Tag:dispute-resolution-and-litigation
"The Decision of the Standing Committee of the National People's Congress on Amending the Civil Procedure Law of the People's Republic of China" will come into effect on January 1, 2024. This amendment to the Civil Procedure Law will bring significant changes to the addressing of international commercial cases, making it crucial for multinational enterprises and Chinese enterprises engaged in cross-border transactions to pay close attention and make preparations in advance. We will introduce, through a series of articles, the impact of the amendments to Civil Procedure Law on the jurisdiction of international commercial cases and its effects on cross-border litigation, assisting enterprises in adapting to the changes.
Expansion of Types of Foreign-Related Cases
Compared to the Civil Procedure Law (2021), the above articles of the Civil Procedure Law (2023) expand the types of disputes within China's jurisdiction involving foreign-related disputes. It broadens the scope from "a contract dispute or any other property right or interest dispute "to "disputes other than that involving identity relationship."
For identity-related actions, Article 23 of the Civil Procedure Law (2021) stipulates, "The following civil actions shall be under the jurisdiction of the PRC court at the place of domicile of the plaintiff; or if the plaintiff's place of domicile is different from his or her place of habitual residence, the civil actions shall be under the jurisdiction of the PRC court at the place of habitual residence of the plaintiff: (1) An action regarding a personal relationship instituted against a person who does not reside within the territory of the People's Republic of China." Therefore, foreign-related identity-related actions can be directly governed based on Article 23 of the Civil Procedure Law (2021). There is no need to repeat the provision once more in Article 276.
It follows that Article 276 establishes a legal basis for the jurisdiction of all types of foreign-related civil disputes in China.
Expansion of Jurisdictional Nexus
Article 276 of the Civil Procedure Law (2023) also introduces "appropriate connection" as a jurisdictional nexus, which derives from judicial practice.
The concept of "appropriate connection" was first adopted in the Supreme People's Court (2019) Final Civil Judgment No. 157 and the Supreme People's Court Gazette Case (2020) Final Civil Judgment No. 517. In both cases, the Supreme Court pointed out, "Whether a Chinese court has jurisdiction over a foreign-related civil dispute filed against a defendant that has no domicile or the place of domicile of the representative office within the territory of China depends on whether the dispute has an appropriate connection with China. In determining whether a dispute over a standard essential patent license has an appropriate connection with China, the characteristics of such disputes should be considered."
The Civil Procedure Law (2023) does not stipulate how to determine the existence of an "appropriate connection." The experience gained in previous judicial practice has concentrated on patent disputes field. Whether this concept can be extended to other fields, and whether there are innovative interpretations and developments, await further clarification in subsequent judicial practice. We believe that to constitute an "appropriate connection," the jurisdictional nexus should at least be comparable in weight with the jurisdictional nexus points such as the place where the contract is signed as stipulated in this article and has reasonable foreseeability.
Enterprises FAQ: What Kind of Cases are Foreign-Related Cases?
The above changes further expand the jurisdiction of Chinese courts over foreign-related disputes, which on one hand creates conditions for China to deal with the "long-arm jurisdiction" of foreign courts, and on the other hand, reduces the threshold for Chinese and foreign parties to file lawsuits in Chinese courts.
It is worthwhile for enterprise legal teams to pay attention to whether a case is foreign-related, since it determines the procedures applicable to the case, such as hierarchical jurisdiction, the period of the written statement of defense, the period of the objection to the jurisdiction, the trial period, etc.,.
With regard to the definition of "foreign-related civil disputes", Article 520 of the Interpretation of the Supreme People's Court on the Application of the Civil Procedure Law of the People's Republic of China (2022 Amendment) and Article 1 of the Interpretations of the Supreme People's Court on Several Issues Concerning Application of the Law of the People's Republic of China on Choice of Law for Foreign-Related Civil Relationships (I) (2020 Amendment) both have clear provisions. There includes five circumstances: (1) 1. where either party or both parties are foreign citizens, foreign legal persons or other organizations or stateless persons; (2) where the habitual residence of either party or both parties is located outside the territory of the People's Republic of China; (3) where the subject matter is outside the territory of the People's Republic of China; (4) where the legal fact that leads to establishment, change or termination of civil relationship happens outside the territory of the People's Republic of China; or (5) other circumstances under which the civil relationship may be determined as foreign-related civil relationship.
It is worth noting that Article 2 of the Notice of the Supreme People's Court on Clarifying Relevant Matters Concerning the Standards for Hierarchical Jurisdiction over and Centralized Handling of Foreign-related Civil and Commercial Cases of First Instance stipulates that the following ten types of cases shall be tried by a tribunal for foreign-related cases or a special collegial panel: (1) A civil and commercial case in which either party or both parties are foreigners, stateless persons, foreign enterprises or organizations; or the habitual residence of either party or both parties is located outside the territory of the People's Republic of China; (2) A civil and commercial case in which the legal fact that leads to the establishment, change or termination of civil relationship occurs outside the territory of the People's Republic of China; or the subject matter is outside the territory of the People's Republic of China; (3) A civil and commercial case which involves the formation, contribution, shareholder eligibility confirmation, profit distribution, merger, division, dissolution and any other matter of a foreign-invested enterprise; (4) A civil and commercial case in which either party is a wholly foreign-owned enterprise; (5) A dispute case over letters of credit or guarantee, including a case of application for suspension of payment; (6) An appeal case over the ruling on objection to the jurisdiction over the cases in the aforesaid 1-5; (7) A case of application for re-trial over the effective judgment for cases in the aforesaid 1-5, excluding those in which either party or both parties apply to the original PRC court for re-retrial according to the law; (8) A case of assistance in cross-border insolvency; (9) A case of judicial assistance in civil and commercial matters; (10) An arbitration-related judicial review case determined in the Notice of the Supreme People's Court on Relevant Matters Regarding the Centralized Handling of Arbitration-related Judicial Review Cases.
The scope of cases under the jurisdiction of the tribunal for foreign-related case is not limited to foreign-related civil disputes. Therefore, cases under the jurisdiction of the tribunal for foreign-related case are not necessarily foreign-related civil disputes, and special provisions on foreign-related procedures do not necessarily apply. In practice, if enterprise legal teams encounter cases tried by a tribunal for foreign-related cases, they need to confirm whether the cases are foreign-related cases and the corresponding limitation to the period, so as to avoid missing the time limitation and causing damage to the interests.
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