JCW

[Enforcement of foreign judgment (Shanghai, PRC) at common law — contractual submission to jurisdiction — public policy defence — proof/admissibility requirements under Evidence Act 1950] Justin (with Chooi Peng and Ko Xin) acted as counsel for the Defendant in this case. In this case, the Plaintiff sought to enforce two Shanghai judgments (first instance and appellate) ordering the Defendant to repay a RMB14 million loan with interest and fees. Both parties are Malaysians residing in Kuala Lumpur. The Defendant (then the Plaintiff’s employee) received the RMB14 million via instalments and bank transfers, and the parties executed a loan agreement providing that disputes would be resolved in the Putuo District Court, Shanghai, with Chinese law as governing law. When the Defendant did not repay, the Plaintiff sued in Shanghai and succeeded at first instance and on appeal (“Shanghai judgments”). The Plaintiff then applied to enforce the Shanghai judgments in Malaysia, alleging the Defendant had assets here. The Defendant opposed the application on, amongst others, the basis that China is not a First Schedule country under the Reciprocal Enforcement of Judgments Act 1958 (REJA), that the Shanghai Courts were not “courts of competent jurisdiction” under Malaysian common law and that enforcement should be refused on public policy / natural justice / alleged fraud grounds. The High Court addressed three main questions: 1. Whether the Shanghai Courts were courts of competent jurisdiction for common law enforcement purposes notwithstanding no reciprocity under REJA and differences between legal systems. 2. Whether the Defendant’s public policy objections (including alleged procedural prejudice, alleged illegal moneylending, and interest rates) were sustainable. 3. Whether the Shanghai judgments (as exhibited) were admissible/proved in accordance with the Evidence Act 1950, such that the enforcement application could succeed. On jurisdiction, the Court held that the parties had contractually submitted to the Shanghai forum and governing law, and in the absence of vitiating factors or exceptional circumstances, Malaysian courts generally hold parties to their bargain on jurisdiction clauses. The lack of reciprocity between China and Malaysia was not fatal because common law recognition of foreign judgments does not depend on reciprocity. On public policy, the Court held that the Defendant did not meet the high threshold to refuse enforcement. Procedural differences between inquisitorial and adversarial systems did not, without more, amount to denial of natural justice. The Defendant had the opportunity to present his case and appeal in Shanghai, and the Malaysian court would not reopen merits. The moneylending allegation failed for lack of evidence that the Plaintiff was carrying on a moneylending business. The interest rates awarded were not so exorbitant as to “shock the conscience” and did not justify refusal on public policy. The Court also rejected the fraud/natural justice objections on the facts. However, the application ultimately failed on proof/admissibility. The Court held that, following the Federal Court’s guidance on proving foreign judgments, the Shanghai judgments (produced as copies) had to comply with Section 78(1)(f) of the Evidence Act 1950 (certified copy with the required certification and proof of character according to foreign law) or alternatively satisfy Section 86 of the Evidence Act 1950. The copies exhibited did not satisfy either provision. In the absence of properly proved Shanghai judgments, the enforcement application could not be allowed and was dismissed with costs.