Preface

Canada is a federal state composed of numerous provinces and territories and the legislative powers are separated between the federal and provincial legislatures pursuant to the Constitution. Some of these powers are exclusive to the provinces, such as matters relating to « property and civil rights ». Themes pertaining to commercial law, for instance, will fall under provincial jurisdiction. 
As a consequence, enforcement of foreign judgments is a matter of provincial law. For example, if a foreign party seeks to enforce a foreign judgment (i.e. a Chinese court judgment) in Canada, it has to seek recognition/enforcement on a province-by-province basis.
 
The province of Quebec is a particular case insofar as civil law is concerned. Due to distinct cultural and historical differences, Quebec’s civil law is based on French civil law system, as opposed to other provinces which are under common law systems.
 
Recognition of a foreign judgment is the acknowledgement by a Canadian court that it will treat the foreign judgment as effective and legitimate. It is the process by which a Canadian court determines whether it will allow a foreign judgment to be enforced in Canada. Enforcement, on the other hand, is the process by which a judgment cause remedial consequences in taking its full effect by being monetized, by seizing and selling property. There can be no enforcement without prior recognition. However, the difference between the terms is only technical as they have blended as one, with « enforcement » often used to refer to both.
 

Part One Conventions and Treaties Regarding International Law Enforcement 

 
On February 1st，1971, Convention on Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters was concluded. It went into effect on August 20, 1979. However, up to now, the convention only has a small limited member states.  Neither Canada nor China is a signatory of the Convention.
Although China and Canada are signatories to the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (Hague Convention), this convention does not cover the recognition/enforcement issue of a foreign court judgment. However, it is worth noting that The Hague will host the 22nd diplomatic session for the Adoption of the 2019 HCCH Convention on Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters, which is of high interest for any lawyer interested in the enforcement of Chinese decisions worldwide.
 
 

Part Two Enforcement in Provinces under Common Law System

Conditions for Enforcement

Under the common law, a foreign judgement can be enforced by Canadian courts if it respects the following conditions: 1) the foreign court had jurisdiction over the case; 2) the judgement is final and binding; and 3) the judgement is adequately precise.

1. The foreign court had jurisdiction over the case

A Canadian court will first and foremost examine if the Chinese court that pronounced the judgement had competent jurisdiction according to the principles of private international law.  Solely these principles will be considered; Chinese local laws pursuant to this subject matter are not relevant to the analysis.
The rise of the influence of international comity has allowed the possibility for a Chinese court to be considered of competent jurisdiction if there is a “real and substantial connection” between the court and the party or subject matter of the action. Though this broad and flexible test was created in the context of enforcing inter-provincial judgments, it can now be applied to any foreign judgement.
The Supreme Court of Canada recently confirmed that the real and substantial connection between the court and the party or subject matter of the action concerns only the foreign court. For instance, if the judgment is from China, then the test will only be applied to the Chinese court. It is not necessary to have such a connection between the case and the Canadian court.

 

2. The judgement is final and binding

The Canadian court will then verify if the judgement is final and binding in its own jurisdiction. Thus, the Chinese court issuing the judgement must no longer be able to rescind the judgement pursuant to its procedural law. This includes a defendant’s right to re-hearing or the possibility for the judgement to be reopened, nullified or altered by the Chinese court that originally pronounced the judgement.
The finality of a judgement is not affected by the possibility of its appeal. However, in practice, Canadian courts will often use their discretion to postpone the execution of the judgement pending the conclusion of the appeal process in China.
 

3. The judgement is adequately precise

Finally, Canadian courts will consider the precision of the judgement on a case-by-case basis to determine if they will enforce it. Originally, only monetary judgments for a debt that is a definite and assertible sum of money were accepted and enforced by Canadian courts.
However, the Supreme Court of Canada broadened the scope of what is considered adequately precise in the decision Pro Swing Inc. v. Elta Golf Inc., allowing non-monetary judgments to be enforced by Canadian courts in certain cases. Factors to consider include, but are not limited to:
· The terms of the order are sufficiently clear and specific;
· The order has a limited territorial scope;
· The enforcement will put a burden on the Canadian judicial system;
· Canadian courts will be required to interpret Chinese law
Canadian courts will generally enforce non-monetary judgments when principles of comity require them to do so. Thus, if the situation was reversed and the foreign court would enforce a Canadian non-monetary judgement, Canadian courts would in turn have the obligation to also enforce foreign non-monetary judgments; if the foreign court would not enforce it, Canadian courts would not necessarily need to do so. In recent years, Canadian courts have enforced permanent injunctions against Canadian defendants, frozen accounts in a Canadian bank, recognized stays of proceedings and recognized procedural orders in insolvency matters.
It is unsure if China would enforce a Canadian judgement. Article 281 and 282 of the PRC Civil Procedure Law states the requirements for a Chinese court to enforce a foreign judgement. Either the deciding court’s country has signed a treaty with China, both countries have co-signed an international treaty regarding this matter, or there is reciprocity between the countries. China and Canada have not participated in a bilateral judicial assistance treaty, nor are they both signatory to an international treaty. Chinese courts have enforced foreign cases when there was de facto reciprocity between the countries, meaning the country where the judgement was pronounced had already enforced Chinese judgments. This is contrary to the de jure method, where reciprocity can be established when there is a possibility that the foreign court could enforce a Chinese judgement. In the past, China has often rejected enforcement of foreign cases in the absence of treaties on the account that there was no reciprocity. However, in 2017, a Chinese court has enforced a judgement originating from the United States based on reciprocity for the first time. Some speculate that it could be a sign of a more liberal approach, perhaps based on de jure reciprocity, in the enforcement of foreign judgments, but many others believe it will have no impact.
There seems to be no precedents regarding the enforcement of a Chinese judgement in Canada. Thus, it appears that Canadian courts do not have the obligation to enforce a Chinese non-monetary judgement; they might however choose to do so. If a Canadian court was to enforce a Chinese non-monetary judgement, principles of comity would require Canadian courts to use judicial resources only to the extent of what would be done to enforce domestic cases.

 
Defenses by opposing parties
It is possible for parties opposing the enforcement of the judgement in Canada to raise the following defenses:
· The judgement concerns foreign public law;
· The judgement was obtained by fraud;
· The judgement deprived the defendant of natural justice;
· The judgement violates Canadian public policy.

1. The judgement concerns foreign public law

If the three previously mentioned conditions are respected, it is presumed that Canadian courts can enforce the Chinese judgement. However, the defendant might plead that the case enforces a Chinese public law, such as a penal law or a revenue law. Canadian courts will then generally refuse to enforce the judgement.

2. The judgement was obtained by fraud

Chinese judgments that were obtained by fraud will not be enforced by Canadian courts. There are two types of fraud: extrinsic fraud and intrinsic fraud. Extrinsic fraud relates to the jurisdiction of the court. It can always be raised and will possibly lead the Canadian courts to refuse to enforce the Chinese judgement. The party who is trying to avoid the enforcement must however prove that it has not been able to present its case to court.
On the other hand, intrinsic fraud refers to the merit of the case, such as perjury or the display of fraudulent evidence. Historically, intrinsic fraud could not be raised as a defense to the enforcement of a judgement by a Canadian court. Nowadays, this defense is used in a restricted matter since Canadian courts fear it would lead to the re-litigation of previously decided foreign issues, in conflict with the principle of res judicata. The Supreme Court of Canada stated that the allegations of fraud must then be new and cannot be the subject of prior adjudication. Also, the facts supporting evidence of fraud must not have been previously examined by the Chinese court, and they must not have been discoverable by the court through the exercise of reasonable diligence.
 

3. The judgement deprived the defendant of natural justice

Furthermore, the defendant might raise the issue of the Chinese proceeding’s incongruity with the Canadian notions of natural justice, also known as fundamental justice. It is crucial for Canadian courts to ensure that the defendant’s rights were respected in China. Natural rights include the right to a fair process through basic procedural safeguards, such as judicial independence and the existence of ethical rules governing the judicial system.
In practice, this defense is rarely applied. In the event that the defendant had the opportunity to present his case, the denial of natural justice in the proceedings must be fundamental for it to prevent the enforcement of the judgement. Examples of reasonable objections are lack of adequate notice of the proceedings, disregard towards the right to be heard and tribunal bias. It cannot be merely an incongruity with Canadian procedural laws, such as the admission of evidence to the Chinese court that would not have been admissible to court according to Canadian laws. Also, this allegation must not have been presented to or taken into consideration by the Chinese court.
 

4. The judgement violates Canadian public policy

The enforcement of a Chinese judgement violating public policy, Canadian legal system’s principles of morality and essential justice, will most probably be denied by a Canadian court. Though the type of conduct targeted has changed, it includes bribery, proposition, coercion and criminal conduct. Thus, the Supreme Court of Canada has declared that a judgement founded on a foreign law contravening “our view of basic morality” will not be enforced on grounds of public policy.
Much like the natural justice defence, public policy has a limited scope and is in practice seldom applied. A Canadian court cannot refuse to enforce a judgement solely because the conjured Chinese law goes against or is harsher than Canadian law, as this would go against principles of international comity.

Part Three Enforcement in Quebec Province 

For reasons stated above, the enforcement of a Chinese judgment will have a different course in the province of Quebec. The Civil Code of Quebec (C.C.Q.) is one single set of comprehensive legislation that notably regulates the enforcement of non-Quebec judgments. The substantive requirements for the enforceability of a non-Quebec judgment are to be found in the C.C.Q. and not in the common law requirements stated above. The procedural requirements are to be found in Quebec’s Civil Procedure Code.
 
In virtue of article 3155 C.C.Q., Quebec courts will recognize and enforce decisions originating from foreign courts except where:
• The issuing court had no jurisdiction;
• The judgment is not final or enforceable;
• The judgment is contrary to the fundamental principles of procedure;
• A decision was already rendered or is pending between the same parties, based on the same facts and having the same subject;
• The judgment is manifestly inconsistent with public order; and
• The judgment enforces obligations arising from the taxation laws of a non-Québec State.
 

Jurisdiction

Quebec law will recognize the jurisdiction of most personal (as opposed to real) actions if they meet any one or more of these criteria, namely:
(i) The Defendant is domiciled in the country where the decision was rendered;
(ii) The Defendant possessed an establishment in that country and the dispute relates to Defendant’s activities in that country;
(iii) A prejudice was suffered in that country and resulted from a fault which was committed, or an injurious act which took place in that country;
(iv) The obligations arising from a contract were to be performed in that country;
(v) That the parties have by agreement submitted the dispute to the foreign authority in question (this is not applicable to consumer contracts or employment matters); or
(vi) The Defendant has recognized the jurisdiction of the foreign authority.
 

Part Four Limitation periods

 Traditionally, the foreign judgment is treated like a contract debt as far as the limitation period is concerned and so the treatment of the foreign judgment is equivalent to a breach of contract .In most Canadian provinces, this period extends to two years from the moment the judgment creditor knows or ought to have known that the judgment debtor has assets in Canada. Yet, it is important to remember that this concept of discoverability varies from province to province. For instance, discoverability in Ontario refers to the moment from which an appeal is expired and in the case of pursued appeal, of its date. Although some judicial precedents have ruled that foreign judgments have to be treated in a similar fashion to domestic judgments (Girsberger v. Kresz), the prevailing line of authority in judicial precedence affirms that foreign judgments are to be interpreted as contract debts for limitation purposes.
 
In Quebec, the limitation period is not as clear, as the Civil Code does not expressly state any prescription period. However, a 2004 judgment from Quebec’s Court of Appeal has ruled the prescription period is that of the enforcement of foreign judgment in its respective jurisdiction.