prc civil procedure

8/13/2019 PRC Civil Procedure

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Civil Procedure()

Civil Procedure Law

(Adopted on 9 April 1991, first revised on 28 October2007, second revised on 31 August 2012, taking effect

on 1 January 2013)


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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 arbitrationcommissions.

Voluntary as to process, and award enforceable.


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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 disputeresolution, both in and out of court.

Peoples jurorsystem (): same as judge?

Judicial supervision (): finality of judgments?

Enforcement of civil judgments, arbitral awards,

mediation agreements by court: effective or not?


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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;


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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, involvingmany litigants, national security, serious punishment, etc

Provincial High Courts:

appellate jurisdiction: over cases appealed from intermediatecourts

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


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Territorial Jurisdiction ()General rule:

Defendants domicile (registered domicile or habitualresidence);

Where there are several defendants: all courts at the locationsin 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.


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Procedures: An OverviewCivil procedures in general:

First instancesummary ()

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.


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Ordinary Procedure: 1stInstance

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


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Ordinary Procedure: 2ndInstanceHow to lodge an appeal:

Within 15 days of the 1stinstance judgment.

File the appeal with the original court (1stinstance court) andsend a copy to other party.

The original court sends all documents to appellate court within 5days 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) factualerror order re-trial.

Appellate trial to be completed within 3 months; extension is possible by courtpresident approval


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Peoples Juror System

NPCSC Decision on Perfecting the Peoples Juror System

(2005) See DM.

Applicable in all 1stinstance civil cases except Except summary procedure

Barred in appellate trial [silent in the NPCSC Decision 2005, but clearfrom 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 referthe case tocourt 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.


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Judicial Supervision ()

Introduced in 2007, confirmed in 2012

A final effectivejudgment canbe challenged by Courts, procuratorates, or parties, if errors found in the judgments.

ByCourt President: The court president, can decide whether to submit a final judgment to the

Judicial/Adjudicative Committee for discussion and re-opening [Art 198].

ByProcuratorate:protest SPP can protest against any judgments of all courts.

Higher level procuratorates can protest against judgments from lower levelcourts.

ByParties:petition Application must meet one of the 13 grounds set out in [Art

200] of 2012 CPL (previously, Art 179 of 2007 CPL).

Courtshallretry 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)


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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 groundsunder 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 originaljudgment will not be suspended except cases involvingexpenses for medical care or labor remunerations, etc.[Art 206,

CPL].


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Enforcement of Civil JudgmentsRevised under 2007 CPL

Court judgment enforced by original court, or the same levelcourt in which the property to be enforced is located.

Court can establish enforcement division within itself ifnecessary.

Time limit for application for enforcement: 2 years after thejudgment is rendered.

Mishandling of the enforcement:Parties or other interested persons can petition (in writing) to theenforcing 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 daysif 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.


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Enforcement (Contd)

If the party refuses to perform his obligation according tojudgment, and has the possibility of hiding and transferring

property, enforcement personnel can adopt compulsory measureon him immediately.

If the party has not reported his financial situation according toexecution 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.


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New Procedures Introduced in CPL 2012

Public Interest Litigation (Art 55, CPL2012)

Relevant bodies and organizations prescribed by law

may bring a mass tort claim against acts thatundermine 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.


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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.


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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 (seealso 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 M di ti I t


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II. Mediation: In-court

Must be on voluntary basis: Parties agree to mediate.

Can be conducted for almost all civil and commercial cases, atall 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 MediationSettlement 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 overthe delivery notice.

If repudiated, they have to start over the dispute resolution process againby litigation or arbitration.

If the mediation attempt is not successful or no settlement can bereached by mediation, the court shall promptly adjudicate.


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Mediation: Out-of-courtMed-Arb 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 bypeoples 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 PeoplesMediation 2010)

Performance (instead of enforcement) pretty much depends on good faith.

Parties may jointly apply to court for ratification of mediation agreement, uponwhich a party may apply to court for compulsory execution if the other partyfails to perform (Art 33, Law on Peoples Mediation 2010, also confirmed in2012 CPL).

Parties can start all over litigation for the unperformed agreements (Art 32,Law on Peoples Mediation 2010, also confirmed in 2012 CPL).


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III. ArbitrationSources 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


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Arbitration (Contd)Dual-Track System

AL governs arbitrations of both disputes of domestic and foreign-related arbitrations

The jurisdictional bifurcation between CIETAC (ChinaInternational Economic and Trade Arbitration Commission),CMAC (China Maritime Arbitration Commission) and LocalArbitration Commissions (LACs) has been blurredsince the1996 State Council Notice (Recallthat State Council Circulars

is one of the sources of regulation on arbitration in China)Since 1996, LACs can receive foreign-related disputes; so canCIETAC and CMAC receive domestic disputes

BUT bifurcations still exist for the two tracks in aspects other than

jurisdicitonsGenerally, the foreign-related track enjoys more favorabletreatment

Most obviously, grounds for setting aside or denial ofenforcement of domestic arbitral awards are much broaderthan

foreign-related awards


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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)


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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 jurisdictionbetween CIETAC and LACs that they can hear bothdomesticand foreign-related disputes

However, recall significant bifurcations for enforcementpurposes

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 judicialreview

By contrast: setting aside or denial of enforcement of foreign-


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By contrast: setting aside or denial of enforcement of foreign-

related arbitral awards is limited to procedural groundssimilar to

those found inArt V of New York Convention (Note: Since 1987,

China has been a party to NYC, thus enforcement of foreign-

related awards in China is aligned with intl standards) Why is the bifurcation signif icant?

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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Cho v. Developer (1):

Alternative - petition for judicial supervisionFacts and procedures

Modes of initiation of judicial supervision(as against legallyeffective judgments)

o Initiated by president of trial court

if considering decision mistaken referring to adjudicativecommittee (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 twoyears of a legally effective decision (Art 178, CPL)

o Initiated by procuratorates

may protest against decisions made by courts at same levels ongrounds 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;26

Ch D l (3)


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(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 fairnessof the judgment

(2) was decided by an adjudicator or adjudicators involved in

corruption, bribery, malpractice and unlawful adjudication

27


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Grounds for judicial supervision

Applying Arts 178 and 179(2), CPL: Whether -Definite errors in the application of Law?

o e.g., Art 42 ofProperty Lawrequires that for the expropriation

of the premises owned by entities and individuals or other real

properties, it is necessary to make compensation fordemolishment 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 individualsresidential

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?

28

Cho v Developer (5)


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Grounds for judicial supervisionViolation 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 1stinstance trial, and prohibited in appellate trial (2005 NPCSC

Decision, Art 2; CPL, Articles 40 and 41).

o PJ suggested to refer case to Adjudicative Committeeviolation of procedure

because juror can only request collegial panel to refer case to the president ofcourt 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 benchsubmission 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).

29

Cho v Developer (6)


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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 thiscase) 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 decidewhether 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 courto 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

suspendenforcement of original judgment (Art 185)30

Cho v Developer (7):


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Cho v. Developer (7):

Application of Property Law

Applicability of Property Law 2007 (wu quan fa)

o Law came into force on 1 October 2007o 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?

(2) also, can compensation ensure subsequent living conditions? 31

Cho v Developer (8):


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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 andfamily?

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 32

prc civil procedure

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