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China – Recent Developments On The Application Of “Small Claim Litigation” Procedure.

27 November, 2013

 


Background And General Rules


With a view to assisting claimants in pursuing straightforward small claim cases and expediting the course of justice, the “small claim litigation” procedure has been formally introduced into the Chinese legal system by the latest amendments to the Civil Procedure Law (the “CPL”).


The CPL is arguably China’s most significant piece of legislation governing civil procedure. Its latest amendments came into effect on 1 January 2013. (Please see our update on “The recently amended PRC Civil Procedure Law” in January 2013).


Article 192 of the amended CPL provides that for simple civil cases where the facts of the case are evident/straightforward and the amount of the claim is less than 30% of the annual average salary of workers of the province, autonomous region or municipality in question during the preceding year, the “small claim litigation” procedure will be applied, and the first instance judgment shall be final.


Is The “Small Claim Litigation” Procedure Applicable To Maritime Claims?


This issue has recently been clarified by the Supreme Court of China by way of a Reply to the Shanghai Higher People’s Court (the “Reply”), which was enacted on the 1538th conference of the Judicial Committee of the Supreme Court. The Reply was then published on 19 June 2013 and implemented on the 26th of the same month.


The Reply says:


The CPL revised in 2012 has stipulated that the “small claims litigation” procedure in the Chapter of Summary Procedure (Chapter 13) and Article 98 of the Special Maritime Procedure Law of the People’s Republic of China (the “SMPL”) provides that maritime courts may apply the summary procedure. In this context, maritime courts may also apply the “small claims litigation” procedure to simple maritime cases.


The amount of claim to which the “small claim litigation” procedure is applicable shall be no more than 30% of last year’s average salary of workers of the provinces, autonomous regions or municipalities directly under the Central Government where the maritime courts or the dispatched tribunals thereof that actually accept the cases are located.


Detailed Rules And Implementation In Shanghai


  • As to the cap of “30% of the annual average salary” for the application of the “small claim litigation” procedures, the Shanghai Higher People’s Court has fixed a maximum rate of RMB 15,000 (or equivalent to around US$ 2,500) as temporary standard. This means all of Shanghai’s courts will implement the “small claim litigation” procedures to govern and try civil/maritime cases involving monetary claims of RMB 15,000 (US$ 2,500) or less this year.

According to statistics, RMB 15,000 is roughly 30% of the average annual salary in the city during the last year. As residents’ salaries increase, the court also plans to adjust the figure in the first half of each year.


  • After receipt of the Supreme Court’s Reply as mentioned above, the Shanghai Maritime Court (“SMC”) has also announced its “Interim Measures in respect of the application of small claims litigation procedure”.

According to the Interim Measures, the “small claims litigation” procedure is applicable to the following six categories of maritime claims:


  • claims for unpaid freight under forwarding contracts in which rights and obligations thereunder are clear and definite;
  • claims for unpaid freight under the contract of carriage of goods by sea in which rights and obligations thereunder are clear and definite;
  • claims for unpaid price under shipping supply contract in which rights and obligations thereunder are clear and definite;
  • claims for unpaid port operation fees in which rights and obligations thereunder are clear and definite;
  • disputes over the amount of salaries, work-related injury medical expenses, economic compensation and repatriation fees in which the facts are clear and the crew’s contractual relationship is definite;
  • disputes over salvage/wreck removal fees in which the facts are evident.

The contents of the Interim Measures also include the circumstances where the small claims litigation procedure shall not be applied, the time limit of trials, the method of trial, transformation of the procedure (to ordinary procedure) and trial supervision.


Comments


According to a spokesman of the Shanghai Higher People’s Court, four district courts in Shanghai have heard more than 10,000 small claims cases under new rules and procedures since last May as part of the pilot program, and if both the claimants and defendants are cooperative, these small claims cases can be settled within two or three days and no longer than a month. Previously, such cases could go on for as long as six months.


If that is the case, we believe that this should take some of the work load involving minor issues off the court and make its process regarding major claims more efficient in the future and so make smaller claims more cost effective to pursue.

 

Clyde & Co

 

For further information, please contact:

 

Ik Wei Chong, Partner, Clyde & Co
[email protected]


Andrew Rourke, Partner, Clyde & Co
[email protected]


Homegrown Dispute Resolution Law Firms in China

 

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