Monthly Archives: November 2015

Domestic violence, Elderly law, Family Law

Some typical Chinese family law cases in 2015

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dd9a8f4c1a39797ea5a7e4843c8a2724 (1)Each month (as highlighted this earlier blogpost), the Supreme People’s Court (SPC) issues typical cases at a press conference. In November, family law cases were the center of attention for a change and were briefly reported by the South China Morning Post.

This month’s typical cases were selected from the Beijing, Shandong, and Henan courts and are aimed at educating the general public rather than legal professionals.  The cases, statistics, and comments from the Supreme People’s judiciary  give a glimpse into the social, economic, and cultural changes that have affected Chinese families over the past 20 years and reflect the differences between rural and big city life.

Statistics

Judicial statistics is one of the areas slated for reform by the Court, which has the potential to improve (or not) the situation for analysts of the Chinese court system.

  • 4,000,000 family law cases have been heard in the past year and 10 months. President Zhou Qiang reported earlier this year that  1,619,000 family law cases were heard in 2014, accounting for about 30% of civil cases, which would mean that over 2 million cases had been heard in the first 10 months of 2015 (assuming the cases are classified the same way in both years).
  • 124981 family law cases have been heard in the Shandong courts this year, constituting about 24% of all civil cases.
  • In the Beijing courts, 38, 619 first instance family law cases were heard in 2014.

Issues for Chinese judges

The press release hinted at some of the difficult issues facing Chinese family law judges nationally, which are many of the same facing their counterparts in Shenzhen:

  • Division of property when spouses divorce, which means both division of family home(s) and family business(es).  Parents often provide some or all of the funds for the home, before marriage, and the controversial rule set out in the #3 Marriage Law Interpretation
  • Child custody;
  • Divorce after a second marriage.

Divorcing spouses are increasingly antagonistic, making it difficult for judges to mediate a settlement, which is the preferred resolution for Chinese judges.

Summaries of some of the 30 typical cases

Must engagement gifts be returned? A case from a rural court in Shandong

Zhang and Zhao were introduced by Zheng, and became engaged. Zhang gave Zhao 40,000 RMB cash, four rings, and other gifts as betrothal gifts (彩礼).  The couple did not marry, and Zhao refused to return the cash and gifts. Zhang sued in the Jining District Court.  At trial, Zhao returned the 4 rings.  The Jining Court ordered Zhao to return the cash but not the gifts.

The SPC commentary noted that although the cash and other items are in form a gift, the legal consequences are different, and according to the #2 Interpretation of the Marriage Law, the gifts must be returned. Article 10 (1) of that interpretation addresses this situation: if the court finds in pleadings a demand for the return of the betrothal gifts given to the other party according to the traditional practices because the parties fail to register their marriage, the people’s court shall uphold the demand.

Concealing property from ex-spouse (Beijing)

Sun and Li divorced in 2004.  The arrangements the couple made were that the wife Li would have custody of the child, the formerly state-owned housing would belong to the wife, and the business, cars, etc. would belong to the husband, who would provide alimony and child support.  In the process of demanding child support from Sun in 2014, Li discovered that Sun had bought property during the marriage, but had concealed that fact from her. She went to court to demand that ownership of the apartment be transferred to her name. Sun said that the apartment was bought when the couple was living apart, he had told her, the divorce settlement provided that the business, cars, etc. belonged to the husband and besides the statute of limitations had lapsed years ago.

The Changping District court decided that because the apartment had been bought during the marriage, it was joint marital property and Sun could not provide credible evidence that Li knew of the property during the marriage.  Therefore the statute of limitations argument failed. The court decided that ownership of the apartment should remain with Sun, but that Li was entitled to half of its market value, or 1,400,000 RMB.  The couple appealed to the #2 Beijing Intermediate Court which upheld the lower court.

The SPC commented that because traditional attitudes of marriage for life have changed, there are more and more divorce cases.  In this case,  because Sun concealed the purchase of the apartment, under Article 47 of the Marriage Law that when the court partitions the property, it could allocate less or no part to Sun.

Does the non-custodial parent of a child born to an unmarried couple have visitation rights? (case from a rural Henan court)

Wang and Chai were introduced and subsequently had a wedding celebration according to local customs, but never formally registered their marriage. They lived together and Chai gave birth to little Wang.  Thereafter the couple separated.  The couple went to the Xun County court to resolve their disagreements about the child.  The court decided that Chai should have custody of the child, until the child is old enough to express her preferences.  A month later Wang went back to court to demand visitation rights.

The Xun County court relied on Art. 38 of the Marriage Law, concerning visitation rights of the non-custodial parent in divorce to decide that the father could visit the child the first Sunday of each month from 9 am to 5 pm.

The SPC commented that visitation rights are a basic legal right of a non-custodial parent to have contact, visit, and live together for short periods, but visitation must be done in a way that does not affect the normal life and studies of the child.

Do the elderly have the right to support from their children? (a Beijing case)

Seventy seven year old Mrs. Liu was in poor health and in financial difficulties.  She sued her two children in Beijing’s Xicheng District Court to require them to provide her support in the amount of 900 RMB monthly.  The daughter said she had no income and the son said his after- tax income was only 6500 RMB and refused.  The court ordered the son to pay 800 RMB per month and the daughter 500 RMB (on the grounds that based on her work history she must have income).

The SPC commented that grown children have the legal duty to support their parents [under the Law on the Protection of the Rights and Interests of the Elderly], but the amount will depend on the elderly person’s cost of living, the health of the elderly person, and life style, and if the elderly person has several persons to look to, the amounts each will need to pay in support will depend on each person’s financial situation.

 

 

 

 

 

 

 

 

 

 

Commercial law

Brief report on bankruptcy litigation in the Chinese courts

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Declaration of bankruptcy meeting of Guangdong company

The soft Chinese economy means that an increasing number of Chinese companies are in financial difficulties.  But, according to the Supreme People’s Court, the number of bankruptcy cases have been decreasing rather than increasing, with over a thousand cases accepted nationally in 2014.  Earlier this fall, the All China Lawyers Association held a conference for its bankruptcy practitioners, to which were invited the head of  #2 Civil Division of the Supreme People’s Court, Judge Liu Min (principal author of the bankruptcy law judicial interpretation),  KPMG partner, Cao Chunye, SASAC officials, and others.  What more can be said about the decrease in cases, why the decrease in cases and what is the Court doing about it?

Some Statistics

According to a 2014 Court study by Ma Jian of the Court’s Research Office, from 2003-2012, the Chinese courts accepted about 40,500 bankruptcy cases, decreasing an average of 12.23% a year, only increasing in Henan and Tianjin, which Ningxia, Hunan, Hebei, and Qinghai decreasing at a rate of 20% a year or more. In almost 70% of cases, the debtor company applied for bankruptcy, with only 30% creditor initiated.  The Court analysis was that creditors didn’t have a clear picture of the business operations of their creditors, or still believed that the debtor would be able to repay, or believed that because asset recovery in bankruptcy was so little, they did not want to bother initiating bankruptcy. Practically all the companies in bankruptcy proceedings were domestic companies, with 55% state owned companies, 26% collectively owned. Almost half of the cases took a year or more to resolve.

Why?

Ma Jian set out the following factors:

  • In a Chinese bankruptcy, the judge has more of a societal function than legal.
  • Most companies misunderstand bankruptcy law;
  • Local government interference in the acceptance, and trial of bankruptcy cases, with local governments closing down companies through administrative means, leaving unresolved debts and workers who have not been resettled;
  • Many obstacles stand in the way of realizing assets: 1) many companies in financial trouble have old equipment that is not worth much on the market or no one appears at the auction; 2) many SOEs occupy allocated land (land given by the government for free), and when the government takes possession of the land, it is impossible to sell the buildings on the site; 3) some companies use collective land, so that only other collectively owned entities can purchase the buildings built on the land.
  • It is very difficult to recover bankruptcy assets.  The debts are generally very old, and often times the statute of limitations has expired; additionally it is often difficult to find company debtors;
  • Resettlement of workers, is the primary issue to be considered in a bankruptcy case, particularly with the social safety net in such a fragile situation (according to Ma Jian).
  • Additionally, reorganization is very difficult to do, with multiple government approvals, difficulties in obtaining creditor agreement, difficulties in changing a company’s line of business, etc.
  • KPMG partner Cao Chunye highlighted the unfavorable tax treatment of companies in bankruptcy restructuring;
  • As to why courts do not want to accept cases, Ren Yimin of the All China Lawyers Association Bankruptcy and Restructuring committee mentioned that a bankruptcy of private company may cause a chain of other companies to fail, and it is difficult to resolve a chain of linked cases.

Measures

Some of the many measures under consideration or being explored include:

  • Moving bankruptcy cases out of the local courts where the company is located, to centralize jurisdiction in certain courts;
  • Making it easier for creditors to switch from enforcement proceedings to bankruptcy;
  • Improving the system for bankruptcy administrators.;
  • Looking to have a fast track system for small cases;
  • Exploring better restructuring systems.
  • Looking to foreign law, particular US bankruptcy law, for concepts that could be used to improve the bankruptcy system.

(Those with a greater interest in this topic can review this law review article–in the current situation, this area of law deserves closer attention by concerned professionals than it is currently receiving.)

Communist Party and the Courts

Central Political Legal Committee issues model cases on leadership interference with the Judicial process

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0d338744ebf81a4cfaf247bad42a6059242da685Five model cases on interference with the judicial process are are making the headlines today on the Communist Party’s Central Political Legal Committee’s website (www.chinapeace.gov.cn) (and therefore on its press outlet, Legal Daily as well as one of the Supreme People’s Court’s websites). It is the first time the Central Political Legal Committee has done so, but is unlikely to be the last.

The practice of issuing model cases in the courts has been discussed previously on this blog, but these have been issued to create an example (in this case a senior judge) to scare others into compliance (“kill the chicken to show the monkeys” (杀鸡儆猴)).

The first of the five cases, and the only one from the courts, is that of Chen Hai’ou, chief judge of the #2 civil division of the Beijing Higher People’s Court (and judicial committee member). Chen seems to be well-known as a bankruptcy law specialist and was likely known to counterparts on the Supreme People’s Court.

According to the press release, Chen received an administrative penalty and has been transferred away from doing trial work because he involved himself in a case that was not within his authority In violation of March, 2015 Central Political Legal Committee regulations on judicial personnel prying into cases.  Some more specific conflict of interest allegations against Chen remain posted on the Internet, although other allegations (and photos) on other sites have been taken down.  It seems likely that these led to his downfall.

Military courts, military law

Fourth Plenum and Chinese military legal reforms

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From time to time, I write on Chinese military legal developments, an outgrowth of my interest in one of the few Chinese courts without a internet presence, the military courts.  I recently published an article on the military legal reform document published earlier this year (full text not available), looking at some of the related academic discussions and relating it back to the 4th Plenum Decision and the 4th Five Year Judicial Reform Plan.  I would welcome any comments or corrections any readers might have.

Court Reform

Should the retirement age for Chinese judges be raised?

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President Zhou Qiang, speaking at a national court conference

The retirement age of Chinese judges, is 55 for women and 60 for men, the age when judges in many other jurisdictions are in their prime. US Supreme Court judges have lifetime appointments, while compulsory retirement ages include:  Germany–68, Australia, 70, Hong Kong, 65 (with provisos).  The discrepancy between China and the rest of the world has not escaped NPC deputies as well some of the more senior members of the Chinese judiciary.  Many of them have been working in the courts since the early 1980’s, and are now facing retirement.

As work begins on a re-draft of the Judges Law (as highlighted in an earlier blogpost), one of the issues that has been repeatedly mentioned in the Chinese legal press is raising the retirement age and/or permitting judges to go on “senior status.” Among those speaking out include President of the Supreme People’s Court, Zhou Qiang, presidents of provincial high court of Hubei, Zhejiang among others, as well as the president of the National Judicial College. The 4th Five Year Judicial Reform Plan mentions raising the age for becoming a judge，but is silent about retirement.

The issue of retirement for judges relates to larger issues, such has separating the treatment of judges from other civil servants, raising the general retirement age for judges, and the type of qualifications that judges should have, and of course compensation.

The president of the National Judicial College published a long article in the People’s Court Newspaper (affiliated with the Supreme People’s Court) in August of this year calling for a re-think of career paths for judges. He noted (among other issues) that many judges are “three gate cadres” (三门干部) who have gone from the gates of home, school, to the courts, and lack the necessary life experience.  (The article seems to be the public version of a talk he gave to a closed door conference on judicial reform sponsored by the China Academy of Social Sciences, reported here).

It is a waste of know-how and experience, particularly for women, who are forced to retire five years before men. The Chinese courts need to try to retain the talent that they have, particularly when the courts will be faced with an increasing number of cases relating to an ageing population. With Zhou Qiang and other senior court leaders backing delayed retirement, it appears the reform will eventually be implemented, but it is likely to be too late for those now close to retirement age.