【Case Study】

Hubei Gezhouba Sanlian Indus Co v.Robinson Helicopter Co (06-01798,C.D.Cal 2009)

On March 29,2011,the United States (US) Court of Appeals for the Ninth Circuit (the Ninth Circuit Court) affirmed the judgment of the United States District Court for the Central District of California (the District Court) in the case of Hubei Gezhouba Sanlian Indus Co v.Robinson Helicopter Co.That decision recognized the judgment of the Higher People’s Court of Hubei Province of China (the Hubei Higher Court) in favour of Hubei Gezhouba Sanlian Indus Co (Sanlian) and Hubei Pinghu Cruise Co,Ltd (Pinghu) against Robinson Helicopter Co.(Robinson),a Californian corporation.

Sanlian was the owner of a model R-44 helicopter manufactured by Robinson.Pinghu was the owner of a river cruise boat from which the helicopter had been operating.On Tuesday,March 22,1994 the helicopter crashed into the Yangtze River,causing the death of three people.The crash was the result of a manufacturing defect in the particular Robinson R-44 model and in March 1995,the two Chinese companies sued Robinson in the Superior Court of the State of California claiming negligence,strict liability and breach of implied warranty.Robinson demurred,arguing that the People’s Republic of China had an independent judiciary which followed due process of law and that a Chinese court would have jurisdiction over the case.The California Superior Court agreed,and the suit was dismissed on the grounds that China was a more convenient forum.However,as a condition for dismissal of the California lawsuit,Robinson agreed to toll the statute of limitations and to abide by any judgment rendered by a Chinese court.

In 2001,after an attempt to submit the case to arbitration in the International Chamber of Commerce (ICC) failed,the Chinese companies decided to commence civil proceedings against Robinson in the Hubei Higher Court in Hubei.A three-judge panel was formed,and among other things,it properly notified Robinson of the date set down for trial,March 25,2004,in accordance with the provisions of the PRC Civil Procedure Law.Robinson failed to appear on that date but the trial continued.After assessing the evidence submitted in due course by the plaintiffs,the three-judge panel found that the fatal helicopter crash had indeed been the result of manufacturing defects in the Robinson R-44.Finally,in December 2004,the Hubei Higher Court issued a judgment awarding the equivalent of approximately US $ 6.5 million in favour of Sanlian and Pinghu.

Since the PRC Judgment was rendered by a court of first instance,Robinson had an automatic right of appeal under the PRC Civil Procedure Law which,as a party without domicile in the PRC,it had to exercise within 30 days of service.However,Robinson did not exercise its right of appeal in the PRC courts,and as a consequence the PRC Judgment became final and enforceable under PRC law.Because Robinson was a party without domicile in the PRC,the plaintiffs were entitled,in principle,in accordance with the PRC Civil Procedure Law,to apply for recognition and enforcement of the PRC Judgment directly to the foreign court with jurisdiction over Robinson’s assets.(https://www.daowen.com)

There is no treaty and there are no reciprocal arrangements between the U.S.and China with respect to the mutual recognition and enforcement of judgments issued by each other’s courts in civil and commercial matters.However,in the U.S.,the general principles of comity and recognition of foreign money judgments have been codified in the Uniform Foreign Money Judgments Recognition Act (“UFM-JRA”) and the state of California has adopted the provisions of the UFM-JRA in its Code of Civil Procedure.

Notwithstanding this,the plaintiffs’ initial efforts to obtain recognition of the PRC Judgment in the U.S.were rejected.In enforcement proceedings before the United States District Court for Central District of California,Robinson argued,and presiding Judge Cooper agreed,that the PRC Judgment was void because California Law rather than PRC Law applied to the statute of limitations,which had expired before the Chinese proceedings were commenced.However,the plaintiffs appealed Judge Cooper’s decision to the U.S.Court of Appeals for the Ninth Circuit which ruled that the Chinese proceedings were not time-barred.This was so,according to the Court of Appeals,because Robinson’s agreement to toll the statute of limitations in the original California Superior Court proceedings remained in place.The Court of Appeals also found that recognition and enforcement of the PRC judgment would not offend California’s public policy against stale claims.

On remand to the California Central District Court,Judge Cooper again heard argument from the parties concerning recognition and enforcement of the PRC Judgment.At the bench trial on June 2 and 3 2009,Robinson argued,contrary to its original position,that the Chinese legal system does not provide impartial tribunals or procedures compatible with the requirements of due process.However,finding no evidence that the Hubei Higher Court’s decision lacked either impartiality or due process,Judge Cooper ruled that the PRC Judgment was “final,conclusive and enforceable under the laws of the People’s Republic of China” deciding on August 12,2009 that “Plaintiffs are hereby entitled to the issuance of a domestic judgment in this action in the amount of the PRC Judgment,with interest calculated as set forth in the PRC Judgment.”

Robinson appealed Judge Cooper’s decision to a panel of three judges of the United States Court of Appeals for the Ninth Circuit.Following a hearing on March 9,2011 the appeal court ruled that “Robinson Helicopter is estopped from arguing that the judgment of the Higher People’s Court of Hubei Province in the People’s Republic of China (PRC) in favour of Hubei Gezhouba Sanlian Industrial and Hubei Pinghu Cruise Company (collectively “Hubei”) is not “enforceable where rendered” under California’s Uniform Foreign-Money Judgments Recognition Act” and declined to consider a new argument raised by Robinson that the PRC statute of limitations had expired before the Chinese parties filed their claim with the Hubei Higher Court in Hubei.Thus,on March 29,2011,the United States Court of Appeals for the Ninth Circuit issued its ruling which affirmed Judge Cooper’s decision to enforce the US $ 6.5 million PRC Judgment.