PRC Civil Procedure Law Revised

As part of the continuing effort to deal with these issues, the Standing Committee of the National People Congress adopted an amendment to Civil Procedure Law 1991 on October 28 2007. The new PRC Civil Procedure Law will go into effect April 1 2008 (Civil Procedure Law 2008). The amendment mainly addresses the provisions on retrial and enforcement procedures.

MAJOR AMENDMENTS TO RETRIAL PROCEDURES

More Legal Grounds for Retrial

The Civil Procedure Law 1991 only prescribed five legal grounds for the retrial of a case by court, namely (1) there is sufficient new evidence to set aside the original judgment or written order; (2) the main evidence on which the facts were ascertained in the original judgment or written order was insufficient; (3) there was definite error in the application of the law in the original judgment or written order; (4) there was violation by the people"s court of the legal procedure which may have affected the judgment or written order in the case; or (5) the judicial officers have committed embezzlement, accepted bribes, engaged in malpractice for personal benefits and perverted the law in the adjudication of the case. These legal grounds were insufficient to meet the gradually increasing requirements for rectifying flawed judgments. In addition, since most of these provisions were very general in nature, Chinese judges often had difficulty applying them in an appropriate manner.

Therefore, the Civil Procedure Law 2008 tries to provide greater certainty by setting out more detailed provisions for retrial while keeping the old ones, so that all the participants in civil proceedings are able to understand and apply these provisions more easily. The newly added legal grounds for retrial are as follows: (1) the main evidence on which the facts were ascertained in the original judgment or written order was forged; (2) the main evidence on which the facts were ascertained in the original judgment or written order was not cross-examined; (3) where a party was unable to collect the evidence by themselves for objective reasons and submitted a written application to the people"s court for collecting such evidence, the court failed to do so; (4) the court had no lawful jurisdiction over the case; (5) the trial organization was unlawfully constituted or the judge did not withdraw from a case as required by law; (6) a person with no legal capacity to engage in litigation failed to appoint a statutory agent to act for him in a lawsuit or a party failed to participate in the litigation process due to reasons not attributable to himself or his agent; (7) a party was deprived of his right of argument in violation of law; (8) a default judgment was entered against a party without serving him with any summons; (9) the original judgment or written order omitted certain claims or went beyond claims; (10) the legal document on which the original judgment or written order was made has been set aside or modified.

The Supreme People"s Procuratorate is also empowered by the Civil Procedure Law 2008 to lodge a protest with the respective court against effective judgment or written order on the same specific legal grounds as mentioned above.

Through the abovementioned revisions, China has strengthened the role of the retrial procedure in preserving justice. Aggrieved parties will find it easier to have recourse to the retrial process when they are subjected to an unfair judgment.

Extension of Statute of Limitations for Retrial under Special Circumstances

The Civil Procedure Law 1991 provided for a two-year limitation period for filing a retrial application. If a party failed to apply for retrial within two years after he received the original judgment, he would be deprived of such procedural rights. Therefore, even if the party could establish legal grounds for retrial after the prescribed period, he would have lost the opportunity to apply for retrial and to rectify the flawed judgment. In order to avoid such injustice, the Civil Procedure Law 2008 provides for some exceptions to the two-year period of limitations under special circumstances. As stipulated by the Civil Procedure Law 2008, even after the expiration of the statute of limitations, if a party finds out that the legal document on which the original judgment or written order was made has been set aside or modified, or that the judicial officers have committed embezzlement, accepted bribes, engaged in malpractice for personal benefits and perverted the law in the adjudication of the case, he may apply for retrial within three months from the date when he was aware of or ought to have been aware of the particular circumstance. Therefore, the period of limitations for applying for retrial has been relaxed for cases that fall into any of the above exceptions. Because of this, partiess' rights to apply for a retrial are now better protected.

Time Limit for the Courts to Consider Retrial Applications

The Civil Procedure Law 1991 contained no stipulation as to a time limit for the court to consider a retrial application. For that reason, the court always delayed its ruling on a party"s application for retrial. In some cases, the delay could be protracted for two or three years.

Justice delayed is justice denied. For the purpose of ensuring speedy justice and providing timely legal remedy through the retrial procedure, the Civil Procedure Law 2008 prescribes a time limit for the court to consider an application for retrial. The court is required to examine the application for retrial and to decide whether to retry the case or not within three months from the date it receives the application from a party. The time limit may only be extended under special circumstances and upon approval of the President of the court.

The Civil Procedure Law 2008 also requires the court to make a decision on whether to retry a case within one month after it receives a protest against a judgment from the procuratorate.

In view of the above, the court is now bound to consider an application for retrial and make a decision within the prescribed time limit. This will substantially enhance the effectiveness of the retrial procedure and provide the party concerned with a more timely remedy.

MAJOR AMENDMENTS TO ENFORCEMENT PROCEDURES

Heavier Punishments

For the purpose of ensuring the effective enforcement of judgments, the Civil Procedure Law 2008 stipulates heavier punishments for those who fail to enforce a judgment or who fail to perform their duty to assist in enforcement procedures.

The second paragraph of Article 103 of the Civil Procedure Law 2008 provides that any party that refuses to perform its statutory duty to assist in enforcement may be detained, while the Civil Procedure Law 1991 merely provided that such a party could be fined.

The Civil Procedure Law 2008 has imposed a higher fine on violators of enforcement procedure by ten times. An individual may be fined not less than Rmb10,000 yuan, and an entity may be fined not less than Rmb10,000 yuan but not more than Rmb300,000 yuan.

Obligation to Disclose Assets

Parties subject to enforcement will more often than not conceal, dispose of or transfer their assets, and since the Civil Procedure Law 1991 contained no stipulation to deter such conduct, a lot of judgments could not be enforced because the judges had great difficulty in locating their assets. The Civil Procedure Law 2008 stipulates a new article which requires a party subject to enforcement to disclose his assets to the court in case it fails to enforce the judgment in time. If such party refuses to disclose his assets or makes false statements, he may be fined or detained (fined if such party is an entity). The new provision is specifically designed to compel the parties concerned to report their assets directly to the court. This will make it easier for the court to seize their assets and hence enforce judgments.

New Measures to Ensure Enforcement

The Civil Procedure Law 2008 provides for new measures for ensuring the effective enforcement of judgments. The court is empowered to take appropriate measures to prohibit a party who fails or refuses to enforce a judgment from going abroad, as well as to disclose the non-enforcement through the Credit Record System or through the media. These new measures will put more pressure upon those who do not perform their duties under a judgment. Their freedom would be restricted and their lack of credit-worthiness would be disclosed to the general public. As a result, more parties will perform their duties under a judgment on their own initiative from fear of such pressure.

Extension of Statute of Limitations for Enforcement

Another significant development is that the Civil Procedure Law 2008 extends the statute of limitations for enforcement. According to the new law, a party is allowed to apply to the court for enforcement within two years while the Civil Procedure Law 1991 merely provided for a six-month limitation period for entities and a one-year limitation period for individuals. The new provision will better safeguard the rights and interests of the parties concerned.

Immediate Compulsory Measures

The Civil Procedure Law 1991 required the enforcement officer to send a notice of enforcement to the party against whom enforcement was being sought before taking any compulsory measures. However, such party would normally conceal or transfer his assets once he received the enforcement notice from the court. This was a very serious practical problem in the past since it had very much hampered the enforcement officer in his effort to seize the assets of the party concerned and enforce the judgment. In order to amend the situation, the Civil Procedure Law 2008 empowers an enforcement officer to take immediate compulsory measures to enforce a judgment to prevent the party from concealing or transferring his assets. This is another noteworthy amendment to the PRC Civil Procedure Law.

Time Limit for Hearing a Third Party"s Objection to Enforcement

It is important to note that the Civil Procedure Law 2008 also prescribes a time limit for the court to hear a third party"s objection to enforcement. The court is required to examine the objection within 15 days of receiving it and to decide whether to reject or accept it. In legal practice for the past 16 years, third partiess' legal rights and interests were in many cases not given proper protection because they were not formally party to trial and enforcement procedures. Their objections often had little effect on the decisions of the enforcement officers. The Civil Procedure Law 2008 provides a time limit in order to balance the rights and interests of the parties to a lawsuit and those of third parties. The court will be required to consider a third party"s objection more seriously and promptly when the amendment goes into effect.

Last but not least, it must be pointed out that the chapter on “Bankruptcy Procedures” of the Civil Procedure Law 1991 that applied solely to non-State-owned enterprises has been deleted. China"s New Bankruptcy Law was adopted on August 27 2006 by the Standing Committee of the National People"s Congress and went into effect June 1 2007. It lays down bankruptcy procedures and applies to all types of enterprises.

CONCLUSION

In summary, the Civil Procedure Law 2008 provides for more specific measures for the purpose of ensuring the lawfulness of retrials and increasing the effectiveness of enforcement. We believe that the initiation of retrials will be based on more explicit legal grounds and parties against whom judgments are being sought will be more inclined to perform their duties under a judgment on their own initiative as a result of the severity of the new punishments, such as heavier fines and detention. Nonetheless, the effectiveness of the new Civil Procedure Law remains to be seen as its implementation is closely connected with the entire law enforcement system. We expect to see actual progress to be brought about by the new Civil Procedure Law.