Hu Jin Rong Fa [2022] No. 2
Article 1 The model judgment scheme is established to properly address mass securities-related disputes, protect the legitimate rights and interests of the parties concerned, and timely and effectively resolve such disputes. These Provisions are formulated in accordance with the Civil Procedure Law of the People’s Republic of China, the Interpretations of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China, and the Opinions of the Supreme People’s Court and the China Securities Regulatory Commission on Comprehensively Advancing the Building of Diversified Resolution Mechanisms for Securities and Futures Disputes, as well as the functions and responsibilities of the Shanghai Financial Court (the “Court”).
Article 2 Model judgment scheme refers to the dispute resolution mechanism in which the Court, in dealing with mass securities-related disputes, selects representative cases among them for prioritized trial and judgment, so as to enable these model cases to provide guidance in the proper resolution of parallel cases.
“Mass securities-related dispute” refers to a class of securities-related disputes with the same type of subject matter to be litigated and involving ten or more plaintiffs or defendants in aggregate.
“Model case” refers to a representative case on mass securities-related dispute.
“Parallel case” refers to a case on mass securities-related dispute that shares common factual and legal issues with a model case.
Article 3 The model judgment scheme, through arrangements of the trial procedures, is designed to unify the application of the law in mass securities-related disputes, improve trial efficiency, protect small investors, lower the cost of litigation, and facilitate the resolution of disputes.
Article 4 This Provisions can be applied to any mass disputes over civil damages within the jurisdiction of the Court arising from tortious acts in the securities market such as misrepresentation, insider trading, and market manipulation, except those to be tried as representative actions pursuant to the Provisions of the Supreme People’s Court on Issues Concerning Representative Action in Securities-Related Disputes.
Other mass financial and commercial disputes may be resolved in reference to this Provisions.
Article 5 A model case shall meet all of the following criteria:
(1) It shares common factual and legal issues with other mass securities-related disputes;
(2) Its underlying factual and legal issues are representative; and
(3) The parties or their attorneys possess a certain level of litigation skills and professional experience.
Article 6 In selecting model cases, priority shall be given to actions over mass securities-related dispute that are backed or filed by a state agency or a duly established public benefit organization and meet the criteria for a model case.
Article 7 A model case may be selected as such at the request of either party or by the Court ex officio.
Article 8 A party’s request for selecting its case as a model case shall be submitted in writing before the trial of the first instance.
Article 9 The request for model case shall contain the following information:
(1) The factual and legal issues of the case that are in common with those of other mass disputes;
(2) The facts, legal grounds, and relevant evidence of the case;
(3) The significance of the case to other mass disputes.
Article 10 The trial of a model case shall, in addition to resolving the disputes between the parties to the model case itself, comprehensively review the common factual and legal issues of mass securities-related disputes. The opinions of the parties shall be sought in determining such common factual and legal issues.
Article 11 The Court may review the basic facts and disputes of a case through such means as document review, investigation, inquiry, and hearing and select model cases based on its findings.
Article 12 Upon the selection of a model case at the request of a party or by the Court ex officio, the collegial bench shall inform the parties to the model case and parallel cases of such selection, as well as the common issues in dispute, the scope of the parallel cases, and the rights and obligations of the parties.
Article 13 Where one model case does not cover all common issues of mass securities-related disputes, more than one model case may be selected at the request of the parties or by the Court ex officio.
Article 14 Where it is impossible to proceed with the trial of a model case due to circumstances such as the plaintiff has deceased, lost the capacity to sue or withdrawn the suit, or reached a settlement with the defendant through mediation, the said model case shall be terminated as a model case and a new one shall be selected.
Article 15 Model cases shall take precedence over parallel cases in procedural arrangements such as service of documents, pre-trial preparation, evidence investigation, trial scheduling, and rendering of judgments.
Article 16 Based on the particulars of a case, the Court may separate a model case from a regular joint action or, subject to the consent of the parties, consolidate several individual cases into a model case taking the form of a regular joint action.
The ruling on the separation or consolidation of cases shall be made before the end of the oral argument phase.
Article 17 In the trial of a model case, the collegial bench shall exercise its power of clarification to cause the parties to clearly state their factual and legal theories in relation to the common factual and legal issues and fully fulfill their burden of proof.
Article 18 The parties in a model case shall adequately present their arguments in relation to the common factual and legal issues. Where the parties fail to do so, the judge shall exercise his power of clarification in a lawful, impartial, open, and appropriate manner to cause the parties to argue their case.
Article 19 In the trial of a model case, the collegial bench shall adequately weigh the arguments of the parties on the common factual and legal issues, publish its views on relevant issues if and as appropriate for the circumstances, and protect the right of the parties to fully argue their case.
Article 20 A model judgment shall adequately discuss the case in relation to the common factual and legal issues, with a focus on analyzing the common evidence, establishing the common facts, and addressing the common application of laws.
Article 21 In the trial of a model case, the Court may, at the request of a party or its own decision ex officio, appoint an independent professional agency to retrieve relevant transaction data for professional analysis or loss assessment, and to lawfully provide other professional support services such as forensic examination, testing, evaluation, and audit.
Article 22 Any party that requests for loss assessment by a third party shall make such request within the time window specified by the Court and pay the assessment fees in advance and as required by the loss assessment agency. Failure to submit such request in time or pay the assessment fees in advance is deemed as an abandonment of the request, for which the requesting party shall bear the resulting legal consequences.
Article 23 The Court will deny any request to verify a matter that is irrelevant to the facts to be verified.
Article 24 Where the request for loss assessment by a third party is approved, the Court shall organize the parties to agree on the loss assessment agency or, if such agreement is infeasible, select at random or designate one based on the particulars of the case.
Article 25 Where loss assessment is not requested by the parties but is nevertheless needed for the trial, the Court may appoint a loss assessment agency ex officio.
Article 26 The Court maintains a list of loss assessment agencies. Any duly established independent assessment agency with expertise in assessing losses may apply for inclusion on the list and, upon being approved by the Court, may then undertake loss assessment activities at the Court.
Any party that applies for loss assessment may choose an agency from the said list. If the loss assessment agency unanimously chosen by the parties is not yet on the list, the Court shall review the qualifications of the agency. The agency, if it passes the review process, can then engage in loss assessment for the parties.
The rules governing the list of loss assessment agencies will be separately provided by the Court.
Article 27 Where a loss assessment agency is appointed, the Court shall issue it a letter of appointment which shall specify the trading parties of the relevant transaction data, the time period for the transactions, and the analysis or calculation methods, among other information determined by the circumstances of the case.
Article 28 An appointed loss assessment agency shall issue a written loss assessment opinions which shall be sealed by the agency and signed by the loss assessors assigned to the task by the agency.
Article 29 The Court shall organize the relevant party to challenge the loss assessment opinions as an evidence submitted by the requesting party or an evidence from the Court’s investigation ex officio.
Article 30 A loss assessor shall appear and testify in court if a party objects to the loss assessment opinions he has issued or if the Court deems such appearance necessary. Where despite the Court’s notice the loss assessor refuses to testify in court, the loss assessment opinions shall not be used in the finding of facts and the paying party is entitled to demand a refund by the loss assessment agency.
Article 31 Where an effective judgment under a model case finds the defendant to have committed a tort, any loss assessment fees incurred to resolve the common issues shall be borne by the defendant in full.
Article 32 A party may request the presence before court of one to two assisting experts to challenge the loss assessment opinions, forensic opinions, or other similar evidence on its behalf or to give opinions on the specialized issues relevant the facts of the case.
With respect to the assisting experts requested by a party, any opinion they give in court shall be deemed as statements made by the party itself.
Where the Court approves the appearance of assisting experts, the relevant fees shall be borne by the requesting party.
Article 33 The Court may designate ex officio assisting experts to appear in court and notify the parties of the same if it deems their opinions necessary for the specialized issues of the case.
The Court will be responsible for the reasonable expenses incurred by such assisting experts to appear in court, as well as the appropriate compensations for their services.
Article 34 The notice to appear shall be served to the assisting experts three days before the hearing and state the time of hearing, venue, and the rights and obligations of the expert assistants.
Article 35 An assisting expert has the right to:
(1) access the loss assessment opinions, forensic opinions, and other case files involving issues of a specialized nature;
(2) with the permission of the presiding judge, question the parties, loss assessors, forensic examiners, and other participants of the proceedings; and
(3) give explanations and opinions on the specialized issues in the case.
An assisting expert has the obligation to:
(1) give opinions independently and objectively;
(2) answer the questions of the court, the parties, and the parties’ attorneys truthfully;
(3) maintain the confidentiality of the state secrets, commercial secrets, and personal information learned during the proceedings.
Article 36 The Court may pose questions to the assisting experts appearing in court. Subject to the approval of the Court, the parties may also do so, and the assisting experts engaged by either party may challenge the assisting experts of the other party over issues relevant to the case.
Assisting experts may not participate in any court hearing activities other than those concerning the specialized issues.
Article 37 If necessary for the trial of a model case, persons with relevant expertise may be selected as expert assessors to participate in the proceedings.
Article 38 If an effective ruling on a mass securities-related dispute has established that the Court has jurisdiction over the dispute and the defendant in another dispute challenges the Court’s jurisdiction on the same ground, the Court will give an explanation and dismiss the challenge.
Article 39 Upon the selection of a model case, the trial of parallel cases may be stayed.
Article 40 Upon the effectiveness of a model judgment, the parties in parallel cases are exempt from presenting evidence with respect to the common facts established in the model judgment.
Upon the effectiveness of a model judgment, with respect to any common standards of application of the law established in the model judgment, the Court may support the direct application thereof if it is requested by the plaintiff in a parallel case, and shall review such direct application if it is requested by the defendant and objected to by the plaintiff.
Article 41 A model judgment is wholly or partially ineffective as a model for other cases if:
(1) the common facts or standards of application of the law established in that model judgment have been overruled; or
(2) new evidences or circumstances have arisen that are sufficient to alter the outcome of that model case.
Article 42 Upon the effectiveness of a model judgment, the parties in parallel cases shall be promptly notified of the said model judgment.
Article 43 Parallel cases shall be tried based on the principle of mediation first, grouping of like cases, and simplified proceedings.
The trial of a parallel case shall make full use of electronic service, virtual hearing, transcript reform measures, and asynchronous hearing for greater efficiency.
Article 44 Investors in a mass securities-related dispute to which the model judgment scheme applies may register their names, the identity certificate numbers they used to open the securities accounts, the time of transactions, the amount of claim, and other relevant information through the platform designated by the Court if they decide to file a claim against the defendant.
The completion of such registration will suspend the limitation period.
Article 45 For any dispute for which the litigation procedures have not been started and the corresponding model judgment has not taken effect, the Court will, with the consent the parties in the parallel case, assist such parties to first pursue mediation.
After the model judgment has taken effect, a dispute shall be mediated on the basis of that model judgment through a mediation organization or the one-stop multi-dimensional dispute resolution platform of the people’s courts before litigation.
Article 46 Where the parties request for, and the Court approves, the withdrawal of their suit following pre-acceptance mediation, or where the parties have reached a mediation agreement and have requested for its confirmation by the Court, the case acceptance fees will be waived.
Where the parties, following pre-acceptance mediation, have reached a mediation agreement and are requesting a mediation statement from the Court, the case acceptance fees will be waived if the amount in controversy is at or below RMB 50,000, or charged at one-fourth the full rate if it is above RMB 50,000.
Article 47 Where the parties request for, and the Court approves, the withdrawal of their suit because they have reached a settlement agreement in post-acceptance mediation before trial, the case acceptance fees may be waived; if the parties have reached a mediation agreement and the Court has issued a mediation statement to conclude the case, the case acceptance fees may be charged at one-fourth the full rate.
Where the parties request for, and the Court approves, the withdrawal of their suit because they have reached a settlement agreement in post-acceptance mediation after trial, the case acceptance fees may be charged at one-fourth the full rate; if the parties have reached a mediation agreement and the Court has issued a mediation statement to conclude the case, the case acceptance fees may be charged at one-half the full rate.
Article 48 Where the investors in a dispute that falls within the scope of parallel cases file an action after a model judgment becomes effective, the case acceptance fees may be charged in a manner that is expedient for the parties in view of the particulars of the case.
Article 49 Where a party in a parallel case refuses the mediation solution proposed based on the model judgment and does not obtain a more favorable result in the subsequent litigation proceedings, the Court may increase the portion of court costs payable by such party as it deems appropriate.
The Court may, as it deems appropriate, also support the opposing party’s claim for compensation of the additional transportation, accommodation, and other necessary expenses arising from subsequent proceedings.
Article 50 Loss assessment in a parallel case shall in general be delegated to the loss assessment agency selected in the corresponding model case.
If loss assessment is performed in a parallel case, the loss calculation fees shall be borne by the defendant in full if the defendant is found liable for the loss, and by the plaintiff if the defendant is found not liable for the loss.
Article 51 The parties in a parallel case may modify their claims, produce supplementary evidence, and file statements of defense based on the model judgment by the time specified by the Court. The Court will deny any abuse of the right of action and intentional delay of the proceedings by a party.
Article 52 Where none of the parties in a parallel case objects to the common facts and the standards of application of the law established in the model judgment, the Court may apply the simplified procedures after the collection of transaction data and loss assessment.
If court hearing is required, parallel cases may be consolidated and heard as a group in the same hearing session. The parties are not required to produce evidence or challenge the facts that have already been established in the model judgment.
Article 53 Subject to the consent of the parties, a parallel case may be heard virtually via the internet or a dedicated network. If only one party opts for virtual hearing, then based on the circumstances of the case, the hearing may be held either physically or with one party attending virtually and the other parties attending physically.
Article 54 Subject to the consent of the parties, audiovisual recording is to be preferred over transcript for the court hearing of a parallel case.
Article 55 Subject to the consent of the parties, the Court may direct the parties to each log into the Mini Court Room app or a similar platform by a specified time to participate in such proceedings as mediation, exchange of evidence, investigation and questioning, and hearing through an asynchronous approach.
Article 56 For parallel cases, evidences, litigation documents, and judgments may, subject to the consent of the parties, be served through such channels as the China Judicial Process Information Online, the People’s Court Legal Service Platform, the Mobile Mini Court app, the Shanghai Litigation Service Platform, and emails.
Article 57 The judgment for parallel cases may take the form of tables or a list of the key information and decisions for those cases, with the total compensation stated in the body text and the names of the plaintiffs and the amount of compensation awarded to each presented in tabular form as an appendix to the civil judgment.
Any party that objects to the amount of compensation may petition the Court for a review. If there is an error in the amount, the Court shall make corrections through a ruling.
Article 58 If in a mass securities-related dispute there is evidence to show that the judgment may be difficult to enforce because the listed company concerned may become insolvent or the defendant may transfer or conceal its assets, the Court may order ex officio the taking of preservation measures. The amount to be preserved may be determined based on the amount of claim in a registered case.
Article 59 Where the Court takes preservation measures ex officio, it may, through the Online Enforcement Investigation and Oversight System or other means, locate the assets ordered to be preserved or assets whose values add up to the amount to be preserved, and seal up, seize, or freeze such assets accordingly.
Article 60 Once a judgment takes effect and enters the enforcement proceedings, if at the reminder of the court, the judgment debtor voluntarily fulfills its obligations established in the effective decision document, it may be exempted from the enforcement fees.
Article 61 If the controlling shareholders and de facto controllers of the listed company involved in a parallel case bear joint and several liabilities with the listed company in accordance with the effective judgment, assets held under their names may be enforced first.
Article 62 If the assets held under the name of the judgment debtor have been sealed up according to administrative penalties or criminal fines and the judgment debtor has no other enforceable assets, the Court may coordinate with relevant authorities to take over the disposal of the sealed assets.
Article 63 The Court may directly disburse the proceeds from the performance or enforcement of an effective decision or instruct the party obligated to assist in enforcement activities to do so through the relevant securities trading and settlement system.
Article 64 The model cases for mass securities-related disputes shall be selected by the collegial bench and finalized by the Judges Conference or the Court’s Professional Committee of Judges for Securities Cases.
Article 65 Once a model case is selected, the collegial bench shall promptly mark it in the trial management system and register and enter information relevant to the proceedings.
Article 66 The court hearing of a model case shall, in principle, be broadcast live on the internet, except in cases where the trial shall not be held openly according to law or is otherwise inappropriate to be broadcast live.
Article 67 The effective judgment on a model case shall in principle be published on the internet unless such publication is inappropriate according to law.
Article 68 Information on the proceedings of a model case shall be published on the internet in a lawful, compliant, timely, and user-friendly manner, except for any information that involves state secrets or is required by law or judicial interpretations to be held confidential or placed under restricted access.
Article 69 Before a model judgment is rendered, it shall be submitted to the Court’s Professional Committee of Judges for Securities Cases for deliberation and, if necessary, to the Adjudication Committee for decision making.
Article 70 The Court will enhance the milestone-based management regime for model cases by strictly observing the time limit for such milestones as case selection, loss assessment, hearing, deliberation, and rendering of judgment, in order to increase the trial efficiency of model cases.
Article 71 Upon the selection of a model case, the corresponding parallel cases will be tried as a group. The Court will enhance the docking of proceedings between the parallel cases and the model case to achieve higher judicial effectiveness.
Article 72 The Court will enhance the oversight of such procedures of parallel cases as loss assessment and mediation to ensure the grouping of parallel cases can achieve its intended benefit and higher trial efficiency for such cases.
Article 73 For cases to which the model judgment scheme is applicable, the Court shall employ information technologies to improve litigation efficiency, such as by enhancing the IT-based case management system and the Securities Investor Protection Chamber, in order to facilitate the litigation procedures including case registration, batch processing of case documents, notification and announcement, court hearing, mediation, judicial confirmation, and disbursement of enforcement proceeds.
Article 74 During the application of the model judgment scheme, the Court shall strengthen communication with securities regulatory authorities, stock exchanges, securities depository and clearing institutions, investor protection organizations, mediation organizations, and trade associations, and collaborate with them in investigation and evidence gathering, professional support, litigation-mediation docking, judgment enforcement, and investor education.
Article 75 The Court will establish an information sharing framework to regularly share information on administrative penalties, effective model judgments, and mediation of parallel cases with securities regulatory authorities, stock exchanges, and investor protection organizations.
Article 76 The Court will jointly establish an electronic transaction data exchange scheme with securities depository and clearing institutions and stock exchanges to simplify the registration of parallel cases and the calculation of damages.
Article 77 The Court will improve the multi-dimensional dispute resolution mechanism encompassing model judgment, professional mediation, and judicial confirmation and streamline the procedures for pre-acceptance and post-acceptance mediation, with a view to resolving the disputes in parallel cases in a prompt and effective manner.
Article 78 The Court will proactively coordinate with securities regulatory authorities, other courts, and other authorities to implement the linkage and collaboration mechanisms for ensuring administrative and criminal fines be preferentially used to cover civil compensations.
Article 79 The Court will improve the risk prevention measures, issue risk alerts in such forms as judicial recommendations and case white papers in response to the issues identified during the trials, and supervise market entities to operate compliantly to prevent mass dispute.
Article 80 These Provisions are subject to the interpretation of the Adjudication Committee of the Court.
Article 81 These Provisions take effect on January 11, 2022. The Provisions of the Shanghai Financial Court on the Model Judgment Mechanism for Securities-Related Disputes (For Trial Implementation) issued on January 16, 2019, expires on that same day.
Shanghai Financial Court
January 6, 2022
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