Comments on the “The Implementation of the Representative Action
Directive” of Prof. Stadler
ZHIXUN CAO*

The procedural system of collective redress is of great importance in handling complex
cases. In recent years, the issue of third-party funding attracts significant attentions as well.
The Chinese law provides in both aspects some new development.
On one hand, in general, a system of bringing representative actions exists which takes
the opt-in approach, while no follow-up action for performance is necessary after theregistration in the representative action. No action for a model declaratory judgment ispossible, so as to the action for skimming-off illegally gained profits. For cases where thepotential claimants are clear and able to be identified, the representative actions werebrought in practice. Yet, for cases which are similar to the VW-scandal, no real case broughthas been heard. In Chinese context, this kind of cases is summarized as the cases “wherethe subject matter of claims for each party is of the same kind, the parties on one side of anaction are numerous, but the exact number of such parties is uncertain when the action isinstituted” (Art. 57 of Chinese Civil Procedure Law).
Then, along with the revision of the Security Law in 2019, things changed. Its Art. 95
says the followed:
Article 95 Where investors institute civil actions for damages caused bymisrepresentation, among others, related to securities, they may legally recommend andselect representatives to participate in the actions if the subject matters of the actions areof the same kind and the parties on one side of the actions are numerous.
For actions instituted according to the provision of the preceding paragraph, if there
may be many other investors who have the same claims, the people's court may issue anannouncement to state the facts of the case involving the claims and notify investors thatthey may register with the people's court during a certain period. The judgment or rulingrendered by the people's court shall be valid for the registered investors.
An investor protection institution may, as authorized by 50 or more investors,
participate in actions as a representative, and according to the provision of the preceding
paragraph, register right holders confirmed by the securities depository and clearing
institution with the people's court, except for investors who have expressly indicated theirreluctance to participate in the actions.
In this regard, besides the ordinary ones, e.g. consumers, who are with no doubt
qualified claimants and already regulated in Civil Procedure Law, some specialized
investor protection institutions could be qualified as well. This specific procedural systemis then provided by the Provisions of the Supreme People's Court on Several Issues
Concerning Representative Actions Arising from Securities Disputes in 2020. Hereby, thejudiciary differs the special representative from the ordinary one in Civil Procedure Law
Professor (Research) of Peking University (PKU), Ph.D. supervisor.
1via its abstract judicial interpretation which is also binding in practice. Among others, thesystem of special representatives establishes an opt-out mechanism. Art. 34 of theaforementioned judicial interpretation provides the following rules.
Article 34 Where an investor unequivocally expresses its unwillingness to participate
in the action, it shall give its withdrawal statement to the people's court within 15 days
after the expiration of the announcement period. Failure to give a withdrawal statement
shall be treated as consent to participate in the representative action.
For an investor who gives a withdrawal statement, the people's court shall cease toregister it as a plaintiff in the special representative action, and the investor may initiate
an action separately.
On the other hand, i.e. regarding the third-party funding, a test case was adjudicatedby a Shanghai court in May 2022 which raises fierce discussion, after the funding businessis developing gradually in practice for years. The judicial attitude is generally negative
considering the financial nature of the funding, the excessive control of the funded party’s
litigation activities, the dangers of non-disclosure and the public interests. The third-party
funding is highly related to the access to justice and acts as a crucial background factor forgood judicial service. This contribution of Prof. Stadler also gives an outstanding landscapeof the related issues in Germany in the framework of EU Directive.
In the end, I would like to ask two questions to the speaker.
1. Do you think the solution taken by the Model Rules provides a better best practice?
2. What kind of role should the litigation insurance or a general insurance for legal
protection play in making civil litigation affordable for the normal citizen?

2Comments on the “Digitisation and civil procedure” of Prof. Stadler
ZHIXUN CAO*

The relationship between the trend of digitisation and the civil procedure is one of my fieldsof research. My attention should especially be attributed to Prof. Deguchi, who led arelevant project for IAPL Conference in Brazil in 2021 and continues working in this field
as well as unfortunately also the global pandemic. In Summer 2022, my team of Peking
University also invited Prof. Michael Stürner to give a speech on this topic virtually while
now I am translating his final contribution of “Der digitale Zivilprozess” in ZZP (2022). In
my opinion, the German experience introduced by this contribution, especially thediscussion on the proposals for reforms in recent Germany, is always of great value.
As we may all agree, ODR is one of the “two global movements” that can dramatically affectthe “complexion of justice.” While in every jurisdiction there must have been some modern
digital instruments adopted in practice, we have still to look for how the proceedings
themselves could be modernized in a digital manner. Prior to the global pandemic, theonline service had already been adopted by Chinese courts, e.g. Internet Courts, as well as
arbitration institutions. Regarding the latter ones, for instance, both the China
International Economic and Trade Arbitration Commission (CIETAC) and the Shenzhen
Court of International Arbitration (SCIA) allow the usage of online arbitration. Also, theCIETAC announced its Guidelines on Proceeding with Arbitration Actively and Properly
during the COVID-19 Pandemic (for Trial) in the summer of 2020 which stipulated how
the online arbitration ought to be carried forward and a virtual oral hearing ought to beheld. Moreover, online judicial mediation is possible just as online litigation. Despite that
there are already countless online mediation cases previously, the SPC promulgated theRules on Online Mediation of People’s Courts on December 30, 2021. This judicial
interpretation says basically that the judges and other mediators could mediate the cases
before the commencement of or during civil proceedings.
The global pandemic calls especially for more steps taken to reduce the obstacles between
the justice provider and ordinary citizens who need to rely on the judiciary. Especially, evenat the early stage of the outbreak of the COVID-19 pandemic, the Chinese judiciary andindividual judges insisted on continuing hearing cases using e-platform as announced
before the pandemic. Not merely China is working very hard in these three years, butalmost the whole world tries its best to practice the digitisation principle much morepositively. Videoconferences and court hearings using E-technology are used more
frequently both in ordinary civil procedure and international arbitration. The digitisation
principle stands for the future of justice suggested by Susskind, which is neverthelessalready emphasized by the Chinese authority in recent years. The difficulty in promoting
civil proceedings in the traditional way merely highlights the need for digital justice.
In China, all types of dispute resolution systems, namely the civil court system, commercialarbitration, facilitated mediation, and e-commerce systems, have introduced ODR intoProfessor (Research) of Peking University (PKU), Ph.D. supervisor.
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their operations. Chinese courts continue reforming their online judicial practice. Besides
e-filing of civil cases, evidentiary submissions play a crucial role in civil proceedings andalso need to be accomplished electronically. A witness is generally allowed to be examined
online as well. Moreover, if we consider the internet streaming of physical trial hearings onthe website China Court Trial Online since September 2016 to be a type of ODR, then theonline hearing system has already been established for many years. And relying onvideoconferencing to support the remote trial, the advanced version of an online hearing
is carried out solely online.
It is fair to say that the practice goes more promptly than the research. Three special
Internet Courts have been founded in the last four years ago which shall try cases online,
while the acceptance, service, mediation, evidence exchange, pre-trial preparation, courttrial, judgment pronouncement, and other procedural steps concerning a case shallgenerally be completed online as well. On the application of a party or depending on theneed for the trial, an internet court may decide to complete certain parts of the procedural
steps offline. In other words, the parties have no right to reject the adoption of e-justice.
Only the relevant court has the discretionary power to determine the form of proceedings
adopted.
Such strong arbitral power turns into a milder one when it comes to the new Art. 16 of theCivil Procedure Law statute. It says that (merely) with the consent of the parties, civilproceedings may be conducted online through an information network platform. And
online civil proceedings conducted through an information network platform shall havethe same legal force as offline legal proceedings. As the background for the new legal norm,
we may trace back to the previous pilot program which aims to separate complicated cases
from simple ones in civil proceedings. This two-year-long experiment was started on 15
January 2020 and was carried out in some areas of 15 provinces (municipalities) (out of a
total of 34). Among others, there was a separate part of this reform experiment thatconcerns improving electronic litigation, where the consent of the parties did not yet betreated as a precondition for having online judicial activities.
The supplemented requirement of the parties’ consent in statute shows the efforts of theacademics in China who endeavour to stand for ordinary citizens and justice users. Because
the procedural rights of the parties to initiate a civil process will be affected by the newreform equipped with rules for online proceedings, we have to be prudent and cautious torequire the agreement of the parties on having such online proceedings. On the other hand,as principles of civil procedure continue developing, we may need to further answer
whether both parties have legal rights to a physical trial rather than a virtual one andwhether there should be a legal right for the general public to have access to any hearings
that are broadcast live. Besides the old doctrines which seem to be self-evident, a delicate
analysis of the balance of interests should still be carried out by our generation ofproceduralists.
Besides the parties’ consent as one general principle to be reconsidered, there could bepractical institutions and issues which we may not encounter when the civil procedure is
not digital at all. Improper behaviours during online hearings need to be addressed. Bad4

internet connections and intentionally interrupting the connection could be mostfrequently challenged in practice. And some Chinese courts explored the approach of an“asynchronous trial” which means the parties are allowed now to log in to the court’s
electronic system at different times and places. Moreover, the examination of factual
witnesses, the online service of legal documents, or electronic evidence (as a new type ofevidence) can be special and rather difficult in internet-based proceedings. The potential
use of artificial intelligence (AI) systems in China, as opposed to other jurisdictions, isalready a very popular research topic. There is maybe too much research imagining how
legal AI could make a difference. In practice, computer programs and websites can provide
preliminary answers to legal questions without any manual interference. Yet, the current
e-technology is too elementary to be regarded as AI technology that will radically change
the understandings and behaviours of the legal community. we may encounter the wellknown saying of John von Neumann while trying to solve the problem of complexity: “withfour parameters I can fit an elephant, and with five I can make him wiggle his trunk.” Acomplex model may fit the collected data with abundant parameters, whereas using thismodel to predict the future is another thing. The AI technology has still a long way to go.
Lastly, we may not forget, as a matter of fact, the development of ODR is dependent on thelevel of technological evolution and the improvement of local infrastructure, which differs
dramatically from nation to nation. Among other perspectives on such a highly
controversial issue of e-justice, one may argue that it is ODR that must fit for circumstancesin the national context, and not the other way around. ODR could be a mirror for theperformance of traditional dispute resolution like court service within a physicalcourtroom or other mediation, arbitration, or mixed choices. Whether ODR is managed
successfully or not, depends on the general understanding and operation of dispute
resolution in individual jurisdictions. The settled procedural principles regarding due
process and neutrality should still be the primary task of civil justice and ADR. Keeping theadvantages of the one-stop dispute resolution mechanism in mind, it deserves worries anddoubts whether the fundamental right of claim could be safeguarded even if the pre-action
mediation is promoted vigorously. Considering the convenience of dispute resolution
which is given rise to by a one-stop mechanism, this chance to be mediated should neversubstitute the parties’ day in court. These conclusions could be limited to developing
countries such as China that are approaching a steady implementation of the rule of law.
Nevertheless, the conclusions could also be generalized more broadly for various
jurisdictions.
Among others, I am very interested in your ideas regarding the three following questions:
1. What is your ideal model of the proposed basic documents which may be more suitable
for a more digitalized civil proceedings?
2. What should be the international standards for e-justice, as the global jurists may havealready successfully summarized the overarching elements of the rule of law?
3. Do you agree that the relatively outstanding performance of the German justice system
may be disadvantageous in regard of embracing the technologies-based new justice model?

5Concise Comments on the “Model European Rules of Civil Procedure” of Prof.
Stadler
ZHIXUN CAO*
Since I am authorized by the UNIDROIT during the pandemic to translate the Model
Rules and the attached commentaries into Chinese and my team is almost at the final stageof publication, I am very interested in this topic and am not disappointed after reading thiscontribution. Instead of writing substantially on this topic, which was taken in my Chinese
contribution as a on-going result of a global cooperative project and a desired career workfor proceduralists, I would raise several questions to learn from the speaker.
1. What would be, under your evaluation in general, more optimal for the best practicein civil proceedings, the German law or the Model Rules? Which key elements you would
consider when it comes to a specific jurisdiction which would intend to select a mother law
as major reference?
2. During IAPL Peru Congress, the issue of judicial independence was visited fromvarious perspectives. While it has been regarded as one of the overarching principle ofmodern civilized societies, Should the solution provided by the Model Rules be taken as
one set of common standards of rule of law?
3. The principle of proportionality has been emphasized both by the English rules andthe Model Rules. Yet, someone may argue that this principle provides nothing new but
could be covered by the traditional cost-benefit-analysis. What could be your reply to thisviewpoint?

Thank you for your attention and look forward to your forthcoming outstanding
speeches.

Professor (Research) of Peking University (PKU), Ph.D. supervisor.
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