China’s supreme court issues new guidelines for handling civil disputes with criminal elements

China's top court introduced a new guideline on Monday to better handle civil disputes involving criminal elements, thereby strengthening market order and enhancing the business environment through the rule of law.

The Supreme People's Court highlighted that as the economy and society develop, civil cases are increasingly becoming entangled with criminal activities, making these disputes more complex. Over 60 percent of these cases involve contract issues.

The differences between civil and criminal procedures have posed significant challenges for courts across the country, leading to inconsistent handling of such cases, the SPC said. It revealed that there have been instances where criminal measures and penalties were improperly applied to financial disputes, infringing on the legitimate rights and interests of the parties involved and negatively affecting the business environment.

The SPC stressed the importance of effectively addressing these cases, especially those involving contracts, as they are crucial to maintaining market stability, protecting legitimate business interests, and ensuring the accurate implementation of the Private Sector Promotion Law.

Under the new guideline, consisting of 24 articles and effective starting Tuesday, courts at all levels are required to prioritize principles that ensure the timely and strong protection of litigants' rights and support a law-based business environment.

Recognizing the differing opinions on handling the criminal and civil aspects of cases, the guideline generally advocates for a "criminal first, civil later" approach. This means that criminal proceedings, involving state intervention, often provide stronger and more immediate relief for victims, which is particularly useful in large-scale crimes like illegal fundraising. In such cases, recovering illegal gains or ordering restitution can address victims' losses more effectively and fairly.

However, the SPC emphasized that this approach is not universally applicable. It should not be interpreted to mean that civil lawsuits cannot be initiated if a criminal offense is involved, or that existing civil cases must defer to related criminal proceedings. Each case should be assessed individually. If the criminal and civil proceedings are related but do not involve the same facts, and if criminal proceedings cannot provide adequate relief, both types of proceedings should be allowed to run concurrently.

Furthermore, the guideline specifies that when civil and related criminal cases are handled by different courts, these courts should promptly share information about case filings, progress, and outcomes with each other.