NPCSC Amends Criminal Procedure Law, Overhauls Judicial System Organic Laws, Loosens Stock Buyback Restrictions & Designates SPC as National IP Appeals Court (FURTHER UPDATED)

UPDATE (Oct. 31, 2018): An English translation of the Criminal Procedure Law with the latest amendment incorporated is available here.

UPDATE (Oct. 30, 2018): An English translation of the International Criminal Justice Assistance Law is available here.


The 13th NPC Standing Committee (NPCSC) concluded its sixth session on Friday. Below we will take a look at the series of laws and decisions it adopted, with a focus on five of them: an amendment to the Criminal Procedure Law, revisions to the organic laws of courts and procuratorates, an amendment to the Company Law, and a decision altering appeals procedures in technical intellectual property cases.

Laws

The Criminal Procedure Law (CPL) [刑事诉讼法] amendment changes the Law in three main aspects. First, it accommodates the supervision commissions by deleting all references to crimes abusing public office since investigations of these crimes (by supervision commissions) are now governed only by the Supervision Law [监察法]. It also adds a new article prescribing the procedures to be used where supervision commissions transfer cases to the procuratorates for prosecution. Second, the amendment codifies two interrelated reforms: expedited procedures [速裁程序] and the “system of leniency for those who admit guilt and accept punishment” [认罪认罚从宽制度]. Under the new Section 4 in Part III, Chapter II, expedited procedures may be used—subject to exceptions—in cases where (1) the facts and evidence meet the standard for conviction; (2) the possible sentence is three years or less; (3) and the defendant has admitted guilt, accepted punishment, and consented to the use of such procedures. The court must render a verdict within ten days of accepting such a case (or within 15 days if the possible sentence is over a year). Suspects who plead guilty are also entitled to lesser or mitigated punishment—or even exempted from prosecution if they make “major meritorious contributions.” Lastly, the amendment introduces new trials in absentia procedures [缺席审判程序] (as the new Chapter III of Part V), to be used in (1) cases of corruption and bribery as well as (1) “serious cases of crimes endangering national security or of terrorist activities” where the suspects or defendants are abroad, subject to approval of the Supreme People’s Procuratorate (SPP). The amendment has already taken effect; an English translation is available here.

The revisions to the People’s Courts Organic Law [人民法院组织法] and the People’s Procuratorates Organic Law [人民检察院组织法] are the first comprehensive overhaul of the two laws that structure China’s judicial system since they were enacted in 1979. The revisions did not fundamentally alter the system—for instance, there are still four levels of courts and procuratorates. What they did was to update the Laws by incorporating the relevant legislative decisions and judicial reforms in the past 40 years. The revised People’s Courts Organic Law, for instance, now explicitly lists maritime courts (established in 1984), intellectual property courts (2014), and financial courts (2018) as special people’s courts [专门人民法院]. It recognizes the authorities of the Supreme People’s Court (SPC) to issue guiding cases [指导性案例] and to establish circuit tribunals [巡回法庭]. It also codifies the judicial responsibility system [司法责任制], judge quota system [员额制], new judge selection system, and other recent reforms. Similar changes were made to the People’s Procuratorates Organic Law. As a result, the courts law has been expanded to 59 articles (from 40) and the procuratorates law to 53 articles (from 28). Both revised Laws will take effect on January 1, 2019; English translations are now available here (courts) and here (procuratorates).

The Company Law [公司法] amendment rewrites article 142 of the Law, which governs stock buybacks. The amendment retains the prohibition on stock buybacks as the general rule, but expands the list of exceptions to the following six situations:

  1. To reduce the company’s registered capital;
  2. To merge with another company holding shares in the company;
  3. To use shares for employee stock ownership plans or equity incentives (updated);
  4. Where a stockholder objects to the resolution of the shareholders’ meeting on corporate merger or separation and requests that the company purchase his shares;
  5. To use shares to convert corporate bonds issued by a listed company that may be converted into stocks (new);
  6. Where it is necessary for a listed company to protect corporate value and the rights and interests of the shareholders (new).

Stock buybacks are subject to the additional rules (on, e.g., corporate decision-making processes) found in paragraphs 2 through 5 of the new article 142. The amendment has already taken effect.

The NPCSC also adopted three other bills. The new International Criminal Justice Assistance Law [国际刑事司法协助法] includes nine chapters with 70 articles. “International criminal justice assistance” is defined to include mutual assistance between China and foreign countries in criminal cases including “service of documents,” “investigation and evidence collection, “arranging witnesses to testify or to assist in investigations,” “sealing, seizing, and freezing property involved in cases,” “confiscation or return of illegal gains and other property involved in cases,” and “transfer of sentenced persons.” Each of these types of assistance is governed by a separate chapter. There is also a chapter that governs the “submission, acceptance, and disposition of requests for criminal justice assistance,” in which multiple governmental bodies play a role, including the State Supervision Commission, SPC, SPP, and Ministries of Justice, Public Security, and State Security. The Law has already taken effect.

The new Regulations on Fire and Rescue Ranks [消防救援衔条例], enacted under the NPCSC’s constitutional authority to institute system of “special titles and ranks” (art. 67, item 16), govern the ranks conferred on members of the new integrated fire and rescue teams [综合性消防救援队伍]. These teams are the successors to the public security fire-fighting forces [公安消防部队] and the armed police forest forces [武警森林部队], which were merged and placed under the direction of the Ministry of Emergency Management as part of this year’s government reorganization. The fire and rescue ranks are modeled after the police ranks that were previously applicable to the two now-abolished forces. The ranks are separately classified for “management and commanding personnel” [管理指挥人员], “professional technical personnel” [专业技术人员] and “firefighters” [消防员]. The Minister of Emergency Management holds the rank of Commander General [总监]. The Regulations have already taken effect.

Lastly, the NPCSC amended the Wildlife Protection Law [野生动物保护法] and fourteen other laws[*] to reflect the government reorganization. The Atmospheric Pollution Prevention and Control Law [大气污染防治法], for instance, was amended so that all 63 references to “departments in charge of environmental protection” were changed to “departments in charge of ecology and environment.” The changes to other laws were likewise minor.

Decisions

The NPCSC on Friday adopted the Decision on Several Issues Concerning the Litigation Procedures in Patents and Other Intellectual Property Cases [关于专利等知识产权案件诉讼程序若干问题的决定] to “unify the standard for adjudicating intellectual property cases.” As the SPC explained in submitting the draft Decision, intermediate people’s courts (including intellectual property courts) now exercise jurisdiction over first-instance “highly technical” [专业技术性较强的] civil and administrative intellectual property cases—including those involving patents, new plant varieties, integrated circuit layout designs, technical know-how, computer software, and monopoly. Judgments in these cases are then appealable to provincial-level high people’s courts. Under the Decision, however, such judgments will be directly appealable to the SPC (and heard by its soon-to-be-established Intellectual Property Tribunal [知识产权法庭]). Such an arrangement seems only temporary, as the SPC is ordered to report to the NPCSC after three years on the implementation of the Decision, which will take effect on January 1, 2019. An English translation of the Decision is available here.

Finally, the NPCSC extended a pilot program of the “marketing authorization holder” [上市许可持有人] system for another year to November 4, 2019 while it considers an amendment to the Drug Administration Law [药品管理法] that would codify the system. As we previously explained:

Under current law, only companies with a drug manufacturing license may obtain a drug marketing authorization. To commercialize their inventions, therefore, drug researchers must either transfer them to such a company or invest in their own manufacturing facilities. By contrast, the pilot decouples marketing authorizations from manufacturing licenses, thereby allowing researchers themselves to apply for marketing authorizations [thus called marketing authorization holders]. They then have the option of either manufacturing the drugs in-house (if they are so capable) or contracting with manufacturing companies.

* * *

Last week the NPCSC also considered the following bills, which we expect to be released for public comments this week:

  • draft amendment to the Drug Administration Law;
  • draft amendment to the Rural Land Contracting Law [农村土地承包法];
  • draft Basic Healthcare and Health Promotion Law [基本医疗卫生与健康促进法];
  • draft revision to the Civil Servants Law [公务员法].

[*] The Metrology Law [计量法], Atmospheric Pollution Prevention and Control Law [大气污染防治法], Disabled Persons Protection Law [残疾人保障法], Women’s Rights and Interests Protection Law [妇女权益保障法], Advertising Law [广告法], Energy Conservation Law [节约能源法], Desertification Prevention and Control Law [防沙治沙法], Agricultural Mechanization Promotion Law [农业机械化促进法], Agricultural Product Quality Safety Law [农产品质量安全法], Circular Economy Promotion Law [循环经济促进法], Tourism Law [旅游法], Environmental Protection Tax Law [环境保护税法], Public Libraries Law [公共图书馆法], and Vessel Tonnage Tax Law [船舶吨税法].


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