The Impact of the Amendments to the Civil Procedure Law on Foreign-Related Civil Disputes

The Chinese Civil Procedure Law was revised by the Standing Committee of the National People's Congress on September 1, 2023 and such new Civil Procedure Law will come into effect on January 1, 2024.

In the new era of rapid economic development and market openness, the number of foreign-related civil disputes has been increasing. The recent amendments to the Civil Procedure Law have made substantial modifications to the procedures relating to foreign-related civil litigation. By establishing systems for jurisdiction, service of process, investigation and evidence gathering, judicial assistance, as well as clarifying and improving aspects such as recusal, fraud litigation, designated inheritance administrators cases involving special procedural rules, it aims to create a market-oriented, rule-of-law-based, and internationalized first-class business environment. This is done with the goal of achieving efficient, fair, and convenient resolution of civil and commercial disputes, and equal protection of the legitimate rights and interests, as well as litigation rights, of both Chinese and foreign parties.

The special provisions of the Civil Procedure Law regarding procedures for foreign-related civil litigation are an important component of China's foreign-related legal system and a key focus of the recent amendments to the Civil Procedure Law. Highlights of these provisions include:

1. In terms of jurisdiction over foreign-related civil cases, the amendments have expanded the scope of cases that Chinese courts can accept

1.1 The types of cases have been expanded from "contract disputes or other property rights disputes" to "foreign-related civil disputes excluding identity-related matters."

The amended Article 276 of the Civil Procedure Law expands the jurisdiction of Chinese courts in civil litigation cases filed against defendants without a domicile within China. The jurisdiction of Chinese courts, which previously covered "contract disputes or other property rights disputes," has been expanded to include "foreign-related civil disputes excluding identity-related matters." This expansion broadens the scope of foreign-related civil disputes that Chinese courts can handle from the perspective of increasing the types of cases accepted.

1.2 Locations of “other appropriate relationships” have been added as connection points

In addition to the existing provisions in the current Civil Procedure Law regarding the jurisdictional connections based on locations of actual relationships such as the place of contract signing, place of contract performance, location of the subject matter of the lawsuit, location of seizable assets, place of tortious acts, and domicile of representative organizations, the amendment includes locations of “other appropriate relationships” as the connection points for determining the jurisdictional court. That is, if there are other appropriate relationships between a foreign-related civil dispute and China, the dispute can be under the jurisdiction of Chinese courts. At the same time, the law does not provide further specifications regarding the locations of “other appropriate relationships”, which gives judges greater discretion.

1.3 Jurisdiction by agreement clauses have been added

The amended Article 277 of the Civil Procedure Law stipulates that parties involved in foreign-related civil cases can choose Chinese courts for jurisdiction through written agreements. Furthermore, there are no restrictive provisions on whether the chosen court should have a practical connection to the dispute as agreed upon in the agreement. Allowing parties to agree upon jurisdictional courts based on the most convenient means of resolving disputes not only respects the parties' autonomy and provides them with greater flexibility in choosing the jurisdictional court but also grants judges a certain degree of discretionary power.

1.4 Two types of cases exclusively under the jurisdiction of Chinese courts have been added.

The amended Article 279 of the Civil Procedure Law designates the following disputes as exclusively under the jurisdiction of Chinese courts:

(1) disputes related to the establishment, dissolution, liquidation of legal persons or other organizations established within the territory of the People's Republic of China, as well as disputes concerning the validity of resolutions made by such legal persons or organizations;
(2) disputes related to the validity of intellectual property rights examined and granted within the territory of the People's Republic of China.

2. In improving the efficiency of adjudicating foreign-related civil cases, the methods of service in foreign-related cases have been improved

Regarding the methods of service of process in foreign-related cases, the recent amendments to the Civil Procedure Law have further improved this aspect. They have adopted more flexible and diverse methods of service, addressing the practical issues of lengthy and challenging foreign-related service periods, difficulties in effecting service, and potential difficulties in ensuring the legitimate rights and interests of the parties. These improvements aim to enhance the efficiency of adjudicating foreign-related civil disputes.

2.1 The restrictions on serving legal documents to litigation representatives have been removed
In practice, some foreign-related parties restrict the authority of litigation representatives to accept legal documents on their behalf, explicitly stating in the power of attorney that it does not include receiving judicial documents. The amended Article 283 of the Civil Procedure Law removes the requirement that representatives must have the authority to accept service and clarifies that any litigation representative entrusted with the case has the right to accept service on behalf of the principal.

2.2 More recipients for the service have been prescribed in the Law. Specifically speaking, service to the wholly foreign-owned enterprises within China is allowed; at the same time, as for service to the branch offices of foreign legal entities, the restrictions of "having the authority to accept the service" have been removed

2.3 The provision has been added to allow for the substituted service to Chinese legal entities or other organizations, as well as Chinese legal representatives or primary responsible persons. Specifically:
(1) If the recipient is a foreigner or stateless person, and they are the legal representative or principle of a legal entity or other organization incorporated within the territory of the People's Republic of China, and they are joint defendants with that legal entity or other organization, the documents can be served to that legal entity or other organization.
(2) If the recipient is a foreign legal entity or other organization, and its legal representative or principal is within the territory of the People's Republic of China, the documents can be served to their legal representative or principal.

2.4 The validity of electronic service has been clarified, which is not limited to fax or email. However, electronic methods prohibited by the laws of the recipient's country are excluded

2.5 Provisions for service by other means with the consent of the recipient have been added, allowing parties to freely choose a method that is more advantageous for the realization of their own rights and interests in accepting legal documents

2.6 The notice period for service by public announcement is reduced from three months to sixty days, shortening the original service timeline.

The new Civil Procedure Law provides parties with more respect and freedom of choice in parallel litigation and the establishment of exclusive jurisdiction. The addition of extraterritorial evidence collection broadens the avenues for courts to ascertain facts in cases and reflects China's emphasis on judicial assistance. Furthermore, the new Civil Procedure Law further improves the relevant provisions on the recognition and enforcement of judgments of foreign courts and awards of extraterritorial arbitration.

The amendments to the Civil Procedure Law in terms of jurisdiction have enabled more foreign-related disputes to be accepted by Chinese courts, facilitating the participation of Chinese parties in litigation. More civil disputes can now be subject to the jurisdiction of Chinese courts through party agreements, providing a legal basis for overseas parties who choose to have their disputes handled by Chinese courts. The improvements in the foreign-related service of process system under the Civil Procedure Law have enhanced the efficiency of service and shortened the trial period of foreign-related civil cases. This benefits the efficient and convenient resolution of foreign-related civil disputes and safeguards the legitimate rights and interests of the parties involved in such cases. The improvements in judicial assistance, such as parallel proceedings and extraterritorial investigation and evidence collection, under the Civil Procedure Law also contribute to expanding China's judicial influence and credibility in the international community. It is of great significance for China's efforts in promoting high-level opening-up to the outside world.

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