Civil Appeals and other Means of Recourse Against Judgments in China: a Critical Review of the Procedural Issues

Peter C.H. Chan, Solicitor, Hong Kong; Solicitor, England & Wales, Teaching Fellow, School of Law, City University of Hong Kong, Hong Kong, China

1.   Introduction.

The Constitution of the People’s Republic of China (henceforth, PRC Constitution) does not entrench the right to seek remedy through civil appeals or other means of recourse against judgments. Only broad concepts relating to civil justice are stipulated in the constitution. For instance, under Articles 126 and 127 of the PRC Constitution, the court should exercise judicial power independently and the higher courts should supervise the work of lower courts. Appellate procedures are governed by the Civil Procedure Law of the People’s Republic of China (henceforth, Code)[1], the Organic Law of the People’s Courts of the People’s Republic of China (henceforth, Organic Law)[2] and a number of judicial interpretations of the Supreme People’s Court (henceforth, SPC)[3], for instance, the Opinions of the Supreme People’s Court on Some Issues Concerning the Application of the Civil Procedure Law of the People’s Republic of China (henceforth, 1992 Opinion)[4]. Under the Chinese appellate system, a second instance decision is said to be “final” (liangshen zhongshen zhi)[5]. However, the Chinese concept of finality is not true finality, as a “final” decision can be re-opened under the “adjudication supervision procedure” (shenpan jiandu chengxu)[6]. The procedure provides recourse against non-appealable civil judgments tainted by “definite error” (queyou cuowu)[7]. The adjudication supervision procedure is regulated by the Code, the Organic Law and a number of judicial interpretations of the SPC, including the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of the Adjudication Supervision Procedure under the Civil Procedure Law of the People’s Republic of China (henceforth, 2008 Interpretation)[8], Several Opinions of the Supreme People’s Court on Accepting and Examining Applications for Retrial of Civil Cases (henceforth, 2009 Opinion)[9], and Some Opinions of the Supreme People’s Court on Regulating the Docketing of Cases for Retrial by the People’s Courts (for Trial Implementation)[10].

Art. 128 of the PRC Constitution reads, “The Supreme People’s Court is responsible to the National People’s Congress and its Standing Committee. Local people’s courts at different levels are responsible to the organs of state power which created them”. The President of the SPC is selected by the National People’s Congress[11]. Presidents of all other courts at various levels are selected by the people’s congresses at corresponding levels[12]. The direct subordination of the judiciary to the legislature means that there can be no real judicial independence in China unless the constitutional structure is modified. But Chinese constitutional theory specifically rejects the concept of separation of power[13]. While the legislature has de jure control over the judiciary, real control over the courts is exercised by the administrative organs. The local government still (in principle) controls the court budget[14]. This fiscal link between the local administration and the courts entrenches local protectionism in civil adjudication[15].

2. Civil appeals in China: the appellate procedures

An appeal against a first instance judgment lies as of right to the second instance court[16]. An appeal must be lodged within 15 days from the date when the written judgment is served[17]. A party may also appeal against a first instance ruling so long as the appeal is lodged within 10 days from the date when the written ruling is served[18]. A “judgment” is a determination on substantive issues of the lawsuit while a “ruling” is a decision on procedural issues[19]. The time limits for appeal are strict and no extension of time is allowed[20]. Leave is not required to appeal against a judgment or ruling in Mainland China. This is contrasted with the position in Hong Kong where an appeal against an interlocutory judgment or order of the Court of First Instance must obtain leave[21].

An appellant must submit a written “notice of appeal” (shangsu zhuang)[22]. A verbal application for appeal is inadequate[23]. Among other things[24], the notice of appeal must include a “request for appeal” (shangsu qingqiu)[25] and the “grounds of appeal” (shangsu liyou). Regarding the “request for appeal”, the appellant must indicate whether he is seeking to set aside (chexiao)[26] or reverse (gaipan) the first instance decision. Essentially, the request for appeal sets out the scope of the appeal as envisaged by the appellant. With regards the “grounds of appeal”, the appellant must indicate whether he is challenging the factual or legal findings of the first instance decision, or both. The appellant may raise new legal or factual issues (and submit new evidence) at the time of submitting the notice of appeal[27]. The appellant may submit the notice of appeal either to the first instance court or to the appellate court (although the usual practice is to file the appeal with the first instance court)[28]. The first instance court has five days to deliver the notice of appeal to the respondent upon receiving the same. Upon receiving the notice of appeal, the respondent has 15 days within which to submit a written response (dabian zhuang). Failure to submit a written response would not prevent the appeal from going forward[29]. The appellate court must review all the relevant facts and applicable law pertaining to the request for appeal[30]. The appellate court must form a collegiate bench to adjudicate the case[31]. After verifying the facts of the case[32], the collegiate bench shall decide whether it is necessary to hold a court hearing[33]. If it is unnecessary, the collegiate bench will render a decision without a hearing[34]. Under Article 37 of the Some Provisions of the Supreme People’s Court on Reforming the Civil and Economic Adjudication Method (henceforth, 1998 Provisions)[35], a court hearing is required if the collegiate bench believes that there is a need to re-examine the evidence on which the first instance fact-finding was based, or if new evidence has been presented on appeal. The collegiate bench may render a judgment or ruling without a hearing under four circumstances: (a) where the first instance ruling concerns a refusal to accept an action, an objection to jurisdiction, or a dismissal of an action, (b) where the request for appeal is clearly unsustainable, (c) where there is a legal error in the first instance judgment (but no factual error); or (d) where the first instance judgment is tainted by procedural violation (and should be remitted to the original court for a new trial)[36].

There are five possible outcomes in a civil appeal[37].

(1) dismissing the appeal (i.e. affirming the first instance judgment or ruling) on the basis that the first instance judgment or ruling applied the correct law and was based on “a clear finding of facts” (rending shishi qingchu)[38] (henceforth, Outcome (1))[39];

(2) overruling (i.e. reversing, modifying or setting aside)[40] the first instance judgment or ruling on the basis that the decision is tainted by factual or legal error (henceforth, Outcome (2))[41];

(3) (i) where the first instance judgment is based on “an unclear finding of basic facts” (rending jiben shishi buqing)[42], the appellate court may set aside the judgment and remit the case to the first instance court for a new trial (henceforth, Outcome (3)(i))[43]; or (ii) where the first instance judgment is based on “an unclear finding of (non-basic) facts”[44], the appellate court should reverse the judgment after ascertaining the facts on its own (henceforth, Outcome (3)(ii))(together, Outcome (3))[45];

(4) setting aside the first instance judgment and remitting the case to the first instance court for a new trial on the basis of serious procedural violation (such as unlawfully entering a default judgment or omission of a party in the first instance judgment)(henceforth, Outcome (4))[46]; or

(5) setting aside the first instance judgment and dismissing the action if the appellate court finds that the court should not have accepted the case in the first place (henceforth, Outcome (5))[47].

An appeal against a ruling would only result in Outcomes (1) and (2), while an appeal against a judgment may result in Outcomes (1) to (5)[48].

In relation to Outcome (3)(ii), where there is “an unclear finding of (non-basic) facts”, the court should ascertain the facts on its own and reverse the first instance judgment (without the need to remit the case to the original court). It is only where the first instance judgment is based on an unclear finding of “basic facts” (Outcome (3)(i)) that the appellate court should remit the case to the original court for a new trial. This arrangement is designed with procedural efficiency in mind[49].

Confusion may arise as the Code fails to define “factual error” (see Outcome (2)) and “an unclear finding of facts” (see Outcome (3)) and explain the differences between the two concepts. “Factual error” and “an unclear finding of facts” are two different types of irregularities in fact-finding. A “factual error” arises when facts established are based on false or fabricated evidence, rendering the facts inaccurate. “An unclear finding of facts” refers primarily to the situation where the facts established are based on insufficient evidence (and the judgment is rendered prematurely without thorough investigation)[50].

A new trial by remittal (see Outcomes (3)(i) and (4)) follows the procedural rules of first instance proceedings and a decision rendered in the new trial is a first instance decision[51], which may be appealed under the same appellate procedures.[52] In the past, endless rounds of remittals made civil appeal in China unpredictable and caused undue delay. The phenomenon was consistent with the socialist characteristic of civil procedure[53]. This problem was rectified in the 2012 Amendment Version of the Code by limiting a case to one remittal only in the context of civil appeal[54].

The appellate court renders a ruling to determine an appeal against a first instance ruling[55]. It is unnecessary for the appellate court to hear the case as a ruling concerns only procedural matters[56].

Under the Chinese appellate system, before a decision is rendered, an appellant may only withdraw his appeal with the approval of the court[57]. The rationale behind this rule is that the court must be able to step in to protect the interests of third parties (as well as state interest and public interest) and uphold substantive justice (e.g. where there is a serious error in the first instance decision) by disallowing a withdrawal if these other interests are at stake[58].

Chapter 14 of the Code deals exclusively with the appellate procedures but it only covers parts of an appeal. It must be read in conjunction with Chapter 12 of the Code (Ordinary Procedure at First Instance), which deals with, for instance, the conduct of court hearings[59].

The time limit for rendering an appellate judgment is three months from the docketing of the case. This is contrasted with the much shorter time limit of 30 days for the rendering of an appellate ruling[60]. The reason for the difference is that a judgment concerns the disposition of substantive rights while a ruling is purely procedural in nature.

It is not necessary to stay the enforcement of the first instance decision on appeal, as an appeal lodged within the prescribed time limit means that the first instance decision would not become a legally effective decision. Only legally effective decisions can be enforced[61].

A second instance decision is said to be “final”[62]. However, as will be discussed, the Chinese concept of “finality” is nebulous and shaky. A second instance decision may be re-opened under the adjudication supervision procedure.

3. The nature of Chinese appellate review – real appeal or de novo hearing?

Fu observed that the Chinese appellate review system has five defining characteristics[63]: (1) the court reviews both legal and factual findings of the first instance court; (2) the court may review matters outside the scope of the appellant’s request for appeal[64]; (3) the court may entertain new evidence and new points of law; (4) appellate review is conducted by way of a court hearing[65]; and (5) the court may overrule the first instance decision or remit the case to the first instance court for a new trial[66].

The Chinese appellate court has the power to review any finding of the first instance court (both legal and factual)[67]. Art. 168 of the Code reads, “A people’s court of second instance shall review the relevant facts and the applicable law pertaining to the request for appeal”. The Chinese appellate court has unrestricted powers to examine the factual findings of the first instance court that is within the scope of the request for appeal[68]. In theory, such examination involves a qualitative assessment of the accuracy and adequacy of the lower court’s factual findings. If the request for appeal encompasses every factual finding of the first instance decision, then it is the appellate court’s duty to review every factual aspect of the case[69]. In practice, the review goes beyond simply reviewing the overall merits of first instance fact-finding and rectifying obvious errors. It is often a repetition of the fact-finding exercise as if the appellate court were a trial court[70]. This is contrasted with the common law position where the appellate court gives much more deference to the factual findings of the lower court and will only disturb a primary finding of fact if there is a plain error[71]. This deference in common law appellate review is partly due to the fact that the appellate court “does not enjoy the advantages enjoyed by the trial judge who received the evidence at first hand”[72]. The Chinese appellate court is not subject to this kind of restriction. Even at the stage of verifying the case to determine whether a court hearing is necessary, the Chinese appellate court may conduct its own investigations and question parties to obtain first hand evidence on the case[73]. The power of the Chinese appellate court to repeat the fact-finding exercise is consistent with the notion that substantive justice has preeminence in Chinese civil adjudication.

With regards to the scope of an appellate review, Art. 168 of the Code seems to suggest that the appellate court is limited to review only legal and factual matters set out in the appellant’s “request for appeal”. But Art. 168 of the Code must be read in conjunction with Art. 180 of the 1992 Opinion, which states that if the court finds an error in the first instance judgment that falls outside the scope of the “request for appeal”, the court shall correct the error.

The power of the court to move beyond the scope of the request for appeal is said to be restricted under Art. 35 of the 1998 Provisions, which provide that the appellate court may only go beyond the scope of the request for appeal if the first instance judgment violates prohibitive regulations (of the law), harms public interest or violates the interests (and rights) of another party[74]. However, what constitute a violation of the interests (and rights) of another party is not defined in the 1998 Provisions or any other normative instrument. Presumably, “another party” encompasses the respondent in the appeal and third parties, and a broad meaning would be given to “interests” (and rights).

From the perspective of statutory interpretation, Art. 35 of the 1998 Provisions should have precedence over Art. 180 of the 1992 Opinion[75]. However, in practice, the appellate court may not see itself bound by Art. 35 of the 1998 Provisions when there is an obvious error in the first instance judgment that has not been highlighted in the request for appeal. In any event, as long as overall substantive justice is served, courts are likely to interpret Art. 35 of the 1998 Provisions flexibly so as to allow itself to venture beyond the scope of the request for appeal. Hence, by appealing, an appellant may end up in a worse position than before if the appellate court decides to review beyond the request for appeal to rectify an injustice in the first instance judgment[76]. Such a result is clearly undesirable from the perspective of procedural justice and constitutes a blatant violation of the principle of party disposition[77]. From a policy perspective, it is argued that the court needs to balance the right of the appellant to limit the scope of the appeal against the imperative to ensure that the first instance judgment does not harm another party’s interests (or public interest) as a result of any judicial error or misfeasance. It is further argued that this is only possible if the court has the discretion to extend the scope of review beyond the request for appeal[78].

In the past, the appellate court may entertain new evidence without any restrictions. Under Art. 139 of the Code, parties may present new evidence during trial (first instance hearing) or on appeal (second instance hearing). This rule has been criticised for causing undue delay[79]. This position has changed with the introduction of the Some Provisions of the Supreme People’s Court on Evidence in Civil Procedure (henceforth, Civil Evidence Rules)[80]. Art. 139 of the Code now has to be viewed in conjunction with Art.s 40 to 45 of the Civil Evidence Rules, i.e. that the parties’ right to present new evidence is not unrestricted[81]. In the case of Guo Chun Xuan v Liu Zong Lai[82] (a first instance decision), the plaintiff applied to the Zhengzhou City Intermediate Court to produce supplemental evidence. The court rejected the application on the basis that the supplemental evidence was not “new evidence”, as it is already in “objective existence” (and in the custody of the plaintiff) during the time period for producing evidence[83]. Similarly, in a second instance decision, the appellate court rejected the appellant’s application to adduce a fresh piece of evidence on two grounds: (a) the evidence was already in existence before the first instance hearing (hence it is not “new evidence” within the meaning of Art. 41 of the Civil Evidence Rules); and (b) unless it is new evidence, the appellate court must not accept any evidence after the expiration of the time-limit for producing evidence (see Art. 43 of the Civil Evidence Rules)[84]. The “objective existence” test[85] is contrasted with the more sophisticated test in Hong Kong for adducing new evidence on appeal pursuant to the principles in Ladd v Marshall[86].

There seems to be no restriction on raising new points of law on appeal[87]. This is contrasted with the position under common law where the introduction of new legal issues on appeal is the exception rather than the norm[88].

The Chinese appellate court’s power to review beyond the request for appeal extends to legal issues (i.e. not limited to factual issues) if an error is identified[89]. Hence, even where the appellant raised no new points of law, the appellate court could arguably examine legal issues that have not been considered at first instance if so doing could help rectify a legal error.

One may argue that China has moved from a “complete review” system to a “limited review” system as Art. 168 of the Code specifically provides that appellate review should be within the scope of the “request for appeal”[90]. However, the defining characteristics of the Chinese appellate review system[91] suggest that a “complete review” system is still in place. The appellate court has almost unlimited authority (save for some minor restrictions) to redefine the remit of the appeal, entertain new evidence and legal issues, actively probe into the merits of the first instance court’s factual and legal findings, and even repeat the whole fact-finding exercise altogether. Liu attribute this practice to the Chinese judicial notion of “base the decision on facts and take the law as the criterion (ye shenshi wei genju yi falu wei zhunsheng)”, which means that the appellate court has an obligation to rectify any error identified in the first instance decision[92]. In other words, substantive justice (in the pure sense) is still the top priority of Chinese civil justice. A limited review would not serve the purpose of defending this kind of substantive justice.

The official position is that Chinese appellate review is a genuine appeal and not a trial de novo. However, based on the above analysis, an appellate review in China can actually operate very much like a trial de novo in practice. Some critics even suggest that second instance proceedings in China cannot qualify as an appeal at all[93].

 4. The Adjudication Supervision Procedure: The nature of adjudication supervision and its underlying policy considerations

Chapter 16 of the Code sets out the key procedural rules for adjudication supervision (shanpan jiandu)[94]. The adjudication supervision procedure allows a legally effective judgment or ruling (or mediation agreement)[95] to be re-opened for re-adjudication[96] on the basis that the decision has been tainted by error[97]. It is a core principle in Chinese civil justice that “errors, when identified, must be corrected” (youcuo bijiu)[98]. Adjudication supervision is a discretionary procedure and should only be used sparingly (i.e. only when a definite error has been identified in the final judgment)[99].

The adjudication supervision procedure can be distinguished from the appellate procedure on a number of levels[100]:

First, unlike an appeal (which, at least in theory, is a complete review in China), a re-adjudication triggered by the adjudication supervision procedure is a trial de novo. From a comparative perspective, re-adjudication in China bears no resemblance to the final appellate procedure in common law jurisdictions[101], or the cassation or Revision procedure in civilian jurisdictions.

Second, while a case can only be appealed once (second instance being the ‘final’ instance)[102], there is no legislative or other limitation on the number of times a case could be reopened under the adjudication supervision procedure[103]. The adjudication supervision procedure can potentially make litigation an endless exercise in China. As promoting “substantive justice” is a fundamental objective of judicial undertaking[104], a case must be re-opened if any definite error is found in a legally effective judgment, no matter how high the procedural cost is.

Third, unlike in the appellate procedure where an appeal must be lodged within a strict time limit (i.e. within 15 days from the date when the written judgment is served), there is no time limit on the court’s exercise of its ex officio power of adjudication supervision under Art. 198 of the Code.

Fourth, while an appeal is a procedure exclusive to the parties (and initiated by the parties), the adjudication supervision procedure can be triggered by non-party entities, such as the adjudicative committee of the court that rendered the legally effective judgment, a higher-level court (and the SPC), a higher-level procuratorate and the people’s congresses.

A “final judgment” in China is not truly final[105]. The lack of finality encroaches on the procedural rights of litigants and throws the overall reliability of the system into doubt. Different reasons were advanced seeking to justify the system of adjudication supervision. The most significant one is that since there are only two instances in any civil lawsuit, adjudication supervision becomes an indispensible recourse for litigants against judgments, as re-adjudication can ensure that a legally effective decision is fair, accurate and just[106]. Another argument is that the re-adjudication process promotes uniformity in the application of law, since any erroneous application of law in a legally effective judgment is a ground for its re-opening under Art. 200 of the Code (i.e. under the party application regime)[107].

The adjudication supervision procedure is also a vital measure to guard against social instability resulting from unjust court rulings. The Central People’s Government’s emphasis on the imperative to build a “harmonious society” (hexie shehui) has set the tone for China’s civil justice reform in the past decade or so[108]. The pressing need to provide redress for aggrieved litigants far outweighs any reform objectives on the procedural level (such as the need to uphold the finality of judgments). Similar to the promotion of court mediation as the preferred form of civil dispute resolution[109], the reform in adjudication supervision has strong underlying policy reasons. Policy-makers have warned of the risks associated with the lack of effective channels for disputants to express their grievances, or in Chinese, the “difficulty of seeking redress through petition” (shensu nan)[110]. Adjudication supervision provides a convenient avenue to alleviate discontent by correcting “errors” in civil judgments that may have social ramifications. By stepping up the power of the courts and procuratorates to re-open judgments that could potentially stir up unrest, proponents of the reform argue that conflict within the community can be channeled from the streets to the courtroom where problems can be handled in a much more controlled manner. This is the real incentive for further strengthening the powers of adjudication supervision in the latest amendment of the Code (in 2012). On a more practical level, a court that chooses wisely in re-opening “sensitive” judgments can avoid the proliferation of citizen petitions[111] (also known as “letters and visits” (xinfang and shangfang))[112]. Consistent with the policy objective of promoting social harmony, leaders of the judiciary would not hesitate to exert pressure on courts to keep petition rates as low as possible[113].

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