Case summary

On 31 August 2008, Zhang brought an action against an industrial company in Shanghai (hereafter Company M), claiming the repayment of a loan in the sum of 30.37 million Yuan plus late payment interest at an annual rate of 24%. On 23 September 2008, the people’s court of District P, Shanghai issued a civil mediation agreement, under which Company M would “voluntarily” repay the principal of 30.37 million Yuan to Zhang along with the interest calculated at an annual rate of 24%. Subsequently, as Company M failed to fulfilled the mediation agreement on time, Zhang applied for enforcement of the agreement. In the course of the enforcement, Company M found that the company was not a proper respondent and this had violated the voluntary principle of civil mediation. In addition, Zhang had submitted fabricated evidence and this had violated the principle of legality of civil mediation. On 9 July 2009, Company M applied to the higher people’s court of District P (hereafter the intermediate court) for a retrial of the case. On 25 September 2009, the intermediate court dismissed Company M’s application.

Early 2014, lawyer Zheng Dapeng acted on behalf of Company M after learning about the details of the case and lodged a protest with the people's procuratorate of District P, Shanghai. The procuratorate examined the case and issued procuratorial suggestions to the court of District P, which promptly carried out an investigation. The court found that the case concerned suspected false litigation and involved a huge amount. In compliance with applicable provisions on jurisdiction of the Criminal Procedure Law, the court then sent a case transfer letter to Economic Crime Investigation Agency, Shanghai Public Security Bureau on 8 October 2016 and requested the latter to duly conduct an investigation. The agency referred the case back to the court in March 2017, along with a letter informing that Zhang was suspected of committing false litigation crime for which they were unable to file a case for investigation due to a lack of retrospective effect and suggesting that the court initiate the retrial procedure.

Lawyer Fu Rong, who had served in the front line of court trial for over 10 years, joined the team led by Zheng Dapeng and assisted the latter in reviewing the case from the perspective of judicial practice. He communicated with the filing division of the court fully and effectively on a timely manner, and submitted a petition letter along with evidence. The president of the court personally received Zheng Dapeng and gained an in-depth understanding of the case. The court eventually accepted the lawyers’ opinion, and the president personally referred the case to the court’s judicial committee for discussion. The committee eventually made a decision and on 15 November 2018 issued the Civil Ruling (2018) H 0107 MJ No.1, ordering to initiate the retrial procedure and suspend the enforcement of the original mediation agreement.

After the retrial started, Zheng Dapeng and Fu Rong came up with new defence and response strategies, and effectively protected the lawful rights and interests of Company M at court hearings in the course of retrial, gaining overwhelming advantages in the litigation.

At the moment, the District P Branch of Shanghai Public Security Bureau has decided to officially file a case to investigate Zhang on suspicion of committing false litigation crime, and the court of District P has, on 11 November 2019, duly transferred the case to the public security authorities for investigation.  

Breaking through the plight

After applying to the intermediate court in 2009 for a retrial and protesting with the people's procuratorate of District P in 2014, Company M had explored nearly all remedies available under the existing legal system and was very frustrated. Then acting on the advice of Zheng Dapeng and Fu Rong, Company M decided to try the last and only remedy remaining – to request the court passing the effective judgment to cure its own error. This was in compliance with Article 198 of the Civil Procedure Law, which provides that “if the president of a people's court at any level finds definite error in a legally effective judgment, ruling or mediation agreement of his court and deems it necessary to have the case retried, he shall refer it to the judicial committee for discussion and decision.” The retrial procedure could in turn be initiated. Overcoming setbacks with persistent efforts, the lawyers eventually succeeded in initiating the retrial.

It should be noted that the case was returned to the court by Economic Crime Investigation Agency of Shanghai in 2017 on the grounds of a lack of retrospective effect. Although this action by the public security authorities was legitimate, the lawyers did not stop their attempts to break through the plight. They studied the case carefully, and found that Zhang’s action of false litigation had been ongoing although the civil mediation agreement took effect before the enactment of Amendment (IX) to the Criminal Law on 1 November 2015. From 2014 to November 2017, Zhang repeatedly applied to the court of District P, urging the court to enforce the mediation agreement as soon as possible. Such action constituted an element of false litigation crime and the offender should be held criminally liable for the following reasons:  

1. Zhang “put forward” his claims after the enactment of Amendment (IX) to the Criminal Law. In November 2017, Zhang submitted to the court of District P an Application for Supplements and Corrections to a Civil Enforcement Ruling, in which his claim for interest incurred after 1 November 2015 was an active pursuit of unjust enrichment and a continuation of the criminal offence.

2. Zhang’s application to the people’s court for supplements and corrections to an enforcement ruling constituted a civil litigation activity. According to the provisions on enforcement procedure of the Civil Procedure Law of China, civil procedure includes enforcement procedure. Moreover, Amendment (IX) to the Criminal Law does not exclude civil enforcement procedure from “litigation”. Accordingly, the “litigation” in “false litigation” should cover “civil enforcement” procedure.

3. Zhang’s false litigation activities had been ongoing. In July 2009, Company M applied to the intermediate court for a retrial. During the retrial procedure, Zhang continued to deceived the intermediate court, resulting in the dismissal of Company M’s retrial application as well as serious and continuous infringement of justice and Company M’s lawful rights and interests. In addition, the court of District P had repeatedly extended the attachment of the real estate owned by Company M at Zhang’s request.

Practical significance

There was no agreement in theory or in practice on whether the enforcement stage was part of a litigation process. In this case, however, the handling lawyers believed that Zhang, as the enforcement applicant, had continuously and consistently carried out false litigation activities with causal relationships before and after the enactment of Amendment (IX) to the Criminal Law; such false litigation activities conducted for the same purpose had interfered with justice and seriously infringed Company M’s lawful rights and interests. The results of the crime were also ongoing. For these reasons, Zhang should be charged with false litigation crime. To say the least, even if Zhang’s false litigation activities before the enactment of Amendment (IX) to the Criminal Law were not found criminal, the same activities conducted in November 2017 after the enactment of the amendment should be deemed to have constituted false litigation crime, and accordingly a case should be filed against Zhang, taking into consideration the false litigation activities he conducted before the enactment of the amendment.

This case is thus a breakthrough. For the first time, the judicial authorities have officially charged a litigant with false litigation crime for his actions taken at the court enforcement stage.