• First Enforcement of a Chinese Judgment by a U.S. Court under Review
  • January 31, 2011 | Author: E. Paul Dougherty
  • Law Firm: Wilson Elser Moskowitz Edelman & Dicker LLP - Los Angeles Office
  • In what continues to be a closely studied case, the U.S. Court of Appeals for the 9th Circuit is reviewing the first enforcement of a Chinese judgment against an American company. The U.S. District Court for the Central District of California had enforced a Chinese court’s judgment against a California helicopter manufacturer in Hubei Gezhouba Sanlian Industrial Co., Ltd. and Hubei Pinghu Cruise Co., Ltd vs.  Robinson Helicopter Company, Inc. CV-01798-FMC (2009) (U.S. Court of Appeals, 9th Circuit - Case No. 09-56629). The case involved a lawsuit over a helicopter crash in China that killed three people. A $6 million-plus judgment against Robinson Helicopter Company, the maker of the helicopter, was imposed by a Chinese court after the case was heard in China. Despite the absence of any bilateral treaty or multilateral international convention between the United States and China, the California District Court recognized and gave enforcement to the Chinese judgment.  

    The District Court overcame the absence of any U.S./Chinese treaty by relying on the Uniform Foreign Money Judgment Recognition Act (UFMJRA) to enforce the Chinese judgment. The court’s reliance on this act provided the basis for finding that the judgment was legitimate, holding that the Chinese court had jurisdiction over the parties and that due process was satisfied by compliance with The Hague Convention in service of process upon the U.S. company.

    U.S. District Court Judge Florence-Marie Cooper, who has since died, noted that the three-judge panel in China had conducted a thorough hearing on the merits of the case and not simply ruled on the default that arose because Robinson Helicopter did not appear. She further found that the Chinese court was an impartial tribunal and that due process and justice had been satisfied.

    The District Court excused the absence of any reciprocity between the U.S. and China. It held that the parties had agreed to send this case to China for resolution and, therefore, they should be bound by the Chinese court’s judgment. In fact, it was the defaulting defendant that had originally requested that the U. S. court transfer the case to China, where the accident that prompted the lawsuit had occurred. When the Chinese company Hubei Industries sued Robinson Helicopter in China for indemnity, Robinson defaulted and failed to defend itself or take an appeal of the judgment in China. When Hubei came back to California to enforce the Chinese judgment, Robinson argued that the judgment should not be recognized.

    It should be noted that this lawsuit has had a tortured 15-year life in litigation, having been filed in 1995, following the1994 crash of the helicopter in the Yangtze River that killed three passengers. Suit was originally commenced in California state court, then removed to federal court, and then dismissed with an agreement of the parties to litigate in China. The Chinese judgment of $900,000 has now grown with interest to more than $7 million.

    This case is now on appeal to the 9th Circuit. The primary issues that the appellate court was asked to decide are whether Robinson Helicopter was properly and completely served through The Hague Convention and whether the statute of limitations in China had already expired by the time the action had been filed in China.

    The significance of this case is that it is the first U.S. enforcement of a Chinese judgment, despite the lack of any treaty or agreement between the U.S. and China on the enforcement of foreign judgments. It is also significant that the Chinese court noted that neither Robinson Helicopter nor Hubei Industries had signed an arbitration agreement, which would have greatly facilitated the resolution of this dispute.