Upcoming amendments to Chinese Civil Procedure law to address foreign parties

On 1 September 2023, the Standing Committee of China’s National People’s Congress passed new amendments to the Civil Procedure Law, which will take effect from 1 January 2024 (EN news report). These amendments will enhance measures for handling foreign-related cases.

The amendments in Chinese are available here. (We also provide an unofficial translation below of some of these amendments.)

Summary

The key highlights of the amendments relating to foreign parties’ procedure rights in civil litigation in China are:

• Jurisdiction nexus: The proper connection principle has been codified to permit a Chinese court to exercise jurisdiction over any case with proper connection to China. The proper connection principle was applied by the SPC (Supreme People's Court) in the OPPO v. Sharp and OPPO v Nokia cases to establish the Chinese court’s jurisdiction over a global FRAND determination case. Now the proper connection principle has been officially codified into the new amendments in Articles 274 and 278. 

• Parallel litigation: Two new rules relating to parallel litigations provide that a Chinese court may still exercise jurisdiction over a case under certain circumstance even if the same dispute has been filed first in a foreign court. (See Articles 280, 281 and 284.) 

• Service of proceedings: China has been placing efforts to ease the way and shorten the time for service on foreign defendant. New ways of service of process on foreign defendants have been introduced. Under the new amendments, service of process on a foreign company can be made by delivering the litigation documents to the legal representative of this foreign company when he/she travels to China. These amendments are in Article 283.

Translation

Below is an unofficial translation of some of the amendments:

Jurisdiction nexus

Art 274 reads as:

“For foreign related civil disputes, in an action(identity related litigation cases excluded) that is instituted against a defendant who has no domicile within the territory of the People's Republic of China, if the place where the contract is signed, the place where the contract is performed, the place where the subject matter of action is located, the where the chargeable property is located, the place of infringement or the place where the representative office is located, is within the territory of the People's Republic of China, the people's court at the place where the contract is signed or performed, where the subject matter of action is located, where the chargeable property is located, where the infringing is occurred or where the representative office is located could have jurisdiction over the action.

In addition to the above provision, If a dispute has other proper connection with the People’s Republic of China, the court of the People’s Republic of China can exercise jurisdiction over the dispute”.

A newly added Art 278 reads as:

“If a party fails to raise a jurisdiction objection to a court of the People’s Republic of China and respond to the [China] action or bring a counter action, it would be deemed as if the court of the People’s Republic of China has jurisdiction over the case.”

Parallel litigation

A newly added Art 280 reads as:

“For the same dispute between two parties, if one party brings an action before a foreign court, the other party brings an action before a court of the People’s Republic of China, or one party brings an action both before a foreign court and a court of the People’s Republic of China, if based on this Law the court of the People’s Republic of China has jurisdiction, such case could be accepted [by the China Court]. If the exclusive jurisdiction agreement concluded between the parties agreed that a foreign court has [exclusive] jurisdiction and does not violate the exclusive jurisdiction provisions in this Law, and it does not relate to the sovereignty, safety or public interest of the People’s Republic of China, the court can dismiss the filing of the case. ”

A newly added Art 281 reads as:

“After a case has been accepted by a court of the People’s Republic of China in accordance with Art 280, if a party file a written application to request the court to stay the case based on earlier filing of the same dispute before the foreign court, the court of the People’s Republic of China can stay the [China] litigation, except for any one of the following circumstance:

(1) The parties agree on consensus that the case is subject to the jurisdiction of the court of the People’s Republic of China, or the dispute fall within the exclusive jurisdiction of the court of People’s Republic of China; or

(2) Apparently it is more convenient for the court of the People’s Republic of China to try on the case

If the foreign court fails to take necessary measure to try on the case, or is unable to conclude the case within a reasonable period, the litigation[in China] should be resumed upon written application of the party involved.

If a judgement or an order of a foreign court has been fully or partially recognized the court of the People’s Republic of China, but the party involved still files an action asserting the part of issues that have been recognized before a court of the People’s Republic of China, such case should not be accepted, if the case has been accepted, a dismissal of the filing shall be ordered.”

Forum Non-Convenience

A newly added Art 284 reads as:

“If a foreign related civil case is accepted by the court of the People’s Republic of China, upon jurisdiction objection raised by the defendant, [the Chinese court] can dismiss the action and inform the plaintiffs to bring the case before a more convenient foreign forum if it meets all the following requirements:

(1) The key facts of the dispute did not take place within the territory of the People’s Republic of China, it is obviously inconvenient for the court of the People’s Republic of China to try the case and the parties to attend the litigation in China;

(2) There is no agreement between the parties that the case should be subject to the jurisdiction of the court of People’s Republic of China;

(3) The case does not relate to the sovereignty, safety or public interests of the People’s Republic of China; and

(4) It is more convenient for a foreign court to try on the case.

Once the action is dismissed [by the Chinese court], if a foreign court refuses to exercise its jurisdiction over the case, or fails to take necessary measure to try on the case, or is unable to conclude the case within a reasonable period, and the party files the case again before a court of the People’s Republic of China, the Chinese court shall accept the case.”

Service on foreign defendants

The below (5), (6) and (7) are newly added to Article 283:

“A people's court may serve process on a party which has no domicile within the territory of the People's Republic of China in the following manners:

(1) Process can be served in the manners specified in the international treaty concluded or acceded to by the home country of the person to be served and the People's Republic of China.

(2) Process can be served through diplomatic channels.

(3) If the party to be served is a citizen of the People's Republic of China, service of process may be entrusted to the embassy or consulate of the People's Republic of China stationed in the country where the person to be served resides.

(4) Process can be served on a litigation counsel authorized by the person to be served to receive service of process.

(5) Process can be served on the foreign solely owned company, representative office or a branch office or business agent authorized to receive service of process established by the party to be served in the territory of the People's Republic of China.

(6) If the party to be served is a foreign individual or a stateless person, he/she is the legal representative or a key person in charge of a legal entity or an organization established within the territory of the People’s Republic of China, and such legal entity or organization has also been listed as a co-defendant, the process can be served on this legal entity or organization.

(7) If the party to be served is a foreign legal person or a non-legal person organization, their legal representative or key-person-in-charge is within the territory of the People’s Republic of China, the process can be served on the legal representative or the key-person-in-charge.

(8) Service of process by post is allowed if the law of the home country of the party to be served permits service of process by post, and if, three months after the postmark date, the service acknowledgement is not returned, but based on all circumstances, it is sufficient to determine that process has been served, process shall be deemed served on the expiration date of the aforesaid period.

(9) Process is served by email that is able to confirm receipt by the party to be served, except that the law of the home country of the person to be served prohibits such means of service.

(10) Process is served on other means that has been agreed by the party to be served, except that the law of the home country of the person to be served prohibits such means of service.