Supreme People's Court promulgates comprehensive judicial interpretation on PRC Civil Procedure Law

On 30 January 2015, the PRC Supreme People's Court (SPC) promulgated its Judicial Interpretation of the Civil Procedure Law (the Interpretation)[1] which came into effect on 4 February 2015. The Interpretation aims to assist implementation of the current Civil Procedure Law, as last amended in 2012 (2012 CPL).

The full Chinese text of the Interpretation can be found at here.  

The Interpretation contains 23 chapters and 552 articles in total. It is a substantive update of the SPC's previous interpretation on Civil Procedure Law in 1992 and clarifies a number of issues in the 2012 CPL. With the promulgation of the Interpretation, it is hoped that the implementation of the 2012 CPL across the country can be more unified and consistent.

The Interpretation has introduced detailed rules in a number of procedural areas, including but not limited to: (i) the jurisdiction of courts to hear cases (Chapter 1); (ii) principles for determining burden of proof, procedures and time limits for submitting evidence, as well as criteria for determining the probative value of evidence (Chapter 4); (iii) court standards for requesting security for preservation measures (Chapter 7) and (iv) compulsory measures imposed against actions that obstruct civil proceedings (Chapter 8); and (v) procedure for challenging enforcement of a judgment or arbitral award (Chapter 15). 

There are a number of arbitration-related provisions in the Interpretation worth noting by parties that are likely to be exposed to arbitration in China. These include: 

• if the court has already accepted a case, but its jurisdiction is challenged before the first hearing on the basis that there is a valid arbitration agreement, the court should review the issue and strike out the action if: (a) the arbitration institution or another court has already upheld the validity of the arbitration agreement; (b) the parties have not challenged the validity of the arbitration agreement before the first hearing in the arbitration; or (c) the court itself reaches a decision that the arbitration agreement is valid (Article 216); 
• the ruling of the court refusing enforcement of a domestic arbitral award is not subject to challenge or review[2]; the parties can either enter into a new arbitration agreement to arbitrate their dispute again or submit their dispute to the court (Article 478); 
• where a court grants an order for asset preservation or injunctive relief on the application of a party to arbitration before a foreign-related arbitration institution in China, it is now mandatory for the applicant to provide security. Where the court orders evidence preservation, however, it has discretion to exempt the applicant from providing security, if the court considers such security unnecessary (Article 542); 
• in order to enforce a foreign arbitral award, the applicant must first apply to have the award recognized by the court (thus, in practice, one should apply for recognition and enforcement). Only after the court rules to recognize the award can it then grant enforcement. If the applicant only applies to recognize the award but not to enforce it, the court would only rule on its recognition but not to enforce it (Article 546). 

For further information, please contact Jessica Fei, Partner, Arthur Ma, Counsel, Stella Hu, Associate or your usual Herbert Smith Freehills contact.

[1] Fa Shi [2015] No.5.

[2] Although Article 478 refers only to domestic arbitration awards, we understand that rulings of the court refusing enforcement of foreign-related awards or foreign awards are not subject to appeal or review either. However, if a lower court is minded to refuse enforcement of a foreign-related award or a foreign award, it must refer the case to a higher court to confirm the decision. If the higher court agrees that enforcement should be refused, it must refer the matter to the SPC for a final decision. Recognition or enforcement can be refused only if the SPC agrees. This is known as the "reporting system", applicable to enforcement of foreign and foreign-related awards in mainland China. The reporting system was introduced by the SPC Notification Concerning the Handling of Issues Regarding Foreign-related Arbitration and Foreign Arbitration Matters by the People's Courts, 28 August 1995 (Fa Fa [1995] No.18).