Should Perjury Bow Low to King Clause in the PRC Courts? -- the PRC Supreme Court Hum and Hawed in Guiding Case No. 82.

20 April 2022

By Chen Fei  Associate Attorney at ZY Partners

Could one be benefited from perjury in the PRC courts? Do not be shocked if you happen to find out that the answer is an unbelievable “yes”.  Though perjury is a crime punishable by the PRC Criminal Law, however, perjury under the criminal penal code is limited to curb conduct of perjury relevant only to the criminal procedure, leaving the gate for perjury wide open and unpunishable in the PRC civil proceedings 

If perjury in the PRC civil proceedings is not a crime, or at least there is no substantive law in the criminal code to penalize perjury committed in the legal actions in the PRC civil court, should perjury punishable in any way in the PRC civil court? Article 114 of the new edition of the PRC Law of Civil Procedure effective since 1 January 2022 reads “[w]here a participant or any other persons to the civil litigation proceedings commits any of the following acts, the People's Court may impose sanctions such as fine or detention according to the severity of the circumstances; where a crime is constituted, said participant or person shall be held criminally liable for conducts as follows: (1) forging or destroying critical evidence, thereby obstructing the trial of a case by the People's Court; (2) preventing a witness from testifying by means of violence, threat or bribery, or instigating, bribing or coercing others to commit perjury….” The language of the new PRC Law of Civil Procedure concerning punishable perjuries is limited to perjuries by means of forgery, bribery, coercion or violence. It is obvious that the negative consequence of the perjury statute under the PRC Law of Civil Procedure is that pure lies in the civil court not mixed with forgery, aiding and abetting or coercion is not regarded as a punishable courtroom conduct in any procedural phases of the civil proceedings. That means, punishment for “pure lies” or “pure fake” evidence without forgery, or without being proved of forgery by the victim of such conduct or “evidence”, is not within the legislative intent of the olden or current editions of the law of civil procedure.

Perjuries in civil court is an aging pandemic in civil litigations, and the perjury statute of the Law of Civil Procedure has not demonstrated any intent to cope with courtroom lies or fake evidence. Fortunately or semi-pessimistically, the Supreme Court of the PRC appeared to want to take a step towards coping with perjury in civil litigations by making a “a guiding case” out of Wang Suiyong vs. Shenzhen Gelisi Apparel Stock Limited (“Guiding Case 82”), a case decided by the Supreme Court back in 2014, by relying on the king clause principle of good faith as ground for punishing “pure-lie” type of perjuries by making the party that proffered fake evidence suffer the unfavorable outcome of the its case.

In Guiding Case 82, Wang Suiyong, plaintiff in the trial instance (appellee in the second instance and respondent in retrial) used a trade mark not yet approved for registration as ground of trademark infringement actions. The Hangzhou Intermediate Court and the Zhejiang High Court decided for Wang Suiyong. The opponent party initiated retrial proceedings in the Supreme Court, which held, inter alia, that owner of unregistered trademark should have no right to file a lawsuit against others for infringement of trademark. Further, the unregistered trademark in dispute contradicts the prior right of the opponent party who had used the mark and logo as tradename to gain market popularity in apparel products before the plaintiff in the first instance tried to apply for the same logo in dispute in product in other commodity groups.

The Supreme Court in Guiding Case 82 held that “[t]he principle of good faith is the fundamental criterion for all market players to follow. On the one hand, the principle of good faith encourages people to accumulate social wealth and create social value through honest labor, protects the property rights and the freedom to dispose the property rights for legitimate purposes; On the other hand, the principle of good faith requires people to be abide by honesty and credibility in manners harmless to social and public interests in the pursuit of wealth and interests in the market activities. Civil litigation activities should also follow the principle of good faith. On the one hand, it guarantees the rights of the parties in the civil litigation actions within the boundaries prescribed by law. On the other hand, it requires the parties to exercise their rights in good faith and with prudence so as to avoid others and public interests being hurt by conducts of bad faith. Any act of bad faith in acquirement of a right or act of disruption of fair competition constitutes abuse of right. Actions or claims based on bad faith should be denounced by law.”

The numerous “on the other hands” in the dictum of the Supreme Court decision in its Guiding Case 82 indicate the endeavor of the Supreme Court to be as evasive as possible to reveal the obvious issues of perjury and lies involved in lower courts decisions in which perjury prevailed for the benefit of the culprit plaintiff in the first and second instances. Though people are still at loss as to why their people’s courts are so reluctant to punish perjury in a straightforward manner, it at least made a step forward in an attempt to cope with the everlasting headache of civil court perjury which is still rather prevalent in civil proceedings.

Caveat is the Supreme Court rules on Guiding Cases may demonstrate, to certain extent, the judicial policies for uniform application of law. However, in the absence of evidence statute that intends to subject courtroom lies and perjuries to consequences of substantive outcome of the litigation, “pure perjury” unaccompanied with evidence of forgery, coerce, instigation or bribery will still encourage litigation participants to infest the courtrooms with “pure” or “perfect” perjuries.

Moreover, Guiding Cases often contradicts with each other on many issues including the Supreme Court attitude towards perjury. For instance, another Supreme Court case numbered as Guiding Case 84, seems quite friendly to courtroom lies of the defendant in a patent infringement action around a pharmaceutical manufacturing process.  In Case 84, the Supreme Court even created a “rule” that fake evidence should not harm the perjury culprit even the perjury is critical to the outcome of the case and culprit has the burden of evidence.

ZY litigation team is tracking closely as to how the courts of various jurisdictions in China deal with the issue of civil court perjury and under what circumstances perjuries may affect the outcome of civil cases. For now, identifying and revealing perjury in the civil proceedings by skillful use of rules of evidence is of paramount importance for litigation lawyers.

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