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Amended Civil Procedure Law Provides Better Protection for PRC Litigants
1 March 2013

The National People’s Congress adopted the revised PRC Civil Procedures Law (“New CPL”) on 31 August 2012, which law came into effect on 1 January 2013. The New CPL aims to enhance the rights of litigants and refine the procedures for small claims and enforcement of arbitration award/judgment in civil proceedings. We set out the salient features of the New CPL as follows :-

1. Commencement of Litigation

Article 123 of the New CPL expressly provides that the People’s Court (the “Court”) should safeguard the right of a party to institute litigation and must accept lawsuits filed in conformity with Article 119. In particular, it requires the Court to provide parties with a refusal notice in writing within 7 days of the lodging of the claim if the filing is rejected. The notice will become the basis for appeal if the claimant is not satisfied with the reasons for rejection. There is thus a greater transparency for the process.

2. Interim Measures
Prior to the implementation of the New CPL, evidence and asset preservation are the only interim measures available to litigants except for certain types of intellectual property actions.

Under Articles 100 and 101 of the New CPL, new interim reliefs similar to specific performance and prohibitive injunctive relief have been created. The Courts are now empowered to order a party to preserve certain asset(s), take certain action(s) or prohibit a party from performing certain act(s) during the course of litigation or arbitration. To apply for these interim measures, an applicant has to show that the circumstances will render the judgment difficult to enforce or his interest will be affected without such orders. As usual, the applicant for such interim measures is required to pay a security deposit to the Court.

Article 104 applies to property related disputes. If a defending party is able to provide security deposit to the Court, he will be entitled to apply to the Court to discharge the interim measures ordered in accordance with Articles 100 and 101 above. It remains to be clarified if the application for discharge under Article 104 is applicable to intellectual property cases as well, as an earlier judicial interpretation made a decision otherwise.

It also remains to be seen how these new interim measures will be used in practice to protect the interests of litigants during the course of litigation.

3. Small Claim Regime

A new small claim regime has been established under Article 162 of the New CPL for simple civil cases with clear facts and trivial disputes, to be tried by the primary People’s Court. If the amount in dispute is lower than 30% of the annual average salary of workers in the relevant province in the previous year, then the first instance judgment will be final and binding on the parties in the dispute.

4. Enforcement of Arbitral Awards

Prior to the New CPL, the Court is entitled to refuse an arbitral award granted by a domestic arbitration tribunal due to (a) lack of evidence to support the findings; or (b) an error in the application of the law in the findings.

Under the New CPL, the above two grounds were replaced and the Court is now entitled to refuse an arbitral award only (i) if there is false evidence (Article 237(4)) or (ii) if a party concealed substantial evidence which affects the impartiality of the arbitral body in granting the arbitral award (Article 237(5)). These amendments are welcomed as they are consistent with the grounds for setting aside an arbitration award under Article 58 of the PRC Arbitration Law.

5. Access to Judgments

Judgments or decisions delivered by the Courts are often not open for public inspection. Article 156 of the New CPL now allows the public to inspect judgments and written orders except those involving state secret, business secret and personal privacy. It remains to be seen how the public can exercise such rights under Article 156 and further clarification on the provision is expected.

If you have any questions on the above or other issues regarding doing business, litigation or dispute resolutions in Mainland China, experienced lawyers in our China Business Department will be happy to assist you.

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