Enforcement of PRC judgments in the British Virgin Islands: an important precedent is established
在英属维京群岛执行中国的判决：一个重要的案例
The British Virgin Islands (BVI) Court has for the first time recognised and enforced judgments delivered by the Court of the People’s Republic of China (PRC). It is a significant development in light of the established practice of Chinese individuals and entities using BVI corporate entities as asset holding vehicles.
凯瑞奥信的合伙人Jeremy Lightfoot及高级律师Yang Yang讨论东加勒比最高法院最近的一个判决。法院为了如何在执行过程中委任公平的接管人提供指引。
The decision sets a significant precedent as many practitioners and judgment creditors alike in the PRC have historically considered BVI corporate entities (and their assets) as being beyond the reach of the PRC courts and often left ‘forgotten’, notwithstanding the well-established rules for recognition and enforcement of foreign awards and judgments in the BVI.
In the matter of Industrial Bank Financial Leasing Co Ltd and Xing Libing (BVIHC (COM) 0032 of 2018), Industrial Bank Financial Leasing Co Ltd (the 'Bank') held three judgements in the PRC which it sought to utilise in the BVI (the 'PRC Judgments'). Specifically it sought recognition of the judgments there and enforcement by way of appointment of equitable receivers over the 100 per cent shareholding held by the judgement debtor in a BVI company, Firstwealth Holding Ltd ('Firstwealth'). The motivation for this enforcement was clear: Firstwealth owned valuable assets including shares of a Hong Kong SAR listed company, deposits in bank accounts and (potentially) beneficial ownership in a luxury property situated in Hong Kong. These assets were ring-fenced awaiting execution by extant freezing orders in Hong Kong.
The PRC Judgments were recognised by the BVI Court and the Bank was granted a final charging order over the shares in Firstwealth. It is worth noting that the judgment debtor sought to challenge the PRC judgments on the basis that he was not able to defend the proceedings in the PRC. However, there was no application in the BVI to set aside the order for recognition of the PRC judgments, nor did the defendant seek to move the application for a stay of execution to a hearing. The BVI Court noted that in the absence of such an application before the court, the Bank was entitled to proceed to enforce the PRC judgments. The BVI Court also suggested that if the defendant were to apply for a stay, detailed evidence would be required as regards the prospect of his application to the PRC Court to challenge the PRC judgments succeeding.
The Court further gave guidance on how enforcement over shares in a BVI company should proceed:
- The ordinary method of enforcement against shares held by a judgment debtor is first by interim charging order followed by the final charging order.
- When a final charging order is made, if the debtor fails to pay, then either the shares are to be sold or an equitable receiver may be appointed over the shares. In the latter scenario the equitable receiver may be able use their powers as receiver to replace the director(s) of the company then use their powers to realise the assets of the company for the benefit of the creditor. However, the appointment of equitable receivers by way of execution will not be granted unless there is some ‘hindrance or difficulty’ in using the normal processes of execution.
- On the facts of the matter, the appointment of an equitable receiver would be considerably more advantageous than selling the shares of Firstwealth: the shares owned by Firstwealth in the Hong Kong listed company would return more value on the open market than the sale of the shares in Firstwealth (likely to be at a large discount) and the potential purchaser would be less interested in buying a claim to litigation for the luxury property in Hong Kong. The BVI Court considered that these were sufficient special circumstances which constituted ‘hindrance or difficulty’, making it expedient to appoint receivers.
- The appointment of a receiver was for the limited purpose of appointing a new director who would take steps to administer Firstwealth so as to maximise its value as opposed to ‘any and all rights the company may have whatsoever and howsoever found’ which would otherwise be an ‘exorbitant exercise of a foreign court’s long-arm jurisdiction’ according to the Judge. For that limited purpose, no expert evidence of Hong Kong law was required as the Judge considered it unlikely that the Hong Kong Court would refuse to recognise the appointment of a director which has the approval of the court of the place of incorporation of the company.
The case serves as a reminder that PRC judgments, fulfilling the relevant criteria are fully capable of being enforced in the BVI. The flexible tools available in the enforcement process, including the appointment of equitable receivers in this case, could assist judgment creditors in the PRC in maximising recovery of the judgment debt through the BVI, particularly where the judgment debtor is a BVI company or where the judgment debtor holds shares in a BVI company. There is now a clear precedent established which is of considerable relevance given the prevalence of BVI asset holding vehicles in the PRC.
An original version of this article was first published by the IBA, June 2020.
© Carey Olsen 2020.
BVI法院首次认可及执行中国法院送达的判决。对于在BVI设立公司作为资产持有工具司空见惯的中国个人及企业来说本案是一个重大的发展。这个判决会成为了重要的先例为今后案件所援引。尽管BVI有一套获得认可及执行的外国裁断及判决的规则，但很多中国法律从业者及判决债权人历来都不把BVI企业（及他们的资产）视为中国法院的触角所及，而常被“遗忘”。
在Industrial Bank Financial Leasing Co Ltd 诉 Xing Libing 一案中（编号：BVIHC (COM) 0032 of 2018），兴业银行金融租赁有限责任公司（下称“执行人”）在中国获得三份判决。执行人寻求在BVI执行该等判决（下称“判决”）。具体而言，执行人作为判决债权人寻求在BVI对判决进行承认，并透过委任财产管理人管理被执行人拥有的BVI公司Firstwealth Holding Ltd（下称“Firstwealth”）中的百分百股权。采取这种执行方式的原因很明确：Firstwealth持有重要的资产，包括香港一间上市公司的股份、银行存款及（可能）在香港有实益拥有权的豪宅。而这些资产都已经在香港由冻结令而被搁置一边。
BVI法院同意承认中国法院的判决，并同意执行人对Firstwealth股份的最终扣押令的申请。值得注意的是，判决债务人以当时无法参与在中国进行诉讼为由，试图对中国法院的判决提出异议。但被告在BVI并没有提出拒绝承认中国法院的判决的申请，也未要求对中止执行提出聆讯申请。BVI法院认为，在被告没有提出此申请的情况下，执行人有权继续执行中国的判决。BVI法院还建议，如果被告申请中止执行，则需要详细证据证明其有很大机会能成功向中国法院提出申请质疑判决的有效性。
BVI法院还为如何执行BVI公司的股权提供指引：
1. 强制执行对判决债务人所持股份的最普通方法是先申请临时扣押令，其后申请最终扣押令。
2. 在发出最终扣押令时，如果债务人未能还款，则将出售其股份或可对股份指定管理人。在后一种情况下，管理人可以使用其权力替代公司董事，为债权人的利益变现公司资产。但是，除非正常的执行过程即上述普通做法存在某种“障碍或困难”，否则将不准以执行管理为由任命管理人。
3. 本案中，任命管理人比出售Firstwealth的股份要有利得多：Firstwealth持有的香港上市公司股份在股票市场上的回报要比在直接出售Firstwealth（可能会有大折扣）更大，而且潜在买家购买与诉讼索偿有关的香港豪宅兴趣较小。BVI法院认为，这些特殊情况足以构成“阻碍或困难”，应当任命管理人。
4. 任命管理人的目的仅限于重新任命董事，该董事要采取措施管理Firstwealth，以使其价值最大化，而不是对公司采取“可能行使的任何权利”，根据法官的说法就是在他国“明目行使其他法院的法律”。而若只是为任命董事的目的，法官认为香港法院不太可能会拒绝认可公司成立所在地的法院批准任命的董事，因此不需要提供香港法律的专家证据。
此案提醒我们，符合相关标准的中国法院判决（如需要我们可以提供我们在BVI、开曼群岛、根西岛和泽西岛执行判决和仲裁裁决的指南）完全可以在BVI执行。执行过程中可用的灵活手段，包括本案中任命管理人，都可以帮助中国的判决债权人最大程度地在BVI追回判决债权，特别是在判决债务人是BVI公司，或其持有BVI公司的股份的情况下。由于BVI作为资产持有工具在中国十分盛行，现在有此明确先例以供参考对未来的执行非常有帮助。
