Wang Jing & Co | View firm profile
New amendments to the Civil Procedure Law of PRC (“CPL”) that optimize procedures for foreign-related civil cases will take effect since 1 January 2024,as announced by the top legislature of China on 1 September 2023, 29 articles have been amended, 19 of which relate to special provisions on foreign-related civil procedures, including jurisdiction, service abroad, collecting evidence abroad, and recognition and enforcement of foreign judgments, rulings and arbitral awards.
As often embroiled in complex disputes all over the world, international shipping companies may concern the influence of these new amendments, especially when their business involves China, more or less. WJNCO appreciate these concerns and humbly provide our insights into some new amendments to the CPL in regard to maritime and shipping matters.
- More choices of courts for international maritime cases
- An extended scope of “connections” to establish Chinese court jurisdiction on foreign defendants
Under the present CPL, a lawsuit against a defendant not resident in the PRC can only be lodged before a Chinese court when the relevant dispute is connected with the PRC by way of:
- i) the underlying contract is signed and performed in the PRC; or
- ii) the subject matter of the lawsuit is located in the PRC; or
iii) any enforceable property of the defendant is located in the PRC; or
- v) the tort act occurred or any representative office of the defendant is located in the PRC. Now, in addition to the above, the new CPL (Art. 276, para. 2) adds a cover-all provision to allow such a lawsuit to be brought before Chinese courts where the dispute has other proper connections with the PRC.
Literally speaking, such “other proper connections” may be interpreted very broadly, before specific judicial interpretations are further promulgated. In maritime cases, the connections can be the Claimant’s domicile, the ship-repairing location, the domicile of a crewmember injured in a collision incident, etc., but always subject to the court’s own discretion.
- A new provision to admit agreement on Chinese jurisdiction
A special provision on the choice of court agreement is inserted in the foreign-related procedure session (Art. 277), which states “if the parties to a foreign-related dispute have agreed in written that courts of China are to have jurisdiction, Chinese courts may exercise jurisdiction.” This new provision allows parties to choose based on their own agreement the forum in China.
Although Article 35 of the CPL that pertains to purely domestic civil cases requires the forums agreed to have actual connections with the dispute, which remains unchanged in the amended CPL, we opine the new Article 277 shall specially apply to foreign-related civil cases and it is independent from and not subject to Article 35; namely, it will abolish the constraint on “actual connection”. In other words, parties can freely choose to submit their disputes to Chinese courts in bills of lading, charter parties or other contracts, without any constraint, as long as such jurisdiction clause is agreed to or accepted by both parties.
- New rules for parallel litigations and conflict of jurisdictions
The amendments to the CPL insert Articles 280, 281 and 282 to deal with issues on parallel litigation and conflict of jurisdiction, most of which are break-throughs in the Chinese legislation.
To simplify the reading, we would like to give a brief but incomplete summary of these articles. Basically, the new Article 280 allows a Chinese court to exercise jurisdiction in case of parallel litigations, and the Chinese court shall respect the exclusive jurisdiction agreements between the parties unless the case/dispute shall be subject to statutory exclusive jurisdiction of Chinese courts or it involves sovereignty, security or public interests of China; Article 281 introduces the first-seized court approach in case of conflict of jurisdictions, encouraging the later-seized Chinese court to give up jurisdiction if the case has been first accepted by a foreign court, whilst allowing the Chinese court to resume the proceedings if the foreign court delays in rendering judgement; Article 282 provides for forum non conveniens, allowing Chinese courts to decline jurisdiction in favor of a more convenient/appropriate court of another country, when a jurisdiction challenge has been raised.
In short, the newly amended CPL provides more choices of courts for parties, either when agreeing the jurisdiction clause in contracts or when a lawsuit is to be lodged after a dispute arises. We will see challenges against the jurisdiction of Chinese courts may have less chance to be supported after the amendments come into effect.
- Shortened defense period due to more efficient service abroad
International shipping companies will also be affected by the more efficient service abroad prescribed under the newly amended CPL. Compared to the existing means, the amendments (Art. 283) additionally allow (1) service to an agent ad litem appointed in the case, whether or not the agent ad litem has been explicitly authorized to accept legal service; (2) service to a wholly-owned corporation, a representative office, a branch, or a business agent set up in the PRC by the legal entity to be served, no matter whether or not they are duly authorized to accept service; (3) service to the joint defendant located in the PRC where the person to be served takes the position of legal representative or principal person in charge; (4) service to the legal representative or principal person in charge in the PRC of the person to be served; (5) service by electronic means, unless such service method is prohibited by the local law; (6) other means agreed by the person to be served service unless such service method is prohibited by the local law.
We have bolded those amendments require more attention. Amongst others, we would like to remind the worldwide shipping companies that, after the newly amended CPL comes into effect, legal service upon their wholly-owned corporations in the PRC will be deemed as proper service upon them (as we understand, they usually have set up wholly-owned companies in the PRC). Also, the electronic means have gone beyond emails and faxes, and may refer to instant messaging such as WeChat and other electronic systems.
The new mechanism will substantially improve efficiency of service abroad. It will be more difficult for non-China resident defendants to argue improper court service. Foreseeably, after the newly amended CPL comes into effect, it would shorten the time waiting for foreign defendants to respond to Chinese court cases.
In the circumstances, WJNCO suggests the international shipping industry insiders who may be impacted by amendments concerning legal service to consider granting a general authorization to their lawyers beforehand (which has been commonly accepted by the PRC maritime courts), rather than a particular authorization when each specific case arises. So that their lawyers can get early involvement in case of urgency and avoid a long waiting for the notarized and legalized authority document to be available (although the notarization and legalization procedures may be simplified after the Hague Apostille Convention will take effect in the PRC as from 7 November 2023).
Author: Li Rongcun