Chapter 4
Reforms in the Judicial Regime
The accession of China to the WTO has exerted a far-reaching impact on its judicial regime. It is a very significant part of honoring China¡¯s WTO commitments to ensure that each and every case is handled fairly and efficiently in accordance with China¡¯s laws.
Shanghai¡¯s courts of law have been confronted with formidable new challenges since China became a WTO member. Active and effective measures have been adopted in anticipation to various effects on judicial matters following China¡¯s entry into the WTO. For example, WTO experts have been recruited as advisors on cases directly related to WTO rules, special research groups have been set up in the intermediate and higher courts to organize relevant judges to study WTO rules, dispute settlement mechanisms and procedures, as well as pertinent international laws and international practices. In addition, the intermediate and higher courts have also established ties with the Shanghai WTO Affairs Consultation Center to provide training programs to the judges. Incessant efforts have been made to explore ways of establishing a judicial regime consistent with WTO rules.
I. The Implementation of Judicial Transparency
Transparency, a basic WTO principle, requires that not only all the judicial interpretations and regulations but also all the procedures and verdicts of trials be made readily available to the public, unless specifically stipulated otherwise in the relevant laws. Since China¡¯s accession to the WTO, the public audit system has been reformed and improved, and now not only Chinese but also foreign nationals can attend an open trial. At the present, except for those cases that the law specifically provides for non-open trials and some of the trials of second instance that are conducted in written forms, all the cases should be put on open trial and everyone at the age of 18 or older is allowed to attend a trial as a bystander upon presentation of a valid identification card or document. For example, Bob Klarkson from Sweden¡¯s Camlas Pans Law Firm was at the trial of a case involving a foreign national in the No. 2 Municipal Intermediate Court. According to incomplete figures, 83 foreign nationals attended the trials of cases involving foreign nationals in the No. 2 Municipal Intermediate Court in the first half of 2004. In Shanghai, unless otherwise prescribed in the law, all the cases of first instance, 50% of criminal cases of second instance, and 80% of civil cases of second instance are to be held open to the public. In addition, everyone can, upon production of his or her valid identification card or document, go to the No. 2 Municipal Intermediate Court to search and read on computer networks court decisions of cases that have been closed. The typical cases serving as a guide for future trials passed by the Trial Committee of the Shanghai Higher People¡¯s Court are published on the Internet. People present at a trial can also put forward their opinions, comments and suggestions on the trial by filling out the Opinion-seeking Form, and the court will compile at regular intervals a summary report on the information collected in this way to help the judges receive public monitoring. To fully safeguard the rights of the parties in action to be informed and to be heard, it has become a regular practice to notify litigating parties through notice, posters or the Internet of all the essential and necessary information such as their rights and obligations, litigation risks, changes in the date of the trial, and reason for the postponement of the trial of civil and business cases. To increase the transparency of the court verdict, on the one hand, the legal basis of the court decision and the facts established during the trial are elaborated in the written judgement; on the other hand, difficult legal jargons used are explained in easier terms. In some cases, different opinions of the panel of judges and clauses of the laws relevant to the case are included in the court verdict. In 2004, court decisions of civil and commerce cases and cases related to intellectual property rights that have taken effect are published on the Internet. Public media such as television, radio, newspapers and magazines have been used to cover important cases so as to enhance the transparency of trials and to expand the ways to receive public supervision. Since 2003, Shanghai¡¯s law courts have published or broadcast more than 3,000 articles or reports, and the clicks on the websites of courts have exceeded 280,000. The management of contract clerks of courts has been strengthened. Explanations of relevant laws during and after the trial have been provided so as to help the parties to the lawsuit better understand the court decision and the legal basis thereof. For example, the Regulation on the Law Explanation at the Trial of Appeal in Written Form issued by the Administrative Court of the No. 2 Municipal Intermediate Court requires that the judges should make clear to the parties to the lawsuit their legal rights and obligations.
Ceaseless efforts have also been made in increasing openness and transparency in the enforcement of judgements. Ways to contact the enforcement judges, rights and obligations, points of attention and enforcement risks in the process of enforcement are expressly written in the notes to judicial enforcement delivered to the parties to a lawsuit. Public hearing and investigation have been held to verify the financial standing and debt paying ability of the parties concerned. All the measures regarding sealing up, freezing, seizing, appraising and auctioning assets should be executed in an open manner. The parties to a lawsuit shall be notified in a timely manner of major matters such as preliminary results of enforcement and the plan of assets distribution. A special column on enforcement has been run on the court websites, publishing some 590 companies or individuals who are attempting to evade financial obligations and using the pressure of public opinions to prevent the evasion of debt obligations. The Suggestions on Further Improving the Transparency of Judgment Enforcement issued by the Shanghai Higher People¡¯s Court stipulates the basic principles, mechanisms and methods, and in particular, the demand to inform the parties concerned of their rights and obligations, thereby ensuring the openness and transparency of enforcement. The Shanghai Higher People¡¯s Court has also specified the format of a series of enforcement-related legal documents. To further strengthen the transparency of enforcement, courts at various levels in Shanghai have paid particular attention to handling requests and enquiry on enforcement made by phones, in letters or in person. As a trial measure, some courts have set aside half a day every week for enforcement judges to receive the parties to a lawsuit. No effort has been spared to ensure that every request and enquiry will be dealt with adequately and in a timely manner. As a result, the rate of complaints regarding the execution of judgement has greatly reduced.
Box 4.1 Five Challenges Posed to the Law Courts Since China¡¯s WTO Accession
1. The speedy advancement in the enactment, amendment and termination of China¡¯s laws and regulations has brought about new demands on the appropriate application of relevant laws and regulations on the part of the courts.
2. With the rapid development of international trade and cooperation after China¡¯s entry into the WTO, the number and the category of cases have grown remarkably, and the cases themselves have become increasingly complex.
3. The implementation of WTO-based rules clashes with the traditions and current situations of China¡¯s legal environment and judicial order.
4. The overall competence of the current contingent of judges in China, compared with the demands on them to handle fairly and efficiently cases involving foreign nationals, leaves much room for improvement.
5. With the ever-deepening adjustment of economic structure and the great changes in the setup of vested interests, the courts will face a tough test to ensure social stability in the years to come.
The WTO places specific and rigid demands on judicial independence, and requires that the collegiate panel or a single judge try a case independently in strict accordance with the law and eliminate all the interference from individuals, administrative organs or any other organizations.
To safeguard judicial equity, Shanghai¡¯s law courts have strengthened the responsibility system of collegiate panel and the dual monitoring and guidance of the panel and the court. On the condition of ensuring the independence of judges and the collegiate panel to exercise the right of adjudication, the supervision and guidance of trials have been strengthened. At the same time, the procedures of hearing a case by the collegiate panel have been elucidated, and the collective responsibility and democratic decision-making through voting among the collegiate panel have been strengthened. For example, during the deliberation of a case, it is required that the presiding judge be the last to voice his or her opinion so as to avoid predisposing the positions of other judges; as for doubtful or complex cases, the legal problems may be submitted for discussion at the joint meeting of chief judges convened by the president of the court, but the judgment should be made independently by the collegiate panel. Aside from deliberation of major, doubtful, complex, or new types of cases, the adjudication committee, the highest body in charge of trials, should strengthen the guidance of trials of major cases, make rectifications according to the supervision procedures, and decide the responsibility of wrong judgments so as to strengthen the monitoring, examination and evaluation of the quality of trials. The trial supervision court, a body responsible for the control of trial quality, has conducted more than 40 quality examinations of various kinds and written over 60 quality analysis reports since 2003. Trial quality review session is held on a quarterly basis in Shanghai¡¯s courts to provide the appraisal of the trial quality regularly. A comprehensive trial quality evaluation mechanism has been established, providing overall, specific and objective assessment of the trial quality by each collegiate panel and by each judge on the basis of the rate of the changes in trials of second instance and re-trials, the ratio of errors in legal documents, and the rate of complaints from litigant parties. In addition, recruiting members from the Municipal Political Consultative Conference and people from other circles in society as the people¡¯s assessors, and engaging the service of members from the Municipal People¡¯s Congress and other distinguished figures as special supervisors, Shanghai¡¯s courts have placed itself under the supervision of the people¡¯s assessors and special supervisors. The people¡¯s assessors will participate in hearing the cases which have profound social impact or which are involved in particular technical areas. To strengthen ties and communication with the people¡¯s assessors and special supervisors, and to ensure a smooth channel for hearing their suggestions and receiving their supervision, joint conferences of the people¡¯s assessors and special supervisors have been held on a regular basis, and the Gazette for the People¡¯s Assessors and Special Supervisors has been compiled and circulated.
As judicial equity is also manifested in completing a trial in the shortest time possible to alleviate the burdens on litigant parties, Shanghai¡¯s courts have taken measures in improving the efficiency of trials by cutting back on the time needed for trials. On the one hand, the mechanism of trial process management has been introduced. Through a 3-month in-depth research, a computerized process management system covering the time from the filing and the acceptance of a case to the trial and the closing of a case has been worked out, and the approval procedures for extending the period of a trial have been more rigorously enforced. As a result, for the period from January, 2003 to August, 2004, the average time to complete a trial has been reduced by 9 days, and the number of trials that have to be extended in time has been cut by 39% over the same previous period. On the other hand, different cases have, based on their degree of complexity, been sorted into different groups, and while ensuring the quality of their trials, some of the judicial proceedings and court documents have been simplified for simple and petty cases to increase the efficiency of trials. In September, 2003, petty sessions were set up for ordinary civil and business disputes, reducing the period of trial to 10 days.
In addition, to ensure judicial equity, the judgment execution mechanism has been improved and strengthened, giving particular attention to petition for rehearing in protest of the judgment of execution. All the execution forces have been mobilized to conduct, in good time, concentrated judgment execution campaigns to produce good results of enforcement. For example, in the all-out enforcement campaign in March, 2004, the court decisions of 1,447 cases involving 549,000,000 Yuan RMB were executed within 10 days by the Shanghai Higher People¡¯s Courts and the courts below. To explore effective ways of execution, Enforceable Assets Investigation Department was set up to bear down on those who willfully evade their debt obligations according to the court rulings. Since 2003, the department has initiated and investigated over 20 cases, discovering 120,000,000 Yuan RMB that have been hidden or transferred, and redeeming 70,000,000 Yuan RMB. Those who have refused to surrender themselves to court rulings to fulfill their obligations have been handed over to the public security department for further investigation, two of whom have been prosecuted and given criminal sanctions. Other measures that have been adopted to ensure judicial equity include the issuance of investigation permit to the attorneys of applicants to collect information of enforceable assets and the separation of the judgment power and the enforcement power to strengthen the internal supervision mechanism.
The mechanism of separating the judgment power from the enforcement power is based mainly on the public hearing of execution items in judgment enforcement and the review of reconsideration. In the Proposed Suggestions on Matters Regarding Judgment Enforcement issued by the Shanghai Higher People¡¯s Court, the power of judgment and the power of enforcement, the procedures of case remittance and matters to be decided in execution are defined. The courts at various levels have, in accordance with the Suggestions on Strengthening the Construction of Court Enforcement Forces in Shanghai, reinforced supervision procedures and provided training programs to build an effective contingent of execution personnel.
III. Strengthening the Judicial Protection of Intellectual Property Rights
In strict accordance with China¡¯s laws, regulations and judicial interpretations, Shanghai¡¯s law courts have taken adequate measures to afford equal judicial protection of intellectual property rights to both Chinese and foreign companies and individuals. Since China¡¯s WTO accession, the areas covered by judicial protection of intellectual property rights have been expanded from trademarks, patents and copyrights to computer software, domain names, and clashes between trademarks and corporate names.
Achievements that have been made in 2004 regarding judicial protection of intellectual property rights include:
1. Steadfast efforts have been made to disclose relevant information to increase judicial transparency. Great strides have continued to be made by the law courts in Shanghai in disclosing information regarding intellectual property rights protection. A special conference was convened by the Shanghai Higher People¡¯s Court on August 26, 2004, to brief officials from consulates of 22 countries in the city on the protection of intellectual property rights over the past ten years. Since October, 2004, all court decisions on cases involving intellectual property rights have been posted on the Internet for reference of the general public. In addition, some courts have tried to disclose differing opinions among the panel of judges in the judgment documents.
2. Adequate legal measures have been adopted to reinforce the protection of intellectual property rights. In accordance with the judicial interpretations issued by the Supreme People¡¯s Court on the newly instituted legal measures such as injunction prior to litigation, perpetuation of evidence prior to litigation and legal compensation. As of August, 2004, law courts in Shanghai have, according to the relevant laws, issued injunction prior to litigation in 7 cases, appealed to perpetuation of evidence in 6 cases, and decided on maximum prescribed penalty of 500,000 Yuan RMB in 5 cases regarding intellectual property rights and involving foreign nationals. All these have severely punished the infringement upon intellectual property rights and protected the lawful rights and interests of the foreign holders of intellectual property rights. To improve the litigation procedures, the courts have arranged for the parties in action to exchange evidence prior to the litigation so that interrogation and argument could be centered on key points of disputes in the trial, thereby improving the quality and efficiency of the trial. Some grassroots courts have come up with new ways to hear cases of intellectual property rights; the Intellectual Property Rights Court (currently the No. 3 Civil Court) shall try all the civil, criminal and administrative cases involving intellectual property rights.
3. A better regiment of judges of intellectual property rights have been built and experts have been mobilized to provide counseling services. At the present, there are 35 intellectual property rights judges in Shanghai¡¯s courts at various levels, all of whom have a bachelor¡¯s degree or above. Among them, 2 judges have doctor¡¯s degrees and 17 have master¡¯s degrees, accounting for 54.3% of all the intellectual property rights judges. Two judges have received master¡¯s degrees in law in the United States or Great Britain; 6 have academic degrees or backgrounds in Chinese, physics, mechanics, communication engineering, international trade, and applied electronic engineering, accounting for 17.1%. The Shanghai Higher People¡¯s Court hosts intellectual property rights training programs annually for judges, and sends 14 judges abroad for further study every year. In addition, a total of 15 experts on intellectual property rights have been recruited as consultancy advisors over the years.
IV. The Improvement of Administrative Litigation Regime in Building a Rule-based Government
In administrative litigation, a proper balance should be kept between legal results and social results as well as between equity, efficiency and results. In the trial of administrative cases, basic-level and intermediate courts have instituted a corresponding mechanism to try to solve the administrative disputes, to give due attention to both quality and impact of the trial, and to maintain social stability and harmony. At the present, the areas that come under administrative litigation have been expanded from urban construction, public security, industry and commerce to foreign trade, judicial administration and real estate; at the same time, administrative litigation has evolved from the adjustment of domestic relations between private individuals, legal entities and administrative organs to the important function of international disputes settlement. The courts at various levels should bear down hard upon offenders against the law who seriously disrupt the order of market economy to ensure national economic security and upon government officials and employees who have stooped to embezzlement, bribery and favoritism to safeguard the smooth functioning of economic governance.
Box 4.2 Shanghai¡¯s Law Courts Have Strengthened Intellectual Property Rights Protection
The number of cases involving infringement upon intellectual property rights that have been filed to and closed by Shanghai courts has been growing at 10% respectively every year since China joined the WTO. The courts at various levels in Shanghai have intensified intellectual property rights protection. From January to September in 2004 alone, the courts have accepted 499 intellectual property rights cases of first instance, and completed the trial of 487 cases.
Using new judicial protection measures instituted after China¡¯s WTO accession, Shanghai courts have protected the lawful rights and interests of holders of intellectual property rights in a timely and effective way. The degree of protection against intellectual property rights infringement is now up to the WTO standards. For example, a final judgment has recently been awarded in a case in which a French firm has charged three Shanghai companies of trademark infringement. Although it was difficult for the French firm to establish in court the exact amount of gains made by the accused companies through the unlawful use of its trademark, the court has, based on legally prescribed penalty and the degree and the extent of the alleged infringement, ruled that the three defendants stop infringement and pay to the French firm a total of 500,000 Yuan RMB in compensation.