Introduction

The People's Republic of China Administrative Litigation Law ("ALL") was enacted in 1990. Back  then, it was seen as a ground-breaking development, as the law authorizes entities and individuals  to bring lawsuits against administrative authorities and their personnel.

In 2013, the Standing Committee of the National People's Congress – China's legislative branch –  decided to amend the ALL. The main aim of the revision seems to be to remove what is perceived to  be a range of procedural obstacles that plaintiffs face when  bringing administrative lawsuits. On  31 August 2014,  the Standing Committee published its latest draft amendments to the ALL ("Draft")  and issued a call for comments from all interested parties. The deadline for comments is 20  September.

Key focus of the proposed amendments

The Draft aims to lower the burden on plaintiffs in various ways, for example:

  • Broadening the scope of administrative acts that could be challenged. The amendments propose  to add new categories of actions relating to administrative acts, in particular decisions regarding  ownership over, or rights to use, natural resources; expropriation of private property and  corresponding compensation payments; abuse of administrative powers resulting in the elimination or  restriction of competition; and unlawful demands for funding, disproportionate expenses or other  unlawful obligations imposed upon individuals.
  • Adding a new ground on which to challenge administrative acts. The Draft expands the number  of grounds on which plaintiffs can challenge an administrative act. In addition to the incorrect  application of the law, procedural defects, insufficient evidence and so forth, the Draft also allows courts to examine whether the contested act is manifestly "improper." This amendment would effectively bring the  grounds for  bringing administrative litigation into line with the administrative-internal review process under  the People's Republic of China Administrative Reconsideration Law.1
  • Extending the statute of limitation. The Draft allows plaintiffs to file an action up to six  months after the point at which they had knowledge of a disputed administrative act. The current  ALL only provides a three-month filing period unless otherwise provided under the law.

At the same time, the Draft seemingly aims to increase the defendant authorities' compliance  obligations and burden with respect to adverse court rulings. For example, the Draft allows "the  public" to request "access" to final judicial rulings, though parts involving state secrets, trade  secrets or personal data are to be redacted. The Draft also provides for a battery of measures for  combatting non-compliance with judicial rulings:

  • If an authority fails to enforce a judicial decision within the indicated deadline, that  authority's chief is personally liable to a fine of RMB 50100 per day.2
  • The courts can publicize the administrative authority’s non-compliance.

Implications for the intellectual property area

Administrative litigation plays an important role in the process of registering and enforcing  intellectual property rights ("IPRs"). In particular, many of the key decisions involving patents  are issued by courts in administrative litigation proceedings. For instance, for patent  applications filed with the State Intellectual Property Office, an administrative-internal appeal  process to the Patent Re-examination Board ("PRB") is possible. Yet, if the patent applicant – or a  third party – is not satisfied with the PRB decision, a formal administrative lawsuit before the  courts can be instituted. Apart from patents, administrative litigation is also possible for other  forms of IPR registrations, such as trademarks: decisions from the Trademark Review and  Adjudication Board can also be appealed to the courts. Administrative litigation is finally also  essential to the enforcement of IPRs, since IPR owners can request administrative authorities to  handle infringement cases. The decisions issued by the authorities in such cases can likewise be  appealed to  the courts.

The Draft may make IPR-related administrative litigation simpler for plaintiffs. For example,  suppose an IPR holder files a complaint against an IPR infringer with a local administrative  authority (such as the  Administration for Industry and Commerce), but the complaint is rejected.  If the complainant believes the authority's decision was influenced by local industry pressure, the  amended ALL would allow the complainant to submit the argument that the authority decision was  manifestly improper.

Implications for the antitrust area

Administrative litigation is primarily important in the antitrust arena for two reasons. First, the  People's Republic of China Anti-Monopoly Law ("AML") and other antitrust rules allow entities  involved in administrative procedures to challenge the final decisions by the authority in question  before the courts. Second, the AML not only prohibits anti-competitive practices by companies and  other market players, but also by government authorities.

It is in this second area where the Draft brings about an important change relative to the current  ALL: until now, the law was not clear as to whether a company or individual could challenge an  administrative act that has negative effects on competition – often referred to as "administrative monopoly" conduct in China – directly before the courts, or if the act could only be challenged within the specific  administrative-internal appeal processes that are widely perceived to lack teeth. The AML is not clear on the point, and the  Beijing Intermediate People's Court ducked the issue in a lawsuit filed against the General  Administration of Quality Supervision and Quarantine on the day the AML came into force back in 2008.

Now, by explicitly including "administrative monopoly" conduct as a category subject to  administrative litigation, the Draft strengthens the legal basis for bringing lawsuits against  administrative authorities under the AML.

This proposed revision might need to be interpreted against the mandate by the Third Plenum of the  18th Congress of the Communist Party's Central Committee to "further diminish all forms of  administrative monopolies." Even for foreign companies, the AML's "administrative monopoly"  provisions may become more important, as China grapples with structural reforms.

Conclusion

The Draft is issued for public comment against the backdrop of the somewhat tentative attempts to  reform China's incipient market economy and the (also tentative) attempt to strengthen the rule of  law (in particular, by cutting the budgetary link between local courts and local governments).  There remains much more to be done in this regard.

Administrative litigation allows market players, and other entities or individuals, to bring  lawsuits against government authorities and other administrative actors. Strengthening the rights  of plaintiffs challenging administrative conduct – as the Draft appears to aim for – would thus be a step into the right direction. Indeed, for both the IPR and antitrust fields, the  Draft might mean progress, but only if the reforms are adequately enforced in practice.