[Judgment] Recognition of foreign insolvency officeholder pursuant to Article 5 of China’s Enterprise Bankruptcy Law

On August 18, 2021, the Xiamen Maritime Court (Xiamen Court), in a ruling, recognized the status and capacity of an individual who was appointed as judicial manager by the Singapore High Court (Justice Kannan Ramesh in HC/ORC 6341/2020).

Although Chinese courts have previously recognized the capacity of foreign liquidators, those recognitions were mostly based on bilateral treaties between China and the jurisdictions concerned. In this decision, the Xiamen Court opined that an application to recognize the status and capacity of a foreign insolvency officeholder is in essence an application to recognize a foreign bankruptcy judgment, and therefore should be examined pursuant to Article 5 of the Enterprise Bankruptcy Law.

In the absence of any relevant treaty between China and Singapore, broadly speaking, examination according to Article 5 involves reviewing whether (1) there is reciprocity between the two jurisdictions; and (2) whether the recognition, if granted, would be against the basic principles of Chinese laws and undermine China’s national sovereignty or security.

Specifically in relation to the first point, the Xiamen Court cited not only past cases where Singapore money judgments have been recognized in China, such as the Kolmar Group AG case (2016 Su 01 Xie Wai Ren No. 3)) and Oceanside Development ((2017) Zhe 03 Xie Wai Ren No. 7) but also the June 2020 order by Justice Vinodh Coomaraswamy of the Singapore High Court to recognize the Chinese bankruptcy proceedings against a shipping company as foreign main proceedings and the capacity of the Chinese administrator. The Chinese court in that case is the Nanjing Intermediate People’s Court.

Furthermore, the Xiamen Court also said that this individual, with his status as the judicial manager being recognized, is entitled to represent the company in lawsuits.

Read the full judgment in Chinese here. It remains to be seen whether this ruling represents any trend when it comes to the attitude of Chinese courts concerning foreign bankruptcy matters.

More about China’s reorganization and insolvency regime and past cases where Chinese courts have recognized foreign bankruptcy judgments can be found in the jurisdictional report for China in Corporate Restructuring and Insolvency in Asia.

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