Amended Civil Procedure Law’s impact on commercial disputes

By Mike Wang, Dentons
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A decision to amend the Civil Procedure Law was adopted at the 32nd session of the Standing Committee of the 13th National People’s Congress on 24 December 2021. The newly revised law, which came into force on 1 January 2022, will significantly affect commercial dispute resolution, allowing commercial subjects to better use their procedural options.

FLEXIBLE ONLINE LITIGATION

The covid-19 pandemic further promoted the popularity of online litigation and judicial representation to transform and improve the format of the trials. It is now possible for parties to choose to hold a trial online or offline, according to the specifics of their commercial disputes.

For cases under the jurisdiction of non-local courts, online court sessions will save time and lower economic costs. Article 16 of the Civil Procedure Law stipulates that, “civil litigation activities carried out online through an information network platform shall have the same legal effect as offline litigation activities”. Commercial subjects can also use online and cross-jurisdictional case registration, mediation, court sessions, appeals and other litigation services.

For complex cases or cases where it would be helpful for one party to hold a trial offline, the party may apply to the court for an offline hearing, which normally would be accepted by the court. Article 16 of the Civil Procedure Law also stipulates that one precondition for an online court session is the consent of all parties.

MEDIATION AGREEMENTS

Amended Civil Procedure Law’s impact on commercial disputes Mike Wang
Mike Wang
Senior Partner
Dentons

Prioritising the development of alternative dispute resolution mechanisms and slowing down the increase of new litigations are express requirements of the state to transform the dispute resolution system. The Decision of the CPC Central Committee on Several Major Issues Concerning Comprehensive Promotion of the Rule of Law proposes a “perfect diversified dispute resolution mechanism with mediation, arbitration, administrative adjudication, administrative reconsideration, and litigation organically connected and and co-ordinated with each other”.

Article 201 of the Civil Procedure Law stipulates that, “if a mediation agreement is arrived at under a mediation organisation established in accordance with the law and an application for judicial confirmation is to be made,” both parties shall jointly submit it to the court within 30 days from the effective date of the mediation agreement.

The amendment to the Civil Procedure Law expanded the scope of judicial confirmation to mediation agreements reached under “mediation organisations established according to law”, which is conducive to enhancing the mediation function of commercial mediation organisations other than the mediation committee in commercial dispute resolution cases.

In the dispute resolution clause of a contract, parties may agree that in the occurrence of a dispute, they will first seek mediation from a commercial mediation organisation, after which the court can confirm a mediation agreement. This would improve litigation efficiency and save litigation costs.

SOLE JUDGE OR COLLEGIAL PANEL

If the court arranges for a commercial dispute to be heard by a sole judge, but if one party believes a collegial panel hearing is more appropriate, it may request a collegial panel hearing. Article 42 of the Civil Procedure Law lists the following cases that a sole judge should not hear:

(1) cases involving national interests or social and public interests;

(2) cases involving group disputes that may affect social stability;

(3) cases of wide public interest or with great social influence;

(4) new types of or difficult and complex cases;

(5) cases that should be heard by a collegial panel as required by law; and

(6) other cases that are not suitable to be heard by a sole judge.

Article 43 of the Civil Procedure Law stipulates that, “if a party holds that a case being heard by a sole judge violates the provisions of the law, it may raise an objection to the people’s court, which shall review the objection raised. If the objection is tenable, the court shall rule that a collegial panel hearing should be applied instead of a sole-judge hearing; if the objection is not tenable, the court shall reject it.” This right of procedural relief can be beneficial and should be put to good use.

HEARING OF APPEALS

The Civil Procedure Law establishes the principles for second instance hearings in court. Article 176 of the Civil Procedure Law stipulates that “the people’s court of second instance shall hear the appeal in court. However, a second instance may not be heard in court if, after reviewing the files, investigating the case and questioning the parties, the people’s court deems it unnecessary as no new facts, evidence or reasons were presented”.

In practice, courts of the second instance often hear appeal cases by means of conversation or in other forms instead of a hearing in an open court. For difficult and complex commercial dispute cases, a written application for hearing in open court may be submitted to the court of second instance. The application should state that it is not sufficient to ascertain the case only by reviewing the files, investigating the case, and questioning the parties involved. The focus of factual and legal disputes can only be fully discussed in a court session. Meanwhile, new facts, evidence or reasons should also be presented to the greatest extent in the appeal to better achieve the aim of holding a hearing in court.

METHOD OF SERVICE

To improve judicial efficiency, the Supreme People’s Court has made expansion of the scope of electronic service an essential part of improving electronic litigation rules in reforming the diversion between simple and complicated civil procedures. The amendment to the Civil Procedure Law further clarifies the electronic service method.

Article 90 of the Civil Procedure Law stipulates that, “with the consent of the recipient, the people’s court may serve litigation files by electronic means of which the receipt can be confirmed. If the recipient requests paper documents for a judgment, ruling or mediation served by electronic means, the people’s court shall provide such paper documents”. If the parties do not agree, the court shall not serve such documents electronically. Even with the consent of the parties, the court should only use electronic means for which the receipt can be confirmed. If the court serves electronically, the parties may request the provision of paper documents simultaneously.


Mike Wang is a senior partner at Dentons. He can be contacted at +86 10 5813 7739 or by email at mike.wang@dentons.cnam