Recently, the Shanghai High People's Court issued a reconsideration ruling affirming the Shanghai Financial Court's 2024 ruling recognizing a judgment of the Court of Chancery of the State of Delaware ("Delaware Court") awarding damages for securities fraud, with the damages awarded exceeding USD 44 million.
Han Kun Law Offices acted as counsel in this case. Since the recognition and enforcement proceedings were commenced in 2019, the case has spanned 7 years and has set several precedents in the history of Chinese judicial practice, making it a milestone for Chinese courts' foreign-related adjudication and securities judicial practice.
This is the first case in which a Chinese court has recognized a U.S. court judgment based on the principle of "legal reciprocity". It has changed prior judicial practice under which Chinese courts, in most cases, declined the existence of reciprocity between China and the U.S., while only occasionally recognizing and enforcing judgments issued by courts of certain individual U.S. states based on "de facto reciprocity";
This is the first case in which a Chinese court has recognized a judgment rendered by the Delaware Court;
This is the first case in which a Chinese court has recognized a foreign court judgment in the fields of finance, securities, and capital markets.
The courts conducted a comprehensive review of key issues relating to the recognition and enforcement of foreign court judgments, including the central issue of the "principle of reciprocity," the Delaware Court's personal jurisdiction over the directors and senior officers of a U.S.-listed Chinese company, the validity of service of process and its potential conflict with the Hague Service Convention, and whether the parties had been duly summoned and afforded a reasonable opportunity to be heard and to present arguments.
Han Kun leveraged its extensive experience in cross-border dispute resolution and collaborated closely with U.S. legal experts to conduct in-depth analysis and argumentation on the core procedural and substantive legal issues. Han Kun submitted multiple rounds of legal opinions, all of which were fully upheld by both the Shanghai Financial Court and the Shanghai High People's Court. These efforts ultimately secured a landmark favorable ruling for the clients and established a solid foundation for the subsequent enforcement of the judgment in China.
This case was led by Mr. Sun Wei, a partner in Han Kun's Commercial Dispute Resolution Department. The team also included Huang Binle, Li Yanlong, Guo Yitao, Gong Zheng and others. The matter also received strong support from the team at U.S. law firm Arnold & Porter.
This landmark result delivers a replicable framework for domestic and foreign parties seeking recognition and enforcement of U.S. court judgments in China, and sets a valuable precedent for cross-border financial and securities dispute resolution and foreign-related judicial assistance. It further demonstrates Chinese courts' steadfast commitment and openness in deepening cross-border judicial cooperation, rigorously combating securities fraud, equally protecting the lawful rights and interests of Chinese and foreign investors, and enhancing the international credibility of China's foreign-related adjudication. Leveraging its core strengths in cross-border dispute resolution and financial legal services, Han Kun will continue to provide professional, efficient, and tailored dispute resolution solutions to clients worldwide, and fully safeguard clients' lawful rights and interests in cross-border matters.
