Litigation 2024 Comparisons

As a civil law country, China’s legal system is primarily based on written laws. Complementing these laws, the Supreme People’s Court and the Supreme People’s Procuratorate periodically issue judicial interpretations. These interpretations serve as crucial guidance for courts nationwide, ensuring consistent application of laws across different regions and cases.

In addition to these judicial interpretations, the various ministries and commissions under the State Council are empowered to formulate and issue regulations within their respective domains of authority. Together, these elements – the laws, judicial interpretations, and regulations – constitute the core of China’s statutory legal system.

The people’s courts of China hear all types of cases within their respective jurisdictions, including civil, administrative, criminal cases and other cases. In the course of litigation, the people’s courts encourage the parties to engage in adversarial activities to ascertain the truth through evidence, debate between the parties, court investigation, appraisal and other means.

The legal process is conducted in China through both written submissions and oral arguments. There must be a hearing for the trial of first instance while the appellate court is likely to hold a hearing for the parties to review the first instance judgment.

The Chinese court system has the following four-tier structure:

• the basic-level people’s courts;
• the intermediate people’s courts;
• the high people’s courts; and
• the Supreme People’s Court.

The basic people’s courts are usually located in counties, cities without districts and urban districts on the basis of population. The intermediate people’s courts are usually set up in the cities within provinces and the districts within municipalities directly under the Central Government. The high people’s courts are typically established in each province and in municipalities. The Supreme People’s Court is the highest judicial organ in China.

Each court may hear different types of cases, including civil cases, criminal cases and administrative cases by organising different divisions within the court. Higher-level courts hear appeals to the judgments made by lower-level courts. The judgment made by the Supreme People’s Court is the final decision and is not appealable.

In addition, China has railway transportation courts, maritime courts, IP courts, and financial courts, which are equivalent to the intermediate people’s court. As implied by their titles, these courts have expertise in adjudicating specific types of cases related to their respective fields.

Generally, most civil lawsuits of first instance are heard by the basic people’s courts and reviewed by the intermediate people’s courts. The decision made by the appeal court is final. The losing party in the appeal may request a retrial after the second instance; however, this may not be accepted by the courts in the absence of a valid reason or new conclusive evidence.

Court filings in China are not public. Chinese courts organise exchange of evidence and legal opinions between parties before the hearing, but do not voluntarily release these documents.

When state secrets, commercial secrets and personal privacy are not involved, hearings are open to the public. Parties can request a private hearing if the case involves state secrets, trade secrets or personal privacy. When approved by the court, the hearing will be held in private while the confidential information will be hidden in the judgment.

The following persons can act as litigation agents:

• lawyers;
• close relatives or employees of a litigant; and
• citizens recommended by the local community, a litigant’s employer and certain social bodies.

In China, lawyers can represent clients in all kinds of litigation. In addition, natural persons can be represented by their close relatives while a company can be represented by its staff members in civil actions. Patent attorneys, as recommended by the All-China Patent Agents Association, can represent clients in IP-related litigation.

A foreign lawyer may represent clients of the same nationality in a foreign-related civil case in China but cannot participate in the proceedings as a lawyer.

There is no rule on litigation funding by a third party in China. It is generally assumed that the third-party funding is based on the party’s choice and interest.

There is no applicable information in this jurisdiction.

There is no applicable information in this jurisdiction.

There is no applicable information in this jurisdiction.

There is no applicable information in this jurisdiction.

Contingency fees are permitted in China.

According to the Justice Department, National Development and Reform Commission and State Administration for Market Regulation, contingency fees are not allowed in criminal cases, administrative litigations, state compensation cases, class actions, marriage cases, inheritance cases, and cases requesting social insurance, subsistence allowances, alimony, maintenance, pension, relief, worker’s compensation, and labour payments.

The bar association holds the opinion that allowing contingency fees in these kinds of cases would have a negative impact on professional ethics and social value orientation.

There is no applicable information in this jurisdiction.

Generally speaking, there is no pre-action requirement imposed by the court. For example, to proceed with civil litigation, a plaintiff must meet the following requirements:

• The individual or entity initiating the lawsuit must have the legal standing to do so.
• There must be a clearly identifiable party or parties against whom the action is brought.
• The plaintiff is required to present specific claims, supported by facts and legal grounds, to substantiate the lawsuit.
• The case must fall within the realm of civil matters that the people’s court is authorised to hear, and it must be filed in the correct jurisdiction.

Failing to meet these requirements will lead to the case’s dismissal.

However, labour disputes are an exception. In such cases, the law mandates that the involved parties – employers and employees – must first seek arbitration. The court will not accept legal actions pertaining to labour disputes that have not undergone this compulsory arbitration step.

Under the Civil Code, the limitation period for civil suits is three years for most cases.

The limitation period starts running from the day when the plaintiff knows or should have known the facts giving rise to its claim. The limitation period can be interrupted due to:

• petitions from obligees requesting that obligors meet obligations;
• negotiation between the parties over the dispute; and
• legal action or arbitration filed due to the dispute.

If the limitation period is interrupted, it restarts, affording the claimant an additional three years from the day of such interruption, such as when an obligee demands payment of a debt from an obligor.

In addition to the interruption, the limitation period can be suspended by circumstances that are essentially out of the parties’ control. Suspension can only occur during the last six months of the limitation period. A typical instance where suspension may apply is during force majeure events, like the disruptions caused by the COVID-19 pandemic. In such scenarios, the party may receive an extension of six months from the time the suspending event ceases to apply.

However, irrespective of any interruptions or suspensions, the courts will not entertain claims if the lawsuit is filed twenty years after the day the limitation period started, no matter how many times the limitation period was interrupted or suspended.

In order to determine jurisdiction, people can usually try the following three-step test:

• determining whether the case is under exclusive jurisdiction;
• identifying possible jurisdictions based on the type of action; and
• determining the level of jurisdiction according to the importance of the case.

In China, as is the case in other countries, certain types of cases are subject to exclusive jurisdiction. For example, real estate cases fall under the exclusive jurisdiction of the court where the real estate is located. Another example of exclusive jurisdiction is intellectual property cases. This kind of case usually goes to the intellectual property court within the jurisdiction.

After confirming that the case does not fall under exclusive jurisdiction, competent courts can be determined based on the type of case according to laws and regulations. In China, the principle of jurisdiction is to conduct proceedings at the location of the defendant. That is, generally speaking, the court of the defendant’s domicile can always exercise jurisdiction over the case.

However, there might be some other options provided by laws and regulations. For instance, in contract cases, the competent courts include the court in the district where the defendant is domiciled, the court in the district where the contract is performed, the court in the district where the contract is signed, the court in the district where the plaintiff is domiciled, and the court in the district where the subject matter of the contract is located. The plaintiff may choose one of the courts to bring the action.

Finally, when the competent court is determined, the importance of the case needs to be considered. For example, the first instance of a normal case is under the jurisdiction of the basic people’s court. However, if the case is of particular significance in the jurisdiction or even in the country as a whole, the intermediate people’s court, a high people’s court or even the Supreme People’s Court may take over the jurisdiction.

After the court of first instance has been determined, a complaint may be filed to initiate the lawsuit. In China, the initial complaint does not need to contain too many details of the case; instead, it needs to include some basic information about both parties, such as the name and address of the defendant, the cause of the action, and the plaintiff’s claim.

Along with the complaint, the plaintiff is required to submit evidence that substantiates the claims. This evidence should be sufficient to elucidate the nature of the dispute and the basis of the plaintiff’s claims, though it does not need to be comprehensive enough to enable judgment.

The plaintiff may amend their claims at any time before the conclusion of the court debate during the hearing.

In China, service is arranged by the court.

Chinese courts are adopting various ways to serve documents, including direct service, electronic service, mail service, etc. If a court fails to serve documents after trying all kinds of methods provided by law, the court can serve by public announcement. Service is deemed to have been made in a domestic case thirty days after the date of the public announcement. Where a foreign entity is involved, the period is three months after the date of the public announcement.

If a defendant receives the court files but refuses to participate in the proceedings after being summoned, a default judgment can be made. If a defendant’s attendance is mandatory and they fail to appear without valid justification, even after two summonses, the court may compel appearance through a warrant.

Where a large number of obligees may join a collective action but the number of obligees has not been determined at the time of the action, the court may issue a public announcement explaining the case and the claim and notify the obligees to register with the court within a certain period of time. As such, the Chinese system operates on an “opt-in” basis for class actions.

The obligees registered with the court may elect representatives to participate in the trial. If no representative can be elected, the people’s court may suggest one or more representatives in the trial.

Actions taken by a representative have the same legal effect as if undertaken by the obligees they represent. However, should the representative seek to amend, waive the claims, acknowledge the claims of the opposing party, or agree to a settlement, they are required to obtain the written consent of the parties they represent.

The judgments and rulings made by the people’s courts in the class action are binding on all registered co-plaintiffs. Obligees who have not joined the action retain the right to bring individual lawsuits on identical grounds within the limitation period, and the previous judgment may be considered in these subsequent cases.

According to the All China Lawyers Association, lawyers and clients should reach an agreement on the power of attorney, attorney fees and other terms of the entrusted matters.

The Association provides guidance on the attorney fees for various types of cases and practices for public reference. Of course, the specific fees and costs may vary significantly among law firms.

The interim measures available in China include:

• preliminary injunctions;
• preservation of property;
• preservation of evidence; and
• advance execution.

Preliminary Injunctions

The party to a dispute may apply for preliminary injunctions before or during the litigation proceedings. The preliminary injunctions may require a party to perform, or refrain from performing, a particular act. The following four factors are considered by the court before issuing a preliminary injunction:

• whether the act being committed or about to be committed by the respondent constitutes an infringement of the lawful rights or interests of the applicant;
• whether denial of the injunction would cause irreparable damage to the applicant;
• the adequacy of security provided by the applicant; and
• whether the injunction would harm the public interest.

The preliminary injunction application will be rejected if the applicant refuses to provide security.

Preservation of Property

Property can be preserved by the court by means of seizure, impounding, freezing of accounts or any other means prescribed by the law. This interim measure can be applied before or during the litigation proceedings.

The preservation of property is allowed if the court determines that it may be difficult or impossible to enforce a judgment due to the bad faith conduct of a party.

The court may require the applicant to provide security for a property preservation application. The application will be rejected if the applicant refuses to provide security.

Preservation of Evidence

The court may issue an evidence preservation order before or during litigation proceedings. The order can be issued upon the request of a party or on the court’s own initiative during the proceedings. Before trial or arbitration, the order is issued generally upon the applicant’s request.

The rationale for these orders is the potential destruction of evidence or the difficulty of its later procurement. Notably, no security is required for the preservation of evidence.

Advance Execution

The people’s court may, upon the application of the parties, order advance execution in the following cases:

• claims for alimony, maintenance, pensions or medical expenses;
• compensation for labour claims; or
• where advance execution is required due to urgent circumstances.

The factors considered by the people’s court when deciding to order advance execution include:

• a clear delineation of the parties’ rights and obligations, where non-implementation could gravely disrupt the applicant’s livelihood or business operation; and
• the respondent’s ability to fulfil the execution.

The people’s court may order the applicant to provide security. If the applicant fails to provide security, the application will be rejected. If the applicant loses the case, the property losses suffered by the respondent as a result of the advance execution must be compensated.

If the plaintiff files multiple claims, the court may decide one or more of the claims if the facts are clear enough for the court to make the decision on those claims. However, it is not common in practice.

Before trial, the plaintiff may change, withdraw, or waive their claims in the lawsuit. The defendant has the right to contest the jurisdiction, admit or refute the plaintiff’s claims and bring counterclaims in the lawsuit. Both parties have the right to settle in order to end the lawsuit. Chinese courts usually ask the parties before trial if they are willing to settle. Where mediation is possible, the courts usually actively co-ordinate and facilitate the parties to reach a settlement agreement.

During the trial, the court is tasked with ensuring the presence of all necessary parties. If one or more necessary parties are missing, the court may add the parties ex officio or at the request of the parties already participating in the proceedings. Of course, the missing party may refuse to joint the action. In this case, the party must explicitly waive their substantive rights in the action.

In China, a defendant has no right to apply for an order that the plaintiff/claimant must pay a sum of money as security for the defendant’s costs.

For the most part, procedural requests, such as changes in evidence or waiving claims, are exempt from court fees.

In China, the court’s litigation fee is primarily contingent on the litigation subject, and apart from this fee, the parties are not obliged to make any additional payments to the court.

Most requests filed by the parties in the action must be made before the end of the hearing. For example, the plaintiff may change their claims or waive one or more claims before the debate stage of the hearing. One notable exception pertains to objections over jurisdiction: a defendant must lodge this objection within 15 days from receipt of the complaint.

Discovery is not available in China. Typically, each party must bear the burden of proof on its own in substantiation of its claims.

There is no applicable information in this jurisdiction.

There is no applicable information in this jurisdiction.

While formal discovery is not practiced, there are procedures that are somewhat similar.

Court Investigation

Should evidence be held by the defendant or a third party and the plaintiff is unlikely to access the evidence, the plaintiff may request the court to order the defendant or the party to submit such evidence. If the defendant refuses to submit the evidence without valid reasons, the people’s court may conclude that the content of the evidence claimed by the applicant is true.

Evidence Preservation

To prevent the destruction or future inaccessibility of evidence, parties can request the court to preserve evidence.

These requests must be written, detailing the evidence’s location and the necessity for court intervention. On approval, the judge will order either the investigation or preservation of evidence.

China does not recognise the concept of legal privilege, such as attorney-client privilege. In practice, cases involving state secrets, trade secrets or personal privacy are not open to the public.

The court may order the parties to submit confidential information to ascertain the facts. In this scenario, the attorney of the opposite party is allowed to access the information under a non-disclosure agreement. That is, the attorney is allowed to cross-examine the information but is not allowed to reveal the secrets to their client.

There is no applicable information in this jurisdiction.

In China, injunctive relief can be awarded as an interim measure or in a permanent form. Regarding interim injunctions, see 4.1 Interim Applications/Motions.

Permanent injunctions are court orders prohibiting a party from engaging in a specific activity. They are common in tort and intellectual property law. When a tortious act endangers the personal or property safety of others, the injured party may seek a permanent injunction to stop the infringement, remove the obstruction, or eliminate the danger. Permanent injunctions are almost always awarded in cases of intellectual property infringement.

Chinese courts can issue injunctions to prevent parallel proceedings in another jurisdiction. These injunctions are mainly issued in maritime and SEP (standard essential patent) cases. Like other jurisdictions, the purpose of these injunctions is to prevent unnecessary parallel litigation between the same parties and ensure fair litigation in China. Chinese courts are generally cautious about issuing this type of injunction.

A court must issue a ruling within 48 hours of accepting an application for a preliminary injunction, the preservation of evidence or property. Once injunctive relief is granted, it should be executed immediately.

If the court issues an injunction, the respondent may request a reconsideration. The injunction remains in effect during the reconsideration. The court’s decision on the injunction is not appealable.

Where an application for interim measures is successful, but is subsequently found to be unjustified or erroneous, the applicant must compensate the respondent for any losses incurred.

Injunctive relief can be granted against the worldwide assets of the respondent. The injunction against a foreign asset must be filed by the party to a dispute.

When the injunction is granted, the foreign assets will be kept under supervision of a third-party authority. In practice, the foreign assets mainly include, for example, ships and aircraft registered in a foreign country. For these assets, supervision is necessary to prevent the assets from leaving China.

Injunctive relief can be obtained against third parties. In general, the purpose of interim injunctions is to make sure the judgment or the trial can be fulfilled. Therefore, injunctions against third parties are allowable when necessary.

If a respondent violates the terms of an injunction, the applicant may request the court to enforce it. If the court is unable to enforce the injunction due to the respondent’s bad faith conduct, the court may order a fine, detention, or seizure of the respondent’s property.

Like most courts in the world, Chinese courts focus on fact-finding during the hearing, which can be divided into the following stages outlined below.

Appearance Review

The court clerk verifies whether the parties and other participants in the proceedings have appeared in court and announces the court’s rules. After the presiding judge formally opens the trial, they state the cause of action and inform the parties of their litigation rights and obligations.

Court Investigation

The court focuses on fact-finding during this stage. The court investigation mainly includes reviewing the complaint and defense, cross-examining witnesses and evidence, listening to the parties’ opinions on judicial appraisal conclusions, and discussing whether to admit new evidence submitted after the evidence submission period has expired.

Court Debate

Once the evidence and basic facts have been presented, the panel organises a court debate and listens to arguments made by each party. Sometimes, judges ask questions about certain issues in the case to try to ascertain the facts through the parties’ debate. The court may end the hearing if the judges believe that the facts have been sufficiently ascertained.

Issuance of Judgment

A judgment is issued within a certain period of time after the hearing. There is no set time limit between the hearing and the issuance of judgment, which can take weeks or months.

Case Management Hearings

In China, while there are no formal case management hearings, the court does determine the case’s timeline. To effectively manage complex cases, the court may facilitate pre-hearing cross-examinations of evidence and discussions of key arguments, particularly when parties exchange evidence. This approach enables the court to pinpoint the crux of the dispute, potentially shortening the duration of the hearing. Such pre-hearing sessions are particularly beneficial in highly complex cases.

Hearings

There must be a hearing in first instance in China. Each party is summoned to court to present evidence and arguments. Second instance cases may be conducted in writing, but the appellate court typically schedules a hearing for the parties to review the first instance judgment.

The length of the hearing depends on the complexity of the case. It may last several days or even end in ten minutes. There may be multiple hearings if necessary, such as if one party submits new but conclusive evidence after the hearing. In this case, the court may have to hold another session to cross-examine the evidence and reconsider the case.

There are no jury trials in China.

Objectivity, Legality and Relevance

The rules governing the admission of evidence at trial in China require that evidence be objective, legal, and relevant.

• Objectivity: The evidence must reflect objective facts.
• Legality: The evidence must be collected and preserved in accordance with the law. Evidence collected illegally is not admissible.
• Relevance: The evidence must be relevant to the facts of the case. Irrelevant evidence will be excluded.

Time Limit for Adducing Evidence

Parties are required to submit evidence within the time limit set by the court. Parties may submit additional evidence after the time limit or even during the hearing, but they are discouraged from doing so. Courts will generally not refuse to admit this evidence, but the party that misses the time limit should have a good reason for doing so. Otherwise, the court may reject the evidence or admit it but issue a warning or fine. If late evidence is admitted, the other party will have an opportunity to cross-examine it and provide evidence to the contrary.

Expert testimony is permitted at trial in China. Parties may request the court to allow expert witnesses and expert testimony. The court will assess whether the expert witness requested by the parties is qualified to explain certain knowledge and facts to the court.

Parties may also apply to the court to have an expert appointed to the case. Both parties must agree on the candidate for the qualified expert. If the parties cannot agree, the court may appoint an expert.

On the other hand, if the court believes that it is necessary to examine certain issues, it may appoint a qualified expert ex officio.

Anyone may apply to the court to attend hearings. Hearings are open to the public unless the case involves state secrets, trade secrets, or personal privacy.

Transcripts of hearings are not publicly accessible. Only the parties and their agent ad litem can request access to the transcripts.

The judge generally controls the trial and focuses on fact-finding throughout by, for example, reviewing the evidence, conducting court investigations, listening to the parties' arguments, organising court debates, and seeking expert advice.

There are no specific rules on the timing of issuing a judgment. In most cases, the court issues the judgment after the hearing. If the facts are clear and the law is simple, the parties may learn the judgment at the hearing and receive the written judgment within ten days.

The timeframes for proceedings vary from case to case. In general, domestic parties may receive the first instance judgment in six months of launching the action. For cases involving foreign entities, there is no explicit time limit. The case may take roughly one to two years.

A typical timeframe is as follow:

• Complaint: This is the start of the action.
• Defence: A domestic defendant has 15 days from the date of receipt of the complaint to file a defence. If the defendant has no domicile in China, the period for filing a defence is 30 days.
• Time limit for adducing evidence: The court then sets a time limit for adducing evidence, within which each party may submit evidence. The time limit can be extended upon request of the parties. For the first instance, the time period for submitting evidence is no less than 30 days, which may occur about two to three months after filing the complaint. Expert witnesses and requests for judicial appraisal are also subject to the time limit for adducing evidence.
• Exchange of evidence: After the time limit for adducing evidence expires, the court orders the parties to exchange evidence. In practice, some courts allow the parties to cross-examine the evidence at this time by summoning them to court, especially for complex cases.
• Hearings: After the exchange of evidence, the court schedules a hearing. There may be multiple hearings if the court finds it necessary. Hearings may end when the court believes that the facts in dispute have been ascertained and a judgment can be made.
• Judgment: The parties receive the judgment at this stage. Appeal must be filed within 15 days after receipt of the judgment.

In China, parties engaged in a lawsuit have the right to settle the case independently, without the need for court approval. Additionally, the court may play an active role in facilitating a resolution by organising mediation between the parties. In such instances, the court issues mediation agreements to the parties, which become effective upon their receipt.

Settlements reached between parties can remain confidential. In practice, most settlements in China are indeed kept confidential from the public.

When parties independently reach a settlement, they are both obligated to adhere to the terms of the agreement. If the parties wish to have their settlement legally enforceable, they can request a people’s mediation committee to issue settlement agreements and then seek the People’s Court’s confirmation of these agreements within 30 days of their effective date. Once confirmed by the court, these agreements become judicially enforceable, and either party may apply to the court for enforcement.

If the settlement is brokered through court-mediated procedures, the court-issued settlement agreement is judicially enforceable.

The parties may set aside the settlement agreement by applying to the court for retrial if the settlement agreement: 

• was entered into due to a significant misunderstanding;
• is clearly unfair; or
• was made by means of deception, coercion, or taking advantage of the other party’s difficulties.

The remedies available at the full trial stage include:

• damages;
• declarations;
• permanent injunctions; and/or
• specific performance.

Generally speaking, damages in China are compensatory. However, punitive damages are available in some areas, including:

• product defect liability;
• fraudulent acts by goods or service providers causing death or serious injury to consumers or other victims;
• willful infringement of intellectual property rights that result in serious consequences; or
• intentional pollution of the environment or destruction of the ecology.

Pre-judgment

In general, whether one party is able to cover pre-judgment interest is dependent upon the agreement between the parties.

More specifically, if the interest for late performance is included in the contract and the claims based on the interest is supported, the court usually awards the plaintiff the interest based on the contract caused by late performance before the judgment. Therefore, if the claim on the delay of performance is included in the contract and supported by the court, the successful party may collect interest based on the period from the beginning of the proceeding to the date of judgment.

Post-judgment

Post judgment includes two parts in China, the interest for late performance according to the contract and a penalty for late performance of monetary obligation in the judgment.

In the judgment, a specified period is set for the unsuccessful party to fulfill the monetary obligations. If the obligations is performed within the specified period, the post-judgment interest only includes the interest for late performance according to the contract that accrues up to the date of actual payment. On the other hand, if the monetary obligations fail to be fulfilled within the period specified by the court, the obligee must additionally pay a penalty for late enforcement of the judgment while the part for late performance continuously accumulates. In this case, the post-judgment including two parts will accrue up to the date the obligee pays.

The penalty generally is calculated as follows:

The amount of money the defendant must pay x 0.0175% per day x the days from date the specified period expires to the date the obliges pays.

If a party refuses to voluntarily perform a judgment, the other party can apply to the court for enforcement.

To enforce a judgment, the applicant must submit an application to the court of first instance, or to the same level court where the property is located. On receipt of the party’s application for enforcement, the enforcement judge issues an enforcement notice to the obligor, ordering them to perform the judgment within a designated period. If the party still refuses to perform the judgment, the enforcement officer may take compulsory measures to enforce it.

The judgment from a foreign country can be enforced in China. There are two routes through which a foreign judgment can be enforced in China. One is that the foreign court that made the judgment requests Chinese courts to perform the judgment. The other is that the party involved in the foreign judgment files an application to Chinese courts. In the latter case, the applicant needs to file the application to the court in the place where the enforceable property of the obligor is located.

Chinese courts will recognise a foreign judgment in accordance with international treaties to which China is a party or on the basis of reciprocity.

Before recogniszing a foreign judgment, the court will consider the following factors:

• the foreign judgment must be final and binding;
• the jurisdiction of the foreign court over the case complies with the requirements of Chinese law and public order and good customs;
• the judgment does not violate Chinese laws and the principles of public order and good customs;
• the trial procedures of the foreign court meet the requirements of procedural justice under Chinese law;
• the judgment does not violate China’s vital interests such as sovereignty, security or public interests;
• the matters covered by the award do not conflict with existing Chinese judgments or arbitral awards;
• the party obligated to perform the judgment has property or ability to perform the judgment in China; and
• the application must be made within two years from the date of the foreign court decision.

Generally speaking, if the parties are dissatisfied with the first instance judgment, they may appeal to a higher court. Exceptions include intellectual property cases, where the Intellectual Property Courts have first instance jurisdiction and appeals in IP cases involving technical issues go to the Supreme People’s Court.

Appeals are of right, and no permission is required from the court. The appeal may be filed with the first instance court or directly with the appellate court. The court will primarily review whether the appeal was filed within the legal time limit.

The time limit for appealing a civil judgment is 15 days from the date of service of the judgment. The time limit for appealing a ruling is 10 days from the date of service of the ruling. If a party is not domiciled in China, the time limit for appealing both judgments and rulings is 30 days.

The appellate court’s review focuses on identifying any errors in the fact-finding or application of law in the first instance judgment. The appeal may be conducted in writing, but there is typically a hearing to review the case and hear the parties’ arguments. New evidence is allowed, but the party submitting new evidence must explain why it was not submitted in the first instance. The appeal may comprehensively review the case, extending beyond the original fact-finding and legal assessments of the first instance court.

The appeal is of right and no permission is required for the appellant to bring an appeal.

The appellate court may:

• affirm the first instance judgment;
• revoke, amend or modify the first instance judgment if the appellate court finds errors in the fact-finding or application of law in the first instance judgment;
• rescind the original judgment and send the case back to the original court for retrial or revise the judgment after ascertaining the facts if the basic facts were incorrectly determined; and
• rescind the original judgment and send the case back to the original court for retrial if the appellate court finds that the original judgment seriously violates legal procedures, for example, omitting a party in necessary co-litigation.

Generally, the losing party pays the court fees in China. The court may allocate the court fees between the parties in proportion to each party’s liability if each party wins partially.

Usually, the parties pay their own attorney fees and expenses, like expert fees. There are several exceptions where the attorney fees and expenses can be reimbursed by the losing party, for example, including:

• personal injury cases;
• defamation cases;
• security rights cases;
• infringement of intellectual property;
• environmental tort cases; or
• unfair competition.

The court may award attorney fees to the successful party in these cases based on specific laws and regulations. However, the amount of fees and expenses awarded by the court follows the government’s recommended fee scale, which means that the winning party’s attorney fees and expenses may not be fully reimbursed.

When determining the award of costs to the winning party in a lawsuit, Chinese courts take into account several factors. These include the nature of the lawsuit, the actual workload undertaken by the attorneys involved in the case, the amount of expenses actually incurred, and the recommended scale of attorney fees within the jurisdiction.

There is no regulation on interest when awarding costs.

Arbitration

Arbitration is a popular alternative dispute resolution (ADR) mechanism in China.

Mediation

Parties can choose to mediate disputes independently. Successful mediation culminates in a mutually agreed and signed agreement. The effectiveness of this process largely depends on the skills and efforts of the attorneys facilitating the mediation.

Mediation can also be conducted and organised by judges. When a lawsuit is filed, judges often inquire if the parties are willing to settle. If they reach an agreement, the court can issue a legally binding settlement agreement. This practice is encouraged by Chinese courts to conserve judicial resources.

People’s mediation committees operate at the grassroots level, such as in villages, residential blocks, or companies. These committees are particularly adept at handling everyday, non-critical disputes, leveraging their understanding of local issues and community dynamics. A considerable number of minor disputes can be effectively resolved through these committees, offering a practical and community-centric approach to dispute resolution.

To optimise judicial resources, Chinese courts actively encourage dispute resolution through settlement. Before proceeding to trial, judges usually inquire whether the parties are interested in settling the case. If there is an inclination towards settlement from at least one party, the court typically allocates a specific period for the parties to engage in discussions and negotiations. It is important to note that court-mediated mediation is voluntary; parties face no penalties for declining a settlement proposal.

For labour disputes, parties are required to seek arbitration before they can file a lawsuit.

In addition to judicial mediation, people’s mediation committees play a significant role in dispute resolution at the grassroots level in communities and within governmental organisations. Enterprises also have the option to establish such committees. Participation in mediation before these committees is not compulsory, and parties are free to accept or reject mediation proposals. This form of mediation is valued for its flexibility, speed, and cost-effectiveness compared to lawsuits.For example, each side can elect one mediator in the panel while the mediation can be conducted in private so that the dispute can be resolved discreetly.

The Arbitration Law of China, effective on 31 August 1994 and recently revised on 1 September 2017, governs arbitration in China. In addition, the Supreme People’s Court has issued the Interpretations of Several Issues Concerning the Application of the Arbitration Law of the People’s Republic of China (2006) and the Provisions of the Supreme People’s Court on Several Issues Concerning Enforcement of Arbitral Awards by People’s Courts (2018).

These laws, interpretations, and provisions provide rules on all aspects of arbitration in China, including arbitration agreements, arbitrators, arbitration procedures, evidence, remedies, awards, and enforcement.

If an award is not performed, the applicant must apply to the intermediate people’s court where the respondent is domiciled or where the respondent’s property is located to enforce the awards.

According to the Arbitration Law, contractual disputes and other disputes over property rights and interests between citizens, legal persons and other organisations are arbitrable.

On the other hand, personal relationship matters, such as marriage, adoption, child custody, maintenance (alimony), and inheritance, are not arbitrable.

Finally, administrative disputes that are legally mandated to be handled by administrative organs are also not arbitrable.

Arbitral awards can be appealed in the courts. To set aside an arbitral award, the applicant must apply to the intermediate people’s court in the place where the arbitration committee is located. The grounds on which arbitral awards can be set aside include:

• the absence of an arbitration agreement between the parties;
• the award deals with a dispute or contains decisions on matters which are not contemplated by, or do not fall within, the terms of the arbitration agreement, or the subject matter of the dispute is not arbitrable;
• the composition of the arbitral tribunal or the arbitration procedure violates legal requirements;
• the evidence on which the arbitral award is based is fabricated;
• the other party has concealed evidence that could have impaired a fair decision of the arbitral tribunal; and
• the arbitrator(s) has (have) demanded or accepted bribes, committed malpractice or perverted the law in making the arbitral award.

Note that the parties cannot appeal arbitral awards on grounds of substantive errors in general. The only ground that may concern substantive errors is that the arbitral award is in conflict with public interest.

Enforcement of Domestic Arbitration

If an arbitral award is not performed, the applicant must apply to the intermediate people’s court where the respondent is domiciled or where the respondent’s property is located to enforce it.

Enforcement of Foreign Arbitration

China joined the New York Convention in 2018 and is subject to the reciprocity and the commercial reservation declaration made when it acceded to the Convention. China applies the Convention only to disputes arising from contractual and non-contractual commercial legal relationships under Chinese law.

According to the Convention, the grounds to refuse enforcement of foreign-related arbitral awards include:

• there is no valid arbitration agreement between the parties;
• the composition of the arbitral tribunal or arbitration procedure is improper;
• the subject matter of the dispute is not contemplated by the terms of the arbitration agreement or is not arbitrable in China;
• the award is not binding or has been revoked or suspended; and
• recognition or enforcement of the award is in conflict with the public policy of China.

China has been exploring online dispute resolution since 2017. Currently, many litigation activities before Chinese courts can be conducted in an online manner. Due to the country’s vast size, online litigation undoubtedly provides great convenience, particularly for parties who would otherwise have to travel extensive distances to participate in legal proceedings.

In addition, Chinese courts are also actively exploring the use of AI technology in trials. For example, transcripts of court hearings are automatically made by voice recognition technology in most courts, which greatly reduces the workload of court clerks. In addition, in terms of evidence, Chinese courts have gradually recognised evidence collected through blockchain, time stamps and other technologies, which has also greatly reduced the complexity and cost of collecting evidence for litigants.

Finally, China continues to encourage the parties to settle disputes through mediation. People’s mediation committees, established in villages, residential areas, or factory settings, are strategically placed at the core of community life, ensuring a deep understanding of local disputes. China now continues to provide about four million people’s mediators with professional training and legal support. Professional mediation training programmes, court-annexed mediation, legislative reform, and online dispute resolution methods are all key developments helping to facilitate dispute resolution in China.