Helicopters in Hubei
November 02, 2009 | BY
clpstaff &clp articles &The Robinson Helicopters case finally ended in August when a Californian court upheld a PRC judgment. Although a positive development, this is unlikely to lead to Chinese courts enforcing US judgments
The saga of the Robinson Helicopters case (Hubei Gezhouba Sanlian Industrial Co., Ltd. and Hubei Pinghu Cruise Co., Ltd. v Robinson Helicopter Company, Inc) began in March 1995, and finally ended on August 12 2009 when a court in the US state of California upheld a US$6.5 million PRC judgment against the American aircraft manufacturer.
The case was triggered when a Robinson R-44 helicopter crashed into the Yangtze River, killing three people. The machine was owned by two Chinese companies – Hubei Gezhouba Sanlian Industrial and Hubei Pinghu Cruise. A few months after the crash they decided to sue the manufacturer in the US in an action based on negligence, strict liability and breach of implied warranty.
Interestingly, although the manufacturer was a US company, it applied for a stay of the action on the ground that the PRC was a more suitable and convenient forum. The stay was granted, and the companies entered US arbitration proceedings. When these failed, the Chinese companies again sued Robinson, but this time in the Hubei Province Higher People's Court. The case took several years to come to trial, and when proceedings finally began in 2004, Robinson did not appear. The Chinese court eventually ruled against Robinson, finding the crash was caused by manufacturing defects. This year that ruling was enforced in the US. In its three-page decision, the California district court stated that the PRC judgment was “final, conclusive and enforceable under the laws of the People's Republic of China” and the local Foreign Money-Judgments Recognition Act therefore applied.
The court said that the PRC judgment could be regarded as final as China had provided “impartial tribunals or procedures compatible with the requirements of due process of law” and there had been no appeal or request for extension by the manufacturer. The Chinese companies were therefore “entitled to the issuance of a domestic judgment in this action in the same amount of the PRC Judgment”.
Although Article 264 of the PRC Civil Procedure Law (中华人民共和国民事诉讼法) explicitly allows for the foreign enforcement of PRC judgments, in a recent client bulletin Allen & Overy describes this kind of enforcement as “rare”, and highlights the fact that it occurred in Robinson Helicopter despite there being no bilateral treaty between the US and China. The PRC was praised by international lawyers for its use of the proper process (under the Hague Convention) for serving notice on the US defendants, and some have seen the case as an encouraging sign of improving legal ties.
“At present, it is difficult to ascertain whether this is just an isolated occurrence or a sign of an increasing acceptance of the reciprocity principle by the courts of the two countries,” the firm writes.
Allen & Overy consultant Fai Hung Cheung says that the big difference between levels of damages awarded in the US and in mainland China means the tactics of defendants trying to stay proceedings in the US would probably continue.
“This would probably mean that we may see some rise in the participation by US entities in proceedings in China. I expect this would gradually change the Chinese litigation landscape,” he says.
As well as leading more Chinese companies to enforce their judgments in the US, and possibly elsewhere, a significant positive implication for foreign companies is that their argument for Chinese courts' enforcement of US judgments has now been made a lot stronger.
“If you have a Californian judgment, you will be able to try to argue before the court as to whether it should be enforced, because the Californian court did it,” says Roy Chan of DLA Piper.
Lovells' Eugene Chen says he does not think this will lead to pattern of reciprocity, as the Robinson case had a very specific set of facts. But he adds that if reciprocity comes, it is likely to start on the US side.
[This article forms part of a feature on enforcement of dispute resolution awards in China.]
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