Focusing on the revision of civil procedure law -- the evolution and practical prospect of "Inconvenient Court" principle

The author is Zhibo Li Zhen Ji

On September 1, 2023, the Standing Committee of the 14th National People's Congress of China deliberated and adopted the new Civil Procedure Law of the People's Republic of China (hereinafter referred to as the "Xinmin Procedure Law"). The New People's Action Act will come into force on January 1, 2024.

With the major adjustment of "jurisdiction" in Chapter 24 of Part IV "Special Provisions on Civil Procedures concerning Foreign Affairs", the application conditions of the "inconvenient court" principle have been substantially relaxed. It can be predicted that after the formal implementation of the Xinmin Litigation Law, more cases will be ruled by the court to dismiss the prosecution on the grounds of inconvenience. For courts, this means that the case hearing load is reduced to a certain extent, but at the same time, there will be more cases that cannot be heard in Chinese courts.

01

Te principle of "inconvenient court" is gradually established in written law of our country

It is generally believed that the "Forum non conveniens" principle originated in Scotland. It usually means that after accepting a case, the court thinks that it is more convenient for the court of other jurisdiction to hear the case due to various inconvenient factors, and then decides to give up its jurisdiction over the case.

As early as in the 1990s, the Supreme People's Court of our country once refused to have jurisdiction over cases based on the principle of "inconvenient courts". Article 7 of Answers to Questions on Foreign Commercial and Maritime Trial Practice (I) has also provided guidance on how to understand and master the principle of inconvenient courts [1].

The first formal establishment of the principle of "inconvenient court" in our country's legal system can be traced back to the Minutes of the Second National Conference on Foreign Commercial and Maritime Adjudication issued on December 26, 2005 (hereinafter referred to as "Minutes of the Second National Conference on Foreign Commercial and Maritime Adjudication"). Subsequently, Article 532 of the Interpretation of the Supreme People's Court on the Application of the Civil Procedure Law of the People's Republic of China (2015 Amendment) (hereinafter referred to as the "Interpretation of People's Litigation (2015 Amendment)") further clarified the principle of "inconvenient courts" in the form of judicial interpretation.

The Minutes of the Second Commercial and Maritime Conference required seven conditions to be met simultaneously to apply the inconvenient court principle. However, in the Interpretation of Public Litigation (Revised in 2015) issued 10 years later, the number of conditions to be met simultaneously was reduced to six. The condition that "the Chinese court accepting the case shall have jurisdiction over the case" has not been retained in the Interpretation of People's Litigation (2015 Amendment).

Although the Interpretation of People's Litigation (2015 Amendment) no longer emphasizes the jurisdiction of the court itself, the jurisdiction of the court over the case is still the prerequisite for the application of the principle of "inconvenient court" [2]. Starting from the definition of the "inconvenient court" principle, only when the court has jurisdiction according to law can it be possible to reject the prosecution of a particular case by applying the "inconvenient court" principle. Otherwise, the court should directly reject the lawsuit on the grounds that it does not have jurisdiction [3].

Since then, the Interpretation of People's Litigation (2015 Amendment) has been amended twice in 2020 and 2022, and the expression of the "inconvenient court" principle has not been revised.

02

"Inconvenient court" past practice disputes

The principle of "inconvenient court" is considered to reduce the litigation burden of the court, realize the fairness and efficiency of litigation, and avoid the occurrence of conflicting judgments [4]. However, in the past civil and commercial litigation practice, due to the existence of the condition that "the case does not involve the interests of the state, citizens, legal persons or other organizations of the People's Republic of China", the courts in our country rarely apply the principle of "inconvenient court" to refuse jurisdiction.

Studies have shown that among the 82 cases related to the Interpretation of People's Litigation (2015 Amendment) after it came into effect, only 13 cases refused jurisdiction, indicating that the role of the "inconvenient court" principle has not been fully played. [5]

According to the author's practical experience, although the cases that enter the court system of our country do not necessarily involve the national interests of our country, most of them regard Chinese citizens, legal persons or other organizations as one of the defendants. However, the court usually holds that as long as a Chinese citizen, legal person or other organization is listed as the defendant, the case therefore involves the interests of a Chinese citizen, legal person or other organization, and the court therefore refuses to transfer jurisdiction.

In this regard, some people believe that in the past practice, the application space and existence value of the principle of "inconvenient court" in our country are extremely limited, and Chinese courts cannot reduce the burden of litigation. The "interests of Chinese citizens and legal persons" in paragraph 4 of Article 532 of the Interpretation of People's Litigation is considered to lack a clear boundary. This leads to a certain degree of separation between judicial practice and legislative objectives [6].

Furthermore, under the guidance of this legislation, fictitious defendant appeared in some cases to create the appearance that the case involved the interests of citizens and legal persons in our country. Considering that our country's Civil Procedure Law only requires the defendant to be clear in the filing stage, whether the behavior of falsely listing the defendant can "get what he wants" in the jurisdiction stage depends largely on the review scale of individual cases.

For example, in the case No. 6 of Shanghai Minhaizhong (2018) tried by Shanghai High People's Court, the appeal claimed that the court of original instance identified the appellant XX Shanghai Company, which had nothing to do with the dispute, as the defendant of this case and thus established jurisdiction, and then determined that the case was not applicable to "inconvenient jurisdiction" on the grounds that the appellant XX Shanghai Company was a Chinese legal person and the case involved the interests of Chinese parties. The logic of the referee is clearly wrong.

Shanghai High Court held that although the subject qualification of XX Shanghai Company affected the determination of the jurisdiction of this case, it still needed to be found out by entity trial whether it was really related to this case and should bear the corresponding responsibility. Finally, the appeal was rejected and the original ruling was upheld.

For example, in (2016) Case No. 624 of Liao 02 and Early Republic of China, there was a corporate bond trading dispute between the plaintiff and the defendant. In addition to a British company, the plaintiff will also Chinese citizens Lin mou, Jia mou and Chinese enterprise X fly company as a co-defendant.

Dalian Intermediate People's Court believes that although the plaintiff will be Chinese citizens Lin mou, Jia mou and X fly company as the defendant, but according to the facts and reasons stated in the plaintiff's complaint, X Fly company is the actual user, the defendant Lin mou is the shareholder of X Fly company, the defendant Jia mou is the spouse of the bond manager, the above company and natural people are not the parties to the corporate bond trading contract, There is no legal relationship with the plaintiff in corporate bond trading...... It should not change the nature of the basic legal relationship of the case, nor should it be used as the basis for determining the jurisdiction of the case......

03

The improvement of "Inconvenient Court" principle and the prospect of practice in Xinmin Litigation Law

With the revision of the New People's Litigation Law, whether a case involves the interests of Chinese citizens, legal persons or other organizations no longer constitutes the judgment standard of "inconvenient court" principle. The corresponding judgment standard has evolved to "the case does not involve the sovereignty, security or public interests of the People's Republic of China".

In the future, there will be more cases that simultaneously meet the five judgment criteria under Article 282 of the Xinmin Litigation Law, so that Chinese courts can transfer their jurisdiction to overseas courts. However, it is worth noting that under both the Interpretation of People's Litigation (2015) and the New People's Litigation Law, the court in China can rule to reject the prosecution, rather than should or should rule to reject the prosecution.

This means that even if all conditions are met, the court can legally keep the case open if the plaintiff can present the case convincingly. There is usually some commercial rationale behind plaintiffs' choice to Sue in Chinese courts. From the perspective of the plaintiff's lawyer, how to persuade the court to retain jurisdiction over the case will become more important.

In this regard, although we cannot predict the discretion standard of the court after the implementation of the Xinmin Litigation Law, a case [7] tried by Huizhou Intermediate People's Court of Guangdong in February 2021 May give us some inspiration.

The plaintiff of the case is X Feng bank, the defendant is X da company and natural person Luo mou. In the first instance, Huiyang District Court of Huizhou City ruled to reject the lawsuit based on the principle of "inconvenient court". In the appeal trial, X Feng Bank from the perspective of the success rate of execution, successfully realized the appeal over.

Xphon Bank argued, "... Foreign courts are more convenient for the trial of cases. The word "trial" cannot be limited to the trial procedure of civil litigation. If a foreign court is more convenient for the trial procedure, but not convenient for the execution procedure, the legitimate interests of the parties concerned cannot be finally realized. Such a result is contrary to the fundamental task of our country's civil procedure law... Xfeng Bank's lawsuit and enforcement in the court of first instance is the only relief way to realize the creditor's rights ".

In this regard, the court of second instance clearly pointed out that all parties are Hong Kong subjects and do not involve the interests of mainland citizens, legal persons or other organizations. The relevant contract is governed by the laws of Hong Kong, and the court of the Hong Kong Special Administrative Region has certain advantages in hearing this case.

However, even so, Huizhou Intermediate People's Court still decided that Huiyang District Court should conduct the first instance of this case based on the feasibility and effectiveness of preservation and execution.

In all cases involving the application of the "inconvenient court" doctrine, courts of multiple jurisdictions have jurisdiction over the case. As the author analyzed in the article "Focusing on the Revision of the People's Litigation Law - The Evolution of Cross-border" Parallel Litigation "and" Litigation Jump Start ", the plaintiff needs to choose the appropriate court from the perspective of the global freezing and recourse of the defendant's assets.

Once the plaintiff has selected a Chinese court to file a lawsuit, in the event that the Chinese court may rule to reject the lawsuit based on the principle of "inconvenient court", the plaintiff may consider persuading the Chinese court from the perspective of execution and preservation (or other favorable circumstances of the case), so as to retain the jurisdiction of the case in the Chinese court as much as possible.

04

Conclusion

In general, after the revision of the civil Litigation Law, the overall judgment standard of the "inconvenient court" principle tends to be more reasonable. In addition, the legislation has filled loopholes and made it clear that when an overseas court refuses to exercise jurisdiction, fails to take necessary measures to hear the case, or fails to conclude the case within a reasonable time limit, the Chinese court shall accept the case. However, this also puts forward higher requirements for plaintiff lawyers, who need to present more convincingly within the scope of the discretion exercised by Chinese courts.

Note:

[1]  Huang Zhihui. Reflections on the Current Situation of the People's Court's Inconvenient Court Principle: from "Six conditions theory" to "Two stages Theory" [J]. Local research, 2017 (6) : 156-165. The DOI: 10.16390 / j.carol carroll nki issn1672-0393.2017.06.019.

[2]Understanding and Application of the Supreme People's Court's New Judicial Interpretation of Civil Litigation (Part II), People's Court Press, The Office of the Leading Group for the Implementation of the Supreme People's Court's Civil Code, 1st edition, June 2022, 1170.

[3] In practice, some courts enjoy jurisdiction by invoking the principle of inconvenient courts in the reasoning part of judgment, such as (2020) Yue 04 Min Hai Zhong No. 92 case, on which the author has reservations.

[4] Previous note 1

[5] Chen, N. R. The application and improvement of the Inconvenient Court Principle in Chinese courts: from the perspective of 125 judgment documents [J]. Wu3 da4 international law review, 2021, 5 (02) : 114-135. The DOI: 10.13871 / j.carol carroll nki whuilr. 2021.02.009.

[6] Supra note 5

[7] (2021) Yue 13 Min Hai Zhong No. 19