CHINA Trends and Developments Contributed by: Hao Zhan, Jia Wan, Xuelei Wang and Wei Cui, AnJie Broad Law Firm
• higher penalties for violations, with broader liability and increased fines to raise the cost of non-com- pliance. Formation of the National Financial Regulatory Administration On 18 May 2023, the National Financial Regulatory Administration was formed on the basis of the CBIRC and is responsible for the supervision of the financial industry, including the insurance industry. Before this, the CBIRC had been in operation for more than five years. With the formation of the National Financial Regulatory Administration, the CBIRC will no longer exist.
However, the territorial jurisdiction is subject to some exceptions. China has established some professional courts, such as the financial court, to handle litiga- tions in certain sectors. For instance, since 26 March 2021, the Beijing Financial Court has heard insurance disputes over which the Beijing Intermediate Peo- ple’s Court has first-instance jurisdiction. The Beijing Financial Court will also try the appeals for insurance disputes from the district courts of the first instance. Impact of the Civil Code The Civil Code came into force on 1 January 2021, and its provisions have numerous significant impacts on the PRC Insurance Law and its judicial interpreta- tions. In accordance with the Civil Code, insurers have a specific explanation obligation not only with regard to clauses that exempt or diminish the insurer from liability, as prescribed by the PRC Insurance Law, but also for those clauses in which the applicants, benefi- ciaries or insureds have major interests. Another noteworthy point concerns the amendment of the statute of limitations. Article 188 of the Civil Code provides that the limitation period for a person to request the People’s Court to protect their civil rights is three years, unless otherwise provided by law. However, before the Civil Code officially stipulated this statute of limitations, a two-year statute of limitations had long been implemented in China in accordance with the PRC General Principles of Civil Law, prom- ulgated in 1987. The PRC courts have been divided as to whether a two- or three-year statute of limitations should apply to disputes involving property insurance policies, because the current PRC Insurance Law still stipulates that the period of limitation for the insured or benefi- ciary of non-life insurance to claim insurance benefits is two years. Up to now, most of the courts have held that a three-year statute of limitations in accordance with Article 188 of the Civil Code should be applied in property insurance claims, as most courts believe that the two-year statute of limitations prescribed by the PRC Insurance Law was inherited from the abolished PRC General Principles of Civil Law, instead of the special provisions of the PRC Insurance Law.
Changes of hierarchical jurisdiction In China, there are four levels of courts: • the primary courts; • the intermediate courts; • the high courts; and • the Supreme People’s Court.
In accordance with the judicial interpretations pub- lished by the Supreme Court on 17 September 2021, the following applies: • if the amount in dispute for a civil case is less than CNY500 million (not inclusively), the primary court will have first instance jurisdiction; • if the amount in dispute for a civil case is between CNY500 million (inclusively) and CNY5 billion (not inclusively), an intermediate court will have first instance jurisdiction; and • if the amount in dispute for a civil case is more than CNY5 billion (inclusively), the high court will have first-instance jurisdiction. It is rare for the Supreme People’s Court to hear a case at the first instance. Changes of territorial jurisdiction In accordance with PRC laws, a lawsuit brought in an insurance dispute will fall under the jurisdiction of the People’s Court where the domicile of the defendant or the insured object is located.
82 I NSURANCE L I T IGATI O N 2026
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