who expressed their contradicting opinions to whether a Chinese court would enforce a judgment issued by an Israeli court, and after examining all the evidences, the Tel Aviv court ruled as follows:
- The Chinese legislation relevant to this case is Sections 281 and 282 of the ‘People’s Republic of China Civil Procedural Law’, which determines that when a Chinese court reviews an application for the enforcement of a foreign judgement, it shall consider the following: 1) The judgement is enforceable in its home country; 2) there exists a relevant treaty to which both countries are parties, or alternatively – the reciprocity concept exists with respect to the foreign country; and 3) The foreign judgement does not violate China’s major values and does not contravene its sovereignty, homeland security and social and public’s interests.
The above legislation shall enable a Chinese court to enforce a foreign judgment based on the reciprocity concept.
- The fact that Chinese courts refused to enforce several judgments issued by the courts of Japan and England (states with which China is not a party to a relevant international treaty) cannot imply on the probability that a Chinese court would reject an Israeli judgement.
- The nowadays increasing trade and mutuality relations between Israel and China lead to a durable public interest to facilitate the commercial cooperation between both countries; such interest is an important consideration in this case.
- According to the evidences submitted in this case, there is a reasonable potential for an enforcement of an Israeli judgement in China, that is, the Reciprocity Requirement has been proven in this case.
Based on the assumption that there is a reasonable potential for the enforcement of an Israeli Judgement in China, the Israel, Tel Aviv District court decided last month to enforce, for the first time in the history of the Israeli Judicial System, a Chinese judgment in Israel.
We trust that the reciprocity concept shall indeed by applied by Chinese courts in future applications for the enforcement of Israeli judgements in China.