China Litigation and Case Acceptance

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Though my law firm has been involved in a number of China litigation matters, I was not familiar with how it is that Chinese courts decide what cases to accept.  I know a lot more now, after reading the Chinese Law Prof Blog’s post, Case acceptance in Chinese courts. First off, let me say that I am not aware of any case involving any of my firm’s clients not getting accepted by a Chinese court. It is possible we had a client sued in a Chinese court, but whose lawsuit was rejected and so we never heard of it.

But of the cases we have helped bring in China, none of them were rejected, and it would have shocked me if any of them had been. It would have shocked me because all of them were pretty much your garden variety breach of contract action.

Yet I have read of important cases being “accepted’ or, in some (usually politically charged) cases, being rejected for filing and I never quite understood that. The Chinese Law Prof Blog explains it all quite nicely and does so by distinguishing the “gate-keeping” function of the Chinese courts from those in the United States. To simplify, in the United States, there is pretty much no gate-keeping at all and one can file and have accepted a complaint that says pretty much anything. I could sue someone for not reading this blog often enough and get a complaint to that effect filed. Of course my case would be terrible and the defendant would no doubt get it dismissed in fairly short order and probably get monetary sanctions against me as well. But I would get it filed and the defendant would need to do something to respond.

Hence, the saying that “you can sue anyone for any reason.

It’s not like that in China:

[Y]our complaint “must first pass through a gate-keeping procedure in which a special division of the court (the case filing division [立案庭]) decides whether or not to accept (受理) and docket (立案) the case. According to Art. 108 of the Civil Procedure Law and Art. 41 of the Administrative Litigation Law (the applicable law depends on the kind of case), courts must, unless an exception applies, accept cases that meet the following standards:

    1. The plaintiff has a direct legal interest (a term of art) in the case.
    2. There is a specific defendant.
    3. There are specific claims, facts, and causes of action.
    4. The lawsuit is within the court’s geographical and subject-matter scope of jurisdiction.

The decision to accept or not is a pre-trial procedure that is undertaken on the basis of the complaint and evidence you may be asked to submit; if the court doesn’t accept the case, you never get the chance to prove your claims at trial. Moreover, it’s made in something of a black box without the benefit of adversarial arguments. When the system works as intended, the case filing division makes its own initial determination of the merits, deciding whether there is enough there to warrant going forward. In practice, a court trying to avoid a nettlesome case can use the case filing stage to reject the case.

The big difference then between China and the United States is that in China your case can be rejected without your having had any chance at all to argue why that should not have been the case:

In both of these [United States] gate-keeping proceedings, both parties appear and make arguments, and the court gives a decision that can be appealed. But this is precisely what doesn’t happen in the Chinese case filing stage, and that has led to dissatisfaction and criticism. There are always cases where, for one reason or another, a court won’t want to give a judgment declaring the plaintiff the winner (e.g., powerful people or institutions will be offended), but at the same time doesn’t want to declare it the loser, either (e.g., the evidence in favor of the plaintiff’s case is overwhelming). The best thing to do in these case is simply to avoid taking the case.

This acceptance/rejection system is in many ways the ultimate nightmare for lawyers.  Just imagine you are a lawyer and you have encouraged your client to bring a lawsuit. You then spend weeks/months gathering up the facts and drafting the complaint  for that lawsuit.

You then find local Chinese counsel and pay that lawyer’s retainer/fee. You then pay the filing fees. After all this, you get back a notice that your complaint has been rejected, without even a chance to argue otherwise. I don’t like it.

What do you think?

20 responses to “China Litigation and Case Acceptance”

  1. I’m a Chinese lawyer.I’m afraid that the description of Chinese Civil Procedure Law in this post is not accurate.The court’s decision of rejecting a case can be appealed to the appellate court.The problem is not the law itself,but is that the court don’t obey the law.In practice,the court often didn’t give the plaintiff a written decision,so that the plaintiff can’t appeal.

  2. I’m a Chinese lawyer.I’m afraid that the description of Chinese Civil Procedure Law in this post is not accurate.The court’s decision of rejecting a case can be appealed to the appellate court.The problem is not the law itself,but is that the court don’t obey the law.In practice,the court often didn’t give the plaintiff a written decision,so that the plaintiff can’t appeal.

  3. “After all this, you get back a notice that your complaint has been rejected, without even a chance to argue otherwise.”
    Actually, sometimes it’s even worse than that. You can appeal a decision not to accept your case. But if the court just sits on your case and never issues a formal notice of rejection (they might tell you informally over the phone), then there’s nothing to appeal.

  4. “After all this, you get back a notice that your complaint has been rejected, without even a chance to argue otherwise.”
    Actually, sometimes it’s even worse than that. You can appeal a decision not to accept your case. But if the court just sits on your case and never issues a formal notice of rejection (they might tell you informally over the phone), then there’s nothing to appeal.

  5. Good post.  Each country has its own procedural rules.  Gatekeeping is universal.  In Canada it starts with a clerk at the courthouse window. He or she can reject any filing.   Yes, one can appeal but . . . .  
    The fact is that the rules in China to get through the gate are not at all onerous.  In fact, it appears to me they are the same as in the west.  Perhaps the only difference is that they are applied right at the gate and that the gate is at edge of the court rather than somewhere inside.

  6. If you are required to pay the court filling fee, it absolutely means your case has been accepted.
    If your filling is rejected, you are allowed to appeal. But remember in the appeal proceedings, the decision is still made in the blackbox.

  7. Good post.  Each country has its own procedural rules.  Gatekeeping is universal.  In Canada it starts with a clerk at the courthouse window. He or she can reject any filing.   Yes, one can appeal but . . . .  
    The fact is that the rules in China to get through the gate are not at all onerous.  In fact, it appears to me they are the same as in the west.  Perhaps the only difference is that they are applied right at the gate and that the gate is at edge of the court rather than somewhere inside.

  8. If you are required to pay the court filling fee, it absolutely means your case has been accepted.
    If your filling is rejected, you are allowed to appeal. But remember in the appeal proceedings, the decision is still made in the blackbox.

  9. Harris: After all this, you get back a notice that your complaint has been rejected, without even a chance to argue otherwise.
    Your argument is in the complaint.  One difference between Chinese and US civil procedure is that when filing a lawsuit in China, you are expected to present most of your case in the complaint, and one of the reason that case acceptance exists insure that you present as much of your case as possible in the initial complaint.  Chinese civil procedure is also far more written than US procedure which is quite oral  If you have good local counsel, they should be aware of what cases get accepted and rejected and draft the complaints accordingly.
    The problem with the US system in which there is a very heavy weight procedure is that it causes the courts to be overwhelmed leading to substantial delays.  In the US, people do everything they can to avoid going to court because going to court is long and expensive.  In addition, a lot of court strategy in the US involves taking into account litigation costs.  What’s much worse than getting your lawsuit thrown out immediately is to get hit by a merit-less lawsuit in which you have to spend time and effort to go to court to file 12b-6 motions with the expectation that you’d just rather settle than go through the effort.
    Even if you lose in China, at least you lose quickly.  Something to remember is that in most business civil actions, it’s all about money so if the case is hopeless, then it’s better to lose quickly and cheaply rather than to throwing bad money after good. 
    Finally, although the system can be abused, in the cited law review article describing case review in action, and I think it worked quite well.  The case that was mentioned was *extremely* weak and revealed a basic misunderstanding of the purpose of Article 36 of the Contract Law, and the Shenzhen court was absolutely correct in rejecting this particular case, because it had no merit to it.
    Essentially, Article 36 says that a contract that has a legal or contractual written requirement is still be valid in the absence of writing if work has been performed, but it does not automatically create a contract simply because work has been preformed.  Chinese contract law especially between corporate entities places extremely heavy emphasis on the chop, and if you go into court without a signed contract and some very weak and incorrect legal theory that there was a contract anyway, it doesn’t surprise me that the court would toss the case.  There was no dispute over the facts of the case, only a legal argument which the court quickly, efficiently, and in my view ***correctly*** rejected. 
    Yes, people can play games with appeals, but in this situation, it didn’t happen.  The authors appealed the ruling and their claim was rejected.  You could argue that there was some funny business behind the scenes, but in this situation it’s quite unnecessary because they just had a very weak case.  You could complain that the court didn’t spell out the reasoning for the case, the attitude of Chinese courts are that they are courts and not law schools.  If you complain that courts didn’t hear novel theories of contract law, the attitude of the Chinese courts and that they are courts and not legislatures.
    Lesson here is that don’t do any legal work without getting a signed contract.

  10. One other thing to point out is that with respect to commercial cases, the impression that many business people have about American courts is extremely negative, and the US court system is cited as an example of something to be avoided rather than something to be copied.  In general, the US court system puts an extremely high value on fairness and non-corruption, but this means that there is a low value placed on efficiency, predictability, and cost, and for commercial cases this often poses a problem. The trade-offs for different types of cases is different and some of the things that make human rights and criminal defense lawyers love the US judicial system are exactly the same things that make business people hate it.
    There are some notable exceptions, and there are situations in which the US judicial system can move like greased lightning.  Examples are things like the GM bankruptcy or corporate cases in the Delaware Court of Chancery.

  11. Harris: After all this, you get back a notice that your complaint has been rejected, without even a chance to argue otherwise.
    Your argument is in the complaint.  One difference between Chinese and US civil procedure is that when filing a lawsuit in China, you are expected to present most of your case in the complaint, and one of the reason that case acceptance exists insure that you present as much of your case as possible in the initial complaint.  Chinese civil procedure is also far more written than US procedure which is quite oral  If you have good local counsel, they should be aware of what cases get accepted and rejected and draft the complaints accordingly.
    The problem with the US system in which there is a very heavy weight procedure is that it causes the courts to be overwhelmed leading to substantial delays.  In the US, people do everything they can to avoid going to court because going to court is long and expensive.  In addition, a lot of court strategy in the US involves taking into account litigation costs.  What’s much worse than getting your lawsuit thrown out immediately is to get hit by a merit-less lawsuit in which you have to spend time and effort to go to court to file 12b-6 motions with the expectation that you’d just rather settle than go through the effort.
    Even if you lose in China, at least you lose quickly.  Something to remember is that in most business civil actions, it’s all about money so if the case is hopeless, then it’s better to lose quickly and cheaply rather than to throwing bad money after good. 
    Finally, although the system can be abused, in the cited law review article describing case review in action, and I think it worked quite well.  The case that was mentioned was *extremely* weak and revealed a basic misunderstanding of the purpose of Article 36 of the Contract Law, and the Shenzhen court was absolutely correct in rejecting this particular case, because it had no merit to it.
    Essentially, Article 36 says that a contract that has a legal or contractual written requirement is still be valid in the absence of writing if work has been performed, but it does not automatically create a contract simply because work has been preformed.  Chinese contract law especially between corporate entities places extremely heavy emphasis on the chop, and if you go into court without a signed contract and some very weak and incorrect legal theory that there was a contract anyway, it doesn’t surprise me that the court would toss the case.  There was no dispute over the facts of the case, only a legal argument which the court quickly, efficiently, and in my view ***correctly*** rejected. 
    Yes, people can play games with appeals, but in this situation, it didn’t happen.  The authors appealed the ruling and their claim was rejected.  You could argue that there was some funny business behind the scenes, but in this situation it’s quite unnecessary because they just had a very weak case.  You could complain that the court didn’t spell out the reasoning for the case, the attitude of Chinese courts are that they are courts and not law schools.  If you complain that courts didn’t hear novel theories of contract law, the attitude of the Chinese courts and that they are courts and not legislatures.
    Lesson here is that don’t do any legal work without getting a signed contract.

  12. One other thing to point out is that with respect to commercial cases, the impression that many business people have about American courts is extremely negative, and the US court system is cited as an example of something to be avoided rather than something to be copied.  In general, the US court system puts an extremely high value on fairness and non-corruption, but this means that there is a low value placed on efficiency, predictability, and cost, and for commercial cases this often poses a problem. The trade-offs for different types of cases is different and some of the things that make human rights and criminal defense lawyers love the US judicial system are exactly the same things that make business people hate it.
    There are some notable exceptions, and there are situations in which the US judicial system can move like greased lightning.  Examples are things like the GM bankruptcy or corporate cases in the Delaware Court of Chancery.

  13. There is yet another important difference between Chinese courts and US courts.  The US has several different levels of courts with different procedures, whereas Chinese courts constitute one unified system.  If you get bit by your neighbor’s dog in the United States, you are not going to file suit in Federal court.  Rather you are going to file a lawsuit in small claims court, and in small claims court you are going to encounter much less formalized procedure in which the judge is going to basically run the hearing.  Federal courts have extremely elaborate and extensive procedures, but one common saying in the United States is “don’t make a federal case out of this.”
    China is different because all cases go into the same system, and the same procedural laws that govern multi-million corporate lawsuit also government cases in which you are suing your neighbor because his dog bit you.  Once one realizes that relatively small claim lawsuits make up most of the docket for Chinese courts, and things like case filing divisions make a lot more sense.

  14. There is yet another important difference between Chinese courts and US courts.  The US has several different levels of courts with different procedures, whereas Chinese courts constitute one unified system.  If you get bit by your neighbor’s dog in the United States, you are not going to file suit in Federal court.  Rather you are going to file a lawsuit in small claims court, and in small claims court you are going to encounter much less formalized procedure in which the judge is going to basically run the hearing.  Federal courts have extremely elaborate and extensive procedures, but one common saying in the United States is “don’t make a federal case out of this.”
    China is different because all cases go into the same system, and the same procedural laws that govern multi-million corporate lawsuit also government cases in which you are suing your neighbor because his dog bit you.  Once one realizes that relatively small claim lawsuits make up most of the docket for Chinese courts, and things like case filing divisions make a lot more sense.

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