Chinese Judgments and Due Process: Another New York Decision


Supreme People’s Court China” by Rneches

is licensed under CC BY-SA 3.0

In the United States, the recognition and enforcement of foreign judgments are generally governed by state law. Thirty-eight states and the District of Columbia have adopted either the 1962 Uniform Foreign Money Judgments Recognition Act or the updated 2005 Uniform Foreign Country Money Judgments Recognition Act. (In the remaining twelve states, common law governs.) Both Uniform Acts require recognition of a foreign money judgment unless one of the listed grounds for non-recognition is established. Both acts mandate non-recognition if “judgment was rendered under a judicial system that does not provide impartial tribunals or procedures compatible with the requirements of due process of law.”

In recent years New York courts have grappled with how to apply this systemic due process ground for non-recognition to Chinese judgments. In Shanghai Yongrun Investment Management Co. v. Xu (2022), the First Department of New York’s Appellate Division reversed a New York trial court decision that denied recognition of a Chinese judgment on this ground. Shanghai Yongrun held that State Department Country Reports on Human Rights Practices are not conclusive evidence of systemic lack of due process.

On March 20, 2024, the Second Department of New York’s Appellate Division issued a decision in Liu v. Guan. Here, the trial court had granted summary judgment recognizing a Chinese judgment. Although the Second Department agreed with the First Department that State Department Country Reports are not conclusive on this question of systemic lack of due process, it held that the burden of proving that the Chinese judicial system is fair rests with the party seeking recognition. The Second Department also held that the party resisting enforcement in this case was not precluded from raising systemic lack of due process as a ground for non-recognition by having moved to dismiss the original claim under the doctrine of forum non conveniens, arguing that the case should be heard in China.

What are we do make of these two New York decisions that seemingly point in different directions? The question is complicated by the fact that New York changed its law on foreign judgments in 2021 by adopting the 2005 Uniform Act to replace the 1962 version that applied to both these cases. Among other things, the 2005 Uniform Act changes New York law by placing the burden of proving all grounds for non-recognition (except one not relevant here) on the party resisting recognition. After briefly discussing the two cases, I offer a few thoughts on where New York law now stands.

Shanghai Yongrun Investment Management Co. v. Xu

I have previously discussed the Shanghai Yongrun case, so I will be brief. This case involved a business dispute, which was submitted to a Beijing court under a forum selection clause in the parties’ contract. The defendants were represented by counsel at trial, and the decision was affirmed on appeal. Because there were not sufficient assets to satisfy the judgment in China, the plaintiff brought suit in New York state court seeking enforcement. The trial court, however, denied recognition and enforcement, holding that State Department Country Reports criticizing China’s court system “conclusively establish as a matter of law” that Chinese courts do not afford due process.

The First Department of the Appellate Division reversed in a brief opinion. The court reasoned that the reports, “which primarily discuss the lack of judicial independence in proceedings involving politically sensitive matters, do not utterly refute plaintiff’s allegation that the civil law system governing this breach of contract business dispute was fair.”

Liu v. Guan

Liu v. Guan also arose from a business dispute. In 2018, Liu sued Guan in New York state court for failing to make payments on a loan agreement and for fraudulently conveying real property with an intent to defraud his creditors. Guan moved to dismiss for forum non conveniens, arguing that the case should be heard in China. The New York court granted this motion on the condition that Guan consent to personal jurisdiction in China. Liu duly brought an action for breach of the loan agreement in Chinese court. But Guan did not appear, and so the Chinese court entered a default judgment in favor of Liu. Liu then returned to New York court seeking recognition and enforcement of the Chinese judgment.

The New York trial court acknowledged that, under existing New York law, a party seeking recognition must make a prima facie showing that none of the mandatory bases for non-recognition exist, one of which is systemic lack of due process. The court held that Liu made such a showing based on Guan’s earlier forum non conveniens motion. “Defendants … argued that the interest of substantial justice would be best served by adjudication of the matter in the People’s Republic of China,” the court reasoned, “and they may not now cry foul.”

The Appellate Division reversed. It agreed with Shanghai Yongrun that the State Department Country Reports on which Guan relied were not conclusive evidence of systemic lack of due process. But it emphasized that “a plaintiff seeking to enforce a foreign country judgment by motion for summary judgment … bears the burden of demonstrating, prima facie, that the mandatory grounds for nonrecognition set forth in CPLR 5304(a) do not exist.” Here, Liu submitted only the Chinese judgment and the parties’ stipulation to personal jurisdiction in Chinese courts. This, the appellate court reasoned, was not sufficient to establish that China provides impartial tribunals and procedures compatible with due process.

As for Guan’s forum non conveniens motion, the Appellate Division concluded that it did not preclude him from arguing for non-recognition based on systemic lack of due process. “The position taken by the defendants in the prior New York action,” the court stated, “was not so clearly inconsistent with the position taken in the current action as to warrant the application of the doctrine of judicial estoppel.” I find this hard to understand.

Under the federal doctrine of forum non conveniens, and in most states, Liu v. Guan should have come out the other way. The existence of an adequate alternative forum is a threshold requirement for forum non conveniens dismissal under the federal doctrine and the state doctrines in every state except Delaware and New York. Under most forum non conveniens doctrines, therefore, a defendant who argues that a case should be dismissed in favor of foreign courts necessarily concedes that those foreign courts have impartial tribunals and procedures consistent with due process, and a court that grants such a motion necessarily decides that question.

New York is somewhat different. In Islamic Republic of Iran v. Pahlavi (1984), the New York Court of Appeals held that “the availability of another suitable forum is a most important factor to be considered in ruling on a motion to dismiss” but refused to make it “a prerequisite” for dismissal. Nevertheless, even in New York, it is possible that a defendant seeking dismissal for forum non conveniens would make representations that a foreign legal system is adequate. That seems to have been true here, at least judging from the trial court’s opinion. The Appellate Division offered no explanation why Guan’s argument at the recognition stage was consistent with his position earlier in the litigation.

Making Sense of New York Law

Although these two decisions seem to point in different directions, a few things are clear. First, both Shanghai Yougrun and Liu hold that State Department Country Reports may not be used as conclusive evidence that a foreign legal system does not provide impartial tribunals and procedures compatible with due process.

Second, New York’s law on the burden of proof with respect to this ground has recently changed. Both Shanghai Yongrun and Liu were decided under New York’s version of the 1962 Uniform Act. New York courts had interpreted the 1962 Uniform Act to require a party seeking recognition of a foreign judgment to make a prima facie showing that no mandatory grounds for non-recognition—systemic lack of due process, lack of personal jurisdiction, and lack of subject matter jurisdiction—existed. The party resisting recognition had the burden of establishing other, discretionary grounds for non-recognition, such as fraud or violation of public policy.

But New York’s adoption of the 2005 Uniform Act changes this. CPLR 5304(c) now provides that “[a] party resisting recognition of a foreign country judgment has the burden of establishing that a ground for non-recognition … exists.” This burden of proof applies to both mandatory and discretionary grounds, with an exception only for defamation cases.

What this means going forward is that parties resisting recognition of foreign judgments on grounds of systemic lack of due process will have to prove that the foreign legal system in question lacks impartial tribunals and procedures compatible with due process. Moreover, they will not be able to carry that burden simply by pointing to State Department Country Reports. This inevitably means that some resisting parties will submit expert testimony to establish systemic lack of due process. Parties seeking recognition will submit testimony from other experts in rebuttal. The process is likely to prove expensive and puts courts in New York in the uncomfortable position of judging the adequacy of a foreign judicial system.


We would, I have argued, be better off without systemic review of foreign judgments. The number of cases in which this defense has proved successful can be counted on one hand. The Uniform Acts also provide a host of case-specific grounds for non-recognition. In the 29 states that have adopted the 2005 Uniform Act, now including New York, these include lack of due process in the specific proceeding. It is easier and more appropriate for a U.S. court to apply these case-specific grounds than to sit in judgment of an entire foreign legal system.

Of course, systemic lack of due process is still a ground for non-recognition in thirty-eight states and DC. But courts in the United States should consider it only as a last resort. If the party resisting recognition raises case-specific grounds, the court should consider those first. And if the court finds that there are no case-specific problems—or if the resisting party raises none—the court should think hard before finding an entire legal system incapable of producing enforceable judgments.

States adopting the Uniform Acts have made a policy choice to favor the recognition and enforcement of foreign judgments, subject to limited grounds for non-recognition. The 2005 Uniform Act tilts the balance further in favor of recognition by placing the burden of proving grounds for non-recognition squarely on the resisting party. New York courts, and others applying the 2005 Act, have an obligation to honor that legislative decision.