XCHRX TAN TAY CUAN v. NG CHI HUNG

HCA5477/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.5477 OF 2000

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J U D G M E N T

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1. This is an appeal by the defendant from a summary judgment ordered by the master against the defendant in favour of the plaintiff in respect of a claim by the plaintiff based on a judgment on 27 March 2000 issued by the Higher People's Court of Fujian Province. The way the judgment came about was as follows.

2. The plaintiffs and the defendant entered into an agreement in relation to transfer of shareholding in certain company for a certain price. It is alleged that the defendant had failed in the obligation under the agreement and there was an outstanding amount payable to the plaintiff of some RMB5,000,000 odd. The proceedings were therefore issued by the plaintiff in the Intermediate People's Court of Xiamen, Fujian Province against the defendant. The judgment was given in favour of the plaintiff.

3. Then, as usual, pursuant to the two trial procedures under the laws of the People's Republic of China, the matter was taken up to the Higher People's Court of Fujian Province and where the judgement, as described earlier, was given on 27 March 2000. This is the subject of the proceedings that had been brought by the plaintiff in Hong Kong.

4. The governing principle in relation to an action based on the foreign judgment is if the foreign judgment sued on is final and conclusive, then the Hong Kong court would enforce it. The issue debated today before me is whether the judgment of the Higher People's Court of Fujian Province of 27 March 2000 is a judgment that is final and conclusive. It is a vexed question and it is by no means easy.

5. The material before me is somewhat unsatisfactory. But what is clear, however, by a reading of the relevant code, that is, Chapter 16, with the governing words of "Supervision of Trial Procedure" which starts from Article 177 and runs on to Article 188, is that under the Chinese legal system there is an elaborate procedure for retrial. There are different routes to retrial. One of the routes is under Articles 178 and 179, and the other route is under Article 185. Under the route of Articles 178 and 179, one of the parties can ask for retrial, either from the original court or from a higher court and, if any of the five conditions are satisfied, then the court must order a retrial. One of them, for example, is the wrong application of the law; another one is not following the correct procedure. Article 185 also has a number of grounds which are slightly different from Article 179 grounds, but there the supervision involves the Supreme People's Procuratorate, a special legal person not known in our system.

6. In the judgment of Cheung J, in the case of Chiyu Banking Corporation Ltd v. Chan Tin Kwun [1996] 2 HKLR 395, the dispute is over the involvement of the Supreme People's Procuratorate and the question of the finality of the judgment turns on Article 185 and, to a certain extent, also the larger provisions of Chapter 16. Cheung J refused to order summary judgment and held that on the basis of the material before him, there was an arguable case of the judgment of being not final and conclusive. He therefore stayed the action.

7. Here, of course, it is a very different consideration. But the exercise, to a certain extent, is equally vexing and difficult. I have extensive material put before me by different experts, I am not sure to what extent they throw conclusive light on the matter. Looking at it in a round, it seems to me that the matter is plainly arguable. That is to say, the legal system in place in China is such that the judgment of the Higher People's Court of 27 March 2000 is arguably not a final and conclusive judgment because it is a judgment which by their procedure is capable of being corrected on review and on retrial. There is a reference, for example, in Article 182 to the two year period for application for retrial.

8. My conclusion, therefore, is that summary judgment ought not to have been given. The matter really is sufficiently complicated to merit it going to trial.

9. I just pause to also point out, that we are of course not dealing in abstract about the Chinese legal procedures. We also have uncontested the evidence that there was an application which was made by the defendant to the Supreme People's Court of China in Beijing, which ordered that the lower court should deal with the application, review and deal with it. It is pertinent to note the Supreme People's Court did not reject the application for retrial or dismiss it, which seems to suggest that there are possible good grounds for retrial. Of course, once the grounds have been established, as I read Article 179, then the court has no discretion but to order retrial. So, it is plainly at present that the Higher People's Court has been directed by the Supreme People's Court to consider the application for a retrial and to deal with it. A retrial may take place. It does not necessary mean that it will take place but certainly it may take place.

10. Having regard to the system in the PRC, as revealed by the Code (which the parties and the courts have looked) in Chinese, at pages 49, 68 and 69 of Bundle C, it seems to me that the only sensible order that should be made is to allow the appeal and give unconditional leave to defend to the defendant.

11. The costs in the lower court shall be costs in the cause and the costs before me shall be costs to the defendant in any event.