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Civil Procedure

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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)

Civil Justice: Outlook


Civil litigation Conducted by courts. Judgments enforceable. Mediation Judicial mediation by courts. Med-Arb and Peoples Mediation Committees. Voluntary as to both process and outcome.

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;

Jurisdiction: Four Levels ()


Basic Courts:
first instance of most cases

Intermediate Courts:
appellate jurisdiction: appealed from basic courts original jurisdiction: over cases of foreign-related, involving many litigants, national security, serious punishment, etc

Provincial High Courts:


appellate jurisdiction: over cases appealed from intermediate courts original jurisdiction: over cases of provincial importance

Supreme Peoples Court (SPC):


appellate jurisdiction: over cases appealed from high courts original jurisdiction: over cases of national importance

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)

Where two or more courts have jurisdiction:


First come, first serve.

Procedures: An Overview
Civil procedures in general:
First instance summary () ordinary () Second instance: final Judicial supervision Execution

A glance at the summary procedure:


Facts, rights/obligations are clear, and disputes are trivial. By basic courts or peoples tribunals. Tried by a single judge. Complaint can be orally lodged. Not bound by ordinary procedures. Time limit: 3 months to conclude.

Ordinary Procedure: 1st Instance


Plaintiff files a writ or complaint () The court (filing dept.) examines the writ The court files the case () within 7 days The court serves () the writ on the defendant Defendant files a defence () within 15 days The court conducts pre-trial investigation (optional) The court organizes the collegiate bench and sends notice to both parties at least 3 days before the trial The collegiate bench conducts trial investigation () The collegiate bench organizes court debate () The collegiate bench delivers the ruling: facts, reasons, laws, damages/costs, appeal matters. Time limit for trial: 6 months Possibility of extension with the approval of court president

Ordinary Procedure: 2nd Instance


How to lodge an appeal: Within 15 days of the 1st instance judgment. File the appeal with the original court (1st instance court) and send a copy to other party. The original court sends all documents to appellate court within 5 days after receiving the appeal writ and defence. Appellate court: Investigate relevant facts and laws. Organize collegiate bench and conduct court hearing. Open or closed hearing. Investigation on any issues including those examined by lower court. Decision is final: (1) fact clear, law correct dismiss the appeal; (2) law error appeal allowed and ruling modified; (3) factual error order re-trial.
Appellate trial to be completed within 3 months; extension is possible by court president approval

Peoples Juror System


NPCSC Decision on Perfecting the Peoples Juror System (2005)
See DM.

Applicable in all 1st instance civil cases except


Except summary procedure Barred in appellate trial [silent in the NPCSC Decision 2005, but clear from wordings of Arts 39 & 40, CPL 2012]

Jurors: same powers as judges in terms of adjudication


But can NOT act as presiding judges. For difficult cases, juror(s) can ask the collegiate panel to refer the case to court president for him/her to decide if the case should be referred to judicial committee.

Jurors: appointment and conditions


Recommended by work unit or through self-application; Appointed by NPCSC for 5 years; Conditions: >23 years old, support constitution, good behavior and health, not member of legislature or judiciary Removal: resign, refused to hear case, disobey laws, etc.

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)

Judicial Supervision (Contd)


Parties Petition: Procedures
Apply to higher court within 6 months after the final judgment is delivered. The higher court sends copy of the application to other party(ies) who may file a written defense within 5 days. The court review the case within 3 months to decide whether the application meets retrial conditions according to grounds under Art.200 of the 2012 amended CPL. Retrial should be conducted by intermediate courts or above, or by the original court with a different collegiate bench. During the petition and retrial process enforcement of original judgment will not be suspended except cases involving expenses for medical care or labor remunerations, etc.[Art 206, CPL].

Enforcement of Civil Judgments


Revised under 2007 CPL Court judgment enforced by original court, or the same level court in which the property to be enforced is located. Court can establish enforcement division within itself if necessary. Time limit for application for enforcement: 2 years after the judgment is rendered. Mishandling of the enforcement:
Parties or other interested persons can petition (in writing) to the enforcing court if he/she believes his/her interests unjustly affected. Court must review and decide on the petition within 15 days. The petition party(ies) can further petit to higher court within 10 days if he/she is not satisfied with the decision of the enforcing court.

Judgment which has not been enforced within 6 months:


A party can petit to higher court which can order the lower court, or other courts, to enforce, or the higher court enforces on its own.

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.

New Procedures Introduced in CPL 2012

Public Interest Litigation (Art 55, CPL 2012)


Relevant bodies and organizations prescribed by law

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.

New Procedures by CPL 2012 (Contd)

Small Claims Procedure (Art 162, CPL 2012)


Only applied in basic courts and peoples tribunals In simple cases : using summary procedure Dispute amount lower than 30% of the annual

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.

If mediation agreement violates laws:


The court will render order rejecting the application for confirmation, and parties may file suits in accordance with normal litigation procedure.

II. Mediation: In-court


Must be on voluntary basis: Parties agree to mediate. Can be conducted for almost all civil and commercial cases, at all stages of civil litigation, except:
identity confirmation, instant performance, and cases involving enforcement, announcement, bankruptcy and debt repayment procedures.

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

Result of arbitration is called award.


Awards can be challenged or set aside by court on grounds of procedural injustice or violation of social public interest.

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.

Attention: These are matters related to substantive judicial review

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).

Cho v. Developer (1): Alternative - petition for judicial supervision


Facts and procedures Modes of initiation of judicial supervision (as against legally effective judgments)
o Initiated by president of trial court if considering decision mistaken referring to adjudicative committee (Art 177, CPL) o Initiated by a higher court retry by itself or order the lower trial court to retry (Art 177, CPL) o Initiated by parties (in Chos case) petition trial court or a higher level court for retrial; within two years of a legally effective decision (Art 178, CPL) o Initiated by procuratorates may protest against decisions made by courts at same levels on grounds of insufficient evidence, errors of law, violations of procedure, misconduct by judicial personnel, etc. (Art 187, CPL)

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Cho v. Developer (2)

Legal grounds for retrial: Art 179, CPL


o According to Article 179, para. 1 of the Civil Procedure Law (amended 2007), court shall retry a case if parties application for retrial satisfies any of the following 13 conditions (1) new evidence sufficient to overturn the original ruling; (2) facts lack of evidence support; (3) major evidence was fabricated; (4) major evidence was not verified; (5) court did not collect evidence which a party requested to collect; (6) definite error in the application of law; (7) jurisdictional error due to violation of relevant law; (8) unlawful composition of collegiate bench or adjudicator did not withdraw himself in violation of relevant withdrawal requirements;
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Cho v. Developer (3)


(9) party without litigation capacity was not represented, or party should attend the trial but did not; (10) unlawful deprivation of partys right of defense; (11) default judgment without summoning a party to attend trial; (12) judgment did not cover all the claims or exceed the scope of the claim; (13) legal document on which the judgment based has been nullified or modified. In addition, court shall retry the case that (CPL, Art 179, para. 2) (1) involves a violation of legal procedure which may affect fairness of the judgment (2) was decided by an adjudicator or adjudicators involved in corruption, bribery, malpractice and unlawful adjudication
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Cho v. Developer (4) Grounds for judicial supervision


Applying Arts 178 and 179(2), CPL: Whether Definite errors in the application of Law? o e.g., Art 42 of Property Law requires that for the expropriation of the premises owned by entities and individuals or other real properties, it is necessary to make compensation for demolishment and relocation according to law and safeguard the legitimate rights and interests of the owners of the real properties expropriated; for the expropriation of the individuals residential houses, it is also necessary to safeguard the housing conditions of the owners of the houses expropriated. o In Chos case which was for demolition of residential house whether compensation (RMB 2million) satisfied the above requirements?
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Violation of procedures?

Cho v. Developer (5) Grounds for judicial supervision

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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Cho v. Developer (6)


Procedures for initiating and conducting retrial upon parties application (CPL, Articles 177-186) o Cho should apply to a higher court (Supreme Peoples Court in this case) within two years of the effective judgment o The higher court shall send a copy of the application within 5 days to the other party which may file a written defence o The court shall then review the case within 3 months to decide whether the application meets retrial conditions and should be retried o The cases accepted for retrial by SPC or High Courts should be retried by SPC or High Courts or be sent to other courts, or be retried by the original court o During the application for retrial, enforcement of original judgment should not be suspended (Art 178). o When court decides to retry the case, it should issue caiding to suspend enforcement of original judgment (Art 185) 30

Cho v. Developer (7): Application of Property Law


Applicability of Property Law 2007 (wu quan fa) o Law came into force on 1 October 2007 o Results of application of law depend on whether state expropriation and demolition had met three criteria:
whether offered equal protection of state and private property? (Art 3 and Art 4):

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?

Cho v. Developer (8): Possibility of administrative litigation


Defendant
o not developer, but Shenzhen land and housing authority

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?

How likely to win?: consider


o scope of court review: court only to review legality (not reasonableness) of administrative acts (Art 5 of ALL) o was there any procedural deficiency in defendants act?: e.g., 2 months notice adequate or not for Cho to relocate himself and family? whether proper warning of consequences of non-compliance with notice? again these questions seem to mainly concern reasonableness of administrative act which is not subject to court review

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