“Strengthening the rights of plaintiffs challenging administrative conduct… is thus a step in the right direction… for both the IPR and antitrust fields”

Introduction

In 2013, China’s legislative branch decided to amend the ALL. The main aim of the revision seems to be removing a range of procedural obstacles that plaintiffs face when bringing administrative lawsuits. On 1 November 2014, the Standing Committee promulgated the newest version of the ALL (“the new Law”), which will enter into force on 1 May 2015.

Key focus of the proposed amendments

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

Broadening the scope of administrative acts that can be challenged. The amendments propose to add new categories of actions relating to administrative acts, in particular decisions regarding administrative coercive measures; administrative licensing and franchising agreements; 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 new Law expands the number of grounds on which plaintiffs can challenge an administrative act. In addition to the incorrect application of the new Law, procedural defects, insufficient evidence and so forth, the new Law also allows courts to examine whether the contested act is manifestly “improper.”

At the same time, the new Law seemingly aims to increase the defendant authorities’ compliance with adverse court rulings. For example, the new Law allows “the public” to request “access” to final judicial rulings, although parts involving state secrets, trade secrets or personal data are to be redacted. The new Law also provides for a battery of measures for combatting non-compliance with judicial rulings:

  • The presence of the president of the relevant authority is mandatory during the whole trial.
  • If an authority fails to enforce a judicial decision within the indicated deadline, that authority’s president is personally liable to a fine of RMB 50 to 100 per day.
  • The courts can publicize the administrative authority’s non-compliance.
  • The courts may notify the relevant authority’s bank of any fines and damages ordered in the judgment.
  • The courts can also directly contact the relevant authority’s supervisory organ.

Implications for the intellectual property area

The new Law 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 AIC), 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

The main change brought about by the new Law is that until now, the law was unclear 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.

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

Conclusion

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 new Law does – is thus a step in the right direction. Indeed, for both the IPR and antitrust fields, the new Law might mean progress, but only if the reforms are adequately enforced in practice.