Plenum likely to limit local officials’ clout in court cases

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China is set to unveil key legal reforms this week that will try to limit the influence local officials have on court cases, a move being closely watched by the business community.

The announcement is expected at the end of a meeting of Communist Party of China leaders, to be held from Monday to Thursday, with the theme “rule of law”. The meeting, called a plenum, comes at a time when slowing economic growth in the world’s second-largest economy is raising the prospect of more commercial disputes.

The business community, in particular Chinese private companies and foreign investors, have long complained that it is difficult to get a fair hearing in court because judges usually answer to local governments and Party agencies, which often have their own interests to protect.

Ahead of the plenum, a meeting of the roughly 370-member Central Committee usually held annually, State media have noted that the key goals are to temper the influence of local governments in courts.

This would involve “reforming the judicial system to prevent local officials from interfering in court decisions”, a source with knowledge of the plenum agenda told Reuters on the condition of anonymity.

While the legal reforms are also aimed at quelling some of the roots of unrest by giving people a sense of fairness in the justice system, there is a strong economic rationale for the measures.

On Wednesday, China University of Political Science and Law Professor Li Shuguang wrote in People’s Daily that there could be no economic growth without a sound legal system.

“Protecting intellectual property and contracts are the preconditions for economic development and growth,” Li wrote, adding that the current system was “not working properly” because it gave too much opportunity for officials to abuse their power.

“For healthy future economic growth, the rule of law will play an even more important role in China’s market economy.”

When drawing up contracts, many foreign companies seek to include clauses to enable arbitration in places such as Hong Kong in the event of a dispute.

At the Party’s last plenum, in November, President Xi Jinping announced ambitious economic reforms that signaled an economic shift from infrastructure- and export-fueled growth toward a slower, more-balanced and sustained expansion.

The government has since carried out a handful of economic reforms, although some critics argue that implementation has not been fast enough.

“They have recognized that without improved rule of law, the economic reforms they want to deliver will not succeed,” said a Beijing-based European envoy.

Joerg Wuttke, president of the European Union Chamber of Commerce in China, said it is vital that companies be able to challenge the rulings of regulators in court.

None of the recent barrage of anti-trust cases against foreign companies operating in China are known to have been challenged in local courts.

Separately, the government has begun trial programs in a few parts of the country, including the business hub Shanghai, to simplify court bureaucracy, and more details about how this could work nationally should come after the plenum.

The new programs allow judges to make judgments without getting approval from the court’s chief justice, who may not have had anything to do with the case.

Courts will also be funded by the province or even the central government rather than by local-level budgets.

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