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Filing Lawsuits While Living Abroad: China's New Policy

Sun, 07 Mar 2021
Categories: Insights
Contributors: Meng Yu 余萌

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Litigants living abroad are now able to access China’s virtual court proceedings, according to China’s Supreme Court’s new policy.
 
The new regulation promulgated by the Supreme People’s Court (SPC) has paved the way for foreign parties to file a lawsuit with Chinese courts through online systems.

On 3 Feb. 2021, the SPC issued the Several Provisions on Providing Online Case Filing Services for Parties to Cross-border Litigation (“the Provisions”, 关于为跨境诉讼当事人提供网上立案服务的若干规定), requiring all courts in China to provide services, including online case filing guidelines, answering of inquiries, representative testimony by an entrusted agent via videos, and case filing for parties to cross-border litigation.

The Provisions addresses the issues that we mentioned in our earlier post 2 years ago, i.e., although theoretically, foreign parties may participate in litigation in Chinese courts online, foreign parties cannot participate in reality.

1. Background: Starting from a true story 

Two years ago, we made a study on three Internet Courts in China to find out whether foreign parties can register cases in such three courts.

It all started from an email from our reader.

In February 2019, a reader in New York wrote to us that he had been deceived in the cross-border e-commerce trade with a Chinese company. As he learned that all proceedings could be completed in Chinese Internet courts online, he wished to file a lawsuit against the Chinese company with the Internet court in Guangzhou. But it did not turn out well. Why?

After studying the online system of the three Internet Courts, we found that foreign litigants would possibly encounter the following two obstacles:

Firstly, he/she could not verify his/her identity in the system launched by Internet Courts.

If the parties want to assess the system launched by Internet Courts, they need to pass the identity verification first to ensure that the parties are acting on their own. The verification is based on the Chinese identity information system, and is therefore only applicable to Chinese individuals and organizations.

Secondly, he/she would have a high cost to entrust a Chinese lawyer.

He/she will need to have his/her power of attorney notarized and authenticated, and mail the notarization and authentication materials to the court, which highly increases his/her cost.

Because of these two obstacles, although Chinese Internet Courts and other local courts have begun to routinely involve parties overseas in online litigation, which, however, are predominantly of Chinese nationality. The easy access to online proceedings for foreign litigants was yet to be resolved. 

2. Solutions

The core part of the new Provisions promulgated by the SPC is to clear the obstacles that we mentioned two years ago.

(1) How do Chinese courts verify the identity of parties living abroad

It is relatively easy to verify the identity of Chinese parties living abroad.

For individuals and companies in mainland China, they can directly submit their identity cards or certificates of incorporation issued by the Chinese government.

For individuals and enterprises in Hong Kong, Macao, and Taiwan regions, they can submit their identity documents or certificates of incorporation issued by the Chinese government and submit the relevant notarization documents.

To verify the identity of foreign parties living abroad, their identity documents or certificates of incorporation still need to be notarized and authenticated, but the notarization and authentication materials can be submitted online instead of being mailed to China.

Besides, if foreign parties have registered their identity information in China’s entry-exit system, they can easily verify online on the service platform for identity authentication with entry and exit documents launched by the State Immigration Administration.

Clearly, the current model relatively reduces the cost for foreign parties to verify their identities.

(2) How do foreign parties entrust lawyers in China

Method 1: Online entrustment, without notarizing and authenticating the power of attorney

This is an absolutely brilliant idea. The whole process can be conducted by videoconference: in the witness of the judge, the foreign parties, and the entrusted attorney sign the relevant engagement documents. The Chinese attorney can afterwards start working for his/her client.

Method 2: Engagement overseas and notarization and certification of the power of attorney

Previously, the regular practice was that foreign parties sign the power of attorney outside of China, apply for notarization and certification overseas, and then mail the documents to China. However, Chinese courts now allow foreign parties to submit notarized and authenticated materials online to Chinese courts, rather than mailing the originals.

3. Following work

Foreign parties who use the Chinese court system for the first time can start using all the functions after finishing their identity verification. In other words, they can remotely participate in all virtual court proceedings as permitted by Chinese courts.

For Internet courts, proceedings such as case acceptance, service, mediation, evidence exchange, pretrial preparation, court hearings, and judgment rendering, can all be completed online.

In fact, for many other Chinese courts, they can basically provide services similar to those offered by Internet Courts, especially after the outbreak of the COVID-19 pandemic.

However, it should be noted that the SPC prohibits foreign parties from abusing such rights.

If the materials submitted by the foreign parties are detrimental to China’s public interests or in violation of China’s laws, the case will not be accepted.

Generally speaking, there will be no obstacles to most civil and commercial disputes.

We expect that it may make it easier for foreign parties to directly resort to the Chinese courts to solve disputes related to Chinese companies. Previously, many foreign parties would choose to apply for recognition and enforcement of foreign judgments in China after bringing the case before foreign courts.

 

Contributors: Meng Yu 余萌

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