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Civil Procedure Law (Adopted on 9 April 1991, first revised on 28 October 2007, second revised on 31 August 2012, taking effect on 1 January 2013)
Arbitration Conducted by arbitrators under arbitration commissions. Voluntary as to process, and award enforceable.
I. Civil Procedure
Two trials to conclude a case in civil litigation. ( ) exceptions: small claim case, SPC one trial . Mediation preferred to litigation in civil dispute resolution, both in and out of court. Peoples juror system (): same as judge? Judicial supervision (): finality of judgments? Enforcement of civil judgments, arbitral awards, mediation agreements by court: effective or not?
Civil Litigation
Major Legal Source:
1991 Civil Procedure Law 2007 amendments Focus on judicial supervision and enforcement 2012 amendments Public interest litigation, small claims procedure, confirmation of mediation agreement
Principles:
independent adjudication; open trial; withdrawal in case of conflict of interests;
Intermediate Courts:
appellate jurisdiction: appealed from basic courts original jurisdiction: over cases of foreign-related, involving many litigants, national security, serious punishment, etc
General rule:
Territorial Jurisdiction ()
Defendants domicile (registered domicile or habitual residence); Where there are several defendants: all courts at the locations in which defendants live have jurisdiction.
Contract disputes:
Defendants domicile; or Place where the contract is signed, performed.
Tort disputes:
Defendants domicile; or Place where the tortious act was committed (if mass torts such as product liability, then move to Intermediate level).
Property disputes:
Place of the property (exclusive jurisdiction)
Procedures: An Overview
Civil procedures in general:
First instance summary () ordinary () Second instance: final Judicial supervision Execution
Judicial Supervision ()
Introduced in 2007, confirmed in 2012 A final effective judgment can be challenged by
Courts, procuratorates, or parties, if errors found in the judgments.
By Court President:
The court president, can decide whether to submit a final judgment to the Judicial/Adjudicative Committee for discussion and re-opening [Art 198].
By Procuratorate: protest
SPP can protest against any judgments of all courts. Higher level procuratorates can protest against judgments from lower level courts.
By Parties: petition
Application must meet one of the 13 grounds set out in [Art 200] of 2012 CPL (previously, Art 179 of 2007 CPL). Court shall retry the case that involves corruption, bribery, malpractice and unlawful adjudication (last para. of Art 200, 2012 CPL) (previously, last para. of Art 179, 2007 CPL)
Enforcement (Contd)
If the party refuses to perform his obligation according to judgment, and has the possibility of hiding and transferring property, enforcement personnel can adopt compulsory measure on him immediately. If the party has not reported his financial situation according to execution and enforcement order, or refuses to report or made false report, the court can impose fine on, or detain, this party, etc. If the party does not perform his obligation according to execution order, the court can restrict his overseas traveling, and publicize his non-performance through media, etc. Difficulties in enforcement:
Violence against execution and enforcement; Local protectionism; Corruption, etc.
may bring a mass tort claim against acts that undermine the social and public interests. For example, environmental pollution, product liability with many victimized consumers, etc. Relevant bodies and organizations: not prescribed by the law, but there are academic commentaries pointing to NGO, peoples procuratorate, etc.
average salary of employees of the relevant provincial area in the previous year Judgment of the small claims procedure shall be final.
New Procedures by CPL 2012 (Contd) Confirmation/Ratification of private mediation agreements (Arts 194 &195, CPL 2012)
Special procedure Mediation agreements by peoples mediation committees (see
also Art 33, Peoples Mediation Law) If mediation agreement conforms with laws:
The court will render a judicial order confirming its validity.
By judges with the assistance of work units of parties. Result of Mediation Settlement Agreements:
Prepared by the court and signed by the judge. Legally binding once delivered to the parties. Enforceable as civil judgments. Not appealable, but parties can repudiate at any time before they sign over the delivery notice. If repudiated, they have to start over the dispute resolution process again by litigation or arbitration.
If the mediation attempt is not successful or no settlement can be reached by mediation, the court shall promptly adjudicate.
Med-Arb
Mediation: Out-of-court
Conducted by arbitration commissions. On voluntary basis of both parties. According to laws and legal principles. Mediation settlement agreements can be converted to arbitral awards.
Community Mediation
Conducted by peoples mediation committees attached to justice bureaus. More as means of social harmony to settle community and workplace disputes. Function of persuasion and education. Supervised by local governments and basic level peoples courts. Mediation agreements:
Legally binding and shall be performed by the parties (Art 31, Law on Peoples Mediation 2010) Performance (instead of enforcement) pretty much depends on good faith. Parties may jointly apply to court for ratification of mediation agreement, upon which a party may apply to court for compulsory execution if the other party fails to perform (Art 33, Law on Peoples Mediation 2010, also confirmed in 2012 CPL). Parties can start all over litigation for the unperformed agreements (Art 32, Law on Peoples Mediation 2010, also confirmed in 2012 CPL).
III.
Arbitration
Sources of Arbitration Regulations in China PRC Arbitration Law (AL) (1995) PRC Civil Procedure Law, Cap.28 (CPL) (1991) PRC Contract Law (1999) State Council Circulars on Arbitration Supreme Peoples Court Judicial Interpretations on Arbitration (2006) Rules of Arbitration Commissions Chosen Arbitrability of Disputes All contractual disputes and other disputes over property rights between citizens, legal persons and other organizations (Art 2, AL) What can NOT be arbitrated under the AL?
Disputes relating to personal rights: family and succession disputes Disputes relating to criminal and administrative issues Labor disputes and agricultural disputes are separately regulated
Dual-Track System
Arbitration (Contd)
AL governs arbitrations of both disputes of domestic and foreignrelated arbitrations The jurisdictional bifurcation between CIETAC (China International Economic and Trade Arbitration Commission), CMAC (China Maritime Arbitration Commission) and Local Arbitration Commissions (LACs) has been blurred since the 1996 State Council Notice (Recall that State Council Circulars is one of the sources of regulation on arbitration in China) Since 1996, LACs can receive foreign-related disputes; so can CIETAC and CMAC receive domestic disputes BUT bifurcations still exist for the two tracks in aspects other than jurisdicitons Generally, the foreign-related track enjoys more favorable treatment Most obviously, grounds for setting aside or denial of enforcement of domestic arbitral awards are much broader than foreign-related awards
Arbitration (Contd)
Arbitration Agreements
Requirements of a valid arbitration agreement in China (Arts 16, 18, AL)
Intention to arbitrate; Arbitrable matters; AND most unique, Designated arbitration institution
Arbitration (Contd)
Judicial Review/ Enforcement of Arbitral Awards
Arbitral awards are final and binding on the parties (Art 9, AL) However, arbitral awards can be set aside, vacated or denied recognition and enforcement for certain reasons Recall that there is almost complete overlap in jurisdiction between CIETAC and LACs that they can hear both domestic and foreign-related disputes However, recall significant bifurcations for enforcement purposes Grounds for setting aside or denial enforcement of domestic awards include:
Errors of law; Insufficiency of evidence; and Arbitrator misconduct.
By contrast: setting aside or denial of enforcement of foreignrelated arbitral awards is limited to procedural grounds similar to those found in Art V of New York Convention (Note: Since 1987, China has been a party to NYC, thus enforcement of foreignrelated awards in China is aligned with intl standards) Why is the bifurcation significant? Compare: Awards involving domestic disputes: Arts 58, 63, AL; Art 217, CPL Awards involving foreign-related disputes: Arts 70, 71, AL; Art 260, CPL Important Conclusion: Arbitral awards involving foreign-related disputes are: Easier to enforce; NO public policy grounds (very controversial in China); and NOT subject to substantive review (narrower procedural grounds).
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Violation of procedures?
o Can mediation be conducted at appellate court (Guangdong High Court)? fine, can be done in first instance, second instance and retrial (SPC Provisions on civil mediation, 2004, Art 1) o Whether peoples juror can participate in trial? PJ participation compulsory for two types of 1st instance trial, and prohibited in appellate trial (2005 NPCSC Decision, Art 2; CPL, Articles 40 and 41). o PJ suggested to refer case to Adjudicative Committee violation of procedure because juror can only request collegial panel to refer case to the president of court for him to decide whether or not to submit the case to AC (2005 NPCSC Decision, Art 11). o ACs discussion of the case is this a major, important, complicated case? (Organic Law of Peoples Courts, Art 11; 2010 SPC Opinions on Reforming and Improving AC System, Art 7): probably yes, due to involvement of a HK citizen and highest building in Shenzhen. o AC decided case on basis of oral report from collegiate bench submission of a written report shall be made by collegiate bench to AC before AC meets (2010 SPC Opinions on Reforming and Improving AC System, Art 12); an oral report from the bench shall be made during AC meeting (2010 SPC Opinions, Art 15).
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e.g., whether fairness in valuation? whether in public interest? (Art 42): e.g., (1) whether to build highest building in Shenzhen by developer served public interest (what constitutes public interest is not specified in the law)? (2) what the building was going to be used for? whether offered required compensation for demolition and relocation? (Art 42, original wording does not incorporate just compensation it nevertheless requires guarantee of normal living conditions etc which could be interpreted as requiring just compensation): e.g., (1) market value (claimed RMB 14mn) vs. valuation by judicial discretion (RMB 2mn) - which valuation should prevail? 31 (2) also, can compensation ensure subsequent living conditions?
On what grounds?
o whether procedural deficiencies in administrative act? o whether violation of citizens property rights (according to Art 11 of ALL)? how to establish violation as compensation was indeed offered and issue of public interest seemed to be involved as well?
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