Authors: Guan Feng and Zhao Guannan.
The Decision of the Standing Committee of the National People's Congress on Amending the Civil Procedure Law of the People's Republic of China will come into force on January 1, 2024. The revision of the Civil Procedure Law will bring significant changes to the handling of foreign-related commercial cases, which deserves the attention and preparation of multinational enterprises and Chinese enterprises engaged in cross-border transactions. At the end of 2023, we will introduce the impact of the amendments to the Civil Procedure Law on the jurisdiction of foreign-related commercial cases and cross-border litigation through a series of articles to help enterprises cope with the changes.
Compared with the original Civil Procedure Law, the new Civil Procedure Law adds a separate provision on response jurisdiction in Article 278 of the Foreign-related Section.
Prior to this amendment, the second paragraph of Article 130 of the original Civil Procedure Law constrained both domestic and foreign-related cases. After the implementation of the new Civil Procedure Law, the second paragraph of Article 130 no longer restricts foreign-related cases in accordance with the principle of priority application of the provisions of the Foreign-related Part as provided for in Article 270[1] of the Foreign-related Section.
As a result of the above changes, if a party does not raise a jurisdictional objection within the jurisdictional objection period and defends or counterclaims a substantive dispute, it will still have the right to hear the case even if the court to which the suit is filed violates the hierarchical and exclusive jurisdiction provisions in exercising jurisdiction.
Why does the Civil Procedure Law remove the restrictions on hierarchical jurisdiction and exclusive jurisdiction for responding to litigation in foreign-related cases? In our view, the reason lies in respect for the autonomy of the parties. The principle of respondent jurisdiction is that when the defendant has the right to raise a jurisdictional objection but chooses not to do so and responds to the defense, it actually shows that both parties are willing to resolve the dispute through the court to which the suit is filed. Since the defendant in a foreign-related case may not be familiar with China's hierarchical jurisdiction and exclusive jurisdiction provisions, if the hierarchical jurisdiction and exclusive jurisdiction provisions are adopted at this time to deny the original defendant's choice of the court to be sued, it will undermine the autonomy of the parties.
The spirit behind the above modifications is the same as oursInterpretation of the Revision of the Civil Procedure Law (II): Can Chinese Courts Be Agreed Without Actual Connection with China?The concept of the rules for agreed jurisdiction in foreign-related cases introduced in this article is the same, that is, to protect the parties' choice of the competent court in foreign-related cases as much as possible, and to avoid going against the expectations of the parties due to the actual legal connection, hierarchical jurisdiction, and exclusive jurisdiction restrictions.
Jurisdictional objections are an important adversarial tool in litigation, and if successful, the opposition can help the defendant save the cost of substantive defense and achieve the goal of resolving the dispute at the lowest cost. Therefore, after receiving a copy of the complaint served by the court, the enterprise needs to check the jurisdiction issue as soon as possible and file a written objection to the jurisdiction within the statutory time limit.
The statutory time limit for jurisdictional objections is the period for replying. The period for responding to a case in a domestic case is different from that for a foreign-related case. The period for defending a domestic case is 15 days, and the defendant has no right to apply for an extension. [2] In foreign-related cases, if the defendant does not have a domicile in China, the time limit for responding to the complaint is 30 days after receiving a copy of the complaint, and an extension is allowed, and the court decides whether to extend the complaint. [3] It should be noted that in some foreign-related cases, if some of the defendants are domestic enterprises or have domiciles in China, the defense period is still 15 days and they have no right to apply for an extension. For details of which cases are foreign-related, please refer to the article "Interpretation of the Revision of the Civil Procedure Law (I): Expanding the Jurisdiction of Chinese Courts in Foreign-related Cases".
If the jurisdiction of a court is challenged on the basis of an arbitration clause, it is theoretically called a competent objection (the concept of competent and jurisdiction is different). In practice, most parties still refer to the jurisdiction objection rules of the Civil Procedure Law to raise competent objections in accordance with the arbitration clause during the defense period, and the courts also accept this practice.
However, the Arbitration Law actually has different provisions on the time limit for filing competent objections. Article 26 of the Arbitration Law stipulates that: "If the parties reach an arbitration agreement, and one party files a lawsuit with the people's court without declaring that there is an arbitration agreement, and the other party submits the arbitration agreement before the first time after the people's court accepts it, the people's court shall reject the lawsuit, unless the arbitration agreement is invalid; If the other party does not raise an objection to the people's court's acceptance of the case before the first time, it shall be deemed to have waived the arbitration agreement, and the people's court shall continue the trial. Therefore, if the party does not file a competent objection within the defense period, the latest time to file it is before the first time.
Article 223 of the Civil Procedure Interpretation stipulates: "Where a party raises an objection to jurisdiction during the submission of a reply and also responds to the content of the complaint, the people's court shall review the objection to jurisdiction in accordance with the provisions of Article 130, Paragraph 1 of the Civil Procedure Law." "As a result, parties can express their views on the substantive dispute at the same time as raising a jurisdictional objection. In practice, when there may be uncertainty as to whether a jurisdictional objection is established, lawyers sometimes suggest that enterprises express preliminary views on substantive disputes, so as to influence the court's prediction of the outcome of the case and further influence the court's tendency to jurisdictional issues.
We would like to thank Ms. Huang Yabing, Ms. Shen Yue, Ms. Liu Shuyang, intern Ms. Tan Xiao, and Ms. Zhang Xi for their contributions to this article.
Footnotes: 1] Article 270:The provisions of this Part apply to foreign-related civil litigation within the territory of the People's Republic of China. Where there are no provisions in this Part, apply other relevant provisions of this Law.
2] Article 128:The people's court shall send a copy of the complaint to the defendant within 5 days of filing the case, and the defendant shall submit a reply within 15 days of receiving it. The reply shall indicate the defendant's name, gender, age, ethnicity, occupation, work unit, residence, name and address of the legal person or other organization, and the name and position of the legal representative or principal responsible person, and the people's court shall send a copy of the reply to the plaintiff within five days of receiving the reply.
3] Article 275:Where the defendant does not have a domicile within the territory of the People's Republic of China, the people's court shall serve a copy of the complaint on the defendant and notify the defendant to submit a reply within 30 days of receiving a copy of the complaint. Where the defendant applies for an extension, the people's court is to decide whether to approve it.
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