On 28th of October, 2007, a revision was made according to the decision of the standing committee of the National People’s Congress on Amending the Civil Procedure Law of the People’s Republic of China (hereinafter referred to as the “Law”) as adopted at the 30th session of the standing committee of the 10th National People’s Congress. The amendment (hereinafter referred to as the “Amendment”) above-said, which would not be effective until 1st of April, 2008, was the very first to revise on the Law which has not been amended by the legislators for 16 years since its issuance. The Amendment with its 19 articles involves modifications on three civil procedures, i.e. the bankrupt procedure of enterprise legal person, trail supervision procedure and executive procedure. However, the real concerns of the Amendment are the improvement of the retrial system and the executive system, to clear obstacles to appeal and execution.

I. As for the improvement of retrial system which clears obstacles to appeal, there are 7 articles that apply to the retrial system whose contents are generally as the following:

1. The Amendment improves the expression of statutory conditions applicable when the litigant applies for retrial. Article 179 of the original Law lists 5 conditions for retrial application, while the Amendment makes 13 specifications to the 5 conditions and one item additionally, which makes the applicable conditions more specified and clarified to the litigant. The Amendment:

(1) Emphasizes on the importance of due process, which is one of the highlights of the Amendment. In the event that ＂the main evidence used in the original judgment or ruling to find the facts was not cross-examined＂(Item 4), the litigant will be entitled to apply for retrial. The above-mentioned condition stresses on the procedure value of cross examination. Meanwhile, the Amendment also emphasizes on the relation between legitimacy of the adjudicator and justification of the corresponding results. When ＂the trial organization was unlawfully formed or the adjudicators that should withdraw have not done so＂(Item 8), it shall be deemed as a retrial condition. Further, the Amendment makes emphasizes on the relation between procedure participation rights and due process, especially participation right and debate right. The Amendment has another three conditions, such as “The person incapable of action is not represented by a legal agent, or the party that should participate in the litigation failed to do so because of the reasons not attributable to himself or his legal agent”(Item 9), “The party’s right to debate was deprived of in violation of the law”(Item 10) and “The party’s right to debate was deprived of in violation of the law”(Item 11).

(2) Refines and modifies retrial conditions on evidence and facts, which makes supplement of 3 additional conditions, i.e. “the main evidence used in the original judgment or ruling to find the facts was forged” (Item 3), “the main evidence used in the original judgment or ruling to find the facts was not cross-examined” (Item 4),and “any party to a lawsuit is unable to obtain the evidence necessary for adjudicating the case because of some realistic reasons and has applied to the people’s court for investigation and collection of such evidence in writing, but the people’s court fails to investigate and collect such evidence” (Item 5). The original condition, “the main evidence on which the facts were ascertained in the original judgment or written order was insufficient”, was replaced by “the main evidence used in the original judgment or ruling to find the facts was insufficient”, which makes the conditions more accurate and reasonable.

2. The Amendment refines the procedure of the retrial as follows:

(1) The procedure of the retrial application is clarified. Article 180 of the amended Law stipulates that “a party that applies for retrial shall submit a retrial petition and other materials. The people’s court shall, within five days after receiving the retrial petition, serve the duplicate of the retrial petition on the opposing party. The opposing party shall submit written opinions within 15 days after receiving the duplicate of the retrial petition; and the failure to submit written opinions will not affect the review by the people’s court. The People’s Court may require the applicant and the opposing party to supplement relevant matters and may inquire about relevant matters.” This provision avoids applicants to contact the People’s Court unilaterally; otherwise, the People’s Court’s neutral position will be affected. The provision also keeps applicant’s procedural interest, including defense right, from being neglected.

(2) Special conditions will lead to extension of the term of retrial application. The old Law stipulated that regarding the litigant’s application for retrial, the litigant shall claim within 2 years after the effective date of the judgments and rulings. Empirically, there exist circumstances that some of the retrial conditions would not be available within the 2 years. Therefore, the extension of the retrial application period in order for special conditions is necessary. Article 184, the relevant provision, stipulated that “Any retrial petition by a party shall be made within two years after the judgment or ruling becomes legally effective; or be made within three months after the party has known or should know that the legal document on which the original judgment or ruling was made is cancelled or revised or that the adjudicating personnel were involved in any conduct of embezzlement, bribery, practicing favoritism for himself or relatives, or twisting the law in rendering judgment after two years.”

(3) Retrial application shall be made to the People’s Court at a higher level in a certain period. The original Law stipulated that the application shall be made to the original People’s Court or the People’s Court at a higher level. However, empirically, litigants usually apply to both People’s Courts or apply twice to the same People’s Court, which result in the multiple and repeated inspection. The Amendment stipulated that the application shall be made only to the People’s Court at a higher level, which avoid multiple and repeated application and helps the People’s Court to try the case without disturbance. Meanwhile, the People’s Court shall be engaged in inspection of the case within 3 months after filing the retrial.

3. The Amendment refines the supervision system for procurator. Article 185 of the original Law stipulated that the procurator may protest under 4 circumstances and that the People’s Court shall accept the case the procurator has protested. Under the Amendment, the 4 protest conditions are modified to 13 refined conditions, and one more item was added that local procurator may apply the protest the effective judgments or rulings to the procurator at a higher level. Meanwhile, the People’s Court shall make retrial ruling within 30 days after receiving the retrial application by the procurator.

II. As to refine the execution system and clear obstacles for execution, the Amendment contains 11 articles contributing to the execution refinement as follows:

1. Execution measures are strengthened, which enforces the executed person to fulfill his /her obligations.

(1) ”Immediate execution” was stipulated. According to the original Law, the executor shall send an execution notice to the person subjected to execution, instructing him to comply within the specified time. If the person fails to comply accordingly, compulsory execution shall be carried out. However, according to the Amendment, with reservation of the aforesaid condition, “if a person to be enforced fails to fulfill the obligations specified in a legal document and may hide or transfer his property, the executor may take the compulsory execution measure immediately.” In this way, the execution will be made more flexible and controllable accordingly.

(2) Compulsory property report system for the person to be enforced was stipulated. Property investigation is one of the most important elements in the whole compulsory execution system, because for most execution cases, only when the property of the to-be-enforced person is fixed, can the execution measures be carried out. However, it has been a tough problem that how to fix the property. The best solution may be the compulsory property report system, which is stipulated in the amended Law. Regarding the report system, first of all, the obligation to report the property condition is set. If a person to be enforced fails to fulfill the obligations specified in a legal document as instructed by the execution notice, he shall report his property condition. Second, the scope of property to be reported is fixed. The person to be enforced shall report his property situation for the time being and one year before he has received the execution notice. Third, if the person to be enforced refuses to report his property situation or makes a false report, the People’s Court may, based on the circumstances, impose a fine or detention on the person to be enforced, his legal representative or the principal leading personnel of the unit or the person directly responsible.

(3) The scope of object applied to by detention is enlarged and the penalty amount is increased. Compulsory execution measures like penalty and detention are the safeguard for the execution. The main problems in the original Law regarding execution are the excessively low penalty and excessively short period of detention. Additionally, when the units with assistance obligation do not fulfill its assistance obligation, the principal leading personnel of the unit or the person directly responsible can only be punished with penalty without detention. The Amendment enhanced the punishment to execution-impairing activities as follows: first, to the unit who do have and do not fulfill its assistance obligation, penalty shall be set to the principal leading personnel of the unit or the person directly responsible. If the unit still do not assist, the principal leading personnel of the unit or the person directly responsible may be detained; second, the penalty amount is increased to 10 times of the original; third, the People’s Court may make judicial suggestions to the supervisory organ or other relevant organs on imposing a disciplinary sanction on the unit

(4) Provide legal ground for national deterrent mechanism. Recently, some scholars have pointed out that, to substantially clear the obstacles of execution, a system of national deterrent mechanism shall be established in order to urge debtor to fulfill its obligations and realize the credit enjoyed by the creditor. This creative thought has been generally accepted and supported by the society, and the information management system of the People’s Court has taken shape. To safeguard the mechanism, the Amended Law stipulated that “if a person to be enforced fails to fulfill the obligations specified in a legal document, the people’s court may adopt or notify relevant units to assist to adopt the measure of restricting the exit, making records on the credit system, making public the information about nonperformance of duty through public media or any other measure stipulated by law.”

2. The execution behavior be regulated to protect the lawful interest, the Amendment stipulates the execution objection system.

(1) Relief upon illegal execution behaviors shall be administrated. Influenced by objective or subjective elements, there can be some executor who violates the rules and laws to conduct improper, negative or delayed execution. Meanwhile, the original Law does not provide its observers with any relief measures so that the interested person may only appeal for retrial to the People’s Court. However, due to lacking proper stipulations to relevant appealing procedures, the People’s Court do not cautiously handle those problems, which results in insufficient relief for the infringed legal rights of the interested person. Therefore, Article 202 of the Amended Law stipulated the execution objection system which entitles the interested person to the right of raising objections upon illegal execution behaviors. Furthermore, the article stipulated the details that “the people’s court shall review the written objection within 15 days after receiving it. If the objection is tenable, the people’s court shall rule to cancel or correct the execution; and if the objection is untenable, the people’s court shall rule to reject the objection. If a party or any interested party is not satisfied with the ruling, it may apply for reconsideration to the people’s court at the next higher level within 10 days after the ruling is served.” The above-mentioned stipulation is actually the “procedural execution relief” which is a huge step forward to the original Law. The “procedural execution relief” principle fills the blank of the execution relief system, and marks the development of execution execution relief system to a new level.

(2) Execution applicant is entitled to the variation of execution court. In the last few years, the legal practice shows that one of the obstacles for execution are the disturbance by local protectionism which will not be improved unless local courts are no longer administrated and supervised by local government; another obstacle is acquaintance society. Considered that the outer environment can not be improved in a short period, it is better and more convenient to change the execution court. Therefore, Article 203 stipulates that “if the people’s court fails to make execution within six months after receiving the application for execution, the person who has applied for the execution may apply for execution to the people’s court at the next higher level. Upon review, the people’s court at the next higher level may order the original people’s court to make execution within a specified period of time, or may decide to make execution by itself or direct any other people’s court to make execution.”

(3) The third party is entitled to protect its substantive interests via objection and litigation. During the execution procedure, the executor judges the ownership of the to-be-executed property solely by its look, which may infringe third person’s proprietary rights through seal and sequestration. Therefore, Article 208 provides the third person with the right to make objections which are actually for disputes of substantive right and obligation. However, the original Law only stipulates that the executor shall make examinations without detailed procedures provided, which makes the third person free from safeguard regarding the procedural right. Therefore, according to Article 204 of the Amended Law, the third person may complaint to the court for disputes not related to the original judgment or ruling. Meanwhile, considered that the litigation procedure is complicated and some disputes are quite simple, the case can be examined directly by the executor who is familiar to the dispute and thus resolve the problem. It is quite efficient. Accordingly, this article do not use absolute terms but stipulates that any person who is not involved in the case shall raise a written objection to the subject matter of the execution to claim his substantive rights, the people’s court shall review the written objection within 15 days after receiving it. If the objection is tenable, the people’s court shall rule to suspend the execution on the subject matter; and if the objection is untenable, it shall be rejected. If a person who is not involved in the case or a party involved is not satisfied with the ruling and considers that there is an error in the original judgment or ruling, it shall be dealt with according to the procedure of adjudication supervision; and if a written objection is irrelevant to the original judgment or ruling, the relevant party may file a lawsuit with the people’s court within 15 days after the ruling is served.

3. Further enhancement to protection of creditor rights

(1) It is stipulated the jurisdiction of the People’s Court in the location where the property to be enforced is. According to the original Law, it is the first trial court that has the jurisdiction over the execution of the judgments and rulings. Actually, it can be more convenient for the court where the property that is to be enforced is located to take measures, thus, the alteration of the property to be executed may be easily observed and the execution cost can be lowered. Therefore, theoretically, it will be more reasonable that cases relating to cash payment or property payment are executed by the People’s Court in the location where the property to be enforced is, which is a convention used in many countries and districts. However, our country has its particularity which is that if all the executions are executed by the People’s Court in the location where the property to be enforced is, some execution cases will be disturbed by local protectionism and thus hard to be further executed. Therefore, Article 201 of the amended Law stipulates, with consideration of the background of both foreign and our country’s conventions and customs, that either the first trial court or the People’s Court in the location where the property to be enforced locates has the jurisdiction over execution cases. The Creditor has the right to select one that is most suitable. This stipulation brings flexibility to the execution and will help to realize the credit. Meanwhile, the amended Law regulates that the two courts are of the same level as the first trial court.

(2) The limitation of the application to execution is extended to 2 years. With reference to the original Law, the limitation for the submission of an application for execution shall be one year, if both or one of the parties are citizens; it shall be six months if both parties are legal persons or other organizations. The limitation applied to citizen, legal person and other organizations are not the same, which violates the equality of the subjects. Furthermore, since the limitation is comparatively short, the creditor will be forced to quicken the execution, thus lowering the chance when the litigants reach reconciliation agreement. The short limitation sometimes is not enough for the debt that requires quite a long time to pay. Large quantity of execution cases swarm to the court due to the approaching deadline of the limitation and thus the court can no longer handle the cases quickly which gives the public an impression of low efficiency of the court. When the litigant fails to apply the execution within time limitation, he will no longer be protected by national authority. Therefore, Article 215 of the amended Law extends the limitation to 2 years. Meanwhile, the limitation is counted as limitation of action which can be paused, stopped and extended, which further protects the creditor’s interest to a maximum extent.

4. The arrangement of execution and its organ is refined. The original Law permits grassroots courts and intermediate courts to establish executive organ, but actually, Supreme Court and Higher People’s Court have already established respective execution organ. Empirically, the execution organs of Supreme Court or Higher People’s Court help to guide, supervise and arrange the execution, to arrange the execution and to clear obstacles for execution. Accordingly, the practice shall be confirmed by law as early as possible. According to Item 3 of Article 205 of the Amended Law, The People’s Court may, when necessary, establish executive organs, which provide legal ground for the above-said practice.