CHINA Law and Practice Contributed by: Siyuan Liu, Wei Wang and Huanhuan Yu, Jingtian & Gongcheng
• Representatives must be able to faithfully and dili- gently safeguard the interests of all plaintiffs. In actions with an uncertain number of plaintiffs, spe- cial rules govern the scope of eligible claimants, as discussed in 3.1 Mechanisms for Bringing Collective Redress/Class Actions and 3.2 Overview of Proce- dure . Further, where an investor protection institution par- ticipates as a plaintiff, or accepts authorisation from the investors, the investor protection institution may assign staff or engage attorneys to participate in the proceedings. The court may designate the institution itself as a representative, or appoint representatives from among the parties it represents. Special Representative Action Mechanism In special representative actions, only investor pro- tection institutions may serve as representatives. These professional organisations, mandated to pro- tect investors, currently refer mainly to the ISC or the China Securities Investor Protection Fund Corporation Limited (SIPF). 3.4 Class Members, Size and Mechanism – Opting In or Out Joint Action Mechanism The plaintiffs or defendants must consist of at least two persons. In necessary joint actions, the court will, ex officio, add additional parties. In ordinary joint actions, consolidation requires that the plaintiffs’ claims involve identical or similar subject matter and that the plaintiffs apply for consolidation. In addition, all parties must consent to the consolida- tion. Only when these conditions are satisfied may the court grant approval for the cases to be consolidated. Model Judgment Mechanism The model judgment mechanism imposes no restric- tions on the type, number or scale of plaintiffs. Ordinary Representative Action Mechanism This mechanism does not impose express restrictions on the nature or type of plaintiffs. However, it requires
there to be at least ten plaintiffs, with no upper lim- it. In representative actions with an uncertain num- ber of plaintiffs, once the court issues a registration announcement, eligible right-holders may register to join within the prescribed period and, upon judicial confirmation, will become members of the class. Special Representative Action Mechanism In a case where a special representative action pro- cedure is applicable, there should be more than 50 investors. Investors follow the principle of “opt-out”. As for the nature and type of the investors, although statutory law and judicial interpretations remain silent on this issue, a special representative case in 2024 held that professional institutional investors, due to their distinctive characteristics, should not be recog- nised as eligible right-holders for special representa- tive actions. Such investors should initiate separate lawsuits instead. 3.5 Joinder See 3.4 Class Members, Size and Mechanism – Opt- ing In or Out for joinder in joint actions. In the model judgment mechanism and the ordinary representative action mechanism, eligible plaintiffs must voluntarily initiate proceedings or register after the court issues an announcement. The court cannot add plaintiffs on its own initiative. In special representative actions, investors fall- ing within the court-defined scope of right-holders are automatically included in the class, unless they expressly opt out. 3.6 Case Management Powers of Courts The court’s procedural management authority (exclud- ing its discretion over substantive matters), includes the following: • determining, ex officio, the adjudicatory mecha- nism to be applied; • selecting model cases ex officio under the model judgment mechanism; • deciding, ex officio, whether to suspend separately filed cases in ordinary representative actions with an uncertain number of plaintiffs;
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