China has a new Civil Procedure Law, which comes into force on 1 January 2024.
This new law has provisions that gives jurisdiction to the Chinese courts over many international cases. Yes, this was already a trend in China's jurisprudence: think about the OPPO/SHARP and the OPPO/Nokia cases.
However, with the new law coming into effect on January 1, 2024, we now know that it is the aim of China to claim and obtain jurisdiction over certain cases.
In this article, we will explain in which cases China will do this and will look at what this means for international companies. I.e. what to watch out for.
Chinese jurisdiction if there is a proper connection to China
The new Articles 274 and 278 of China Civil Procedure Law provide, for any case with proper connection to China, to allow for a Chinese court to exercise jurisdiction over.
The Supreme People's Court already applied this principle. Examples are the OPPO/NOKIA cand the OPPO/Sharp cases. The fact that it sees on any proper connection to China, would mean that it could be easy for Chinese courts to claim jurisdiction over international matters.
Furthermore, international companies need to be aware, as not failing to raise a jurisdictional objection to a Chinese court and to respond to a Chinese court, means that the Chinese court will have jurisdiction.
Chinese jurisdiction even if foreign case already has started
The new articles 280, 281 and 284 now allow Chinese courts to exercise jurisdiction over cases that already have been filed first in a foreign court.
This can be the case if it concerns the sovereignty, safety or public interest of China. In case a foreign court is unable to take on the case or does not conclude this within a reasonable time period, the China court can take over jurisdiction.
Service of proceedings possible to foreign legal representative visiting China
The new article 283 China Civil Procedure Law now makes it easier for China to service of proceedings to a foreign defendant can be done by delivering of the litigation documents to the legal representative of the foreign company when he or she travels to China.
This means that international companies need to be careful and mindful about whether their legal representative should travel to China.
Also, process can be served to the WFOE, representative office, branch office or business agent authorized to receive service of process established by the party to be served in China.
In a nutshell
With the new Civil Procedure Law coming into force, it seems that China will more and more exercise jurisdiction over cases with a proper connection to China.
At the same time, it is expected to see China do this when it is about cases close to China's sovereignty, safety or public interest. It would be interesting to keep an eye on the meaning of especially public interest in the future, and how Chinese courts take over jurisdiction based upon that, and on what any proper connection would actually mean in practice.
We will keep you informed.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
