Jurisdiction - China
Reports and Analysis
China – Amendments To Administrative Litigation Law, And Their Potential Impact On Antitrust Enforcement.

19 November, 2014

 

 

Introduction


The Administrative Litigation Law (“ALL”) was enacted in 1990. Back then, it was seen as a ground-breaking development, as the law authorizes entities and individuals to bring lawsuits against administrative authorities and their personnel.


In 2013, China’s legislative branch decided to amend the ALL. The main aim of the revision seems to be removing a range of procedural obstacles that plaintiffs face when bringing administrative lawsuits. On 1 November 2014, amendments to the ALL (“Amended Law”) were enacted. The Amended Law will enter into force on 1 May 2015.


Key Focus Of The Proposed Amendments


The Amended Law aims to lower the burden on plaintiffs in various ways, for example:

 

  • Broadening the scope of administrative acts that can be challenged. The amendments propose to add new categories of actions relating to administrative acts, in particular decisions regarding coercive administrative measures; administrative licensing and franchising agreements; ownership over, or rights to use, natural resources; expropriation of private property and corresponding compensation payments; abuse of administrative powers resulting in the elimination or restriction of competition; and unlawful demands for funding, disproportionate expenses or other unlawful obligations imposed upon individuals.

 

  • Adding a new ground on which to challenge administrative acts. The Amended Law expands the number of grounds on which plaintiffs can challenge an administrative act. In addition to the incorrect application of the Amended Law, procedural defects, insufficient evidence and so forth, the Amended Law also allows courts to examine whether the contested act is manifestly “improper.”
 

At the same time, the Amended Law seemingly aims to increase the defendant authorities’ compliance with adverse court rulings. For example, the Amended Law allows “the public” to request “access” to final judicial rulings, although parts involving state secrets, trade secrets or personal data are to be redacted. The Amended Law also provides for a battery of measures for combatting non-compliance with judicial rulings:

 

  • The presence of the chairperson of the relevant authority is mandatory during the entire trial. 
  • If an authority fails to enforce a judicial decision within the indicated deadline, that authority’s chairperson is personally liable to a fine of RMB 50 to100 per day.
  • The courts can publicize the administrative authority’s non-compliance.
  • The courts may notify the relevant authority’s bank of any fines and damages ordered in the judgment, 
  • The courts can also directly contact the relevant authority’s supervisory organ.
 

Potential implications for antitrust enforcement Administrative litigation is primarily important in the antitrust arena for two reasons. First, the Anti-Monopoly Law (“AML”) and other antitrust rules allow entities involved in administrative procedures to challenge the final decisions by the authority in question before the courts. Second, the AML not only prohibits anti-competitive practices by companies and other market players, but also by government authorities.


It is in this second area where the Amended Law brings about an important change relative to the current ALL: until now, the law was unclear as to whether a company or individual could challenge an administrative act that has negative effects on competition – often referred to as “administrative monopoly” conduct in China – directly before the courts, or if the act could only be challenged within the specific administrative-internal appeal processes that are widely perceived to lack teeth. The AML is not clear on the point, and the Beijing Intermediate People’s Court ducked the issue in a lawsuit filed against the General Administration of Quality Supervision and Quarantine on the day the AML came into force back in 2008.


Now, by explicitly including “administrative monopoly” conduct as a category subject to administrative litigation, the Amended Law strengthens the legal basis for bringing lawsuits against administrative authorities under the AML.


This proposed revision might need to be interpreted against the mandate by the Third Plenum of the 18th Congress of the Communist Party’s Central Committee to “further diminish all forms of administrative monopolies.”

 

Even for foreign companies, the AML’s “administrative monopoly” provisions may become more important, as China grapples with structural reforms.


Conclusion


The Amended Law has been issued against the backdrop of the attempts to reform China’s incipient market economy and the attempt to strengthen the rule of law (in particular, by cutting the budgetary link between local courts and local governments). There remains much more to be done in this regard.


Administrative litigation allows market players, and other entities or individuals, to bring lawsuits against government authorities and other administrative actors. Strengthening the rights of plaintiffs challenging administrative conduct – as the Amended Law does – is thus a step in the right direction. Indeed, for both the IPR and antitrust fields, the Amended Law might mean progress, but only if the reforms are adequately enforced in practice.

 

Hogan Lovells

 

For further information, please contact:

 

Adrian Emch, Partner, Hogan Lovells

 

Hogan Lovells Competition & Antitrust Practice Profile in China

 

Homegrown Competition & Antitrust Law Firms in China 

 

International Competition & Antitrust Law Firms in China

Comments are closed.