UPDATE (Aug. 28, 2023): The NPCSC is expected to approve the draft revision to the Administrative Reconsideration Law, draft Foreign State Immunity Law, and draft amendment to the Civil Procedure Law on Friday, September 1. The draft revision to the Company Law will be subject to a fourth (and mostly likely final) review.
China’s top legislature, the 14th NPC Standing Committee (NPCSC), will convene for its fifth session from August 28 to September 1, the Council of Chairpersons decided on Monday, August 21. In addition to proposing an agenda that includes nine legislative bills, the Council also discussed a few other interesting matters at Monday’s meeting. We briefly discuss all those developments below.
Returning Bills
Five bills were scheduled for further review.
First, the draft revision to the Administrative Reconsideration Law [行政复议法] returns for its third and final review. Administrative reconsideration refers to the procedure whereby private parties challenge government actions through the government’s internal review. The revision “seeks to make reconsideration the preferred channel for resolving administrative disputes” and “hopes to accomplish this by both (1) enhancing the credibility of the reconsideration process to encourage aggrieved parties to try reconsideration first (the carrot), and (2) expanding the situations under which reconsideration is required as a precondition for litigation (the stick),” writes Jamie Horsley, an expert on Chinese administrative law, for China Law Translate. (Here is Horsley’s follow-up post on the second draft of the revision from June 2023).
Second, the draft revision to the Company Law [公司法] also returns for a third reading. While it most likely would pass at the upcoming session, we would not rule out the possibility of a fourth and final reading in the near future.
Third, the draft Foreign State Immunity Law [外国国家豁免法] and draft amendment to the Civil Procedure Law [民事诉讼法] both return for their second review. Professor William S. Dodge of UC Davis School of Law has penned a great two–part analysis of the draft foreign state immunity statute for Transnational Litigation Blog, in which he observes that the bill “has important implications for other states, which would now be subject to suit in China on a range of claims from which they were previously immune.” We have more to say about the proposed civil procedure changes later in this post. Both bills are likely to pass next month, though it is possible a third and final round of deliberations awaits them.
Finally, the draft Value-Added Tax Law [增值税法] is scheduled for a second review as well. The law, once enacted, would be another step in China’s long march to govern all taxes by statutes. Six types of taxes in China, including the value-added tax, are still collected pursuant to administrative regulations only. Though the bill could pass next month, it will more likely than not go through one more review.
New Bills
The State Council submitted all four new bills.
First up, a pair of education-related bills: a draft Preschool Education Law [学前教育法] and a draft Academic Degrees Law [学位法]. The Ministry of Education sought public comment on an earlier version of each bill in fall 2020 and spring 2021, respectively.
- The Preschool Education Law would govern the rights of preschool children, the requirements for setting up kindergartens, as well as the regulation of preschools, teachers, and other employees. We expect the bill to pass after three reviews.
- The Academic Degrees Law would prescribe the categories of academic degrees in China, the relevant duties of various governmental and academic bodies, the conditions and procedures for conferring degrees, as well as the measures to ensure the quality of degrees (e.g., to deal with academic misconduct). Once enacted, the law would replace the current Academic Degrees Regulations [学位条例], one of the few statutes styled as “regulations” and one that has not been updated since its enactment in 1980 (except for one minor amendment in 2004). We expect the bill to pass after two or three reviews.
The State Council also proposed an overhaul of China’s “misdemeanors” statute: the Public Security Administrative Punishments Law (PSAPL) [治安管理处罚法]. The law can be thought of as a supplement to the Criminal Law [刑法] by penalizing conduct not so serious as to warrant criminal punishments. For instance, while drug use without more is only a violation of the PSAPL that carries up to 15 days of administrative detention, more serious drug-related offenses, like drug manufacturing or distribution, are capital offenses under the Criminal Law. The PSAPL is enforced by the police alone, though most violations come with custodial punishments (generally up to 15 days). The Ministry of Public Security released an early version of the draft revision for public comment back in 2017, and that draft would increase punishments for public security offenses almost across the broad (in addition to changes to the elements of offenses). We expect the draft revision to pass after three reviews.
The Story of Two Reform Pilots
The last bill newly submitted by the State Council was a request to renew a pilot program, implemented since October 2020, that has made it easier for Hong Kong and Macao-licensed lawyers to practice civil and commercial law in nine cities in the neighboring Guangdong province—which, together with the two special administrative regions (SARs), makes up the “Greater Bay Area” (GBA) [粤港澳大湾区].
Under the pilot program, lawyers licensed in the two SARs who have practiced law for at least five years may choose to sit for a special “GBA Legal Professional Examination” instead of the mainland’s national bar exam and be directly admitted in the nine mainland cities. This provides an easier route for those experienced lawyers who want to handle only cross-border commercial matters, as the special bar exam is less demanding than the national one. Hong Kong and Macao lawyers who have passed the special bar exam may practice mainland law in only civil and commercial cases that are connected to the nine mainland cities in certain ways. According to Guangzhou Daily, more than 270 lawyers from the two SARs have since qualified under this pilot program.
Contrasted with the success of this pilot is the suddenly uncertain fate of another. In August 2021, the NPCSC authorized the Supreme People’s Court (SPC) to conduct pilot reforms to reorient the adjudicatory roles of China’s four levels of courts for two years. For our purposes, the reform means that retrial petitions challenging the rulings of provincial high courts (after the parties have exhausted their one appeal as of right) will mostly be directed to those courts themselves. The SPC as a result will hear a much lower number of retrial cases, so that it can focus on unifying the application of law and evolve into a “supreme court with Chinese characteristics”—“rather than just China’s highest court,” as Susan Finder observes at Supreme People’s Court Monitor.
In a sign that the pilot was going well, the SPC submitted draft amendments to the Civil Procedure Law (CPL) and the Administrative Litigation Law (ALL) [行政诉讼法] in December 2022 to codify the reform. We originally expected the amendments to pass this month, given the pilot’s imminent expiration. But on Monday, the Council of Chairpersons heard the NPC Constitution and Law Committee’s report on ending deliberations on the draft ALL amendment.
There are two ways in which the Chinese legislature may terminate its consideration of a pending bill. First, it may do so when it has not reviewed a bill again after a two-year period of inaction, typically because key actors sharply disagree over the bill’s necessity or feasibility. In this situation, the legislative leadership may decide to end deliberations, effectively “killing” the bill.
The second way—and what we surmise happened to the ALL amendment—is for the bill sponsor to withdraw the bill before it is submitted for a vote, subject to the legislative leadership’s approval. Perhaps the SPC’s new leadership (who took office in March) now sees the progress of the pilots in a different light and wishes to postpone codification of the reforms. In a research report published on Monday, the SPC’s Trial Supervision Division identified (in broad strokes) various issues with the ongoing pilot, many of which appear related to funneling most retrial petitions to provincial high courts. It is so far unclear whether the SPC will seek an extension of the pilot reform; it is still possible that the NPCSC will consider such a request next week.
Why is the draft CPL amendment still on the agenda, then? That is because it would also make changes unrelated to the court-role pilot reform. The bulk of its provisions seek to update the CPL’s procedures for foreign-related civil litigation, touching on issues such as Chinese courts’ jurisdiction over foreign-related matters, the doctrine of forum non conveniens, service of process abroad, collection of evidence abroad, as well as recognition and enforcement of foreign judgments. The draft amendment also includes miscellaneous other changes.
Government Debt Oversight & Xinfang Rules
In the last bits of news from the Council of Chairpersons’ meeting on Monday, first, the Council heard a report on establishing a system whereby the NPCSC hears the State Council’s (presumably periodic) reports on the management of government debts. Such a report was not included in the NPCSC’s 2023 oversight plan, so perhaps the new system would not be up and running till 2024. The move is consistent with recent reforms to strengthen the NPCSC’s oversight by (among other things) requiring the State Council to submit annual reports on new salient subject matters, including its management of state-owned assets (since 2018) and financial regulation (since 2021).
Finally, the Council also heard a report on the NPC’s xinfang work in the first half of 2023—i.e., efforts to address the public’s complaints and petitions to the NPC. (The NPC opened a xinfang portal on its official website in January 2020.) The Council also approved the Provisions of NPC Departments on Xinfang Work [全国人大机关信访工作规定], though it is doubtful whether they would ever be made public.