i Overview

The jurisdiction of China shares a structural similarity to the continental law system and has begun to adopt certain principles of the common law system in recent years.

There are three main types of dispute resolution available and frequently used in China: litigation, arbitration and conciliation. Although the use of conciliation is increasing, the courts and arbitration commissions settle the majority of disputes in China.

With respect to litigation, the Civil Procedure Law governs civil procedure in China. From time to time, the Supreme Court circulates judicial interpretations of the Civil Procedure Law, which also constitute rules governing civil procedure in China.

With respect to arbitration, the Arbitration Law, judicial interpretations of the Supreme Court and bilateral treaties, as well as multilateral conventions, govern arbitration in China.

There are no specific laws governing conciliation, but the general principles of conciliation can be found in the Civil Procedure Law and the Arbitration Law. Additionally, the Supreme Court has promulgated Provisions of the Supreme People’s Court on Several Issues concerning the Civil Mediation Work of the People’s Courts in 2004, which was amended in 2008.

ii Overview of court system

The Chinese civil court system comprises four levels of courts: district courts, intermediate courts, high courts and the Supreme Court.

Cases are normally heard by a court of first instance and may be appealed to a second instance court, with the second instance court’s decision being final and taking effect. Usually, the district court is the first instance court for a civil case. However, if the case’s amount in controversy is large, the case has profound impacts, or under other circumstances that are explicitly provided by law or judicial interpretations, the intermediate court or even the higher court may be the first instance court.

In addition to the normal courts, the court system includes a number of specialist courts or tribunals as follows:

  • a the Maritime Court, dealing with disputes arising from transportation by sea;
  • b the Military Court, dealing with disputes relating to the military;
  • c tribunals dealing with intellectual property disputes established within the intermediate court, higher court and certain district courts; and
  • d the Circuit Courts, standing trial organs of the Supreme Court, which constitute a part of the Supreme Court.


The past year has witnessed several developments in Chinese legislation, mainly focusing on foreign investment laws, guarantee, property preservation and property laws.

Legislative amendments are detailed below.

i The Supreme Court’s Regulations on Several Issues regarding Hearing Disputes Related to Independent Guarantee

On 22 November 2016, the Supreme Court publicised Regulations on Several Issues regarding Hearing disputes related to Independent Guarantee (the Independent Guarantee Regulations), entering into effect on 1 December 2016, which officially recognise the validity of both domestic and foreign-related independent guarantees.

The Independent Guarantee Regulations explicitly define an ‘independent guarantee’ as a written commitment issued by a bank or a financial institution to the beneficiary, which agrees to pay a specific amount or pay funds within the maximum amount to the beneficiary when presented with a request for payment, as well as bills in conformity with terms and conditions in the independent guarantee.

In addition, the Independent Guarantee Regulations stipulate terms for the courts to identify an independent guarantee in judicial practice, such as ‘on demand’, ‘applicable to URDG758’ and ‘independent from underlying transactions’.

Once the guarantee is recognised as an independent guarantee, the issuer of the independent guarantee cannot refuse to perform the obligations of the guarantee based on issues arising out of or related to the underlying transaction or application for the independent guarantee, which is different from a guarantee under the Security Law.

The Independent Guarantee Regulations also stipulate other important issues, such as guidelines for recognising conformity of bills, milestones indicating termination of obligations under an independent guarantee, recognition of independent guarantee cheating, and mechanisms of the court’s order of termination of payment according to independent guarantees.

ii The Supreme Court’s Regulations on Several Issues regarding Handling of Property Preservation

The Regulations on Several Issues regarding Handling of Property Preservation (the Property Preservation Regulations) were issued by the Supreme People’s Court on 7 November 2016, and entered into effect on 1 December 2016.

The Property Preservation Regulations provide further guidelines for the court to handle property preservation cases, mainly covering the following aspects:

  • a The guarantee to be provided when applying for property preservation shall not exceed 30 per cent of the value of the property to be preserved. If the property preservation application is filed prior to the action, the percentage of guarantee shall be 100 per cent.
  • b A third party may provide a guarantee for property preservation, which shall be subject to the court’s review and approval. In addition, a new form of guarantee, namely an insurance company insurance policy for property preservation liabilities, could be accepted by the court by way of guarantee subject to the court’s approval.
  • c Under certain circumstances enumerated in the Property Preservation Regulations, such as actions filed by vulnerable groups, the applicant for property preservation may be exempted from obligations of providing a guarantee subject to the approval of the court.
  • d If the court has established connections with networks of banks or Registration of Immoveable Property, the applicant may file an application with the court for research of property and take preservation measures over the property found.
iii Judicial Interpretations (I) on Several Issues regarding Implementation of Property Law

The Judicial Interpretations (I) on Several Issues regarding Implementation of Property Law (the Property Law Interpretations) entered into effect on 1 March 2016, aiming to further clarify several issues following promulgation of the Property Law, which mainly covers the following perspectives:

  • a According to the Property Law, the establishment, transfer and termination of title of immoveable property shall be subject to the registration procedures of relevant registration authorities. However, if the relevant parties submit disputes over the title of property as a civil action, the disputes shall be accepted by the court, which shall make decisions based on legal relationships underlying the title registration.
  • b The Property Law Interpretations explicitly clarify the scope of protections granted by pre-registration by stipulating that, after pre-registration following entry into immoveable property-related contracts, without the consent of the party applying for pre-registration, transfer of title of or setting other rights in rem, such as easement and mortgage on the property, shall be recognised as invalid.
  • c In transactions involving special property, such as aircrafts, ships and vehicles, the party failing to go through relevant registration procedures, even if such a party has paid full consideration and taken possession of the property, cannot be recognised or protected as a bona fide purchaser.
  • d The Property Law Interpretations also provide for other important issues such as narrowing the scope of judicial or arbitral decisions, which could directly cause transfer of the property title; protection of preemptive right of co-owners through shares; and important bona fide issues such as the standard for identification of ‘goodwill’ and ‘reasonable prices’.
iv Judicial Interpretations (III) on Several Issues regarding Implementation of Insurance Law

The Supreme Court issued Judicial Interpretations (III) on Several Issues regarding Implementation of Insurance Law, which entered into effect on 1 December 2015, mainly concerns life insurance and provides for several important issues regarding life insurance contracts:

  • a For the purpose of protection of the insured person in a life insurance contract, when hearing relevant disputes, the court shall take the initiative to find out (1) whether the policyholder is an interested party in the life insurance contract; and (2) whether the insured person agrees with the terms and conditions in the life insurance contract, especially the amount of compensation under circumstances where a precondition for payment of compensation is death of the insured person.
  • b After payment of outstanding insurance expenses, the policyholder is entitled to apply for recovery of validity of a life insurance contract terminated due to failure of the policyholder to pay insurance expenses. Accordingly, the insurer shall grant its consent unless the insured person has become significantly vulnerable during the suspension of the life insurance contract’s validity.
  • c The beneficiary shall be entitled to assign all or a part of his or her claims for compensation to third parties after the accident, unless stipulated otherwise in the insurance contract or by-laws.


i Overview of court procedure

The Civil Procedure Law governs court procedures for civil litigation in China. The Supreme Court has also circulated judicial interpretations of the Civil Procedure Law, which also constitute rules governing Chinese civil procedure.

ii Procedures and time frames

For simple civil cases where the facts are evident, the rights and obligations are defined, and the disputes are minor, the district court may decide to apply a summary procedure in which a single judge may resolve the dispute. Where the summary procedure applies, the court should make its first instance judgment within three months of the filing of the case.

Most cases will be heard by courts following normal procedure. The main stages of normal civil law proceedings before Chinese courts are as follows:

  • a the claimant submits a statement of claim and the main evidence to the court;
  • b the court reviews the statement of claim and main evidence and shall accept the case within seven days;
  • c the court serves the statement of claim to the defendant;
  • d the defendant submits a statement of defence and the main evidence to the court (if any);
  • e the exchange of evidence such as witness statements, expert statements, correspondence, and other evidence;
  • f the oral hearing; and
  • g the rendering of the judgment.

This outline applies to the first instance trial. The stages of the second or appellate trial procedure are similar to the first instance trial.

For domestic cases, there is a six-month time limit for the court’s decision in first instance trials and a three-month time limit for second instance trials. There is no time limit for cases involving foreign elements.

In urgent circumstances, a claimant can apply to the court for pre-action orders or rulings against the defendant; for example, an attachment order to protect evidence or property.

When a party intends to apply for a pre-action attachment to protect property, it must provide security to the court. Within 48 hours, the court shall decide whether to accept the application. If the court accepts the application, the applicant must institute an action within 30 days, otherwise the court will cancel the pre-action attachment.

iii Class actions

Current Chinese civil procedure does not permit class actions; however, representative actions, which are similar to class actions to a certain extent, are permitted. In a representative action, the interested party must register with the court. The orders rendered by the court in a representative action are binding on all interested parties that have registered with the court and can also apply to claimants that have not registered with the court but who separately institute an action within the limitation period. The representative action is relatively uncommon and rarely practised by the court, although the Civil Procedure Law allows it.

iv Representation in proceedings

Any person who has full capacity for civil acts (above 18 years old and without any mental disability) may begin and carry on civil proceedings without professional representation. In addition, a litigant may appoint one or two persons to act as an agent in the civil proceedings. The agent must be a lawyer, a close relative or employee of the litigant, or other persons specifically permitted by procedural laws. In cases where the litigant is a legal entity rather than a natural person, the legal representative of the legal entity has the right to represent the entity without any further authorisation by the entity.

v Service out of the jurisdiction

A court may serve documents on a party without a domicile in China in the following ways:

  • a as set out in international treaties concluded by or acceded to by both China and the country where the recipient of service resides;
  • b through diplomatic channels;
  • c by entrusting the embassy or consulate of China stationed in the country where the recipient of service resides;
  • d service on the agent ad litem appointed by the person to be served and authorised to accept service on his or her behalf;
  • e service on the party’s representative office or the branch or business agent authorised to accept service, established within the territory of China;
  • f by post, if this is permitted by the law of the country where the recipient of service resides; if the acknowledgment of service is not returned within six months from the date of posting, but various circumstances justify the assumption that the documents have been served, the documents shall be deemed to have been served on the date of expiry of the time limit; or
  • g by public announcement, if none of the above-mentioned methods can be employed. The documents shall be deemed to have been served when six months have elapsed since the date of the public announcement.

The rules relating to service out of the jurisdiction apply to both natural and non-natural persons.

vi Enforcement of foreign judgments

China only has a few arrangements with other jurisdictions for the enforcement of foreign judgments. For example, China has an arrangement with the Hong Kong Special Administration Region for the reciprocal enforcement of judgments. This arrangement is limited to judgments in cases in which the parties have agreed on the jurisdiction when they commenced the proceedings. The parties must apply to the court to recognise and enforce the judgment. Additionally, in 2015, the Supreme Court issued Regulations on Recognition and Enforcement of Judgments rendered in Taiwan.

Currently China has bilateral treaties regarding judicial assistance in civil or commercial procedures with 37 different jurisdictions (excluding Hong Kong, Macao and Taiwan). Thirty-three of these jurisdictions have arrangements for reciprocal recognition of judgments with China: Algeria, Arabia, Argentina, Belarus, Bosnia and Herzegovina, Brazil, Bulgaria, Cuba, Cyprus, France, Greece, Hungary, Italy, Kazakhstan, Kuwait, Kyrgyzstan, Laos, Lithuania, Mongolia, Morocco, North Korea, Peru, Poland, Romania, Russia, Saudi Arabia, Spain, Tajikistan, Tunisia, Turkey, Ukraine, Uzbekistan and Vietnam.

vii Assistance to foreign courts

China has a number of treaties with other jurisdictions regarding judicial cooperation, which include the service of court documents, cooperation between the courts in different jurisdictions, etc. For cases involving these countries, service of documents must be effected as dictated by the relevant treaty. These jurisdictions are Algeria, Arabia, Argentina, Belarus, Belgium, Bosnia and Herzegovina, Brazil, Bulgaria, Cuba, Cyprus, France, Greece, Hungary, Italy, Kazakhstan, Kuwait, Kyrgyzstan, Laos, Lithuania, Mongolia, Morocco, North Korea, Peru, Poland, Romania, Russia, Saudi Arabia, Singapore, South Korea, Spain, Tajikistan, Thailand, Tunisia, Turkey, Ukraine, Uzbekistan and Vietnam.

China is also a signatory state of the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters of 1965 (the Hague Service Convention). If the jurisdiction from which the proceedings emanate is also a party to the Hague Service Convention, service of documents from the jurisdiction can be effected in China accordingly. Generally, the Hague Service Convention provides that the service of foreign documents in another Member State must be effected through a specially designed body or official in that other state, or through diplomatic or consular channels.

If the relevant jurisdiction does not have a treaty with China and is not a party to the Hague Service Convention, service in China must be carried out through diplomatic channels.

viii Access to court files

Under the Civil Procedure Law and the relevant judicial interpretations of the Supreme Court, civil cases will be heard publicly, except for those cases that involve state secrets or personal privacy or as is otherwise provided by law. Members of the public are entitled to be present at trial and can obtain information about the trial (such as litigants, time, venue, and cause of action) from the website of the relevant court or bulletin boards set up at the relevant court.

The amended Civil Procedure Law stipulates that the courts’ judgments and orders be made accessible to the public. According to the Interpretation of the Supreme Court regarding Application of Civil Procedure Law, judgments and rulings taking effect shall be published on the internet unless these judgments and rulings involve national secrets, trade secrets or personal privacy. However, the general public will normally not have access to judgments or rulings that have not been published on the internet. Currently, court filings, such as pleadings and evidence, are only available to the litigants involved in such cases and their respective lawyers and representatives.


i Conflicts of interest and Chinese walls

According to the Lawyers’ Law, a law firm must establish a system to check for conflicts of interest and must complete a conflict of interests search before it is able to formally take work from a client. A lawyer is strictly forbidden from representing both parties in a case, or representing a client in a matter that involves any conflict of interest with the lawyer or his or her close relatives. Violations of these requirements may be subject to disciplinary action including but not limited to a fine, a warning from local government authorities and the cessation of practice.

A law firm is also required to establish a well-managed internal control system and secrecy system. Lawyers must keep confidential any information involving state secrets, commercial secrets and private information, as well as information that the client or other people do not want disclosed. Generally, a law firm shall have internal arrangements so as to ensure confidential information relating to a particular case is not accessible to other lawyers outside the working group.

ii Money laundering, proceeds of crime and funds related to terrorism

Currently, China’s relevant anti-money laundering laws and regulations only include specific responsibilities and obligations for financial institutions related to the prevention and supervision of money laundering of the proceeds of crime and funds related to terrorism.

There is a provision in the Anti-Money Laundering Law that stipulates as a general principle that certain non-financial institutions have responsibilities related to anti-money laundering. However, specific rules related to these non-financial institutions’ responsibilities are awaiting further formulation by the State Council.

In practice, laws firms tend to be considered one of the types of non-financial institutions with special responsibilities regarding anti-money laundering. Lawyers and law firms have an obligation to conduct reasonable checks and to be generally aware of this issue when providing services to clients.

iii Data protection

The Supreme People’s Court recently issued the Provisions on Publication of Judicial Opinions of the People’s Courts on the Internet, requiring courts to publish their judgments and orders on the internet in a timely manner, except those concerning state secrets, personal privacy, minors’ criminal conduct, and those closed through mediation. The judgments and orders published should generally contain the litigating parties’ names and other information, but should delete people’s contact information, ID numbers, bank account numbers, health and other personal information, minors’ relevant information, organisations’ bank account numbers, trade secret information, etc.

The amended Law of Consumer Rights Protection may also impose data protection responsibilities on lawyers. Article 29 of the Law requires that a business operator must disclose the purpose and scope of any collection and use of consumers’ personal information and must obtain consumers’ consent. Article 29 also prohibits a business operator from disclosing, selling or unlawfully providing to others the personal information of a consumer. In practice, a lawyer is bound by the legal service agreement with a client regarding disclosure and use of the client’s relevant information and data, and must obey applicable data protection laws.


i Privilege

There is no privilege or equivalent concept in China’s legal system.

ii Production of documents

According to the Civil Procedure Law and the relevant judicial interpretations of the Supreme Court, the burden of proof lies with the party that brings the claim, and the other party is not obliged to disclose any relevant evidence (including documents) to the claiming party or to the court. Therefore, during litigation the parties may decide at their own discretion what evidence they provide to the court.

However, if it is shown that one party possesses evidence that may be adverse to its interests, and refuses to provide the evidence without good reason, the other party may apply to the court to order the possessor to present that evidence. The court may require the presence of the evidence if it considers the application to be reasonable.


i Overview of alternatives to litigation

There are two main methods of alternative dispute resolution used in China: arbitration and conciliation.

Arbitration is widely used to solve domestic and international commercial disputes in China. Because China is a signatory to the New York Convention (see below), arbitration awards are generally easier than court judgments to enforce in other jurisdictions, making arbitration most suitable for parties with international commercial disputes.

Conciliation has a deep cultural background in China, and is also widely used to solve disputes. Conciliation has a variety of forms and can be conducted by the judge during the litigation, the arbitrator during the arbitration, or by a conciliation organisation.

ii Arbitration

In China, the rules governing arbitration include the Civil Procedure Law, the Arbitration Law and judicial interpretations of the Supreme Court. According to these rules, to initiate arbitration the parties to the dispute must have a valid arbitration agreement stating the intention of both parties to apply for arbitration, the dispute matter to be arbitrated and the selected arbitration commission. A court will not accept a suit brought by a party if the other party proves the existence of an arbitration agreement between them.

The major arbitration centre is the China International Economic and Trade Arbitration Commission (CIETAC). Besides CIETAC, there are also numerous local arbitration centres in various provinces, which also have a high level of experience in dispute resolution.

The arbitration award is final. After an award is made, neither the arbitration commission nor the courts shall accept a reapplication of the suit concerning the same dispute by any of the parties, unless the arbitral award is cancelled or the court orders that the award not be enforced. A party may appeal to the courts to cancel a domestic arbitral award if it can prove the existence of the following circumstances:

  • a lack of an arbitration agreement;
  • b matters being arbitrated are beyond the scope of an arbitration agreement or are restricted from arbitration;
  • c violation in the composition of the arbitration tribunal or the arbitration proceedings;
  • d forgery in the evidence on which the award is based;
  • e concealment of evidence by the other party that has an impact on the impartiality of the ruling; or
  • f misconduct of the arbitrators, including acceptance of bribes, favouritism or malpractice during the arbitration.

A party may appeal to the courts to cancel a foreign arbitral award rendered by a domestic arbitration institution if it can prove the existence of the following circumstances:

  • a lack of an arbitration agreement;
  • b the respondent was not requested to appoint an arbitrator or to take part in the proceedings, or the respondent was unable to state its opinions for reasons not attributable to the respondent;
  • c violation in the composition of the arbitration tribunal or the arbitration proceedings;
  • d matters being arbitrated are beyond the scope of an arbitration agreement or are restricted from arbitration; or
  • e enforcement of the award is in violation of the public interest.

For foreign arbitral awards, a party may only petition the court not to enforce the award on the basis of the Civil Procedure Law and the New York Convention.

Enforcement of foreign arbitral awards

China is a signatory of the New York Convention and, as a result, an arbitration award issued in another Member State can be enforced in China.

To enforce the award, a party shall apply to the intermediate court where the parties or properties concerned are located for examination of the award. For a foreign arbitral award, normally the court will only examine whether there was any procedural irregularity and will not address the facts of the case and the application of law and regulation by the foreign tribunal. If the intermediate court takes the view that it will not recognise and enforce the award, it shall report to the provincial higher court and Supreme Court, and obtain the approval of the Supreme Court and the higher court for this view.

iii Mediation

The Chinese language makes no distinction between conciliation and mediation; both concepts are covered by the word tiaojie.

Modern business mediation in China normally refers to conciliation by a commercial organisation. Conciliation can be conducted by conciliation organisations such as the China Council for Promotion of International Trade (CCPIT) Conciliation Centre and some small conciliation centres in specific industry areas. However, modern business mediation is still uncommon in China.

The CCPIT Conciliation Centre is a permanent conciliation institution and has over 40 sub-council conciliation centres, which have been set up in provinces, municipalities and autonomous regions throughout the country, constituting a nationwide conciliation network. The CCPIT Conciliation Centre has established uniform conciliation rules governing conciliation procedures.

To commence a conciliation procedure with the CCPIT Conciliation Centre, the parties to the dispute must first agree to conciliation. A list of conciliators is available and the parties to the dispute can name any of them to deal with their case. During the conciliation proceedings the conciliator will, having ascertained the facts, conduct the conciliation in accordance with the law and the contractual agreement, and in light of international practice and the principle of impartiality, urging the parties involved to reconcile with each other in the spirit of mutual understanding and accommodation. If the parties reach a conciliation agreement after the conciliation proceedings, an arbitration clause can be incorporated into their agreement stating that the conciliation agreement is legally binding and that either party may resort to an arbitration commission for arbitration.

iv Other forms of alternative dispute resolution

In China, there is a special form of conciliation conducted by the People’s Conciliation Committee. The Committee is a social organisation and is operated under the guidance of the local government and local court. It aims to solve trivial civil disputes before they reach the court so as to reduce the judicial burden. Such disputes mainly arise from marriage, family and neighbours’ relationships. Except for requests for affirmation of an identification, adoption or marriage relationship, which will not be heard by Chinese courts, each party has the right to ask the court to enforce an affirmed agreement reached in conciliation.


At the Fourth Plenum of the 18th Party Congress in October 2014, China’s leadership accepted ‘rule of law’ as a basis for governmental and judicial functions, including significant reform of the judiciary. Some progress has been made in the following areas:

  • a the higher people’s courts, instead of local government, will oversee the personnel and property of the two levels of lower courts;
  • b some courts may be established that are separate from administrative regions, to avoid the interference of local government with judicial power; and
  • c individual judges have been given more powers to decide their own cases, instead of reporting to the court judicial committee for a decision.

With these new judicial reform measures, we believe that the operations of Chinese courts will become more independent and effective.


1 Xiao Wei is founding partner, Zou Weining is a partner and Wang Lihua is an associate at Jun He Law Offices. The authors would like to thank Ye Li, Zou Delong, and all associates at the firm for their contributions to this chapter.