The current Civil Procedure Law of the People's Republic of China (“CPL”) came into force on 9 April 1991 and was amended with effect from 1 April 2008.
On 31 August 2012, the National People’s Congress adopted the Decision of the Standing Committee of the National People’s Congress on Amending the PRC Civil Procedure Law (“CPL Amendments”), which will become effective on 1 January 2013. The CPL Amendments will be incorporated into the CPL. This means a revised CPL will come into force on 1 January 2013.
The CPL Amendments comprise 60 articles. The most significant updates are the following:
- Cease and desist injunctions available
The CPL Amendments for the first time introduce preliminary cease and desist injunctions in general civil litigation in China. These are needed by applicants who require fast protection against an infringer. Formerly, such relief was only available in China in intellectual property disputes under the PRC Copyright Law, the PRC Patent Law and the PRC Trademark Law. In general civil litigation, under the CPL only preservation of property and of evidence could be applied for in urgent situations by a party and ordered by a court.
Now, according to Article 18 of the CPL Amendments, in cases where the execution of a judgment may become impossible or difficult because of the actions of either party or for other reasons, the People's Court may grant a cease and desist injunction if the opposite party applies for one. In the absence of such an application, the People's Court may itself, where necessary, issue a cease and desist injunction.
This innovation is particularly good news for plaintiffs who are in urgent need of relief from an infringer and cannot wait for full litigation to be completed over one or two instances. Preliminary injunction measures can be obtained within several hours, whereas the full litigation process up until final judgment normally takes several months.
- Strengthening of compulsory enforcement
If a party has lost a lawsuit and still fails to comply with the judgment, the other party is entitled to apply to the competent court for compulsory enforcement. The current CPL states that in such cases the court will first issue an enforcement notice and grant an additional time period to comply with the judgment. Compulsory enforcement can only be carried out if the party subjected to enforcement has still failed to comply with the judgement after the additional time period granted in the enforcement notice.
The above gives parties subjected to enforcement various opportunities for hiding or transferring their property as the procedure is quite protracted. The CPL Amendments aim to prevent this and protect the enforcing party. According to Article 55 of the CPL Amendments, after receiving the application for enforcement from the enforcing party or the instruction for commencing enforcement from the judge, the enforcement officer must send an enforcement notice to the person subjected to enforcement and carry out the compulsory enforcement immediately.
This means that due to the streamlined procedure the enforcing party should be in a significantly better position compared to the old law. However, in practice it will largely depend on the diligence of the enforcement officer whether or not the party subjected to enforcement will still have sufficient opportunities to hide or transfer property. The main factor will be the informal communication channel between the parties and the court, which is quite active in Chinese practice.
The CPL Amendments further introduce or increase punishment measures available to a court against persons or entities who refuse to assist in court investigations and against parties subjected to enforcement who maliciously collaborate with a third party and try to avoid fulfilling the judgment by commencing other litigation or arbitration proceedings.
- Enlarged scope of a simplified procedure
Unlike in ordinary civil litigation, in summary procedures there is only a single judge in charge of the case rather than a tribunal. In addition, the first instance trial shall be finished in three months instead of six. Under the CPL, the summary procedure is only applicable in cases where the facts are evident, the rights and obligations clear and the dispute trivial in nature. Article 35 of the CPL Amendments now also makes this procedure available in other cases if requested by both parties and by their mutual agreement. It remains to be seen how many disputing parties will actually come to an agreement on this.
Further, a small claims procedure is newly established which is even more simplified than the summary procedure. According to Article 37 of the CPL Amendments, where the local People's Court hears cases eligible for the summary procedure in which the value in dispute is less than 30% of the average yearly salary of the past year in the province, autonomous region or municipal city (e.g. Shanghai: 30% x RMB 51,968 = RMB 15,590.40), the dispute must be resolved in a one instance trial, which means that no appeal is available.
- Litigation regarding public interest
Litigation regarding public interest has been newly added to the civil litigation regime. In recent years, environmental pollution and food safety incidents have often been in the public eye. According to Article 9 of the CPL Amendments, institutions and relevant organisations stipulated by the law can bring a lawsuit in the People’s Court against activities which harm social public interests, including environmental pollution and infringement of legitimate consumer rights on a large scale.
According to a statement by the National People’s Congress Law Committee, institutions and organisations entitled to file a lawsuit concerning public interest will be stipulated in forthcoming laws and regulations. It remains to be seen if their scope will be limited to purely government controlled entities; if so, this would introduce an administrative character into civil litigation.
- More publicity
Pursuant to Article 34 of the CPL Amendments, the public can obtain access to legally effective judgments and written orders, except where their content involves state secrets, trade secrets and matters of personal privacy. Although in the past many courts in China have already made certain judgments publicly available, this has only occurred on a voluntary basis. Now, for the first time, the public’s right to have access to these judgments is stipulated in the civil procedure law.
The CPL Amendments aim to modernise the Chinese civil litigation regime. In short, they introduce or adapt certain features which are available in the civil procedural law of western jurisdictions. Judging from the written laws and regulations, the Chinese civil litigation regime has already reached a considerably advanced stage. However, due to a lack of judicial impartiality and independence from political influence in certain areas, the implementation of the law is still lagging behind in practice. For the near and mid-term future, arbitration before international or reputable domestic arbitration commissions will still be the preferred option for foreign and foreign-invested companies doing business in China.