(By You Yunting) Abstract: If Shanghai plans to become an international financial center, it is judicial fairness that is an important aspect of a very good investment environment that must be provided by governments. If the court attempts to protect an enterprise beyond the letter of the law, it will cause greater long-term damage on China’s interests, and on fairness and justice than any immediate benefits obtained now, whatever companies company achieves those benefits.
On March 15, 2014, China CCTV exposed the professional SLR quality problems of Nikon D600 SLR, where black spots frequently appear on photographs. After this exposure, our team, acting as a representative of our client Mr. Xu, brought the case concerning Nikon into court. On March 18, 2014, my colleague Luo Yanjie and our client filed a legal complaint to Huangpu District Primary People’s Court.
Here is an abstract of our pleading: The Plaintiff Mr. Xu spent 10880 Yuan on purchasing a Nikon D600 camera manufactured by the defendant. The Nikon D600 was promoted with such characteristics as excellent quality and high endurance, but, upon actual use of his Nikon D600, the plaintiff discovered that this camera had quality defects that were so bad as to prevent its effective use, for example, black spots frequently appeared on the photographs, and thus he was fundamentally unsatisfied with the characteristics these advertisements had promoted. With the exposure of the quality problem with Nikon D600 camera, it is clear that a serious quality problem occurs with this model of camera. As such, the plaintiff considered the defendant to have engaged i false advertisement and fraud and thus should assume liability for these actions, acting as both the manufacturer and the advertiser.
On March 25, 2014, Mr. Xu received a call from the court, stating that instituting litigation against Nikon D600 camera must be on the grounds of a product quality dispute. However, as Nikon China was not the actual seller of such a camera, the court refused to accept this case. Being refused by the court, Mr. Xu replied that this case was being litigated on the grounds of false advertisement. The court then told him that a problem concerning false advertisement should be filed as a complaint with the Administration of Commercial and False Advertisement. Subsequently, our client published these comments on his micro-blog. In this case, I reposted it on my micro-blog with my comments as the following.
Article 38 of the Advertisements Law stipulates that, where, in violation of the provisions of this law, publication of a false and misleading advertisement affects consumers, thereby causing infringement and damage to the lawful rights and interests of those who purchase the goods or accept the service, the advertiser shall be civilly liable in law. Based on this article, our litigation against Nikon resulting from false advertisement is legitimate. As the lawyer of our client, I think, the oral announcement of refusal to hear such litigation, as decided by Huangpu District Primary People’s Court, does not satisfy the legal requirements.
“After the exposure of CCTV, we chose to file litigation against Nikon China but were told by Huangpu District Primary People’s Court that this case should be filed on the grounds of a quality dispute. If we wanted to allege the liability for false advertisement, the court advised that we should complain to our local industry and commerce bureau. Such a deprival of our litigation rights in violation of the Civil Procedure Law is confusing.”
After I reposted this microblog, the court phoned me, holding that this case arose from the quality problems of Nikon D600 camera and thus is likely to require the seller to enter into the litigation, acting as a third party. My reply was quite different from what the court held, claiming that the seller was not the target because we filed against the advertiser in accordance with the Advertisement Law. If the court did not accept the case on the grounds of the non-addition of the seller as a joint defendant, we don’t have any different opinion about such a refusal, but the court should still give us the Notice of Dismissal of Accusation pursuant to the Civil Procedure Law. After receiving the Notice of Dismissal of Accusation, we would then appeal. During these communications with the court, the judge informed me he was going to the court the next morning to make a written declaration of litigation and then accept the case.
Lawyer’s Comment:
Why did we file this case on the grounds of false advertisement instead of product quality? This is because Nikon China would not be the actual defendant if we filed a quality dispute against the seller. The seller of the relevant Nikon D600 camera was a small company, not Nikon China. However, where the manufacturer is the Nikon Company registered abroad, and where we were required to add the foreign-registered Nikon as a joint defendant, the litigation procedure would be much more complicated and result in the exhausting of a very long time to judge the case, thus weighting such litigation against consumers with limited resources. Therefore, we will use false advertisement to file litigation against Nikon China.
This is actually a simple case because the consumer filed litigation on the grounds of false advertisement against the advertiser. One question remains then: why did the court made a dismissal for such simple case? Maybe the court tried to protect Nikon China from being the defendant. Fundamentally, the courts are devoted to the taxation and political system in China.
Pursuant to the Civil Procedure Law, the general principle of action-acceptance is focused on the place where the defendant is domiciled. An issue arises here in the situation where Nikon China is a large taxpayer: it will receive much greater protection from local governments. Furthermore, Nikon China was registered at Huangpu District and was once number 87 of Top 100 largest taxpayers in 2011 in Shanghai according to the news of SAT Shanghai Municipal Bureau of Shanghai Local Taxation (note: the link is in Chinese); it is certain that Nikon China is large taxpayer in the Huangpu District. As such, enterprise performance is connected with the local government’s income where the enterprise is located. Therefore, the government may be protecting the locally located enterprises to some extent.
Additionally, China’s courts are under the leadership of the Communist Party. Both local courts and local governments are under the same leadership of the Communist Party and as such, the courts are always influenced by governments. Certainly, even in a country with judicial independence, such effects still exist, although maybe to a different degree.
It is at the expense of judicial fairness that this protection is granted from the government. If Shanghai plans build an international financial center, what the government could do to provide the best possible investment environment is to establish judicial fairness. If the court attempts to protect an enterprise beyond the legal scope, it will cause worse damage upon the long-term interests of China, fairness and justice than any benefits realized in the short-term, whatever company has interests at stake.
Lawyer Contacts
You Yunting：86-21-52134918 youyunting@debund.com/yytbest@gmail.com
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