November, 2023 - PRC amends Civil Procedure Law: effect on jurisdiction and service abroad

China recently amended its Civil Procedure Law (“CPL”), which will come into force from 1st January, 2024. Among the amendments, there are several issues that may impact on international shipping cases as follows:

I. Chinese courts’ jurisdiction to foreign related cases (Article 276)

Under PRC law, if the defendant is not Chinese resident, the claimant will only be able to commence legal proceedings before the Chinese court in limited, specified situations. Prior to the amendment to the CPL, the Chinese court would only exercise jurisdiction if one of the following falls within Chinese territory:

1. The place where the underlying contract is signed;
    
2. The place where the underlying contract is performed;
    
3. The location of the subject matter of the dispute;
    
4.  The location of any discernable property of the defendant;
    
5.  The place where the tortious act occurred; or
    
6.  The domicile of any representative office of the defendant.

The recent amendment to the CPL introduces a new provision that allows the Chinese court to exercise jurisdiction over cases where the disputes have “other proper connections” with China. The meaning of “other proper connections” is quite vague but does leave some room for the parties to bring proceedings on additional grounds to the previous limited provisions.

The new amendments also allow parties to agree in writing that the Chinese court has jurisdiction in foreign related matters (Article 277). It appears that such an agreement would not be restricted to disputes that have a real connection with China.

We wait to see if the Supreme People’s Court of China will issue new judicial interpretation to provide some explanation and guidance in respect of  these provisions. 

II. More options for service abroad (Article 283)

The amendment to the CPL also introduces some new methods of service abroad when the defendant is not Chinese resident. The new methods include:

1. Service on the agent ad litem as appointed by the person being served in the relevant case. This does not require that the agent ad litem be expressly authorised to accept service;
    
2. Service on the wholly-owned subsidiary, representative office, branch in China, or its business agent who is authorised to accept service in China;
    
3. If the person being served is a natural person who acts as legal representative or person in charge for a company/institution established in China, and that company/institution is listed as co-defendant in the case, service can be made to the said company/institution;
    
4. If it is a company or institution being served, and such company/institution has its legal representation or person in charge within China, the service can be made to its legal representative or person in charge;
    
5. Serving by electronic method where the delivery can be verified, unless such service method is prohibited by the local law of where the defendant is located; and
    
6. Other service method agreed by the person/entity being served.

If above methods cannot be used, service will be made by public announcement. The new amendment has now shortened the announcement period from three months to sixty days, after which the service will be treated as have been made. These new changes, especially the allowance of serving the wholly-owned subsidiary and electronic method, will substantially increase the efficiency of process service on a  defendant outside China, and shorten the time taken by PRC court proceeding.

As always, if Members have any questions in relation to the above issues, they are invited to contact the Club for further information.