SPC Issues 15th Batch of Guiding Cases

On 3 January 2017, the Supreme People’s Court (“SPC”) issued its 15th batch of guiding cases.

Guiding cases are not binding as legal precedents, but they are considered to have very strong persuasive value and judges in China are required to consider and refer to relevant guiding cases in their rulings on similar issues.

This new batch of guiding cases addresses, among others, the following issues:

  • Food safety. Even if an additive is not in the non-food substance blacklist or the health food additive blacklist, the additive can be recognised as a “toxic or harmful non-food raw material” under Art. 144 of the Criminal Law of the People’s Republic of China 1997 (No. 70).
  • Failure to enforce a court ruling. The criminal liability of refusing to carry out a people’s court ruling commences from the effective date of the court ruling (No. 71).
  • Conversion of loan contracts. The principal and interest under a previous loan agreement may be converted into the paid purchase price in a real estate sale and purchase contract subsequently signed by the parties (No. 72).
  • Priority rights in bankruptcy. The priority rights of a contractor run from the termination date of a construction contract if the contract is deemed to be terminated pursuant to Art. 18 of the Bankruptcy Law of the People’s Republic of China 2006 (No. 73).
  • Insurer’s subrogation right. An insurer has a subrogation right against a third party who damaged the property insured due to breach of contract (No. 74).
  • Standing of whistleblowers. A whistleblower has standing as a plaintiff where the whistleblower reports an actionable infringement of its rights or interests to an administrative agency and has a legal stake in the outcome of the matter reported (No. 77).

Market Reaction

Dr. Mei Gechlik, Founder and Director of Stanford Law School’s China Guiding Cases Project (“CGCP”)

“The release of the 15th batch of guiding cases brought the total number to 77, of which four were released in 2011 (only in the fourth quarter), eight in 2012, 10 in 2013, 22 in 2014, 12 in 2015 and 21 in 2016. The revival of the upward trend in guiding cases confirms what the CGCP has learned from our recent meeting with the SPC: guiding cases will be released in greater number and frequency going forward. Of the newest batch, No. 70 is of special significance for helping to clarify the crime of producing and selling toxic and harmful foods. This is obviously a topic of ‘widespread concern to society’, a criterion for selecting guiding cases.”

Action Items

Given the increasing number of guiding cases and impact on China’s judicial practice, counsel for companies and individuals involved in litigation in China should become familiar with the guiding cases generally, and ensure that trial counsel reviews the full list of guiding cases and studies the content to determine if any may apply.