CHINA Trends and Developments Contributed by: Siyuan Liu, Wei Wang and Huanhuan Yu, Jingtian & Gongcheng
Jingtian & Gongcheng 34/F Tower 3 China Central Place 77 Jianguo Road Beijing 100025 China Tel: +86 010 5809 1385 Fax: +86 010 5809 1100 Email: liu.siyuan@jingtian.com Web: www.jingtian.com
In the jurisdiction of mainland China, collective action is not a single procedural mechanism, but rather a composition of various types of group litigation, includ- ing joint actions, representative actions, and public interest actions. In judicial practice, all these types of class action mechanisms are most often applied in securities disputes. Among all of them, the special representative action, which is exclusive to securities litigation, is the closest analogue to the class action in common law jurisdictions. The evolution of secu- rities class action mechanisms represents, in many respects, the broader trajectory of collective redress in mainland China. In 2024, securities collective actions saw a series of novel practices and breakthroughs. Exploration of Diversified Dispute Resolution Mechanisms The Chinese courts have established systems that organically integrate litigation with non-litigation dis- pute resolution mechanisms, thereby forming a model for diversified dispute resolution with Chinese char- acteristics. However, the courts and administrative regulators have jointly issued opinions reiterating the need to strengthen judicial protection and to enhance diversified dispute resolution mechanisms. Securities disputes are characterised by the number of parties involved, in different cases of the same type, spanning different regions. The Chinese courts have developed new approaches in addition to traditional individual litigation to resolve securities disputes, including model judgments, representative actions, specialised mediation, advance compensation, and settlement. Such mechanisms significantly enhance
judicial efficiency, reduce litigation costs for inves- tors, and facilitate more effective resolution of dis- putes. The courts have also promulgated local judicial rules and guidelines on diversified dispute resolution mechanisms and case management, while deploying intelligent systems such as online diversified dispute resolution databases to improve the capabilities and knowledge of the courts and mediation institutions in handling mass disputes, thereby reducing litigation burdens. In 2024, the Essence Information Technology case was resolved through mediation in the Shanghai Financial Court. The Investor Services Centre represented 7,195 investors and secured CNY280 million in compensa- tion. This marked the first successful civil settlement under the special representative action mechanism. Also in 2024, in the Amethystum Storage case, the defendant agreed to establish an advance compensa- tion fund of CNY1.086 billion for investors and paid CNY189 million into an administrative undertaking fund to the CSRC – representing the first integrated resolution combining administrative enforcement and civil liability. In addition, in a major securities misrep- resentation case, a Hebei court explored combining civil settlement with administrative commitments in an ordinary representative action, which, if successfully implemented, would constitute the first settlement in ordinary representative actions. Following the revision of the Securities Law, rep- resentative actions have seen wider application in securities collective redress. Ordinary representative actions with an uncertain number of plaintiffs have
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