Tuesday, 22 January 2013

Recent Amendments to China’s Civil Procedure Law Help Litigants

      Several recent amendments to the Civil Procedure Law of the People’s Republic of China (“PRC”), now in effect, could have a bearing on decisions as to where to bring a claim -- in the PRC or elsewhere -- or on the juridical advantage aspect of a forum non conveniens analysis in a jurisdictional dispute involving the PRC. 

      As for considerations as to where to bring the claim,  the amendments give PRC courts power to issue evidence preservation orders before a court proceeding has been commenced, not just after as had previously been the case, and to issue such orders also in aid of domestic or foreign-related arbitration.   This power, comparable to a Canadian ex parte Anton Pillar order,  is valuable especially where the defendant is likely to move or destroy evidence as soon as litigation starts.  The plaintiff must commence his/her proceeding within a certain period following the order.   

      The amendments extend the PRC courts’ powers to preserve property (which had already been available before or after commencing a law suit) to include powers to order a person to do or not do something.  Such orders can also now be given in aid of an arbitration not yet commenced, although it is not clear whether that applies only to domestic arbitrations or to foreign – related arbitrations as well.  Unlike in Canada, the plaintiff may have to provide a surety, not merely an undertaking as to damages.  The order is cancelled if the plaintiff does not commence his/her proceeding or arbitration within thirty days.

      The new law widens the parties’ choice of jurisdiction options.  Previously,  the parties could by mutual agreement, in contractual disputes, choose to litigate in the place where either party was domiciled, or where the contract was signed or performed, or where the subject matter of the lawsuit is located.  Now the parties have an additional option:  “any other place actually connected to the dispute”.  This change could possibly mean that if that place is outside the PRC and the parties choose to litigate in that foreign court, a PRC court might be more likely to accept that foreign court’s jurisdiction for purposes of enforcement of a subsequent judgment.   As well, the right to choose applies also to cases relating to rights or interests in property, not just contractual disputes.  

       The courts now have discretion to allow a witness to testify via audio or video transmission or through written testimony, as opposed to physically attending the trial, for reasons of geographic distance, inconvenience of travel, health, or natural disaster. 

      The amendments significantly reduce the grounds to refuse enforcement of domestic arbitration awards.  The grounds provided in the old rules – “the main evidence for determining the facts was insufficient” or “there was an error in the application of the law” have been replaced with “the evidence that forms the basis of the award was fabricated” or “the other party has concealed evidence from the arbitral institution that affects the impartiality of the award”.  

      In summary, the courts' new powers can be of great help to litigants, and reduce some of the differences with other fora outside the PRC.   

      Of course, there are many other factors that bear upon a determination as to where best to sue, including the fact that a litigant’s rights on paper and his/her rights in reality may differ.   One of the amendments, as reported by XinhuaTimes and the National Bureau of Corruption Prevention of China, reminds us of what cannot be taken for granted in Chinese courts:  “The Amendment stipulates that judges should not accept gifts or treatment from any interested parties or their attorneys.” 

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