Introduction

On 13 September 2016, the Supreme People's Court of PRC published the "Several Opinions on Further Advancing Optimization of Judicial Resources by Distinguishing Complicated and Simple Cases" (《最高人民法院关于进一步推进案件繁简分流优化司法资源配置的若干意见》). The Opinion will come into force on the very day of publication.

In this update we focus on some significant contents of the Opinion, which are considered as the potential redefinition of the address for document service and assumption of attorney's fees.

Background

The Opinion is a programmatic guidance for people's courts at all levels on distinguishing complicated and simple cases in the coming period, aiming at overcoming the imbalance between supply and demand regarding "loads of cases" and "lack of human resources". In order to better fulfil the demand of people concerning the quality as well as efficiency of trial, the Supreme People's court has treated the further advancing optimization of judicial resources by distinguishing complicated and simple cases as priority of this year. Besides, the judicial practice in recent years shows that the difficulty of document service arising from ambiguous address or method has long become the headache of courts at all levels and plenty of parties involved in litigation. Meanwhile, since under PRC law the general principle is that the attorney's fees should be assumed by the parties themselves respectively, it has become detrimental to the innocent parties to pursue any further loss caused by counter parties' abuse of litigation rights or delay of undertaking litigation obligations.

During the drafting process of the Opinion, the Supreme People's Court practised series of investigation and research in Provinces such as Hunan and Zhejiang, held several seminars and colloquia with local People's Congresses, CPPCC members, legal experts and experienced lawyers and encouraged the first line judges and the general public to have a say. It is safe to say that the new opinion is a reform achievement based on sufficient investigations and diversified opinions, which on the whole can offer a general guidance for not only judges but also all legal entities under a lawsuit.

Significant contents of the Opinion

Pursuant to the official summary briefed in the press conference held by the Supreme People's Court, the new Opinion, which all together includes 22 articles, can be divided into 3 main parts. First of all, article 1 provides the public with general requirements with respect to the significance of distinguishing the complicated and simple cases; after that, from article 2 to article 15 the Opinion is endeavoured to improve the entire litigation procedure, starting from the filing, service, and pre-trial conference to the litigation documents and second instance process; thirdly, article17 to article 22 focus on optimizing the judicial resources by rational allocation of internal resource of the court as well as taking advantage of external judicial resources.

To be more specific, in answering the aforesaid problems regarding the difficulty of document service and inappropriate assumption of attorney's fees, the Opinion states as follows:

In article 3: To prove the procedures and methods of service. The address of service mutually agreed by parties prior to dispute shall be applied by the court as the appropriate address of document service. When submitting the statement of complaint or defence, the parties shall, according to relevant regulations, sign the address confirmation. To better make use of the electronic methods of service. If accepted and confirmed by parties, document service can be done through electronic methods, such as Fax, Email and WeChat.

In article 22: If any party deliberately abuses its litigation rights or reluctantly undertakes its litigation obligations, which causes direct loss to the counter party or third parties, the people's court may, as the case may be, support claims ,such as compensation for reasonable attorney's fees, proposed by the innocent party.

The conflict between "loads of cases" and "lack of human resources" in court has long been regarded as one of the major concerns in courts at all level, especially the basic people's courts. It is reported as well in the aforesaid press conference that 80% cases are tried by basic people's courts, among which only approximately 70% apply the summary procedure, whereas the respective figure in the U.S. is about 95%. In other words, judges in basic people's courts are under breath-tanking pressure to verdict with both efficiency and quality, which is definitely difficult and exhausting.

In addition, the problems arising from misleading address or method of document service has become more and more common with the increase of cases involving foreign elements. Meanwhile, under the general principle that the attorney's fee should be assumed by parties themselves respectively, if any party abuses its litigations rights or delays to undertake its litigation obligations and causes direct loss thereafter, the innocent counter party may still be hesitate to pursue its legitimate litigation rights because of potentially additional attorney's fees.

Therefore, the recently published Opinion is likely to be of great significance in the coming future for not only judges, but also parties that intent to pursue their claims through litigation. On closer examination of the Opinion, we highly recommend our clients that:

  1. It is highly suggested that our clients pay closer attention to the electronic methods used during different stage of litigation, such as the electronic mode of service, the electronic order of payment, the hearing on remote video and testifying with synchronous video. Moreover, it is recommended that our clients shall, under the guidance of the court, get used to electronic litigation documents and electronic case files. These innovations are likely to become the mainstream in the near future. Besides, it is probably better to reach a mutual agreement regarding the address of document service, which can be of great help for potential litigations. Moreover, whether the address of the law firm can be listed in the mutual agreement as the address of document service may need to be further examined with relevant practice, which, if permissible, will greatly facilitate the resolution of the problems in document service.
  2. The general principle under PRC law is that attorney's fees should be assumed by the parties themselves respectively, yet the situation may be changed in future. According to article 22 of the Opinion, it is possible for the court to order that the attorney's fees should all be borne by the party who abuses its litigations rights or delays to undertake its litigation obligations and causes direct loss thereafter. However, more time and further official explanations are needed to see how the courts will define "abuse of litigations rights" and "delay of undertaking litigation obligations".