What’s New for China’s Rules on International Civil Jurisdiction? (A) - Pocket Guide to 2023 China’s Civil Procedure Law (2)

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The Fifth Amendment (2023) to the PRC Civil Procedure Law has opened a new chapter on international civil jurisdiction rules in China, covering four types of jurisdictional grounds, parallel proceedings, lis alibi pendens, and forum non conveniens. This post focuses on the four types of jurisdictional grounds, namely special jurisdiction, jurisdiction by agreement, jurisdiction by submission, and exclusive jurisdiction.

Key takeaways:

In the Fifth Amendment (2023) to the PRC Civil Procedure Law, a total of seven new articles (Arts. 276-282) has opened a new chapter on international civil jurisdiction rules in China, covering four types of jurisdictional grounds, parallel proceedings, lis alibi pendens, and forum non conveniens.
Under the special jurisdiction rule (Art. 276), Chinese courts may exercise jurisdiction over foreign-related disputes (other than those involving identity relationships) brought against defendants domiciled abroad, provided that one of the five venues listed above is located within the territory of China. Moreover, it also introduces for the first time the principle of “proper connection” – Chinese courts may exercise jurisdiction over foreign-related disputes if the disputes have other proper connections with China.
Under the rule of jurisdiction by agreement (Art. 277), there is no longer a requirement that the chosen court must have an “actual connection” with the dispute in cases where Chinese courts are the chosen courts.
Under the rule on jurisdiction by submission (Art. 278), where the parties do not raise any objection to jurisdiction and respond to defend or file counterclaims, Chinese courts shall be deemed to have jurisdiction.
The exclusive jurisdiction rule (Art. 279) introduces two new types of cases as the basis for Chinese courts to establish exclusive jurisdiction.

On 1 Sept. 2023, the Fifth Amendment to the PRC Civil Procedure Law (the ‘2023 CPL’) was adopted by China’s top legislature, the National People’s Congress’s Standing Committee. The 2023 CPL has made significant modifications to international civil procedures. Among others, major changes can be found in rules on international civil jurisdiction, recognition and enforcement of foreign judgments, and cross-border service of process.

The purpose of this Pocket Guide is to acquaint CJO readers with these salient developments in the 2023 CPL. As one of the brightest spots in the Fifth Amendment, a set of seven provisions -Arts. 276-282 - has opened a new chapter on international civil jurisdiction rules in China, covering four types of jurisdictional grounds, parallel proceedings, lis alibi pendens, and forum non conveniens.

As the second article in the Pocket Guide, this post focuses on the rules of international civil jurisdiction, in particular the four types of jurisdictional grounds, namely special jurisdiction, jurisdiction by agreement (consensual jurisdiction), jurisdiction by submission (prorogation of jurisdiction), and exclusive jurisdiction.

I. Special Jurisdiction (Art. 276)

“Article 276 Where an action for a foreign-related civil dispute, save that involving identity relationships, is instituted against a defendant that has no domicile within the territory of the People’s Republic of China, the people’s court at the place of conclusion of the contract, the place of performance of the contract, the location of the subject matter of litigation, the location of the properties available for seizure, the place of infringement act or the domicile of the representative office may have jurisdiction, if the place of execution of the contract, the place of performance of the contract, the location of the subject matter of litigation, the location of the properties available for seizure, the place of infringement act or the domicile of the representative office is located within the territory of the People’s Republic of China.

Except as provided in the preceding paragraph, foreign-related civil disputes that otherwise have a proper connection with the People’s Republic of China may fall under the jurisdiction of the people’s courts.”

This provision is known as the rule of “special territorial jurisdiction” (or “special jurisdiction” for short), as opposed to the rule of ‘general territorial jurisdiction’ in the CPL, which establishes the defendant’s domicile as the basis for jurisdiction.

Pursuant to Art. 276, para. 1, Chinese courts may exercise jurisdiction over foreign-related disputes (except those involving identity relationships) brought against defendants domiciled abroad, provided that one of the five venues listed above is located within the territory of China. The predecessor of this Article is Art. 272 of the 2021 CPL.

The most significant highlight of this Article (or possibly of this Amendment) lies in the addition of the second paragraph. This paragraph introduces the principle of proper connection for the first time – Chinese courts may exercise jurisdiction over foreign-related disputes if the disputes have other proper connections with China, regardless of whether the aforementioned five venues are within the territory of China. What constitutes a “proper connection” is left to the discretion of Chinese judges.

One thing is for sure, this new provision aims to expand the jurisdiction of Chinese courts over foreign-related civil and commercial cases.

II. Jurisdiction by Agreement (Art. 277)

Art. 277 of the 2023 CPL, which addresses jurisdiction by agreement, reads as follows:

“Article 277 Where the parties to a foreign-related civil dispute agree in writing to choose a people’s court for jurisdiction, the people’s court may have jurisdiction.”

The rule of jurisdiction by agreement was established as early as 1991 when the CPL was enacted, in Art. 244 of Part IV “Special Provisions on Foreign-related Civil Actions”, which affirmed the parties’ rights to choose the court of jurisdiction by agreement, and at the same time imposed some limitations on party autonomy, including the requirement that the chosen court of jurisdiction must have an actual connection with the dispute. In the Second Amendment of the CPL in 2012, this Article was merged with the provisions on the jurisdiction of domestic litigation by agreement, and relocated to Part II “Trial Procedure”. After the merger, the content remained essentially unchanged (except for some wording), and the previous limitations, including the actual connection requirement, still apply.

Compared to its predecessor, the most significant change in this Article is in the “limitations”. It is clear that there are no other restrictions other than the condition of a “written agreement”. In other words, there is no longer a requirement for the chosen court to have an “actual connection” with the dispute.

It should be noted, however, that the fact that “no actual connection is required” applies only to cases where the parties have chosen Chinese courts (not foreign courts) as the court of jurisdiction. In cases where the parties have chosen foreign courts, the “actual connection” requirement still applies pursuant to Art. 529 of the 2022 CPL Interpretation.

If the foreign court chosen by the parties has no actual connection with the dispute, will there be any obstacles to the recognition and enforcement of the foreign court’s judgment in China? This question requires an analysis of the provisions of the 2023 CPL regarding the recognition and enforcement of foreign judgments, primarily in Arts. 300 and 301. For a detailed analysis, please read “What’s New for China’s Rules on Foreign Judgments Recognition and Enforcement? - Pocket Guide to 2023 China’s Civil Procedure Law (1).”

What’s New for China’s Rules on Foreign Judgments Recognition and Enforcement? - Pocket Guide to 2023 China’s Civil Procedure Law (1)

III. Jurisdiction by Submission (Prorogation of Jurisdiction) (Art. 278)

Art. 278 of the 2023 CPL, which addresses jurisdiction by submission (prorogation of jurisdiction), reads as follows:

“Article 278 Where the parties do not raise any objection to jurisdiction and respond to defend or file counterclaims, the people’s court shall be deemed to have jurisdiction.”

The rule of jurisdiction by submission has a similar fate to the rule of jurisdiction by agreement, both of which used to be in the Part of foreign-related civil actions of the CPL and applied exclusively to foreign-related civil litigation. However, in the Second Amendment to the CPL in 2012, the position of the Article was moved from Part IV to Part II and made applicable to both foreign-related and domestic civil litigation.

Now, the rule of jurisdiction by submission has returned to its original place, once again becoming a provision on jurisdiction by submission specifically applicable to foreign-related civil litigation in Part IV. In terms of content, there are no significant changes. In brief, there are two requirements – one inaction, i.e., not to raise an objection to jurisdiction, and one action, i.e., respond to defend or file counterclaims. The primary change in this revision is the addition of “counterclaim”, which is now recognized as an action indicating acceptance of the court’s jurisdiction, in addition to “responding to defend”.

IV. Exclusive Jurisdiction (Art. 279)

Art. 279 of the 2023 CPL, which addresses exclusive jurisdiction, reads as follows:

“Article 279 A people’s court shall have exclusive jurisdiction over the following civil cases:

(1) actions initiated due to disputes over the establishment, dissolution, and liquidation of a legal person or any other organization established within the territory of the People’s Republic of China, as well as the validity of a resolution passed by the said legal person or other organization;

(2) actions initiated due to disputes relating to the examination of the validity of intellectual property rights granted within the territory of the People's Republic of China; and

(3) actions initiated due to disputes arising from the performance of Sino-foreign equity joint venture contracts, Sino-foreign cooperative joint venture contracts, and Sino-foreign cooperative exploration and development of natural resources contracts within the territory of the People's Republic of China.”

Compared to its predecessor (Art. 273 of the 2021 CPL), this Article introduces another two types of cases (namely, the first two of the three types) as the basis for establishing the exclusive jurisdiction of Chinese courts.

The rule on exclusive jurisdiction is crucial, as it is also necessary to determine whether a dispute falls under the exclusive jurisdiction of Chinese courts in situations involving parallel proceedings, forum non conveniens, recognition and enforcement of foreign judgments, and other circumstances.