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Cut through the judicial maze: China issues new opinions on optimising judicial resources

by Ik Wei Chong (Clyde + Co (Shanghai))

Potential redefinition of the address for document service and the assumption of attorney's fees

Introduction

On 13 September 2016, the Supreme People's Court of PRC published Several Opinions on Further Advancing Optimisation of Judicial Resources by Distinguishing Complicated and Simple Cases (the Opinion). The Opinion came into force on the same day of publication.

In this update we focus on some significant elements of the Opinion, which addresses issues related to the use of judicial resources, document service and costs awards for attorney's fees.

Background

The Opinion offers guidance for courts at all levels and is aimed at reducing the significant pressure on judicial resources caused by too many cases and too few judges.

During the drafting process of the Opinion, the Supreme People's Court undertook investigations and research in provinces such as Hunan and Zhejiang, and held several seminars with the local People's Congresses, CPPCC members, legal experts and experienced lawyers and encouraged the first line judges and the general public to have a say. It is safe to say that the new Opinion is a real achievement and offers useful guidance not only for judges but also to the parties in a lawsuit.

Key provisions of the Opinion

Pursuant to the official summary from the Supreme People's Court, the new Opinion contains 22 articles, which can be divided into 3 main parts. First, Article 1 deals with efficient case management by distinguishing between complicated cases and simple cases. The idea here is that simple cases be dealt with separately using a fast-track summary judgement procedure freeing up more time for the court to hear complicated cases. Secondly, Articles 2 to 15 are aimed at streamlining litigation procedure, the filing and service of pleadings, pre-trial conferences and appeals. Thirdly, Articles 17 to 22 focus on optimising judicial resources by rationalizing allocation of the internal resources of the court as well as taking advantage of external judicial resources.

To address problems with unnecessary document service, the Opinion provides that the address for service mutually agreed by the parties prior to the dispute shall be applied by the court as the appropriate address for service. When submitting the statement of complaint or defence, the parties shall, according to relevant regulations, sign the address confirmation. The Opinion also encourages the courts and litigants to better make use of the electronic methods of service. If accepted and confirmed by the parties, document service can be done through electronic methods, such as fax, e-mail and WeChat.

The Opinion also provides that if any party deliberately abuses its litigation rights or reluctantly undertakes its litigation obligations, which causes direct loss to the counter party or third parties, the people's court may, as the case may be, support claims such as compensation for reasonable attorney's fees incurred by the innocent party.

Comment

The conflict between case loads and lack of judicial resources has long been regarded as one of the major concerns in courts at all levels, especially the basic people's courts. It has been reported that 80 per cent cases are tried by basic people's courts, of which only approximately 70 per cent apply the summary procedure, whereas the respective figure in the US is about 95 per cent. In other words, judges in basic people's courts are under a lot of pressure to issue a verdict while maintaining efficiency and quality.

In addition, the problems arising from incorrect or misleading addresses for service and inadequate document service have become more common with the increase of cases involving foreign elements. Abuses of litigation rights and deliberate delaying tactics employed by litigants are also a feature of litigation in China due to the court's inability to grant costs to the innocent party.

Therefore, the recently published Opinion is likely to be of great significance in future not only for judges, but also to parties who wish to pursue claims through litigation. As a result of the Opinion, we would recommend to litigants that:

1. They pay closer attention to technology during the different stages of litigation, such as electronic modes of service, electronic payments, hearings by remote video and testifying via video conferencing. Litigants should also become familiar with electronic documents and electronic case files. These innovations are likely to become the mainstream in the near future.

2. Where possible reach a mutual agreement regarding the address for document service as this will greatly speed up the litigation process. The address of the parties respective lawyers could potentially be listed in the mutual agreement as the address of document service. If permissible, this will greatly facilitate the resolution of the problems in document service.

3. If a party is abusing its rights or deliberately delaying the proceedings don't be afraid to ask for costs. According to Article 22 of the Opinion, it is possible for the court to order that the attorney's fees should all be borne by the party who abuses its litigation rights or delays to undertake its litigation obligations and causes direct loss thereafter. However, more time and further official explanations are needed to see how the courts will define "abuse of litigations rights" and "delay of undertaking litigation obligations".

January 10, 2017

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