Watch out for Mr. Yong when you read about law on Wechat

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This content cannot be read; Yong Hu (user) has complained, discovered this content violates law, regulations, and policy

Those reading about China’s social media in English have been mesmerized by articles summarizing the recently published and impressive study of the pro-government “fifty cent army” on Weibo by Professor Gary King of Harvard’s Institute for Quantitive Social Science and coauthors Professors Jennifer Pan and Margaret Roberts from Stanford and the University of California, San Diego.  However, according to the numbers, the focus of China’s social media has very much shifted to Wechat (Weixin).  According to statistics from April, 2016, the number of Wechat active users has grown to 650 million, while the number of Weibo active users at the same time was about 261 million.  Wang Dong, author of a popular (and prize-winning) legal Wechat public account CU检说法 (with a day job at the Suzhou Procuratorate), recently pointed out that a “Mr. Yong” poses a threat to Wechat readers.

Wang Dong posed the question “who is that guy Yong (用)?”  “Every time Yong Hu (用户) (user) complains about the content in an article, it disappears.” Wang Dong asked further:

Who is this guy “用户”? He certainly does not like to stand on a podium to debate with people, perhaps because of stuttering, but more likely because he really does not have that kind of scholarship, does not know what to say, and perhaps, after he says a few words and omits words and is ridiculed, the crowd of helpless laughter causes him to retreat back.

So, the easiest way is hiding in the shadows, lurking, lurking, lurking silently, silently recording  his hate in every move and every word of the people, to analyze these articles, from which to find  “segments of illegal content.”

Perhaps Professor King and coauthors can now turn their attention to Mr. Yong and his army of Wechat lurkers, to assist us in understanding what made Mr. Yong and his army of lurkers complain about 200,000 items on Wechat in 2015 and cause 120,000 Wechat public accounts to be penalized.

 

 

 

Family court comes to China

imgresAs highlighted in a December,2015 post on this blog, and as Supreme People’s Court (SPC) Vice President Shen Deyong announced on 11 May, family courts are coming to China, or at least 100 pilot projects for them.  Family law cases have been heard within civil divisions of local courts, but there has been dissatisfaction with the way there are being heard.  In 2015, 1,733,000 marriage law cases were heard and about 84,000 inheritance cases.

Family law issues reflect the complexities of Chinese families today:

  • Divorce in major cities often touches on the rights to real estate whether debts are debts of one spouse or of the marriage;
  • Custody and maintenance are issues, particularly when maintaining an expensive life style is involved;
  • In rural areas, bride price and marriage by local customs rather than official registry is an issue.

Justice Shen stressed that family is the basis of society (echoing Confucius). The Women’s Federation, Ministry of Civil Affairs, Ministry of Justice, and Central Political Legal Committee were involved in this initiative. This reform has been piloted on a smaller scale in Guangdong province.  District courts in Shenzhen and Zhuhai have been early stage pilots.   The SPC issued a document to support the initiative which has not yet been publicly released (Notice of the SPC concerning some courts initiating pilot reform work in family court trial methods and work systems 最高人民法院关于在部分法院开展家事审判方式和工作机制改革试点工作的通知). [Update–the document was eventually released–available here.]

This is an area in which the Chinese courts, including Supreme People’s Court is looking to jurisdictions outside mainland China (i.e., including the United Kingdom, Australia, Taiwan, Japan, and South Korea) for concepts that may be used in China.  Hong Kong law has not been mentioned as a model from which the mainland can transplant concepts, because, as this recent article published by a member of the University of Hong Kong Law Faculty details, Hong Kong family law and family law procedure is many years behind developments in Commonwealth countries, and it is an area in which Hong Kong’s executive led government has delayed introducing comprehensive legislation.  Ironically, in March, 2016, the SPC had discussions with Hong Kong’s Secretary of Justice on the issue of the recognition of judgments in the area of marriage and related issues.

Scope of the pilots:

  • matrimonial cases and related cases, including divorce, annulment, revocation of marriage;
  • custody, child support fees, property division after divorce, etc; maintenance disputes; paternity cases, including parent-child relationship to confirm or deny paternity;
  • adoptive relationship disputes;
  • cohabitation disputes, including the division of property during cohabitation, children born out of wedlock, and other dependents;
  • inheritance disputes.

The pilots will promote:

  • mediation as a way of resolving disputes;
  • personal appearance of parties in court;
  • putting the interests of the child first.

Issues with family cases that the Shenzhen judges have highlighted:

  • family law is not taken seriously as an area of law;
  • investigators are needed to support the judges;
  • lack of coordination with other authorities involved in family law issues;
  • burden of proof needs to change in family law cases, because otherwise it is difficult for the weaker party (generally the woman/elderly) to prove her case;
  • court performance indicators make it difficult to handle family law cases properly;
  • the courtroom set up must be changed to better accommodate family law disputes;
  • questions on handling family law issues that impinge on public policy/morality, such as inheritance by mistresses.

If the Confucian value of family as the basis of society is to be taken seriously the Chinese court system needs to show it by its actions. And the Chinese legal system will need to face the issue that family includes people who are gay/lesbians/transgender.

 

 

 

Ramping up China’s bankruptcy courts, the latest data

imgres-1Judging from what I observed at a conference attended by many from the distressed asset industry in Asia recently, information on what the Supreme People’s Court (SPC) is doing to ramp up bankruptcy law has not made it to distressed asset/restructuring professionals outside of China, some of whom seem to think that policy emerges fully formed from Beijing.

This blogpost shows that bankruptcy policy is in fact an evolving process, provides some new data on 2015 and 2016 cases, and summarizes the latest policy signals coming from the Supreme People’s Court in recent months.

As the first chart shows, the number of companies established in China is steadily rising Since the Chinese Company Law was amended at the end of 2013, it has been much easier to establish a company.  According to the SPC, since those reforms, an average over 10,000 new companies are established daily, but less than 70% remain in business after 5 years, and less than 50% remain in business after 9 years.  Most companies simply deregister, or live on as zombies, as the following charts show:

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companies established yearly, in units of 10,000

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cancellation of company registration

As reported earlier (and the chart below shoes), the number of bankruptcy cases has gone steadily down until 2015:

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Full year statistics for 2015 were recently released by the Supreme People’s Court–3568 new bankruptcy cases were accepted.  It is linked to the SPC ramping up bankruptcy law. Some local breakdowns:

Zhejiang:  638

Shenzhen: 131, accounting for 40% of cases in Guangdong.

Numbers for 2016:

  • January, 2016: 167.  This article lists the names of the cases;
  • February, 2016: 101, breakdown found here.
  • March, 2016: 127, breakdown found here
  • April, 2016: 153 (breakdown found here)

Following the 5th Plenum the end of 2015, the SPC has taken steps to promote the role of the courts in eliminating zombie enterprises. This was first announced at a national court conference in December, 2015 (reported here).  This is bankruptcy (insolvency) in the Chinese political and legal environment, which means extensive government involvement.

Certain local courts are taking the lead as pilot bankruptcy courts:

  • Zhejiang;
  • Shandong; and
  • Shenzhen.

Executive Vice President Du Wanhua of the SPC is the spokesman for bankruptcy policy, and in his many press statements is making the same points:

  • The courts should promote more bankruptcy reorganization and conciliation, and diminish liquidation cases (a contrast to what has occurred in recent years).  (The SPC has promoted this approach through recent reports promoting reorganizations by the courts and is continuing to promote this in its pronouncements. Local governments are adopting policies to promote reorganization of companies.)
  • A market-oriented mechanism should be established which classifies zombie enterprises.  The mechanism should distinguish ones than can be saved through restructuring or conciliation procedures from the ones that should be liquidated.  The classification should fulfil the industrial development goals, targets, and other principles of the central government.  (But, Professor Liu Zhibiao, a leading economist suggested in a recent interview that it should the market to determine this, not government.)
  • A unified coordination mechanism for bankrupt enterprises needs to be created under the local Party committee’s strong leadership and support of the relevant government departments to ensure cases are handled in an orderly manner. To avoid this “strong leadership” being implemented to protect local companies ( a study published in the fall of 2015, Ma Jian of the SPC’s research office showed that local government interference in the acceptance, and trial of bankruptcy cases is common), Judge Du proposes that jurisdiction in bankruptcy cases be consolidated in certain courts
  • The rights and interests of the state, workers, creditors, and investors should be protected (in this order).
  • A corporate restructuring bankruptcy information platform mechanism that uses modern information technology tools should be created to promote the greatest degree of success of corporate restructuring, and better use of economic resources.
  • Orderly mechanisms should be established to deal with wages, state tax, and the priority and realization of secured claims, unsecured claims.
  • Local courts should establish bankruptcy divisions and provide bankruptcy judges with better bankruptcy law training;
  • Procedures for bankruptcy administrators should be drafted and their status should be improved;
  • Special funds should be established to pay for bankruptcies and bankruptcy administrators;
  • Local governments, such as Guangdong, are starting to issue policy programs on “supply-side reforms.” The Guangdong program, issued on 28 February, contains a section on bankruptcy. The Guangdong policies mention separate databases for bankrupt state-owned and non state owned enterprises, mentioning that special policies would be forthcoming for state owned enterprises (SOEs) and that courts would be given the “green light” to deal with the bankruptcy of zombie companies. Reflecting policies seen elsewhere, the Guangdong government is seeking to encourage private enterprises to assist in re-organizing SOE zombies and is considering establishing special funds to assist companies to upgrade.
  • One of the industries that is a focus of bankruptcy is real estate.  While Shenzhen, Shanghai, and some other real estate markets are doing well, that is not the case in other locations, as discussed in this earlier blogpost.

Some of the outstanding legal policy issues:

  • Putting in place a better transition from enforcement to bankruptcy procedures (Zhejiang rules recently issued linked here);
  • Consolidating jurisdiction of bankruptcy cases;
  • Consolidating the bankruptcy of related companies;
  • Familiarizing the market with bankruptcy law;
  • Improving the regulatory structure for bankruptcy administrators (Zhejiang leading the way, see these May, 2016 regulations).

Other bankruptcy related political/economic issues:

  • Dealing with the large state-owned money losing companies (this article lists 16, but says that they are not likely to be left to market forces); and
  • Stealth unemployment of SOEs.

One of the points made at the conference is that China does not need ideas from abroad.  If that were true, there would not be so many Chinese articles on bankruptcy law reform, including by Judge Du, discussing the UNCITRAL Model Law Cross-Border Insolvency and bankruptcy law in other jurisdictions, including the United States.

Another major issue and difficult issue is cross-border insolvencies, both in situations where the offshore parent goes into bankruptcy and when a Chinese company with offshore subsidiaries goes into bankruptcy. The first situation now happens regularly, creating difficulties and uncertainties for the insolvency/bankruptcy administrator of the offshore parent as well as for creditors. The second we will see some some time in the future, when some of the over-leveraged companies that have invested abroad go into bankruptcy.

 

 

Happy Mother’s Day from the Supreme People’s Court Monitor!

18573238_095424649175_2 Comprehensive statistics on women in the Chinese judiciary are difficult to locate.  Although there is a Women’s Judges Association under the Supreme People’s Court (SPC), it lacks a web presence. I have not been able to identify the number of women judges on the SPC (as requested earlier this year by a research team assembling statistics on women in the judiciary worldwide).    According to the Chinese National Bureau of Statistics, in 2013 there were 57,200 women judges, constituting 28.8% of all judges, compared to 44,502  women judges in 2009, constituting for 23.48%.  It appears that there are fewer women judges at a senior level, possibly due to the fact that fewer women studied law in the first years after Chinese law schools re-opened post Cultural Revolution, and in part because many have retired at 55. 

Senior judges are not immune from the combination of professional work and family obligations.  According to Judge Gao Xiaoli, of the First Circuit Court:

We presiding judges are of an age where we have the elderly above us and children below us. Take me as an example.  Last year, when I came to Shenzhen, my child wasn’t even 7 years old, and had just started first grade. Working in Shenzhen, I didn’t have time to take care of him, especially when he was sick, I was even more stressed. The First Circuit Court Party Group was concerned about everyone, they let us go home once a month, we leave Friday after work and take the evening flight back, so we don’t miss work on Monday.

According to Chinese media reports, the Zhongshan, Guangdong Women Judges Association has recently established a counselling center, staffed by a trained psychologist, to help women judges and judicial police deal with the pressures of being a wife, daughter, and daughter in law, and an escalating caseload (up 33% in 2015).   Other courts are likely to follow.

Women judges and the new normal

Much has been written about Chinese judges leaving the judiciary. A senior official of the SPC has admitted in a recent article that over 1000 judges left in 2015.  Anecdotal evidence from some judges I have contacted suggests that more male judges are leaving the courts then women, but statistics on this are either not gathered or reported. The proportion of women judges selected to enter the quota of judges in pilot projects is also unclear. What is mentioned in reports on the pilot projects is that women are able to delay retirement to 60 in those areas, an age at which women judges in many other jurisdictions are still on the bench.

According to a 2009 survey by the Peking University Law School (and many other sources), employment discrimination against women is rampant, with almost one quarter of the women surveyed having been refused employment because of their sex. Will the judiciary become a more welcoming place in China than law firms for women, who now being encouraged to have a second child?  How will the judicial reforms, including lifetime responsibility system and new appointment procedures affect women judges and women legal professionals considering joining the judiciary?  The current generation of Chinese women law students (including my students) want to know.

 

 

Supreme People’s Court’s Party School

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study group at the SPC’s Party school

On 29 April 2016, Supreme People’s Court (SPC) President Zhou Qiang, Vice President He Rong, and Xu Jiaxin, head of the SPC’s political department attended a nameplate unveiling ceremony at the Supreme People’s Court (SPC)’s branch of the Communist Party’s Central Party School  at the National Judges College.

For those unfamiliar with the Party school system in China, the Central Party School (with local counterparts) is both think tank and indoctrination center for Party officials, “a furnace for tempering the Party spirit” (according to the Central Party school’s website) (for more, see these articles).  According to press reports, the SPC has had a Party school since 1993 and has trained nearly 1000 officials.  Under the Chinese political system, officials slated for promotion are generally required to attend Party school.  Judge Xu pointed out that “the Party school must firmly uphold the basic principle of ‘the surname of Party schools is the Party,’ and ensure the political attributes of the political-legal institutions (机关党校要坚持“党校姓党”的根本原则,把握政法机关的政治属性).  This is linked to a December, 2015 Politburo document calling for the strengthening of ideological and political education, and it is likely that the SPC issued a document implementing the Central Committee document (a report of the Supreme People’s Procuratorate one can be found here).

Does this take away from the SPC’s judicial education plans, announced last  year, and analyzed here? Not really, as those plans prioritize ideological training.  As one of China’s central political legal institutions, the SPC must implement the latest Party policies.  Given the increased substantive demands on judges of the court reforms, the focus in judicial training still has to be on improved skills and substantive law training, as described in the five year judicial education plan.  It seems from reports, also, that the SPC’s Party school has its practical side, with study groups sent down to the basic level to research (and eventually report) on issues in the basic level courts, the judicial counterpart of some of what occurs in the Central Party School.