Monthly Archives: June 2016

bankruptcy law, Communist Party and the Courts

Chinese courts recruiting more bankruptcy forces

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imgres-1The Supreme People’s Court (SPC) recently issued a notice  (notice concerning the plan for establishing liquidation and bankruptcy trial divisions in intermediate courts)(bankruptcy division notice) (关于在中级人民法院设立清算与破产审判庭的工作方案) aimed at establishing liquidation and bankruptcy trial divisions in China’s intermediate courts and increasing the number of judges and support staff focusing on liquidation (winding up companies not in bankruptcy) and bankruptcy-related issues, to implement the central leadership decision to use bankruptcy law to reduce the number of zombie enterprises.

SPC Judge Du Wanhua had foreshadowed this development in many previous statements. The SPC required the concurrence of the Central Staffing Commission, a Party-State organization that regulates staffing in Party and state entities. A summary of the bankruptcy division notice follows below:

  • Establish bankruptcy divisions in intermediate courts, with some courts taking the lead;

In the directly administered cities, at least one intermediate court should establish a bankruptcy division, intermediate courts in provincial capitals and cities of deputy provincial level also. At lower levels, it will depend on economic development, local need, and professional infrastructure, with provincial courts to make arrangements with staffing authorities.

The following locations will take the lead in establishing bankruptcy divisions: Beijing, Shanghai, Tianjin, Chongqing; and the provincial capitals (and cities of deputy provincial level) of Jilin, Jiangsu, Zhejiang, Anhui, Shandong, Henan, Hubei, Hunan, Guangdong, and Sichuan. These arrangements are to be put in place by the end of July, with the other areas to follow by year end. This blog has reported on previous bankruptcy developments in Jiangsu,  Zhejiang, Anhui, Shandong, and Guangdong.

  • Sets out the work of  bankruptcy divisions;

Try compulsory liquidation and bankruptcy cases, guide lower courts trying these types of cases; coordinate with other courts on these issues; manage and train bankruptcy administrators.

  • Describes the jurisdiction of the bankruptcy divisions;

Intermediate courts should be responsible for the compulsory liquidation and bankruptcy of companies registered at the business registration authorities (administration of industry and commerce) of its own level and below, with variations possible if the provincial high court approves.

  • Staffing principles

Staffing should be according to judicial reform principles and linked to the caseload–the judges should be those familiar with liquidation and bankruptcy from the same or lower courts and they should have a clerk and judicial assistance on a 1:1:1 principle.

  • Measures needed

Improved measures are needed to supervise and evaluate liquidation and bankruptcy work; expedited liquidation and bankruptcy procedures need to be explored; promote reforms in trying liquidation and bankruptcy cases; put in place judicial responsibility (this relates to the judicial lifetime responsibility system announced in September, 2015) to ensure an honest judiciary.

  • Coordinate better with local Party/state authorities

Liquidation and bankruptcy divisions should report regularly to the local Party committee/government to seek their support and major issues should be reported to the SPC.

Some thoughts

This is a positive step although it cannot deal with the underlying political issues related to implementing bankruptcy law in China, particularly local government interference in bankruptcy cases.  Putting in place more qualified judges and support staff is a critical part of making bankruptcy law work.  The political support of the local authorities remains critical and the local judiciary provides a training and liaison function. The bureaucratic level of a troubled company (state owned enterprise) affects the ability of a court to deal its issues.

Academics reaching out beyond the universities and social media is playing a positive role in creating a corp of more competent bankruptcy specialists in the judiciary.  The Bankruptcy Law and Restructuring Research Center of the China University of Political Science and Law, directed by Professor Li Shuguang  has established a Wechat public account, which provides bankruptcy and liquidated news to the profession, including judges, as well chat groups in which Chinese bankruptcy professionals can share their experiences and tap into the experience and knowledge of others.

 

 

criminal law, death penalty, Uncategorized

Supreme People’s Court tweaks capital punishment review procedure

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Screen Shot 2016-06-26 at 3.28.09 PMSeveral days ago, the Supreme People’s Court (SPC) issued the brief judicial interpretation, translated below:

Supreme People’s Court

Reply Concerning issues related to the Application of Article 225 (para 2) of the Criminal Procedure Law

Approved by the 1686th meeting of the Judicial Committee of the Supreme People’s Court, in effect from 24 June 2016

Fa Yi(2016) #13

To the Henan Higher People’s Court:

We have received your request for instructions concerning the application of Article 225(2) of the Criminal Procedure. After consideration, we respond as follows:

I.　　For cases remanded to the second instance people’s court for retrial by the Supreme People’s Court, on the basis of “People’s Republic of China Criminal Procedure Law” Article 239 (2) [if the Supreme People’ s Court disapproves the capital punishment sentence, it may remand the case for retrial or revise the sentence] and Article 353 of the Interpretation of the “Supreme People’s Court on the application of the People’s Republic of China Criminal Procedure Law [where the Supreme People’s Court issues a ruling on non-approval of the death penalty sentenced under a case, it may remand the case to the people’s court of second instance or the people’s court of first instance for retrial, depending on the actual circumstances of the case…], having ruled not to approve the death penalty,and  regardless of whether the people’s court of second instance had previously sent the case back to the first instance court on the grounds that original judgment’s facts were unclear or evidence was insufficient; in principle, it must not be sent back to the original first instance court for retrial; if there are special circumstances requiring the case to be sent back to the first instance court for a retrial, it must be submitted to the Supreme Court for approval.

II. in cases where the Supreme People’s Court had ruled to disapprove the death penalty and remanded the case to the second instance people’s court for retrial, and the second instance people’s court had remanded the case to the first instance court according to special circumstance, after the first instance court has issued its judgment and the defendant has appealed or the people’s procuratorate has made a protest, the second instance people’s court should issue a judgment or ruling according to law, and must not send the case back for re-trial, according to the specifics of the case, which had sent the case to the first instance court for retrial.

So replied.

_________________________________________________________

What is this and what does this mean?

This is a judicial interpretation by the SPC in the form of a reply, as explained here.  It is a reply (批复) to a “request for instructions” from a lower court relating to an issue of general application in a specific case.  The Henan Higher People’s Court had submitted a request for instructions, likely with two or more views on the issue, but the lower court’s request is not publicly available.  It is likely that practice among provincial courts had been inconsistent, and therefore the SPC is harmonizing judicial practice through this reply.  As required by the SPC’s  regulations on judicial interpretations, it must be approved by the SPC’s judicial committee as a judicial interpretation.

This gives further details to the SPC’s capital review procedures, requiring second instance (generally provincial level courts) to hear retrials of cases remanded by the SPC and not instructing those courts not send cases back to the first instance court for retrial.  It also requires the second instance court to rule on a defendant’s appeal or procuratorate’s protest and not remand the case back to the first instance court, expediting the final consideration of these cases and limiting the number of remands of these cases.

Is this a positive development for the protection of the rights of the defendants (the defendants in the typical drugs cases announced by the SPC recently were mostly peasants), by requiring the second instance court to hear these cases, away from the public pressure where the crime occurred?  In a 2013 article, criminal defense lawyer Sun Zhongwei described the pressure on a local first and second instance court is under from the victim’s family and the local Party committee and government, and how the institutions use delay and remanding the case to the procuratorate and public security for additional investigation to avoid making difficult decisions that will alienate local authorities.What has the role of defense counsel been in these cases?  Have most defendants been advised by counsel? Was the delay in final resolution in these cases an issue discussed by the Central Political Legal Committee?

What was the rationale for issuing this interpretation at this time?  Is it a measure to promote the efficiency of the courts, by expediting finality in criminal punishment, so that the courts can announce in a timely manner their crime fighting accomplishments and typical cases?A headline on one of the SPC’s websites  reporting on 30% increase in drugs crime convictions in the provincial level courts may indicate which is valued more–“People’s courts across the country cracked down hard on drug crime.”

Or is it linked to planned reforms to the criminal justice system and improvements to the legal aid system for criminal defendants approved by Xi Jinping and other top leaders on 27 June?

Communist Party and the Courts, Court Operations, Environmental law

How the Supreme People’s Court serves major government strategies

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serve the people
serve the people

In the past year, the Supreme People’s Court (SPC) has issued several policy documents that contain the same phrase: serve the nation’s major strategy (服务国家重大战略).  When SPC President Zhou Qiang gave his report to the National People’s Congress (NPC) in March, 2016, one section addressed this topic.

Provided service for the country’s major strategies.  Issued opinions on the people’s courts providing judicial service and protection for the construction of One Belt, One Road, the development of coordinated development of Beijing-Tianjin, and Hebei, and the development of the Yangtze River Economic Belt, appropriately tried related cases, promoted the coordinated development of geographic areas.

(服务国家重大战略实施。制定人民法院为“一带一路”建设、为京津冀协同发展、为长江经济带发展提供司法服务和保障的意见，妥善审理相关案件，推动区域协调发展)

What, if anything, does serving the country’s major strategies mean for the Chinese courts?  This blogpost briefly looks at one of the policy documents cited by President Zhou Qiang to find out.

What are the documents?

The titles of these three are similar:

  1. Opinion of the SPC on Providing Judicial Services and Guarantees for One Belt One Road (OBOR Opinion)最高人民法院关于人民法院为“一带一路”建设提供司法服务和保障的若干意见;
  2. Opinion of the SPC on Providing Judicial Services and Guarantees for the Development of the Yangtze River Economic Belt (最高人民法院关于为长江经济带发展提供司法服务和保障的意见)(8 March 2016 )(Yangtze River Opinion); and
  3. Opinion of the SPC on Providing Judicial Services and Guarantees for the Coordinated Development of the Beijing-Tianjin-Hebei Region 最高人民法院关于为京津冀协同发展提供司法服务和保障的意见 (18 February 2016)(Beijing/Tianjin/Hebei Opinion) .

What are the country’s major strategies?

A Rand Corporation report set out a definition of the fundamental purposes of China’s national strategy:

the fundamental purposes of China’s national strategy (guojia zhanlue) (1) to safeguard China’s national territory and sovereignty, (2) to guide national construction and social development, (3) to strengthen national power, and (4) to ensure continued national prosperity….China’s national strategic objectives (guojia zhanlue mubiao) constitute those fundamental strategic principles, concepts, and priorities guiding not only foreign and defense policy but also critical domestic realms concerned with national construction and internal order. These objectives include the attainment of great power status in the economic, technological, social, and military realms…, and the development or maintenance of capabilities to defend against any internal or external threats to China’s political stability, social order, national sovereignty, and territorial integrity.

Beijing/Tianjin/Hebei Opinion

It was drafted to support the Beijing/Tianjin/Hebei regional integration plan because the economic integration plan will “inevitably produce a large number of legal disputes, particularly trans-regional legal disputes.” The SPC research office seems to have taken the lead on drafting it, because its head appeared at the press conference to explain it.

The Opinion stresses the following types of cases, in the following order:

  • Criminal law: punish crimes that may effect social stability and regional integration: intellectual property rights infringement; embezzling corporate funds, illegal fund raising;  market manipulation etc. (the priority crimes);
  • Commercial law: priority cases include those involving company relocation; regional logistics centers; relocation of regional markets, including leases, labor disputes; reorganization or bankruptcy of companies with outdated technology; construction of industrial parks and promotion of companies with high quality technology;
  •  Cases involving people’s livelihood, particularly those involving public services, education, medical and health; social protections; promoting entrepreneurship, equal education, etc.
  • Cases involving financial innovation and safety: those include private lending, internet financing, protecting the rights and interests of creditors and financial consumers;
  • Expanding the protection of intellectual property:
  • Environmental cases: focus on environmental civil/commercial and administrative cases;
  • Focus on administrative cases related to regional development; and
  • Focus on major projects and construction projects related to regional integration.

The Beijing/Tianjin/Hebei Opinion also establishes greater coordination among the three courts, including a mechanism chaired by the SPC, exchange of judges, and calls for work on centralization of certain types of cases in certain court.

The Opinion calls for the lower courts to focus on the overall regional integration plan and promote the use of “diversified dispute resolution,” and pre-filing mediation, especially in policy-oriented, sensitive cases, where the local Party Committee, government, and other departments must be relied upon to resolve issues.  ( 特别是对于政策性、敏感性强的案件，要紧紧依靠当地党委、政府及有关部门依法解决).

(The phrase “policy-oriented, sensitive case” was helpfully described by another judge as it is a concept used often within the Chinese judiciary.  Although it is a not a formal legal term, it refers to the following categories of cases: those that affect a larger group of people than the parties involved; involve issues of widespread concern; require the adjustment of certain long-term government policies; and have political implications. Those include cases involving a large number of people, special groups (such as migrant workers, well-known enterprises, offshore entities), ones that can cause social conflict, including bankruptcy, labor disputes caused by restructuring, employee relocation compensation cases, land acquisition and resettlement compensation. Cases involving political, ethnic and religious issues are also included.)

Policy documents serving major government strategies

As a central government institution, the Court must do its part to support national major strategies. To inform the lower courts of the priority issues, projects, and matters, the SPC issues policy documents, which are the court system’s version of policy documents issued by other Party and state organs. Each of the three national major strategies raises a set of legal issues.  Some of those legal issues are relevant to the function of the courts in hearing cases, while others relate to the function of the SPC as a “quasi-legislator,” as when it issues judicial interpretations.  They often relate to forthcoming initiatives or sometimes long-term issues for the SPC, as in the case of the OBOR Opinion.  However, these documents also signal that some issues, projects, and matters are more important than others, and ultimately does not contribute to public trust in the judiciary.

Some thanks in order

My thanks to a Hong Kong solicitor for criticizing the Hong Kong courts for lacking the “spirit of service” during a recent symposium on the mainland (bringing this issue to my attention) and a (mainland) academic for expressing to me his doubts that the SPC’s OBOR Document had any significance whatsoever.

juvenile courts

Violence in Chinese schools–Supreme People’s Court investigates

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u=3100241398,3468186084&fm=21&gp=0While most of the world is mesmerized by the high PISA scores of students in Shanghai schools, and the impressive achievements of Chinese students on standardized tests, a problem that has escaped the attention of most Chinese authorities (and the outside world) is violence in Chinese schools.  In time for Children’s Day (June 1), a team of researchers at the Supreme People’s Court (SPC) published a report on school violence disturbing to any student, parent, or person who was once a school child.

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No comprehensive data

The research team themselves admitted that they do not have comprehensive data on the problem.  School violence often does not enter the formal criminal justice system and is dealt with through public security or other administrative measures, or is not dealt with at all.  The team reviewed 100 criminal cases that arose in the last two years and visited some local courts, including those in Qingdao, a court in which the SPC is piloting measures to improve juvenile justice.

Crimes committed

Screen Shot 2016-06-04 at 11.30.20 AM

Age of offenders

The age of criminal responsibility for juveniles is currently 14, so the statistics on the age of offenders reflects this.  65% were between the ages of 16 and 18, while 34% were between the ages of 14 and 16. These numbers are not a true reflection of the extent of school violence because criminal responsibility for juveniles in China between the ages of 14 and 16 is limited to eight crimes, as set out in Article 17 of the Criminal Law.

Educational level

33% of students were in junior high, 22% in senior high school, 26% were vocational school students, while 12% were unemployed, with 2% primary school students.

Weapons

In 49% of cases, the offender used a knife, including switchblades, fruit knives, and hunting knives, 67% of the time causing death (35%) or serious injury (32%). In about half of the cases the offender turned himself in and also about half the cases were resolved by settlement with the victim/victim’s family.

Criminal punishment

In 32 cases of serious bodily harm, the offender was exempted from criminal punishment, in 68% of cases, the offender received a suspended sentence, while in 14% of cases the offender was sentenced to under three years or three to five years incarceration.

In 35 homicide cases, the offender in 23% of cases received a suspended sentence; 29% of cases, over 10 years in prison; in 34% of cases, five to ten years in prison.

Major issues

The problem is not taken seriously–with a prevalent attitude that school violence is part of growing up, and there is a lack of consensus about what to do about it;

Juvenile justice legislation is lagging behind, with offenders becoming increasingly younger, with cases of intentional homicide committed by juveniles under 14, with no penalties against stalking, verbal bullying, etc. This study, along with others, may lead eventually to changes in the age of criminal responsibility in China。

Too many serious offenders are receiving suspended sentences or avoiding criminal punishment by settling with the victim.

The researchers suggest looking to useful models from outside of China, to improve Chinese legislation.

The Ministry of Education has only recently issued a notice on school bullying. requiring incidents to be reported and preventative measures to be taken. It is likely that schools are reluctant to report these incidents.

School bullying and violence is a global problem and one where international cooperative efforts could be useful. In China, it is related, in part, to adults migrating to cities or developed areas to earn money, leaving behind their children with grandparents to study in underfunded schools.

(photos from the internet)