CHINA Law and Practice Contributed by: Siyuan Liu, Wei Wang and Huanhuan Yu, Jingtian & Gongcheng
3.2 Overview of Procedure Joint Action Mechanism
Special Representative Action Mechanism Although a special representative action is transferred from an ordinary representative action with an uncer- tain number of litigants, the two differ in their initia- tion requirements, as additional procedures must be satisfied before the court may proceed with a special representative action: • during the registration period, if an investor pro- tection institution deems it necessary to act as a representative, it may publicly solicit and obtain special authorisation from at least 50 eligible right- holders to initiate the special representative action; • once the scope of the right-holders is confirmed, the court will issue the Announcement of Registra- tion of Rights for a Special Representative Action; and • during this announcement period, investors may declare to opt out; otherwise, they are deemed to have consented to participate in the action. 3.3 Standing Joint Action Mechanism No special restrictions are imposed on the nature or identity of the litigants. Model Judgment Mechanism No special restrictions are imposed on the nature or identity of the litigants. Ordinary Representative Action Mechanism In ordinary representative actions with a certain num- ber of litigants, there are no restrictions on the nature or identity of the litigants, but numerical and represen- tational requirements apply. Numerical requirements • There must be at least ten plaintiffs. • Two to five proposed representatives must be des- ignated in the complaint. Representational requirements • Representatives must hold a substantial proportion of the interest at stake in the claims. • Representatives or their attorneys must have a cer- tain degree of litigation capacity and professional expertise.
As a general mechanism under the Civil Procedure Law, a joint action follows the procedures applicable to ordinary civil actions. Model Judgment Mechanism The model judgment mechanism imposes no special requirements on the filing of claims or trial procedures. Courts adjudicate model cases following the proce- dures of ordinary civil actions. Once the model judg- ment becomes final, subsequent cases will first be resolved through settlement. If parties fail to reach settlement, the common factual findings and legal interpretations established in the model case may be directly applied to parallel cases. Ordinary Representative Action Mechanism In ordinary representative actions with a certain num- ber of litigants, such litigants may elect representa- tives and file an ordinary representative action with the court. In ordinary representative actions with an uncertain number of litigants, the main procedure includes: • the plaintiffs file ordinary representative actions; • the court determines the scope of eligible right- holders and issues a public registration announce- ment; • right-holders with identical or similar claims register within the prescribed period, after which the court reviews the list of registered right-holders and con- firms the scope of eligible plaintiffs; • representatives are elected by the parties, or appointed by the court if the parties fail to elect them (parties may withdraw their registration upon discovering the representatives and initiate a sepa- rate lawsuit instead); • cases involving representatives will be heard first; and • investors within the determined scope who did not register may bring separate suits, but the court may apply the factual findings and legal interpreta- tions of the effective representative action judg- ment to parallel cases.
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