Chinese courts & formality requirements

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Hong Kong Apostille (from internet)

In February, 2017, the Supreme People’s Court (SPC) issued its second judicial transparency white paper, giving the official version of what the SPC has done to respond to public demands for greater transparency about the Chinese judicial system. But what are the voices from the world of practice saying? One of the issues (for a small but vocal group, foreign litigants) is inconsistent and non-transparent formalities requirements.

Chinese civil procedure legislation requires a foreign litigant to notarize and legalize corporate documents, powers of attorney & other documents. It is a time consuming and costly process, with some jurisdictions providing documents that do not meet the expectation of Chinese courts.   China is not yet a signatory to the Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents  (Hague Legalization Convention)   which substitutes the faster and cheaper apostille process (note that Hague Legalization Convention continues to be applicable to Hong Kong and Macau under the terms of the joint declarations and Basic Laws for each Special Administrative Region (SAR)).  About one year ago, a Ministry of Justice official published a Wechat article discussing the benefits of the Hague Legalization Convention (as well as the issues facing China in implementing it).

While this article addresses issues faced by foreign plaintiffs seeking to challenge Trademark Review and Adjudication Board decisions in the Beijing Intellectual Property Court (Beijing IP Court), according to other practitioners (who have asked not to be identified), these problems with inconsistent (and non-transparent) requirements concerning legalizing foreign corporate documentation are not limited to the Beijing IP Court, but face foreign parties appealing from intermediate courts to provincial high courts elsewhere in China. These requirements can have the effect of cutting off a party’s ability to bring an appeal, for example.

What is the solution?  The long-term solution, of course, is for China to become a signatory to the Hague Legalization Convention.  In the meantime, Chinese courts should be more transparent about their formalities requirements.  These requirements affect all foreign parties, whether they are from One Belt, One Road  (OBOR) countries or not. If China is seeking to become an international maritime judicial center or hear more OBOR commercial cases, the Chinese courts need to become more user friendly.  Courts with significant numbers of foreign cases (Beijing, Shanghai, Shenzhen….) can consider reaching out to the foreign chambers of commerce, many of which have legal committees, to understand in greater detail what specific problems foreign litigants face (and convey their views to foreign audiences). Resolving this issue can create some goodwill with the foreign business community with relatively little effort.

 

China’s Evolving Case Law System In Practice

1200px-Tsinghua_University_Logo.svgI recently published an article in the Tsinghua China Law Review on Chinese case law in practice, building on several blogposts I had previously written and articles by fellow bloggers Jeremy Daum and Mark Cohen.  Many thanks are due to the persons who shared their experience and observations with me. A special thank you is due to the persons who provided detailed comments on earlier drafts.

Judicial assistance between the mainland & Hong Kong at 20

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HK’s Secretary of Justice shaking hands with SPC Justice Shen Deyong

In all legal arrangements, the devil is in the details.  Important details concerning how the Hong Kong and mainland legal systems interact are found in a series of arrangements on mutual legal assistance between mainland China and Hong Kong.  An “arrangement,” for those not familiar with Hong Kong/mainland legal jargon, is a quasi-treaty document between Hong Kong and the mainland. The mainland is looking to conclude further arrangements, including in the area of criminal law.  According to 29 June report by Xinhua News:

Chinese mainland and Hong Kong are expected to confirm further judicial assistance arrangements, including those regarding criminal proceedings.

Shen [Deyong, Supreme People’s Court (SPC) executive vice president] said in an interview with Xinhua that the two sides will carry out further negotiations on judicial assistance in civil and commercial cases and will take effective measures to deal with the assistance issues in criminal cases, so the assistance arrangements cover all judicial realms between the two sides.

It appears that Justice Shen is repeating what he told Hong Kong’s Secretary of Justice Rimsky Yuen in April, 2017.

Justice Shen’s language can be traced back to the 4th Plenum Decision:

Strengthen law enforcement and judicial cooperation between the mainland, Hong Kong, Macau and Taiwan,jointly attack crossborder unlawful and criminal activities.

(I discussed this in a January, 2015 conference at the University of Hong Kong.)

Likely taking the lead in negotiating these arrangements is the Hong Kong Department of Justice (Hong Kong DOJ)’s International Law Division (and I assume others as well) and its mainland interlocutors.  I assume that a team from the Supreme People’s Court (SPC)’s Hong Kong and Macau Affairs office is among the negotiators on the other side of the table (with a team from the Supreme People’s Procuratorate involved with negotiations on criminal matters.  The Hong Kong DOJ’s website lists five mutual legal assistance arrangements, with the most recent one, signed on 20 June 2017, on the Reciprocal Recognition and Enforcement of Civil Judgments in Matrimonial and Family Cases, not yet in force.  The paper that the Hong Kong DOJ filed with the Legislative Council sets out details of the arrangement, including its scope.

This latest arrangement relates to one of many pressing practical legal issues between Hong Kong and the mainland, the large percentage of “cross-boundary marriages.” According to the Hong Kong DOJ’s consultation paper on the arrangement (the SPC did not issue a similar paper), cross-boundary marriages increased from 32% to 37% during 2009-2014 and 20-30% of divorce cases filed in Hong Kong’s family court during 2010-14 related to marriages that took place on the mainland.

This arrangement involved creative lawyering on both sides, because it involves incorporating principles from several Hague Convention to which mainland China is not a party:

  • Recognition of Divorces and Legal Separations (1970), applicable to Hong Kong, but not the mainland;
  • The Hague Convention on the Civil Aspects of International Child Abduction (1980), applicable to Hong Kong, but not the mainland;
  • International Recovery of Child Support and Other Forms of Family Maintenance (2007), not applicable to either Hong Kong or the mainland.

Many of the previous arrangements reflected Hague Conventions to which the mainland was already a party.

Commercial lawyers should note that according to an April, 2017 statement by Hong Kong’s Secretary of Justice Rimsky Yuen, it was agreed in the form of 2016 meeting minutes to prioritize an arrangement for reciprocal judgment enforcement in civil and commercial matters involving situations other than the presence of choice of court agreements.  A consultation paper has not yet been issued for that arrangement. I surmise that the arrangement will reflect the draft Hague Convention on the Recognition and Enforcement of Foreign Judgments.  Hong Kong’s DOJ has at least one representative participating in China’s delegation.  Several senior SPC judges are also on the delegation. (The other two arrangements mentioned have already been concluded.)  It can be seen from this visual from a Chinese court’s Wechat public account, that the end of 2017 has been set as the deadline for concluding that arrangement.

Arrangements involving criminal matters are much more difficult to conclude, although several prominent commentators in Hong Kong this year have called for a rendition arrangement to be concluded. Among those include Grenville Cross, former director of public prosecutions in Hong Kong and Regina Ip, former Secretary for Security.  The issues have been discussed since the late 1990’s.  This 2005 paper submitted to the Legislative Council sets out some of the basic principles that could go into a future rendition arrangements:

  • double criminality;
  • issue of death penalty;
  • non-extradition for political offenses;
  • fair trial;
  • double jeopardy;
  • habeus corpus.

There have been academic articles on many of these topics.

It appears that the increased pressure on Hong Kong relating to the rendition arrangement is related to the drafting by the mainland’s Ministry of Justice of an International Criminal Justice Assistance Law.  (No drafts have yet been released.) Fellow blogger NPC Observer notes that although the law is intended as a comprehensive statute covering all areas of international criminal justice assistance, including the mutual recognition and enforcement of criminal judgments, official discourse labels it an anti-corruption law, likely designed specifically to hunt fugitive corrupt officials overseas.  So it appears also to be linked to Operation Skynet and the Central Anti-Corruption Coordination Group.

The status of negotiations on a rendition arrangement or other arrangements related to criminal justice are unknown.  What is known is that there have been instances, including earlier this year, in which certain mainland authorities have dispensed with the niceties of official liaison. Would having an arrangement improve matters, as Grenville Cross argues, or will “extraordinary” rendition continue to occur?

It appears that upholding an important part of Hong Kong’s rule of law, as evidenced by arrangements between Hong Kong and the mainland depends on the professionalism of Rimsky Yuen, the Secretary of Justice, his Department of Justice colleagues and their mainland interlocutors.  As he told Justice Shen and others at a meeting between the SPC and Department of Justice in April, 2017:

Cooperation [on criminal cases] is significant, but considering the difference of the two legal systems, we face challenges in civil, commercial and criminal ­cooperation. It will still take some time.

Finally, paraphrasing the Guardian, analyzing the Supreme People’s Court takes time and costs money. If you like the Monitor, please make a contribution (details here.)

 

 

Welaw Monitor (微律观察) #2

I am traveling at the moment, so my time to review articles published on Wechat is limited.  But below are some links of interest.

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Huazhen (Flower Town) emotional counseling

Oldies but goodies

Several prominent media sources, the South China Morning Post among them, are running articles on China’s clean-up of the financial sector, this one pointing to the government’s focus on privately owned insurance companies.

But those reading Wechat would have known that several years ago, China’s legal analysts had been writing  articles such as “China’s private entrepreneurs are all on their way to jail  or China’s businesspeople are either in jail or on their way to jail. 

China’s Good Samaritan case Peng Yu back in the news-  a backgrounder plus-retired SPC judge Cai Xiaoxue criticizes as does former judge & Peking U Professor Fu Yulin.

Detention Center Law draft

The Ministry of Public Security (MPS) has recently issued its draft Detention Center Law for public comments (link to Chinalawtranslate.com’s translation.  The draft has caused a great deal of comment within China and those concerned about the treatment of fellow human beings in criminal detention in China should read these articles:

The MPS is drafting the Detention Center Law, but the entire legal world is opposed

10 years of calls for separating detention from criminal investigation

Professor Chen Ruihua, defects of the detention system and how it should be reformed

Professor Chen Ruihua–the detention centers should be transferred to the justice authorities

Commercial law

China’s distraught buy online counseling packages, but does China’s consumer protection legislation protect them if there are no standards for counseling?

Party discipline

A Cangzhou court president is under investigation. Is it connected to the strip search of a woman lawyer?

In CCDI hearing procedures, will evidence provided by the accused be considered?  The answer is, the scope is limited

Criminal law

Three SPC judges (likely to have been on the drafting team) unpack the asset recovery regulations (discussed in this January blogpost). It shows they looked to foreign legislation when doing so;

 20 years of bribery prosecutions, with 9 acquittals

SPC on anti-drug day, with white paper and 10 typical cases

Is it rape if the sexual contact comes after the coercion?

Supervision Commission

The first father’s day after being transferred to the Supervision Commission

Labor law

Does “remote working” in China mean the place of employment has changed?

Don’t make these 10 mistakes when terminating employees

Family law issues & property

Leta Hong Fincher’s book Leftover Women discusses the Marriage Law interpretation & home purchases.  This Wechat post sets out a chart with various scenarios related to marriage & home purchase--a very handy reference.

Bankruptcy

10 typical bankruptcy cases from Suqian, Jiangsu Province, including some real estate companies

Chongqing courts borrow concepts of personal bankruptcy from abroad when dealing with private (shadow) borrowing cases

The many inadequacies in China’s non-performing asset legislation

Judiciary

A review of the Party’s work at the SPC since the 18th Party Congress

 

 

 

 

Welaw Monitor (微律观察) #1

I am tweaking the type of content on the blog, cutting down on the long analytical blogposts.   I will provide links to reports and analysis on court and other legal matters on Wechat. I am concentrating on writing a book and some other related writing and editing projects.

It remains my hope that some followers with the financial wherewithal to do so will consider supporting (in some fashion) the blogs that are enabling the English speaking and reading public to perceive (through translation or bite-sized analysis) the “elephant” that is the Chinese legal system, among them Chinalawtranslate.com and this blog.

Commercial law

14 situations where the corporate veil can be pierced

Criminal law

Public security v. SPC & SPP on what is prostitution–does that include other types of sexual services?

SPC vice president Li Shaoping on drug crimes–relevant sections of Criminal Law should be amended, better evidentiary rules needed for drug crimes, & death penalty standards need to be improved

Hebei lawyer’s collateral appeal statement, alleges torture during residential surveillance, procedural errors (part of China’s innocence project

China’s financial crime trading rules are unclear

Defendant changed his story on appeal but the appeal court ruled he was the killer

25 criminal law case summaries from People’s Justice magazine 

Criminal procedure law

public security does not want the procuratorate supervisors in police stations

A corrupt official’s polygraph problems

Supervision Commission

Its power should be caged

Beijing supervision authorities take someone into custody, will shuanggui be abolished?

Party discipline

On confession writing

10 No nos for Party members using Wechat

Administrative litigation law

SPC issues 10 typical administrative cases, including one involving the Children’s Investment Fund

Those disputing compensation for expropriation of rural land must first apply for a ruling–land is now part of the Harbin Economic and Technical Zone (unpacking of  case #46 of #2 Circuit Court’s case summaries)

Labor law

Important study by the Guangzhou Intermediate Court on labor disputes 2014-16, with many insights & a section devoted to sex discrimination issues

Don’t make these 10 mistakes when terminating employees

Family law

Status report on family court reforms (& difficult issues for judges)

 Why it’s so hard to deal with school bullying in China

How juvenile justice should be improved (the semi-official view)

Judiciary

300 cases in 100 days–a team of young judges & expedited criminal cases

Environmental Law

Procuratorate has brought 79 public interest law suits in Yunnan (press report)

Bankruptcy

Why bankruptcy is so difficult and what needs to improve

Lawyers

 legal qualification system needs changing, the profession needs those with non-law undergraduate training

 

 

 

Private lending leaves the shadows for the courtroom

Supreme People’s Court (SPC) President Zhou Qiang’s report to the National People’s Congress in March of this year omitted data on private lending disputes.  In 2016, Zhou Qiang stated that the courts dealt with approximately 1.5 million cases, up 41% from the year before. According to a widely cited study issued in November, 2016, private lending disputes were the leading type of  civil dispute in the Chinese courts in 2011-2015.  Data on private lending disputes in 2016 seems to be missing from year end reports by many local  courts, although the the SPC is promoting the use of big data.  The report discussed below is an exception to the general trend this year. Beijing’s Chaoyang District  Court, one the busiest basic level court in China, recently published a report on private lending cases.

Data from Beijing’s Chaoyang District, numbers of cases accepted, 2013-2016:

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2013-16, number of private lending cases accepted

The court noted that the year on year growth rate for private lending cases was 8.1% (2013-2014), 128.9% (2014-2015), 160.3% (2015-2016), with 2016 cases over five times the number in 2013. In the first four months of 2017, the Chaoyang  court accepted 8777 new cases. The court expects the number of private lending cases to increase substantially during 2017.

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2013-16 cases , amounts in dispute, in units of 100 million RMB

Cases involving large amounts in dispute are on the rise: in 2013, 21 cases involved more than 10 million RMB, 31 in 2014, 61 in 2015 and 95 in 2016, with one case in 2016 involving 96 million RMB.  Total amounts in dispute in 2016 were over 821 million USD.1f8c0005df46479e9f11

Comments by court researchers:

  • Almost 1/3 of the cases involved one company.
  • Many of the cases involve P2P platforms (no specific numbers supplied);
  • because insufficient information is supplied, courts have problems serving process;
  • many platforms circumvent the restrictions on the rate of interest by imposing intermediary fees;
  • the loan agreements are badly drafted, making it difficult for judges to decide these  cases;
  • Few cases were settled and over 20% were default judgments.

Comment

Failing to release judicial statistics about private lending on a national level does not send positive signals about the state of judicial transparency, but does indicate the way that the SPC needs to serve government strategies.  These statistics, at a local level, do send signals about the state of the economy. Their absence at a national level does not mean the underlying economic concerns have vanished. Further concerns are raised by the fact that the Shanghai Justice Bureau, as of early April, has ordered public notaries to stop notarizing private lending agreements (notarizing an agreement makes court enforcement easier

Chinese courts & “foreign beneficial experience”

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US 7th Circuit Judge Posner speaking by videolink at National Judicial College (NJC) in 2016

Supreme People’s Court (SPC) President Zhou Qiang has been widely quoted for saying in January of this year that Chinese courts should strengthen ideological work and show the sword to mistaken Western ideas of “constitutional democracy”, “separation of powers” and “judicial independence.” What is not widely known outside China is that the relationship between the Chinese judiciary and some of the major international judiciaries (I’ll use the term “Western”) is more nuanced than it appears.  Close observation reveals the following:

  • high-level summits between major foreign and Chinese judiciaries;
  • senior Western judges speaking to or providing training to senior Chinese judges;
  • pilot projects in the Chinese courts involving foreign judiciaries;
  • SPC journals and media outlets publishing the translation of cases from and reports of major Western judiciaries; and
  • SPC judges reviewing legislation, institutions, and concepts from other judiciaries in judicial reform.

The official position on borrowing/referring to foreign legal models is set out in the 4th Plenum Decision (as I wrote earlier):

Draw from the quintessence of Chinese legal culture, learn from beneficial experiences in rule of law abroad, but we can absolutely not indiscriminately copy foreign rule of law concepts and models.

President Xi Jinping further elaborated this view on his visit to China University of Political Science and Law on May 3:

China shall actively absorb and refer to successful legal practices worldwide, but they must be filtered, they must be selectively absorbed and transformed, they may not be swallowed whole and copied (对世界上的优秀法治文明成果,要积极吸收借鉴,也要加以甄别,有选择地吸收和转化,不能囫囵吞枣、照搬照抄).

[The Xinhua report on Xi’s visit in English–“China should take successful legal practices worldwide as reference, but not simply copy them” omits the detail found in the Chinese reports.

Some examples of the way  the SPC considers the “beneficial legal experiences in the rule of law abroad”:

  1. High level summits (some of which were agreed to on a presidential/head of state level) on commercial legal issues, such as the August, 2016 U.S.-China (or China-U.S.) Judicial Summit
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August, 2016 US-China Judicial Dialogue, then Principal Deputy Associate Attorney General William Baer in foreground

“Our three talented and experienced U.S. judges discussed with senior Chinese judges and other experts topics relevant to commercial cases, ranging from case management to evidence, expert witnesses, amicus briefs, the use of precedents and China’s system of “guiding cases.” Speakers from both sides gave presentations that explored complex questions on technical areas of law. The conversations, during the formal meetings and tea breaks, were lively, candid, direct and constructive, highlighting both the similarities in and important differences between the U.S. and Chinese legal and judicial systems. I told our Chinese hosts that the views our judges expressed would be entirely their own, reflecting our separation of powers and the independence of our judiciary. Our judges displayed that independence as they weighed in on a range of issues, such as the role of precedents in interpreting statutes and the challenge of balancing public access to information while safeguarding privacy and protecting trade secrets.

Several of the Chinese participants discussed pending cases in U.S. courts involving Chinese defendants. I [William Baer] believe it was useful for us to air our differences and for our experts to exchange views on technical and sensitive areas of law. At the meeting, it was clear that although we come from different backgrounds and will not always agree, we all recognize the importance of legal reasoning and that increased transparency is a way of earning the public’s trust in the fairness and objectivity of the judicial system.”(from the DOJ website).

2.  Training of Chinese judges by foreign judges

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Dr. Matthias Keller, presiding judge, Aachen administrative court, teaching at NJC, March, 2017

A number of foreign judiciaries have in place long-term training programs with the Chinese judiciary, with the German judiciary among the pioneers.  The National Judicial College (NJC) (affiliated with the SPC) has a long-term program in place with the Germany judiciary, involving the German Judicial Academy, the German Federal Ministry of Justice & Consumer Protection, GIZ (the German international cooperation organization) and other parties, which teaches subsumption and related techniques of applying laws to facts (further explained here).  The NJC has published a set of textbooks that apply the subsumption method to Chinese law.

It is likely that close to 10,000 Chinese judges have been trained under the German program. Common sense indicates that the NJC has continued with the program because it is useful to Chinese judges.

A recent example of  the German training program is illustrated by the photo above, showing Dr. Matthias Keller, presiding judge of the Aachen administrative court giving a training course on the methodology of the application of law in administrative law to 150 Chinese administrative judges, mostly from intermediate and higher people’s courts.

3. Pilot projects in the Chinese courts involving foreign judiciaries

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Australian judges have worked with the Australian Human Rights Commission on a ‘Sino-Australia Anti-Domestic Violence Multi-Agency Putian Pilot Program’ in Putian, Fujian Province, involving judges from the SPC, Fujian Higher People’s Court, and Putian Intermediate Court.

4.  Publishing the translation of cases and reports from foreign judiciaries.

Some examples in recent months include:

  •  excerpts from Supreme Court decision Padilla v. Kentucky (published 7 February 2017), for those unfamiliar, it relates to plea bargaining and effective counsel);
  • U.S. Chief Justice Robert’s 2016 year end report on the federal judiciary;
  • U.S. federal judiciary’s strategic plan, for their takeaways for a Chinese audience;
  • Summary of a July, 2016 report on cameras in the federal courts;
  • Summary of the UK’s 2015 Civil Justice Council’s Online Dispute Resolution Advisory Group’s report on Online Dispute Resolution for Low Value Civil Claims.

5. Considering foreign legal concepts in judicial reform

Foreign legal concepts are considered by the SPC in a broad range of areas of legal reform, most of them unknown to foreign observers.  Several of the more well known examples include: plea bargaining  (see this article by an SPC judge (a comparison with the US “model” is included in Jeremy Daum’s  analysis of China’s expedited criminal procedure reform).  Last year’s policy document on diversified dispute resolution (previous blogpost here) specifically mentions considering concepts from abroad,On the ongoing amendments to the Judges’ Law (the draft has not yet been released), SPC Vice President Shen Deyong said in late April, “we need to learn from and refer to the successful practices of the management system of the judicial team by jurisdictions abroad, but they must be selectively filtered for Chinese use (要学习借鉴域外法官队伍管理的制度成果,甄别吸收,为我所用)。

Comment

A careful review of official statements, publications, and actions by the SPC and its affiliated institutions, as well as research by individual SPC judges shows an intense interest in how the rest of the world deals with some of the challenges facing the Chinese judiciary coupled with a recognition that any possible foreign model or provision will need to fit the political, cultural, economic, and institutional reality of China, and that certain poisonous ideas must not be transplanted.  [Those particularly interested could pore through two publications of the SPC judicial reform office (Guide to the Opinions on Comprehensively Deepening Reforms of People’s Courts and the Guide to the Opinions on Judicial Accountability System of People’s Courts, in which the authors discuss relevant provisions in principal jurisdictions abroad.]

Those who either are most concerned about diluting the Chinese essence of the SPC (or jealous/emotionally bruised) seem to have saved their most poisonous criticism for off-line comments, as I am unable to locate a written version of the nasty comments that a senior Chinese academic shared with me about the over-Westernization of judicial reform or other nasty comments said to have been made about research by certain SPC judges into foreign legal systems.  It is hard to know whether the persons involved are motivated by jealousy or a real belief that these measures described above will have a negative effect on the development of the Chinese judiciary.  It seems safe to say that the concerns raised in the 19th century on the dilution of the essence of Chinese culture when borrowing from the West seem to be alive and well in the 21st century.