A new mea­sure to aid lit­i­ga­tion

China Daily (Canada) - - SHANGHAI - By ZHOU WENTING in Shang­hai

zhouwent­ing@chi­nadaily. com.cn

A Shang­hai court has sug­gested that com­pa­nies reg­is­tered in the Shang­hai Free Trade Zone should in­clude in their busi­ness con­tracts the ad­dress that lit­i­ga­tion doc­u­ments re­gard­ing con­trac­tual dis­putes should be sent to in or­der to en­sure proper de­liv­ery and re­ceipt.

This will be an ef­fec­tive mea­sure to el­e­vate the ef­fi­ciency of the ju­di­cial work of the court and safe­guard the rights of the par­ties in­volved in the dis­putes, said the Shang­hai Pudong New Area Peo­ple’s Court, which had re­leased a doc­u­ment per­tain­ing to this sug­ges­tion on Sept 27, two days ahead of the third an­niver­sary of the found­ing of the Shang­hai FTZ.

Cao Kerui, direc­tor of the FTZ tri­bunal un­der the Pudong court, said that the prob­lem of com­pa­nies not re­ceiv­ing lit­i­ga­tion doc­u­ments is more pro­nounced in the fi­nan­cial zone as there are many busi­nesses that are reg­is­tered in­side the FTZ but op­er­ate out­side.

“The other fre­quently en­coun­tered sit­u­a­tion is that one com­pany trades with an­other that is an over­seas en­tity. Once the ad­dress of the lat­ter is changed, it’s hard for it to re­ceive the lit­i­ga­tion doc­u­ment,” Cao said.

Sta­tis­tics from the court showed that, in the past three years, more than 20 per­cent of the lit­i­ga­tion doc­u­ments for more than 4,700 civil and com­mer­cial law­suits that in­volved one or both par­ties based in the FTZ were not re­ceived prop­erly by the de­fen­dant, and num­bers are ris­ing ev­ery year.

“Un­der such cir­cum­stances, it will take the court an­other two to three months to in­form the de­fen­dant via other meth­ods, in­clud­ing past­ing a no­ti­fi­ca­tion at the no­tice board on the door of the court, at the res­i­dence of the le­gal rep­re­sen­ta­tive of the com­pany and in the news­pa­per. This means the plain­tiff has to wait for a longer pe­riod of time be­fore he can even at­tempt to claim money,” Cao said.

Many com­pa­nies have ap­plauded the court’s sug­ges­tion, say­ing it will shorten the du­ra­tion of the process and present a bet­ter im­age of the Chi­nese courts and the le­gal busi­ness en­vi­ron­ment in China.

Far East In­ter­na­tional Leas­ing, a com­pany spe­cial­iz­ing in fi­nance leas­ing, was one of the com­pa­nies in the FTZ that un­der­went a pi­lot trial for this prac­tice since the be­gin­ning of last year.

Wang Wei­jun, man­ager of the as­set man­age­ment depart­ment of the com­pany, said that the du­ra­tion of the process was re­duced from 232 days to 145 days af­ter the ad­dress was in­cluded in the con­tract.

Liu Yun, man­ager of the le­gal depart­ment at the FTZ-based In­gram Mi­cro, a multi­na­tional IT firm from the United States, could also at­test to the ef­fec­tive­ness of this prac­tice, say­ing that the time re­quired to re­ceive pay­ments from their clients has been re­duced.

“The prac­tice will urge those who ma­li­ciously post­pone pay­ment to pay ear­lier and help com­pa­nies main­tain a bet­ter cash flow,” she said.

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