Civil Procedures in China
Note: This article is taking the People’s Republic of China (the “PRC”) civil proceedings perspective. It is intended for information purposes only and does not constitute legal advice. You should contact our qualified lawyer if you require legal advice.
A comparison between a civil proceeding and a commercial arbitration is always considered when drafting a dispute clause. International arbitration has been widely discussed and there is also a wealth of transparent information for our understanding. Since the processes and relevant information of a civil lawsuit in China are frequently requested by our clients, we summarize them here.
The Judicial System
The people's courts are the procedural organization for civil and criminal cases. The people's court exercises its judicial power independently, free from interference from administrative organizations, public organizations and individuals.
The people's courts hear cases in a body, but in simple civil and minor criminal cases they can also be heard by a single judge.
In China ist das Gerichtssystem als “vier Ebenen und zwei Instanzen von Verfahren” bekannt.
Judicial power is exercised by the local people's courts, which are divided into three tiers (basic people's courts, intermediate people's courts and higher people's courts), the specialized people's courts and the supreme people's courts.
A case may be decided after a hearing if no appeal is lodged within the allotted time. If an appeal is filed, the case will be decided in two hearings.
In certain circumstances, a final judgment may be reviewed within two years of its finality.
Responsibility for Civil Proceedings with Foreign Facts
In the case of a lawsuit relating to a contract dispute or other property rights and interest disputes brought against a defendant who is not a resident of the territory of the PRC, any people's court shall have jurisdiction if the place in the territory of the PRC is the following points
i) Der Vertrag wird unterzeichnet oder erfüllt;
ii) The subject of the action is;
iii) The attachable property of the defendant is located;
iv) The torts are committed; or
v) the seat of representation of the defendant is located.
Parties having a dispute over a contract with a foreign element or over foreign-oriented property rights and interests may, by written agreement, choose the court of the place practically connected with the dispute to exercise jurisdiction. When a people's court is elected to exercise jurisdiction, the law on jurisdiction by jurisdiction and exclusive jurisdiction shall not be violated.
If the defendant in a civil lawsuit with foreign implications does not object to the jurisdiction of a people's court and responds to the lawsuit by defending himself, he is deemed to accept the jurisdiction of the people's court over the case.
Agency of a lawyer
If a foreign party needs a lawyer as an agent ad litem to file a lawsuit or appear on its behalf before the people's court, it must appoint PRC lawyers.
Any power of attorney sent by mail or other means from outside the territory of the PRC by a foreign party not domiciled in the territory of the PRC for the appointment of a lawyer or other PRC person as legal representative must be Notarized by a notary in the country of residence and authenticated by the Chinese embassy or consulate accredited in that country. The authentication procedure must comply with the formalities specified in the relevant bilateral treaties between China and said foreign country before it takes effect.
Introduction of ordinary civil proceedings
The initiation of civil proceedings begins with the filing of a claim with the competent court. A case will be accepted by the court if the claim meets all of the following requirements:-
i) The plaintiff has a direct interest in the outcome of the proceedings;
ii) The defendant(s) is/are specific and the documents can be served;
iii) There are specific claims, facts and reasoning; and
iv) It is a civil dispute over which a court has jurisdiction.
A chief judge is appointed to a particular case after it has been accepted.
The plaintiff may make additional claims and the respondent may make a counterclaim, and the co-plaintiff may make claims relating to the case prior to the expiration of the Evidence Period.
With the exception of cases involving state secrets and individual privacy, all cases are tried in public. In divorce cases and cases involving trade secrets, the parties can request a secret hearing.
Before the proceedings begin, the judge tries to settle the dispute through conciliation between the parties or with the mediation of the court. If the court agrees to a settlement, it makes a decision on the rectification, and the parties abide by the terms of the agreement. Note that there is no appeal against the court's decision to uphold a settlement. In addition, the parties of foreign elements involved in a civil proceeding may request the court to issue an arbitral award under the Settlement Agreement so that the party concerned may seek recognition and enforcement in the court abroad.
If the parties have not been able to reach an agreement through the intervention of the court, the proceedings are resumed. After the judicial investigation, the review of the evidence, the court hearing and the closing argument, a verdict must be reached. Throughout the procedure, if the parties agree, they can reach a settlement, including at the stage of enforcing a final judgment.
During civil proceedings, the plaintiff does not always have the right to withdraw from the process. After the conclusion of the court hearing, the plaintiff's withdrawal of a claim requires the approval of the court. If the court denies the repossession and the plaintiff fails to appear in court after the subpoena, a default judgment may be entered.
Vocation
If a party refuses to accept a first-instance verdict of a local people's court, it has the right to appeal to a higher people's court within 15 days of the delivery of the written verdict. If a party refuses to accept a first-instance verdict of a local people's court, it has the right to appeal to a people's court at a higher level within 10 days of the delivery of the written verdict.
Resumption Retrial
If a litigant considers that a final judgment or a written decision is erroneous, it may appeal to the people's court where the case was originally heard or to a people's court at the next level
People's Court of the next higher level apply for a retrial; however, the enforcement of the judgment or order is not suspended.
With respect to a binding settlement agreement, the party may request a retrial if it can establish that the arbitration violated the principles of voluntary arbitration or that the terms of the settlement agreement violated the law. If this proves to be correct after the examination, the people's court will hear the case again.
Application for a court order for payment
Where a creditor seeks payment of a debt or delivery of negotiable securities from a debtor, he may, provided the following conditions are fully met, apply to the competent court which has an order for payment:-
i) There are no other debt disputes between the creditor and the debtor; and ii) the order for payment can be served on the debtor.
The request must clearly state the amount of money or items of exchange requested, as well as the facts and evidence on which the request is based.
After the creditor submits his application, the people's court notifies the creditor whether it accepts the application or not.
After accepting the application and examining the facts and evidence submitted by the creditor, the people's court issues an order for payment to the debtor if the relationship between the creditor and the debtor is clear and lawful. If the application is unfounded, the people's court rejects it.
The debtor shall repay his debts or, after receiving the order to pay, submit a written objection to the people's court. If the debtor has not objected to the payment order or complied with it within a specified period, the creditor may apply to the people's court for enforcement.
Upon receipt of the debtor's written objection, the people's court issues an order terminating the summary proceedings, and the order for payment itself is declared invalid. The creditor can bring an action before the People's Court.
Arbitration
If the parties have agreed to arbitration clauses in the contract in question or have subsequently concluded a written arbitration agreement whereby the dispute will be submitted to a PRC arbitration court or other arbitration court, they may not bring an action before the people's court.
If a dispute is decided by arbitration in China, the parties may not bring an action before the People's Court for the same dispute.