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II.B.2. Understanding “application of international treaties in priority”
The party served in the aforesaid case contended that service of judicial documents on an overseas company should be made through channels in Hague Service Convention, because Article 238 of the Civil Procedural Law has established a principle that international treaties prevail over national laws, and, therefore, the Hague Service Convention should be applied, instead of Article 247 of the Civil Procedural Law on service on representative offices in China.
Actually, it is a misunderstanding of Article 238 of the Civil Procedural Law, which provides that: “Where international treaties which are concluded or acceded to by the People’ Republic of China provide contrary to this law, the provisions of such international treaties shall prevail.” However, it is not in that China must apply an international convention as long as China acceded to it. In this provision, the application of international treaties has a prerequisite, i.e. the international treaties are “contrary to” the Chinese law.
In terms of the purpose of drafters of international conventions, most conventions, particularly, in civil and commercial matters, are made to strengthen the cooperation among countries and provide the member countries with more channels and chances for cooperation, rather than surpass national laws or even exclude the application of national laws of the member countries.
Therefore, the understanding of conflicts should not be in a narrow sense, mechanically or literally, and one should discern whether there are substantive differences or apparent conflicts between the convention and national law. What are expressly provided for in the national laws but not expressly prohibited or provides for in the conventions should not be treated as contrary.
II.B.3. Understanding “Hague Service Convention”
Article 1 of the Hague Service Convention provides that: “The present Convention shall be applied to all cases, in civil or commercial matters, where there is occasion to transmit a judicial or extra-judicial document for service abroad.”
An examination of above provision and other provisions of this Convention will find no clear standards in the Convention for the determination of whether there exists an occasion to transmit such a document for service abroad, as well as what are these occasions. Hence, some leeway is given to the member countries to interpret these occasions, and the member countries remain to have some discretion on deciding whether this convention is applied. There is the same case appeared in the United State.
In Volkswagen Aktiengesellschaft v. Schlunk, the Supreme Court of the United State held that the service on Volkswagen Aktiengesellschaft, head office in Germany, was valid and complete when the document was served on its agent in Illinois, United States, reasoning that the convention does not itself prescribe a standard for determining the legal sufficiency of the delivery, and the subsidiary of the Germany corporation in the United States and its parent corporation were so closely related that the subsidiary was the parent’s agent for service of process as a matter of law, and therefore the internal law of the forum state controls.
Although this case obviously confirmed the exclusiveness of the Hague Service Convention for service abroad, it directed the right to interpret an occasion to transmit a document for service abroad to the internal law.
At a Special Commission meeting of Hague Conference on Private International Law in 1989, a more consistent opinion on service abroad was that when a company formed an entity in another country, it might has an obligation under the laws of such a country to designate an agent for receiving service of process, and if it refused to designate, it should be deemed to have designated or have chosen a residence in such a country. In such a case, the Convention need not be applied for service abroad.
A conclusion may be drawn based on the above conditions, the convention might be applied, but the national law can be applied to the extent that the convention allows, for the convention itself does not have absolute exclusiveness.
In legal theory, if a legal person of a country forms a representative office in another country, such a representative office should represent the rights and interests of the head office in every case, including being the agent in action and receiving service of process on its head office; otherwise, its meaning of existence will be discounted. It is said that in the United States there should be no problems with the services of process on the representative offices in the United States of foreign companies, and what often cause disputes are services of process on branches in the United States.
As China’s foreign contact further broadens, especially after its accession to the WTO, foreign-related cases will increase. If all foreign-related cases are served through channels of Convention, it is inevitably to cause a detour, prolong the court trial period, and aggravate the courts’ burden of service. Especially when the service result of the Convention is currently not satisfactory, insistence on service through the method in the Convention will be consistent with the theme of “fairness and efficiency” of the people’s courts and the theme of simplicity and high efficiency of the Convention, and vacate Article 247(5) of the Civil Procedural Law losing its legislative meaning.
II.B.4. A Conclusion
In summary, in the event of service of judicial documents on overseas companies that do not have residences within China, if such foreign companies have representative offices in China, their representative offices may be served.
As to whether service of judicial documents on Chinese offices of overseas companies not having residences in China can be made by leaving the documents in such offices, although Part IV of Chinese Civil Procedural Law titled “Special Provisions for Foreign-related Civil Procedural” does not have relevant provisions, Article 237 of Chinese Civil Procedural Law provided that: “Foreign-related civil actions conducted within the territory of the People’s Republic of China shall be subject to the provisions of this Part. In case of any absence in this Part, other provisions of this Law shall be applied.”
The General Provisions of the Civil Procedural Law have made general provisions on service of process including service by leaving documents in offices, so, service on the representative offices of overseas companies can be made by leaving the documents in such offices according to Article 247 of the Civil Procedural Law.
II.C. Interpretation on Hearing of Enterprise Bankruptcy cases
On July 30, 2002, the Supreme People’s Court issued the Rules on Issues concerning Hearing of Enterprise Bankruptcy Cases [hereinafter referred to as the “Rules”], which, for the first time, interprets issues related to the enterprise bankruptcy by unifying the provisions of the Enterprise Bankruptcy Law of the People’s Republic of China (Trial) (the “Bankruptcy Law”) and Chapter 19 of the Civil Procedural Law of the People’s Republic of China (the “Civil Procedural Law”).
The Rules with 106 Articles have taken effect as of September 1, 2002, and have the most detailed provisions on the bankruptcy of legal-person enterprises now. Compared with the previous laws and regulations on bankruptcy, the Rules have many new provisions. One should say that the Rules is playing an active role in promoting the promulgation of a uniform bankruptcy law of China.
II.C.1. Present Status of China’s Bankruptcy Law
The bankruptcy law of China is a product of China’s reform and opening up. The Bankruptcy Law is the first bankruptcy law with Chinese characteristics closely related to the reform of state-owned enterprises. It is with Chinese characteristics, for the Bankruptcy Law involves only the bankruptcy of state-owned enterprises, and the government intervention is significant.
To the date, it has been 15 years since the trial implementation of this Bankruptcy Law, and the formal bankruptcy law has been longtime in discussion and preparation. In order to address issues on the bankruptcy of non-state-owned enterprises, Chapter 19 of the Civil Procedural Law in particular, provides for the bankruptcy procedurals for other legal-person enterprises.
For the specific implementation of the Bankruptcy Law and Chapter 19 of the Civil Procedural Law, the relevant authorities issued some very important documents: (1) the Opinions on Issues concerning the Understanding and Enforcement of the Enterprises Bankruptcy Law of the People’s Republic of China (Trial) ; (2) the Opinions on Issues concerning the Application of the Civil Procedural Law of the People’s Republic of China ; (3) the Notice on Issues Related to the Trial Implementation of State-owned Enterprise Bankruptcy in Some Cities ; (4) the Supplementary Notice on Issues Related to the Trial Implementation of State-owned Enterprise Merge and Bankruptcy and Reemployment of Workers and Staff.
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