Arbitration and Litigation

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Authored by Dr. Zhan Hao (zhanhao@anjielaw.com)

One of the questions in China is whether an insurer should go to arbitration or litigation in subrogation cases.

1. The contradiction between bulks of insurance disputes and less efficient resolution channels

China is facing an increasing number of insurance disputes in respect of all business lines such as construction insurance, credit insurance, marine insurance, product liability insurance, car insurance, D&O liability insurance, environment protection insurance, investment-linked insurance, and life insurance. According to a speech of the Assistant Chief Justice of the PRC Supreme People’s Court, 14,465 insurance litigations were formally accepted by courts in 2005, and in 2010, the number of cases accepted reached 59,747 cases. Some legal experts have estimated that the number of insurance litigations in 2012 is around 1.5 times of that in 2010. Insurance disputes frequently arise from disagreements on the scope of clauses limiting or excluding coverage (“excluding clauses”), the obligation of the insurer to clearly explain the excluding clauses to the applicant, and the disclosure obligation of the applicant and insured.

The biggest proportion of insurance disputes belongs to automobile insurance disputes. Continue Reading To Go to Arbitration or Litigation in Subrogation Cases?

Authored by Dr. Zhan Hao (zhanhao@anjielaw.com), Dr. Song Ying (songying@anjielaw.com)

It has recently been reported that the plaintiff in a private antitrust litigation, heard by the Xian Intermediate People’s Court, was successful in bringing a lawsuit involving abuse of dominant market position.  Given that there have been very few cases won by plaintiffs in China’s private antitrust enforcement since the Anti-Monopoly Law (“AML”) entered into force in 2008, a plaintiff victory is quite rare and encouraging. According to the statistics, there has not been a single plaintiff victory in civil antitrust litigations brought in China since June 2012. In this regard, the concerning case is full of significance and reflects to some extent the effect of the Judicial Interpretation on private antitrust litigation (“the Judicial Interpretation”) published in May of 2012.

Case Description

On June 4th, 2012, Wu Xiaoqin, a consumer located in Xianyang of the Shanxi province, sued Shanxi Broadcast & TV Network Intermediary (Group) Co., Ltd. (“the Company” or “the defendant”) in the Xian Intermediate People’s Court (“the Court”) claiming that the Company, as the only local cable service provider, has tied basic cable TV program services with value-added paying TV programs by taking advantage of its dominant market position. Through the court proceedings, involving further investigation and debate, the Court upheld the plaintiff’s suit, finding that the Company’s practice violated Article 17(5) of the AML regarding tying sales and imposition of unreasonable trading conditions.Continue Reading Plaintiff Victory in China Private Antitrust Litigation

Authored by Gao Ping (gaoping@anjielaw.com)

The preservation of property is a very important step in civil actions. The timely and effective preservation of property plays a vital role in the smooth execution of the case in the future. In practice, the property of the defendant or the person subject to enforcement is often insufficient to meet the requirements of the preservation and enforcement, but at the same time, it is found that the defendant enjoys a large claims owed to it by an outside party. How should these claims be preserved and enforced?

As provided in Article 105 of the "Opinions on Certain Issues Concerning the Application of the Civil Procedure Law of the People’s Republic of China by the Supreme People’s Court" the People’s Court may rule that in accordance with the creditor’s application, where the debtor’s property cannot fulfill the injunction but has debts owed to it by a third party, the third party may not settle with the debtor. When the third party is required to pay, the third party must hold the property or price in escrow. It can be seen that the credit due to the defendant may be preserved by ruling that the third party may not settle the debt to the defendant. This kind of "credit preservation" is different from the preservation of the defendant’s property, and its function is limited. It can only prevent the defendant from privately transferring the property after receiving payment from the third party. But it cannot prevent the third party from paying off other creditors, nor prevent the third party from disposing their own property. Therefore, the ruling cannot be deemed as the preservation of the third party’s property.Continue Reading How to Exercise the Preservation and Enforcement of the Debts Owed to the Defendant

Article 1 of the New York Convention states:

“This Convention shall apply to the recognition and enforcement of arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought, and arising out of differences between persons, whether physical or legal. It shall also apply to arbitral awards not considered as domestic awards in the State where their recognition and enforcement are sought.”Continue Reading China International Arbitration: Standards of Territory and non-domestic

The question of whether a Chinese case with purely domestic elements is capable of being arbitrated in foreign forum has been pondered by many foreign and Chinese lawyers. The results have led to confusion. Recently a major International law firm posed the question before Dr. Zhan Hao, we have summarized Dr. Zhan Hao’s reply below.

In short, if parties opt to arbitrate in a foreign forum, for example, Hong Kong; and opt to use English Law or the law of another foreign jurisdiction; the likelihood of the award being enforced is strong. However, the position is unclear under Chinese law as there are no specific regulations addressing the adjudication of a purely domestic dispute by a foreign arbitral institution. We will now consider the question in further detail.
 Continue Reading A Purely Domestic Case (China) Arbitrated in Foreign Forums?

In China and according to the Organic Law of the People’s Courts, judicial powers are exercised by the courts at four levels:

(i) Basic People’s Court: Courts at the county or district level. Tribunals may also be established in accordance with local practice;

(ii) Intermediate People’s Court: Prefecture level courts;

(iii) Higher People’s Court: Provincial level courts.

(iv) The Supreme People’s Court: the highest court in the judicial system located in Beijing. The court is directly responsible to the NPC and its Standing Committee. The court supervises the administration of justice by the People’s Courts at various levels. Additionally, the court provides interpretations of law which play an important role in the application of law and which act as guidelines for trials in China.
 Continue Reading An Introduction to China’s Judicial System: the Courts

With the rapid growth of the Chinese economy, international business between foreign companies and Chinese companies is commonplace. The presence of dispute is inevitable. Should a commercial dispute arise concerning international trade in China, there is enormous potential for complex legal problems to arise. For example, the party may suffer a large loss; and questions arise as to where in China the lawsuit should be brought and whether a judgment is binding. Parties need to know whether their rights will be protected. Arbitration presents itself as a practical alternative to the traditional mode of courts.

Continue Reading Arbitration in China: Benefits of an Arbitration Clause

The People’s Republic of China acceded to the New York Convention on April 22nd,1987,declaring it would reserve the rights of "reciprocity reservation" and "commercial reservation"
 

The "reciprocity reservation" means China will apply the Convention only for the recognition and enforcement of awards.
 Continue Reading China, International Arbitration and the New York Convention

1) Effective Resolution of Domestic and International Disputes

I can attest to CIETAC’s ability to effectively resolve domestic as well as complex international disputes. CIETAC has a long history, with its first arbitration rules being promulgated in 1956 with the last revisions effective as of May 1, 2005. It provides rules similar to those of many other international arbitral institutions and carefully records qualified domestic and international arbitrators. International arbitrators may be selected as language does not pose a problem, thus the types of commercial disputes which go before CIETAC are not limited. In addition, the cost of resolving disputes at CIETAC is likely to be less than in Hong Kong and many other arbitral forums.
 Continue Reading Quickly, Some Advantage of CIETAC Arbitration in China

With foreign investors testing ingenious ways in which to circumvent the regulatory burdens and scrutiny associated with a foreign owned Chinese insurance company, an interesting question has come to light; is it possible for an insurance policy between a domestic insurer and a Chinese manufacture to have a foreign element. The foundation of this question is rooted in the uncertainty surrounding the enforcement and validity of an arbitration clause designating a foreign jurisdiction for a case which is purely domestic (China).

Article 304 of the Opinions of the Supreme People’s Court on Some Issues Concerning the Application of the Civil Procedure Law of the People’s Republic of China (Opinions of the Supreme Court on the Application of the Civil Procedure Law) states:
 Continue Reading A Domestic Insurer, A Chinese Manufacture, A Foreign Element?