26 August 2016

Fast forward - Class actions in China

While the term “class action” is not known under PRC law, “representative actions” are recognised under the Civil Procedure Law (CPL) with mechanisms for claims involving either:

  1. an undetermined number of unidentified plaintiffs at the point at which the case is filed (Article 54); or
  2. numerous plaintiffs, whose number and identity is known when the action is initiated (Article 53).

Despite this framework, class actions are not yet common practice in China. This is because the Supreme People’s Court (SPC) has actively discouraged the lower level courts from accepting and hearing proceedings in the form of class actions, and encourages courts to divide class action into individual cases.

In addition, securities-related class actions are currently prohibited in China. In the Notice of Supreme People’s Court on Accepting Tort Cases Triggered By Misrepresentation in Security Market, the SPC demands the lower courts accept and hear a securities-related misrepresentation case in the form of an individual case or a joint action (with ten or fewer plaintiffs), rather than a class action.

There have been a limited number of class actions reported in the PRC since the class action mechanism was adopted in CPL in 1991. As noted in The Review 2014/2015, the types of claims in these class actions have related to land acquisition, environment contamination, consumer protection, copyright protection and financial products, although no one type of claim dominates the case list.

As a matter of practice, the SPC requires the lower courts to report the class actions they accept to their superior courts. Courts in different geographic areas are required to communicate internally and to make unified decisions with the guidance of their superior courts.

Looking ahead, we anticipate a continuing increase in the attempts to use the class actions mechanisms provided by the CPL across a broad range of actions.


Want to know more?

The Review: Class Actions in Australia 2015/2016 examines key class action decisions from July 2014 to June 2015 as well as current proposals for reform. It provides an analysis of how these decisions are likely to affect future proceedings for both plaintiffs and defendants, and also looks at emerging trends in class action regimes around the world. 

This is the fifth annual report released by King & Wood Mallesons’ Class Actions & Regulatory Investigations Practice, which has worked on some of the largest and most complex class action matters in Australia.

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We explore the key issues being considered by clients looking to unlock investment opportunities in the People’s Republic of China.

Doing Business in China
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