Vol 21 (2024) - Issue 4

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Reciprocity and Recognition of Insolvency Judgments in the People’s Republic of China

Synopsis
The People’s Republic of China (‘PRC’) is not a signatory to the UNCITRAL Model Law on Cross-Border Insolvency (‘Model Law’). At first blush, this may be considered a significant impediment to the recognition and coordination of foreign insolvency proceedings with PRC elements in the PRC e.g., if the debtor company does considerable business in the PRC. This is so considering that the stated purpose of the Model Law is to provide effective mechanisms for dealing with cases of cross-border insolvency so as to promote the objective of, amongst others, fair and efficient administration of cross-border insolvencies that protects the interests of all creditors and interested persons.
However, as the case of Fujian Huadong Shipyard Co Ltd v Ocean Tankers (Pte) Ltd, Xihe Holdings Pte Ltd and others [2020] Min 72 Min Chu No. 3341 (‘Xihe Judgment’) and subsequent judgments demonstrate, PRC domestic legislation does, in some way, seek to give effect to the same concept of modified universalism2 that underpins the Model Law. In the Xihe Judgment, the Xiamen Maritime Court of the PRC (‘Xiamen Maritime Court’) recognised the appointment of judicial managers over two related Singapore companies, respectively appointed by way of Singapore court order and by a resolution of creditors under section 94 of the Insolvency, Restructuring and Dissolution Act 2018 (No. 18 of 2020) (‘IRDA’).
The case comment explores how the Xihe Judgment, which is reportedly the first case in the PRC to recognise Singapore insolvency proceedings on the principle of reciprocity, and subsequent cases, clarifies the boundaries of the PRC implementation of modified universalism.