Shanghai Chenggong Industrial Co Ltd v Zhihua Chen

This matter concerned a claim by Shanghai Chenggong Industrial Co Ltd, a company incorporated in China, against Zhihua Chen, a Chinese national residing in Australia. The dispute arose from a breach of contract by the defendant, which was adjudicated in a Chinese court. The plaintiff sought to enforce the foreign judgment in Australia. The central legal issues revolved around whether the post judgment interest regime in the People's Republic of China amounted to a penalty, and whether enforcing such a judgment would be contrary to Australian public policy. The court was required to balance the principle of comity with the need to protect Australian courts from enforcing punitive measures.

The court examined the nature of the post judgment interest under Chinese law, finding that it was not punitive but rather compensatory in nature. The court considered the principles of international comity and the public policy exception in Australian law, which permits Australian courts to refuse enforcement of a foreign judgment if it would be contrary to public policy. The court concluded that the post judgment interest did not constitute a penalty and did not contravene Australian public policy. The court found that the interest was a legitimate means of compensating the plaintiff for the delay in payment.

In light of the findings, the court determined that the plaintiff was entitled to enforce the foreign judgment in Australia. The court recognised the importance of upholding international legal obligations while ensuring that Australian courts do not become instruments for enforcing punitive measures. The court granted the plaintiff's application for enforcement of the judgment, including the post judgment interest. This decision affirms the enforceability of foreign judgments in Australia, subject to the public policy exception, and provides guidance on the treatment of post judgment interest in cross-border commercial disputes.