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| Ensuring equal legal footing |
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| Publish Time：2005-5-17 15:45:52 |
Ensuring equal legal footing
Provisions of the Supreme People"s Court Concerning Jurisdiction over Foreign-related Civil and Commercial Cases (hereinafter referred to as Provisions) were adopted by the Judicial Committee of the Supreme People"s Court of China on December 25, 2001 and came into effect on the first day of March, 2002.
According to the Supreme People"s Court, the Provisions are intended to improve the quality of handling foreign-related civil and commercial cases by limiting the number of courts allowed by law to hear cases under this category.
The current judicial system is generally considered unfit for the trial of cases of this kind, which often involve foreign parties or foreign laws and thus pose a greater challenge to the capabilities of judges.
In the first place, there are too few qualified judges in this respect. A limited number of experienced judges capable of handling proceedings in such cases are scattered in more than 3,000 grassroots and intermediate courts across the country, which results in inefficient use of human resources and lowers the general quality of trials of such cases the of such cases.
More importantly, due to the influence of local protectionism, a fair trial may be difficult to achieve when it takes place where the defendant is located. With China"s entry into the World Trade Organization (WTO), the issue has become more pressing.
With the enactment of the Provisions the number of courts having jurisdiction over the first instance trial of the cases as specified in the Provisions have been significantly reduced. Most of the grassroots courts are no longer allowed to hear these cases. The only exception is the courts of first instance located in the 20-plus State-level Economic and Technological Development Zones (ETDZs) approved by the State Council.
The reason is that most of the businesses in ETDZs are foreign-funded or foreign-related. The courts there are generally more experienced in adjudicating such cases.
In addition, it was argued that if you take away the jurisdiction over foreign-related cases from the courts in the ETDZs, there will not be enough cases to keep them busy. It may not be good news for them in a sense. As to the intermediate courts, they may not necessarily have jurisdiction over such cases under the Provisions, as they did previously.
Only those courts located in provincial capitals, municipalities, Special Economic Zones and some independently planned cities, or those specially appointed by the Supreme People"s Court, may entertain and hear such cases under the Provisions. The centralization of judicial powers in this regard is aimed at directing cases to those courts which are most qualified to try them. As intermediate courts are in most cases less exposed to the otherwise powerful local authorities, local protectionism is likely to be curtailed at that level.
However, the Provisions do not apply to the trial of all foreign-related civil and commercial cases.
Article 3 of the Provisions provides that such changes of jurisdiction will only apply to cases that:
(1) involve foreign-related contractual disputes or torts;
(2) involve letters of credit disputes;
(3) involve an application for cancellation, recognition or enforcement of international arbitral awards;
(4) involve judicial review of effectiveness of arbitration clauses in foreign-related civil and commercial contracts; and
(5) involve an application for recognition and enforcement of judgments and orders rendered by foreign courts for civil and commercial cases.
Article 4, however, stipulates that these provisions shall not apply to cases involving border trade disputes that occur in provinces bordering foreign countries, foreign-related real estate cases and foreign-related intellectual property rights cases.
Foreign investors are likely to benefit from the new rules. When foreign investors come to China, one of their major concerns is whether an unfamiliar judicial system may be prejudiced against them if they have to file a lawsuit in China. The centralization of jurisdictional powers aims at ensuring the fairness of dispute settlements so that the rights and interests of the foreign parties can be as equally safeguarded as those of the Chinese.
Another issue worthy of attention is whether the Provisions would cause much more inconvenience to the parties concerned and add to their costs, as they may have to present their cases before a court located in a place where neither of them is domiciled. We believe that the centralization of jurisdiction will increase the burden of parties to only a very limited degree in view of the fast development in transportation and communication technology. In most cases, parties to a lawsuit pay more attention to the quality of the judicial system than costs of time and fees. Many businesses even go a long way to submit their disputes to international arbitral institutions to ensure a just, fair hearing.
From another perspective, the centralization of jurisdiction may prove to be more convenient to parties concerned, as courts having jurisdiction are mostly located in large or coastal cities, where most foreign-funded businesses are headquartered.
The jurisdiction changes may also have an impact on Chinese lawyers. In the past, when a lawyer was retained, an important but unspoken requirement was his familiarity with the local regulations and his personal connection with the local courts. With the centralization of jurisdiction, such a factor may be minimized. Instead, winning a suit will more than ever hinge on the experience and specialized skills of lawyers.
A senior judge of the Supreme People"s Court revealed that the changes would likely be a transitional arrangement. The fairness of trials will eventually depend on the overall improvement of the quality and capability of judges in China. More training should be conducted for judges to this end. It is likely that certain special courts exclusively dealing with foreign-related civil and commercial cases will be established in the future that are familiar to judicial with practices in other countries
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