Environmental public interest litigation in the Qingdao maritime courts

large_article_im2286_ConocoPhillips_oil_spill_in_ChinaChinese maritime courts, which primarily hear maritime commercial cases, also have jurisdiction over maritime pollution cases.  This short blogpost provides a brief update on the first public interest environmental case filed in the maritime courts.

Qingdao Maritime Court has announced that it accepted a case filing by plaintiff China Biodiversity Conservation and Green Development Foundation (CBCGDF) against ConocoPhillips and China National Offshore Oil Corporation (CNOOC).

According to its official social media Weibo, the plaintiff filed a lawsuit on July 7th, 2015, requesting the court to order two defendants to repair the environmental damage caused during the 2011 Bohai Bay oil spill. The court accepted the case on July 21st, 2015.

This is the first maritime pollution case in China brought by a social organization in accordance with the Article 58 of the Environmental Protection Law, which for the first time granted social organizations to file litigation relating to pollution activities that cause environmental pollution, ecological damage or public interest harm.

CBCGDF had previously filed cases regarding fresh water pollution and red wood destruction, which were accepted by the respective courts. Back in May 2015, another social organization brought a similar lawsuit against PetroChina in Dalian Maritime Court for oil spill, which was dismissed by the court. The plaintiff in that case did not seek to appeal the dismissal after PetroChina set aside an ecological repair fund of RMB 200 million.

The 2011 Bohai Bay oil spill has been followed by government investigation and fines, as well as related civil lawsuits. This case will be widely watched by the environmental community, including social organizations [foundations, NGOs, and others] and environmental law experts and Chinese and international practitioners.

[Contributed by Fang Jianwei (Jerry) Fang, a partner with the China-based Global Law Office in the firm’s Shanghai and Beijing offices. He was a judge in China and studied law at Columbia Law School.  For more information on this report, please contact him  at jfang@glo.com.cn.]

Supreme People’s Court and “One Belt One Road”

Judge Luo Dongchuan. chief judge,#4 civil division

Judge Luo Dongchuan. chief judge,#4 civil division, at the OBOR Opinion press conference

On 7 July the Supreme People’s Court (the Court) issued an opinion (意见) policy document on how the courts should provide services and protection to “One Belt One Road” (OBOR Opinion) (关于人民法院为“一带一路”建设提供司法服务和保障的若干意见). This blogpost explains why the Supreme People’s Court issued it, what the policy document provides and what it means for legal professionals. The typical (model) cases issued at the same time include the Sino-Environment case, subject of an earlier blogpost  (and deserve closer analysis).

Why was the One Belt One Road document issued?

One Belt One Road (OBOR) is a major government strategic initiative.  As a central government institution, the Court must do its part to support OBOR.  Major SOEs contemplating investing in OBOR projects or trading with companies on OBOR recognize that their interests are best protected through legal infrastructure and the Court has an important role in this. MOFCOM and other related regulatory agencies realize this as well. Local courts linked to the Belt or the Road, are dealing with new demands because of OBOR and are looking to the Court for guidance.

The OBOR Opinion was drafted with input from these regulatory agencies and certain legal experts, but was not issued for public comment.

What the OBOR Opinion covers

The OBOR Opinion covers cross-border criminal, civil and commercial, and maritime as well as free trade zone-related judicial issues.  It also deals with the judicial review of arbitration.

Criminal law issues: the lower courts are requested to improve their work in cross-border criminal cases, and the courts are to do their part in increased mutual judicial assistance in criminal matters.  The focus is on criminal punishment of  those characterized as violent terrorists, ethnic separatists, religious extremists, and secondarily on pirates, drug traffickers, smugglers money launderers, telecommunication fraudsters, internet criminals, and human traffickers. It also calls on courts to deal with criminal cases arising in trade, investment, and other cross-border business, and deal with criminal policy and distinguishing whether an act is in fact a crime, so that each case will meet the test of law and history.  The political concerns behind criminal law enforcement issues are evident in this.

Much of the focus in the OBOR Opinion is on civil and commercial issues, including the exercise of jurisdiction, mutual legal assistance, and parallel proceedings in different jurisdictions and in particular, improving the quality of the Chinese courts in dealing with cross-border legal issues. These issues are explained in more detail below

One of the underlying goals set out in the OBOR Opinion, is to improve the international standing and influence of the Chinese courts and other legal institutions.

What does it mean for legal professionals

The OBOR Opinion signals that the Court is working on a broad range of practically important cross-border legal issues.  Some of these issues involve working out arrangements with other Chinese government agencies and are likely to require several years to implement.  The OBOR Opinion mentions that the Court:

  • seeks to expand bilateral and multilateral mutual judicial assistance arrangements, for better delivery of judicial documents, obtaining evidence, recognition and enforcement of foreign court judgments.
  • supports and promotes the use of international commercial and maritime arbitration to resolve disputes arising along One Belt One Road.  China will promote the use of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) between countries on One Belt One Road and encourage countries that have not yet acceded to the Convention to do so.
  • supports and promotes the use of various types of mediation to resolve OBOR related cross-border disputes.
  • it signals that the Court will become more involved in Chinese government initiatives such as the Asian Infrastructure Investment Bank, the conference of supreme courts under the Shanghai Cooperation Organization, and other international or regional multilateral judicial cooperation organizations.
  • is signalling the lower courts that they should limit the range of cross-border contracts being declared invalid or void.
  •  sets out the new thinking on the issue of reciprocity in the enforcement of foreign judgments, in particular that Chinese courts can take the initiative in extending the reciprocity principle to parties from other jurisdictions.  This is practically significant for foreign parties and their counsel, and has been discussed repeatedly by both practitioners and academics (such as these);
  • will improve Chinese legal infrastructure on overseas evidence, overseas witnesses giving evidence, documenting the identity of overseas parties, “to better convenience Chinese and foreign parties. ”  This would involve evolving from the current system embedded in Chinese legislation of requiring notarization and legalization of many documents (because mainland China is not yet a party to the Hague Convention on the Abolishing the Requirement of Legalization of Foreign Public Documents. This is a positive sign;
  • The Court has on its agenda further legal infrastructure on the judicial review of arbitration (as signalled at the end of last year), involving foreign/Hong Kong/Macau/Taiwan parties, aimed at supporting arbitration and having a unified standard of judicial review on the following issues:
    • refusing enforcement of arbitral awards; and
    • setting aside arbitral awards.
  • has on its agenda judicial legal infrastructure for supporting the resolution of bilateral trade, investment, free trade zone and related disputes.
  • Reflecting language in the 4th Plenum, it calls for China to be more greatly involved tin the drafting of relevant international rules, to strengthen China’s voice concerning issues of international trade, investment, and financial law.
  •  mentions that an improved version of the Court’s English language website and website on foreign-related commercial and maritime issues is forthcoming.  Specific suggestions can be emailed to supremepeoplescourtmonitor@gmail.com.

The Supreme People’s Court and interpreting the law, revisited (part one)

Marriage law judicial opinion

Marriage law judicial opinion

The topic of the Supreme People’s Court and the interpretation of law is one that vexes many, legal practitioners and academics alike.  Although the Chinese constitution vests the power to interpret law with the Standing Committee of the National People’s Congress (NPC SC), the Supreme People’s Court (the Court) and the Supreme People’s Procuratorate (SPP) actively issue interpretations of law. The Court more so than the SPP, because it deals with a broader range of legal issues.  These interpretations of law are critical to the operation of the Chinese legal system, because national law tends to set out broad principles that require additional legal infrastructure to be workable and the courts, in particular, need that legal infrastructure to decide cases.

A 1981 decision by the NPC SC delegated to the Court the authority to interpret law relating to questions involving the specific application of laws and decrees in court trials, while the Supreme People’s Procuratorate (SPP) was delegated authority to interpret law relating to questions involving the specific application of laws and decrees in procuratorial work.  The Organic Law of the People’s Courts re-iterates the delegation of authority to interpret law to the Court. Oddly enough, the principle is not in the Organic Law of the People’s Procuratorates. Interpretations by both the SPP and the Court are known as “judicial interpretations.”

In 2015, the Legislation Law, which had previously not addressed interpretation of law by the Court and the SPP, addressed the issue in Article 104.  This article is taken as intended to codify existing practice, because the explanation of the law recognizes the practical necessity of judicial interpretations:

  • “Interpretations on the specific application of law in adjudication or procuratorate work issued by the Supreme People’s Court or Supreme People’s Procuratorate shall primarily target specific articles of laws, and be consistent with the goals, principles and significance of legislation.”
  • It requires the Court (or SPP) in the situation described in the second paragraph of Article 45 of the Legislation Law (where the NPC SC  gives interpretations of national law), to submit a request for a legal interpretation, or a proposal to draft or amend relevant law, to the NPC SC.

(The explanation of the law  (legislative history) provides further background).

The process for drafting Court interpretations described in the 2007 regulations requires that the views of the relevant special committee or department of the NPC SC be solicited during the drafting process, and there would be pushback from the NPC SC if it was considered that the judicial interpretation had gone ‘too far.’

What types of judicial interpretations are there?

The 2007 Court regulations on judicial interpretations (linked here)  limit judicial interpretations to the following four types:

Those 2007  regulations set out various procedures for drafting and promulgating judicial interpretations, including a requirement that they be approved by the Court’s judicial committee and be made public.  As discussed in earlier blogposts, broad public consultation may be done if it affects the “vital interests of the people or major and difficult issues. These regulations also provide that judges may cite judicial interpretations as the basis for a court decision or ruling. Article 23 of the 4th Five Year Court Reform Plan mentions reform of judicial interpretations:

Improve the Supreme People’s Court’s methods of trial guidance, increase the standardization, timeliness, focus and efficacy of judicial interpretations and other measures of trial guidance. Reform and improve mechanisms for the selection, appraisal and release of guiding cases. Complete and improve working mechanisms for the uniform application of law.

As discussed in earlier blogposts, the Court also issues other documents with normative provisions that do not fit the above definition.  Those will be discussed separately.

Shine light on draft judicial interpretation on “twisting the law in arbitration”!

images-1The Supreme People’s Court and Supreme People’s Procuratorate are together drafting a judicial interpretation on Article 399a of the Criminal Law, the crime of “twisting the law in arbitration.”  My understanding is that one of the criminal law divisions of the Supreme People’s Court is involved in the drafting, rather than the #4 civil division, well-known internationally for its expertise in arbitration issues. According to an article published by the Guiyang Arbitration Commission, in late April, the State Council Legislative Affairs Office distributed the draft to some arbitration commissions for comment.  Given the many legal issues it raises for domestic and foreign arbitrators (and the Chinese government’s international/regional obligations), it should be issued publicly for comment.

What is Article 399a of the Criminal Law?

Article 399a, is part of  Chapter IX:  Crimes of Dereliction of Duty.

Where a person, who is charged by law with the duty of arbitration, intentionally runs counter to facts and laws and twists the law when making a ruling in arbitration, if the circumstances are serious, he shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention; and if the circumstances are especially serious, he shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years.”(依法承担仲裁职责的人员,在仲裁活动中故意违背事实和法律作枉法裁决,情节严重的,处三年以下有期徒刑或者拘役;情节特别严重的,处三年以上七年以下有期徒刑.)

Article 399a,  (which seems to have been drawn from analogous provisions in Japanese and Taiwan law), was promulgated despite protests from the arbitration community. Harsh criticism continues to be published (in Chinese), such as Professor Song Lianbin’s Critical Analysis of the Crime of Deliberately Rendering an Arbitral Award in Violation of LawRecently, Duan Xiaosong, a Chinese law lecturer, published an article in a US law review on Article 399a, but the article apparently did not catch the attention of international practitioners.

Issues include:

  • Article 399a is a duty crime (one committed by officials). How is it that Chinese arbitrators who are not officials, or foreign arbitrators can commit this crime?
  • The procuratorate investigates duty crimes.  This means that the procuratorate must review an award to make a decision whether to investigate whether an award has been intentionally rendered “in violation of facts and law.” Will a procuratorate be able to conduct this review applying foreign law?
  • If a procuratorate prosecutes a case under Article 399a, it also requires a court to undertake a substantive review of an arbitral award.
  • Judicial interpretations of both the Supreme People’s Court and Procuratorate raise important issues.  As suggested in several earlier blogposts, part of the judicial reforms should include greater requirements for public comment on draft judicial interpretations. Depending on how familiar the US and EU bilateral investment treaty negotiators are with the details of Chinese law, this may be raised by negotiators.

Comment

Because this judicial interpretation has implications for China’s obligations under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) and the analogous arrangement with Hong Kong, the draft should be made public so that the greater arbitration community, domestic and foreign, is able to provide detailed analysis and commentary on it. This is the interests of the international and Chinese legal communities.

New docketing procedures come to the Chinese courts

local court case filing office

local court case filing office

New docketing procedures (case filing) (立案) have come to the Chinese courts.  Chinese courts have a separate case filing divisions, which up until 1 May of this year acted as gatekeepers to courts.  They exercised their approval authority over cases in a non-transparent manner, which meant for litigants in Chinese courts that their cases could be and were rejected without having the opportunity to argue why they should be accepted.  Case filing divisions also were known to put troublesome filings aside, without issuing a rejection, or repeatedly asked for supplementary documents, seeking to drive away litigants by repeated formalistic demands.

More background is given in these blog posts and law review article.  It has been an ongoing problem for many years, provoking endless complaints and articles by ordinary people, lawyers, academics, and NGOs, and has been one of the issues driving petitioners to the streets.

The Supreme People’s Court (Court) leadership identified case filing as one of the needed reforms (and as one of the many contributing factors to the low prestige of the Chinese judiciary), even before the Third Plenum. Because of that, the Communist Party’s 4th Plenum Decision and the 4th Five Year Court Reform Plan flagged this as a priority.  (Unsurprisingly), the language in the two documents is almost identical:

  • Reform systems for courts’ acceptance of cases, change the case filing review system to a case filing registration system, and in cases that should be accepted by the people’s courts, ensure parties procedural rights by requiring filing when there is a case, and requiring acceptance where there is a lawsuit.
  • Change the case filing review system into a case filing registration system, making it so that for cases that should be accepted by the people’s courts, where there is a case it must be filed, and where there is a suit it must be accepted; safeguarding the parties’ procedural rights.

Litigants in line at the #1 Circuit Tribunal

In late April, the Court issued case filing regulations which address many of the longstanding problems that litigants and their lawyers faced:

Case filing divisions

  • refusing to accept complaints;
  • refusing to issue notices rejecting complaints;
  • repeatedly asking for supplementary materials.

The new rules require case filing divisions to accept filings of civil and criminal private prosecution cases (brought by the victim of a crime if the state refuses to prosecute, generally relating to minor crimes) on the spot if possible, provide templates for frequently used types of cases, and to respond within statutory deadlines.  Case filing divisions are directed to make requests for supplementary materials once. (The new administrative litigation law judicial interpretation, described in this earlier blogpost, contains similar provisions.) Litigants who encounter noncompliant behavior can file a complaint with the relevant court or the court above it.

Cases that the courts must refuse:

  1. Matters that endanger national security;

Rights activists have likely noticed that these carveouts are broad and flexible enough to keep out some cases that they might want to bring.

The take-up on the reform: some “Big Data”

According to Court statistics, in the first month since the regulations went into effect, there was a 30% jump in the number of cases accepted,(1.13 million), with most of them accepted immediately. The Jiangsu, Zhejiang, and Shandong courts accepted over 80,000 cases, with Beijing, Hebei, and other areas accepting over 40,000.

In particular:

  • the number of civil cases was up about 28%.
  • the number of administrative cases accepted was up 221% in comparison to last year (starting from a low base), with Tianjin cases up 752.40%,Shanxi, 480.85%,and Shanghai 475.86%, reflecting both the new case registration and new Administrative Litigation Law going into force.
  • Courts in Zhejiang found that fewer litigants were mediating their cases before filing suit (down 17%), and the success rate of mediation was down by 14%.  Does this mean a better outcome for litigants?  Closer analysis is needed.

Much of the press coverage has been about litigants filing cases themselves, rather than with the assistance of a lawyer or other legal personnel, but I haven’t seen statistics that address this.

Some more detailed data from Jiangsu province:

download 1

Case filings in Jiangsu Province, by city

1115572603_14339164175221n

Civil 60791, enforcement 25438, administrative 1980, private prosecution 256, state compensation 56

1115572603_14339164566661n

May, 2015 cases accepted, by location

An evaluation after six weeks

Some thoughts about the case filing reform

  • It will mean more cases in the courts and greater stress for fewer judges and other judicial staff, to assist the many pro se litigants.
  • It should reduce the dissatisfaction level of some proportion of litigants with the court system, such as the anonymous staff from a Guangzhou car finance company quoted in a press report.
  • Violence against court personnel (like medical personnel), is another factor driving qualified and experienced people away, as described in these recent articles.  Will the reforms reduce the level of frustration of ordinary people with the court system, and reduce physical and verbal attacks on judicial personnel?  It is early days to say.
  • It does not resolve underlying issues such as local courts not wanting to offend local government or locally state-owned enterprises.  The 4th 5 Year Court Reform Plan identifies cross-jurisdictional courts as a solution, and pilot projects have started on this in various locations, including Beijing, but a comprehensive framework is not yet in place.
  • For the numerically small number of foreign litigants in the system, it does not change all the documentary requirements needed, such as notarization and legalization of documents and powers of attorney. It should make it easier for foreign invested companies to litigate.
  • As a Court spokesman suggested,  the rejection of many cases could come later, leading to greater pressure on the courts later on, from appeals, more requests for cases to be re-tried, and not ultimately reduce the number of petitioners.
  • It will inevitably lead to abuse of process and frivolous cases, such as the over-publicized case of a Shanghai man suing because of the stare of a TV star caused him spiritual damage. The Court is working on rules to address this.

The tidal wave of Chinese shadow banking disputes

the "pyramiding" private lending  (potentially crushing the banks)

“Pyramiding” private lending (potentially crushing the banks)

My article in The Diplomat on shadow banking disputes was recently published. It highlights what few outside of China have noticed–that shadow banking/private lending disputes account for a substantial proportion of civil/commercial disputes in Chinese courts, creating a particular burden on the courts.  In some places, the percentage hovers close to 50%!  These disputes raise a range of issues and the law is particularly unclear.  Although some provincial (and municipal) courts have issued guidance in the absence of a more detailed judicial interpretation, the lower courts are looking to the Supreme People’s Court for a more comprehensive national legal framework.

Supreme People’s Court’s new policy on drugs

ceb176df44f7c0a32fc56771bb9ba2c9This short blogpost follows up on the recent report on the same topic in the  Diplomat.

In late May, the Supreme People’s Court issued a conference summary on drug crimes (全国法院毒品犯罪审判工作座谈会纪要) setting out further guidance to the lower courts on trying drug cases (for those diving deeper into the subject, a transcript of comments by an official of the #5 criminal division follows the text of the conference summary).

Conference summaries are what the Court entitles “normative documents” and often address new issues or areas of law in which the law is not settled.   “Conference summaries” are also a form of Communist Party/government document.  Conference summaries are not considered “judicial interpretations” and are not required to be made public.  The full text was not generally issued in the legal press but has appeared in social media. This blogpost will look further into the conference summary and what it implies.

The conference summary

A national drug crimes court conference was held in December, 2014, with delegates both from the military and civilian courts.   Although the actual number of drug cases heard in the military courts is unknown, they do occur, as indicated by a press report of a man sentenced in Anhui for selling drugs, who had previously been convicted by a military court in Lanzhou for selling drugs (and other offenses).

The Court organized the conference to ensure that the lower courts were trying drug crimes in line with the latest national policy on the matter and to harmonize lower court practice.  That national policy is set out in the first Central Committee/State Council policy document on drug crimes, issued in July, 2014, and the content appears to be sensitive enough that the full text has not been published. “Harmonizing court practice” means in  Chinese judicial parlance that judges are applying the law similarly. As explained earlier, judicial conferences are an important way of doing so. The conference summary, which was circulated among conference participants (and the Court leadership) sets out guidelines for judges on difficult issues, including the death penalty.

Death penalty

A good analysis of prior law on drugs and the death penalty can be found here. The conference summary provides guidance on how to apply the death penalty, and is consistent with the Court’s general principles on applying the death penalty–in a minority of cases and to the worst offenders.  The conference summary provides guidance in relation to three issues:

  • Trafficking of illegal drugs–the death penalty is most appropriately applied to the head of a drug enterprise, who organizes, ships illegal drugs with armed guards, hires others, etc, and executing 2 or more persons in the same case should be very carefully considered.
  • Illegal drugs supply chain–the death penalty should be applied to the worst offenders.
  • New types of drugs-meth, ice, ketamine–similarly, the death penalty should be applied to the worst offenders.

Who commits drug crimes?

According to a 2011 Court research report, the profile of those committing drug crimes is:

  • Unemployed (51% in 2011), with about 90% peasants and unemployed (this has implications for the government’s urbanization plans;
  • Greater proportion (11%) of women in comparison to other crimes;
  • Many recidivists;
  • Generally low level of education;
  • Involving high level of profits when trafficked away from border areas; and
  • Increasingly involving new types of drugs.

Comment

As Chinese people become wealthier (and the economy becomes more internationalized), drug use (and the illegal drug industry) is growing correspondingly.  As in legal goods, some illegal drug  manufacturing has moved to China.  Although last July’s high level document calls for a three year plan to control illegal drugs, it seems more likely that we will continue to see an increase in drug cases heard in the Chinese courts and capital punishment applied to the most major offenders.