Lehman, Lee & Xu’s China lawyers have been approached by a team of USA law firms to provide local assistance in a Class Action lawsuit in the USA on behalf of a class of Chinese investors.
One of the issues raised in the USA lawsuit is whether the case in the USA would be recognized in China in a way that would made the USA class action proceeding worthwhile.
The USA model of “Class Action Lawsuit” is most closely matched in Chinese law as a Daibiaoren susong (代表人诉讼), best translated as a “Representative Lawsuit”.
The Civil Procedure Law of the People’s Republic of China creates the framework for such Representative Lawsuits similar in nature and intent to the USA system of Class Action litigation.
Chinese law provides for claims of a same or similar nature to be tried concurrently in a single litigation action and also indicates that where participants share “common rights and obligations” a litigation involving one of them shall be binding on others which have consented to the process.
The law goes on to state that where the prospective parties on one side of a potential litigation are “numerous”, a “representative or representatives” may be selected, and the results of such proceeding shall be binding on all parties represented.
There is also a specialized rule for the circumstance in which prospective parties share same or similar claims, and where the number of prospective participants is particularly large, though the details of all potential participants may not be precisely determined. In this circumstance, the law provides for a notice by publication option, but also confirms that a judgment in such action shall be binding even against “rights holders” (potential plaintiffs) which are not personally known to the court or to the litigating parties at the time of the judgment.
It is clear that the framework for Representative Lawsuits established under the Civil Procedure law of China is similar in intention and effect to the USA Class Action System. As such there is strong reason to believe that a Chinese court would recognize a judgment in the USA class action proceeding.