CHINA Law and Practice Contributed by: Qingyou Wang, Yichen Lu, Chao Tang and Yuhe Gu, Anli Partners
2. Litigation Funding 2.1 Third-Party Litigation Funding
A case might take three to four months to reach trial, while complex disputes can take a year or more. 1.3 Court Filings and Proceedings China’s legal system operates on a principle of judicial transparency, meaning court proceedings and filings are generally open to the public. This commitment is demonstrated through online platforms that allow for case tracking and access to a vast database of court judgments. The system is designed to allow public access and provide legal guidance through published decisions. To balance transparency with the protection of sensi- tive interests, the system incorporates specific pro- cedures to restrict public access. Hearings can be closed, and evidence can be partially redacted or subject to confidentiality agreements in certain cir- cumstances. These measures are legally mandated to protect state secrets, personal privacy, and com- mercially sensitive information such as trade secrets. Businesses involved in litigation can, and should, pro- actively apply for these protective measures to pre- vent the disclosure of sensitive data. Understanding how to navigate this balance is crucial for managing legal risks in the Chinese judicial environment. 1.4 Legal Representation in Court Representation in Chinese courts is restricted to spe- cific categories of individuals. Practising Chinese law- yers are the primary representatives, but close rela- tives, employees, and individuals recommended by a community may also act in certain capacities, subject to providing proof of their relationship or authorisation. Each category must present specific documentation, such as practice certificates or kinship proof, to the court to be recognised as a legitimate representative. A key rule states that any party needing legal repre- sentation must appoint a lawyer who is licensed in the People’s Republic of China. Consequently, for- eign lawyers are prohibited from conducting cases or appearing as legal counsel in Chinese courts. Howev- er, they can still provide valuable support outside the courtroom. This includes providing strategic advice on international law and collaborating with the Chinese legal team managing the formal court proceedings.
In China, the availability of third-party funding for law- suits is a developing area of law, with courts drawing a significant distinction between its use in litigation and arbitration. The general judicial trend is cautious, if not passive, regarding litigation, while arbitration is viewed more favourably. China’s current law has no specific regulations author- ising or prohibiting third-party funding in litigation. However, the longstanding legal principles against champerty and maintenance – which forbid instigating litigation and financing it for profit – create a significant degree of legal uncertainty. While China’s legal system does not follow the principle of stare decisis, there was once a judgment that ruled a third-party funding contract invalid for hindering the normal course of civil litigation and for adversely affecting the maintenance of social and public order. Consequently, while such arrangements may occur in practice, their enforceability cannot be guaran- teed and they carry inherent legal risk. And the gen- eral prohibition on law firms directly funding a case in exchange for a share of the award also indirectly shapes the third-party funding market, separating the China’s current law has no specific regulations on the types of lawsuits available or unavailable for third- party funding. In China’s evolving practice, third-par- ty funding is primarily utilised in commercial lawsuits with high-value claims. 2.3 Third-Party Funding for Plaintiff and Defendant China’s current law has no specific regulations that prohibit the third-party funding availability for the plaintiff or the defendant. Third-party funding is, in principle, available to both plaintiffs and defendants in China. roles of legal advisor and case financier. 2.2 Third-Party Funding: Lawsuits
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