On April 25, 2011, China’s Supreme People’s Court issued the Draft Rules on Several Issues about Application of Law in Hearing Monopoly Civil Cases (the “Draft Rules”). The Draft Rules, consisting of 20 articles, provide clarification on jurisdiction; standing to bring civil cases; burden of proof; civil liability; confidentiality of business secrets; and statute of limitations for handling Anti-Monopoly civil cases. The Draft Rules also clarify the relationship between court enforcement and administrative enforcement of the Anti-Monopoly Law (AML), which was promulgated in 2008. Below is a summary of some of the noteworthy issues addressed by the Draft Rules.
Consistent with a previous pronouncement, the Draft Rules designate the Intermediate People’s Courts as the court of first instance for adjudicating AML civil cases. The Intermediate People’s Courts, which already have jurisdiction over intellectual property litigation, are believed to be better equipped to handle AML-related cases that will likely involve novel legal issues and complex economic analyses.
The Draft Rules take a rather broad view on who can bring an action for alleged harm suffered due to an AML violation. In particular, the Draft Rules appear to permit indirect purchasers to bring a claim against sellers for damages caused by allegedly anticompetitive conduct. The Draft Rules also allow plaintiffs to bring AML-related claims in “collective actions” as permitted under China’s Civil Procedure Law.
As set out in the Draft Rules, administrative enforcement against an alleged AML violator, and a civil action against the same party, can proceed in parallel. An aggrieved party may bring an action at any time, whether before, during or after an administrative investigation against the alleged violator, although the court has discretion to stay or terminate the litigation if an administrative investigation is ongoing. Where an AML enforcement authority has not found an AML violation, a court should still adjudicate the case and render a decision based on the evidence before it.
According to the Draft Rules, the burden of proof generally rests with the plaintiff, with the burden shifting to the defendant under certain circumstances. The Draft Rules also specify when dominance of a defendant, accused of abusing such dominance, may be presumed. In addition, the Draft Rules provide guidance on when a plaintiff may seek the court’s assistance in obtaining evidence from a defendant. This is helpful for plaintiffs given the generally limited discovery that is available in Chinese litigation.
Under the Draft Rules, a claimant has two years to bring an AML civil case, counting from the date that the claimant knew or should have known of the alleged AML violation, or where the relevant AML enforcement authority has determined the accused conduct constitutes an AML violation, from the date that the claimant knew or should have known of such determination. The statute is tolled if the claimant reports the alleged violation to the relevant AML enforcement authorities for investigation. The two-year limitations period is restarted from the date when the claimant knew or should have known that the enforcement authorities decline to initiate, dismiss or terminate an investigation.
Since the promulgation of China’s first AML in 2008, many civil monopoly cases have been filed in court. Although administrative authorities have supplemented the AML with various implementing rules, China is still in need of clear procedural and substantive rules to guide those courts tasked with handling monopoly proceedings. The Draft Rules are part of China’s on-going effort to refine applicable procedures and substantive rules. After finalization, the Draft Rules should enhance AML enforcement in China.
For more information please visit http://www.court.gov.cn/gzhd/zqyj/201104/t20110425_19850.htm. Please note this link is to a Chinese language website.