|Iitigation & dispute resolution
• What is a minute?
• What functions do minutes serve in judicial practice?
• How does the court serve litigation documents when the litigant does not have a domicile in China?
• Why should I choose arbitration?
• What shall be included in an arbitration agreement?
• Where can a foreign related dispute be arbitrated?
• As we are a foreign invested enterprise, are there specific procedures that apply to us?
• Can judicial documents be served on a foreign company's representative office in China?
• According to what principles is the law of procedure for international commercial arbitration applied?
• Can a settlement agreement be varied or revoked?
• What is the role of the People's Mediation Commission in China?
• What regulations are provided for in Chinese law of foreign arbitration procedure?
What is a minute?
In the context of litigation, a minute is a record of a judicial conference. Every year, the Supreme Court and Superior Courts will hold annual conferences to discuss matters relevant to judicial actions. It is at these meetings that the minutes are recorded. After the annual meeting, the minutes appear as a record of the meeting attended by the judges of the Supreme Court and Superior Courts.
The minutes are basically a collection of principles and explanations based on a number of select cases handled by the lower courts. These cases are all similar in that there is no statute that covers the matters in the cases, or the present statutes do not declare how to handle the cases very clearly. The minutes are basically divided into two kinds:
What functions do minutes serve in judicial practice?
- Minutes that introduce principles that deal with a new field in law;
- Minutes that are explanations or clarifications of present law.
There are two main functions of minutes according to the two categories of minutes. When the case involves a new situation that goes beyond the scope of the present law, the minutes, as new principles, try to guide judges in dealing with such a case. Minutes as explanations or clarifications of present laws try to guide judges, especially in lower courts, to accurately understand and apply the present laws. Due to the broad nature of the activities and various circumstances in China, statutes are frequently very general. It is therefore necessary for the Supreme Court and Superior Courts to steer the judges in a correct application of the present laws. Minutes act as an effective tool in this endeavor. With the perfection of the Chinese legal system and continual improvement of judiciary qualifications, the function of minutes will taper off and lose their importance.
How does the court serve litigation documents when the litigant does not have a domicile in China?
In accordance with Article 247 of the Civil Procedure law, regarding a litigant who does not dwell within the territory of the People's Republic of China, the people's court usually serves the litigation documents through diplomatic channels. If they can not be served through diplomatic channels, the court will use public notice as a way of serving the documents. After six months from the date of notice, the documents will be deemed to have been served.
Why should I choose arbitration?
Arbitration is one type of alternative dispute resolution (ADR) used in commercial disputes. Compared with litigation, the advantage of arbitration is that it is convenient, saves time and is efficient in concluding cases. Moreover, arbitration allows the parties full autonomy and can resolve disputes independently, impartially and without unnecessary delay. It is also preferred because of the flexibility, confidentiality, finality and enforceability of its award.
What shall be included in an arbitration agreement?
According to Article 16 of the Arbitration Law of China, the following shall be included in an arbitration agreement: 1. an indication of intention to apply for arbitration 2. the matters to be arbitrated; and
3. the selected arbitration commission.
Where can a foreign related dispute be arbitrated?
For foreign related disputes, the parties are generally free to choose where to conduct arbitration. The parties could choose to arbitrate the dispute in China or elsewhere. It is also acceptable that the parties lodge their arbitration application with a domestic arbitration commission. However, we recommend that foreign related arbitration in China be referred to China International Economic and Trade Arbitration Commission (CIETAC) or in case of maritime related disputes, to the Chinese Maritime Arbitration Commission (CMAC).
As we are a foreign invested enterprise, are there specific procedures that apply to us?
Yes. Based on the newly amended Arbitration Rules, CIETAC can handle both domestic and international arbitral cases. Arbitration for the following disputes shall be regarded as domestic: i. Disputes between enterprises with foreign investment and disputes between an enterprise with foreign investment and another Chinese legal person, individual and/or economic organization; ii. Disputes arising from project financing, invitations for tender, bidding, construction and other activities conducted by Chinese legal person, individual and/or other economic organizations through the utilization of capital, technology or service from foreign countries, international organization or from Hong Kong, Macao, and Taiwan; iii. Dispute that may be taken cognizance of by CIETAC in accordance with special provisions of or upon special authorization from the law or administrative regulations of China; or iv. Other domestic disputes which the parties have agreed to refer to CIETAC for arbitration.
Therefore, in most of the cases, domestic arbitration procedures shall be applied to disputes involving FIEs. In general, the difference between international arbitration and domestic arbitration is that the time limit for the latter is shorter.
Can judicial documents be served on a foreign company's representative office in China?
In the past, Chinese law was silent on the issue of whether judicial documents could be served on foreign companies at their representative offices in China. However, on June 18, 2002 the Supreme People's Court issued a Practice Note, which came into force on June 22, 2002, discussing the application of the Hague Service Convention as it relates to the service of legal documents on foreign companies that have representative offices in China. The Practice Note directs, if the party to be served has established a representative office in China, the People's Court may serve litigation documents on the representative office pursuant to subparagraph (5), article 247 of the Civil Procedure Law. Therefore, to effect service in of a foreign company with a representative office in China, a party does not need to effect service abroad pursuant to the Hague Service Convention.
The Practice Note also addresses the issue of service by means of leaving the documents to be served at the Representative Office.
According to what principles is the law of procedure for international commercial arbitration applied?
There are several different principles that are applied but the prevailing one is the so-called lex loci arbitri, which means that the law of the place of arbitration is applied. Arbitration conducted under lex loci arbitri may receive the nationality of that state and further, as a foreign award, be recognized by contracting states to the 1958 New York Convention. According to the theory the place of arbitration has actual and effective jurisdiction over arbitration conducted in its territory.
Can a settlement agreement be varied or revoked?
Yes and the burden of proof lies with the party applying for variation or revocation of a settlement agreement. If a party only applies to vary the settlement agreement, the People's Court cannot revoke the settlement agreement. It is also important to note that the right to apply for revocation expires a year after the party entitled to apply for revocation knows or ought to have known of the existence of the right to apply.
Some of the grounds in which a party may rely on to vary or revoke a settlement agreement are: (i) where the settlement agreement is concluded based on serious misunderstanding, or (ii) where it is concluded unfairly.
What is the role of the People's Mediation Commission in China?
In China, mediation commissions are set up by villagers in some rural parts of China to settle disputes. These mediation commissions are useful as they could settle minor civil disputes and handle minor criminal cases. After a dispute has been settled, the mediation commission would require the parties involved to sign a settlement agreement.
What regulations are provided for in Chinese law of foreign arbitration procedure?
The Civil Procedure Law of the PRC dedicates one chapter to provide for foreign related arbitration. There is also a separate law named The Arbitration Law of the PRC. According to those rules foreign related arbitration disputes in China should be conducted in compliance with Chinese arbitration law. A regulation like this is indicative of the lex loci arbitri theory, i.e. that the parties cannot choose foreign law to be applied to an arbitral procedure conducted within Chinese territory.