Enforcing Chinese judgments in England: restoring dissipated assets

Despite the absence of reciprocal enforcement treaties between China and the UK, Chinese lenders have a clear pathway to recovering from such bad loans.  The landmark English High Court case of Hangzhou Jiudang Asset Management Co Ltd v Hung [2022] EWHC 3265 (Comm) cleared the path and Chinese judgments are now readily enforceable in England.

But what happens where the personal guarantor has dissipated assets once Chinese litigation was intimated?

Section 423: A Creditor-Focused Remedy

English law offers a powerful statutory remedy that is increasingly being used to support cross-border enforcement efforts: s.423 of the Insolvency Act 1986.

S.423 provides a mechanism to challenge transactions made at an undervalue where the purpose was to put assets beyond the reach of creditors. Crucially, it is not limited to insolvency proceedings and can be invoked by any party prejudiced by such a transaction – including foreign judgment creditors.

Recent case law, including the Supreme Court’s decision in El-Husseiny v Invest Bank PSC [2025] UKSC 4, has reaffirmed the broad and purposive interpretation of s.423.  The courts have shown a clear willingness to unwind transactions and restore assets to the debtor’s estate where there is evidence of intent to frustrate creditor claims.

The Role of Injunctive Relief

One of the key advantages of pursuing a s.423 claim is the availability of interim relief, particularly freezing injunctions. These orders can be obtained at an early stage to prevent further dissipation of assets and preserve the creditor’s position.

English courts are increasingly receptive to granting such relief where there is a credible risk of asset flight.  A well-supported injunction application can significantly enhance the effectiveness of enforcement efforts and may also encourage early settlement.

Litigation Funding: Unlocking Access to Justice

Litigation funding plays an important role given judgment debtors' typically cautious approach to pursuing a debt outside PRC.

Funders are particularly interested in cases in which solicitors are willing to share risk and involving:

• A final and conclusive foreign judgment;
• Evidence of asset dissipation or undervalue transactions;
• A realistic prospect of recovery.

This support enables creditors to pursue recovery without bearing the financial burden, making enforcement a viable option even in challenging circumstances.

Conclusion: A Strategic Enforcement Tool

While the lack of a reciprocal enforcement regime between China and the UK presents obstacles, s.423 offers a robust and flexible remedy. It allows creditors to challenge asset shielding tactics, obtain injunctive relief, and encourage third-party funding to support recovery.

For Chinese judgment creditors, this route provides a credible and increasingly well-trodden path to enforcement in England.