Seamus E. Byrne's - In Pursuit of Relevance

Edited by Joe Howie, the Association of Litigation Support Professionals (ALSP) publishes a monthly electronic newsletter for its members (ALSP Online).

Introduction

Eastern Asia features a number of legal systems, in various stages of development. For litigators and litigation support professionals alike, the nuances of each nation’s legal system, is only surpassed by sheer cultural diversity. This brief will outline recent developments in practice and procedure, in three (3) key Eastern Asia nations - Japan, the People’s Republic of China and the Republic of Singapore.

Please Note: International evidence collection and obtaining discovery from a foreign party for use in United States litigation is beyond the scope of this paper.

Japan

Legal System

The Japanese legal system has its modern origins in the German civil law. Consequently, common law practices such as discovery have traditionally been unavailable, with no direct comparative. Litigation is typically conducted with each party producing evidence (i.e. a document) on their own to prove a particular fact in issue. Even with significant reforms in the past decade with a view to reducing lengthy delays in the litigation process, alternative dispute resolution (“ADR”) techniques are highly recommended and promoted by law.¹

Judicial Structure

As a court of first instance, a commercial claim will typically commence in the District Court. Such claims can be appealed to the High Court. Appeals against decisions relating to matters of intellectual property (“IP”), such as patent litigation, are heard exclusively by the Intellectual Property High Court, a branch of the Tokyo High Court. Decisions of quasi-judicial agencies (i.e. regulatory bodies, such as the Fair Trade Commission which deals with consumer and anti-monopoly laws) can be directly appealed to the Tokyo High Court. The court of final resort is the Supreme Court, which will only hear matters at its discretion.

Practice and Procedure

The Code of Civil Procedure (“CCP”) governs civil procedure and with recent reforms, now includes limited discovery-like procedures.

Article 220 of the CCP provides the Court with a discretionary power to order a party or non-party to produce a document (Bunsho Teishutsu Meirei). The requesting party, at a minimum, must be able to identify the type of document to be produced, the document holder (i.e. entity in possession) and the particular fact that the document goes to prove: Article 221-2.

Article 224-5 of the CCP provides that financial penalties and adverse inference sanctions may apply for non-compliance.  However, there is minimal evidence to support the use of such powers.

The utility of such discovery-like measures and penalties is effectively negated in practice by the “self-use” exception provided by Article 220(4)(c). This exception protects a person or corporation from producing documents created solely for self or internal use (e.g. an internal memorandum or intra-office e-mail).

Article 220(4)(b) of the CCP also protects the production of documents subject to a claim of attorney-client privilege. United States case law has also upheld the protection of attorney-client privilege, including patent attorneys, under the amended CCP.²

Data Protection and Privacy

The English translation of Article 3 of the Act on the Protection of Personal Information (Act No. 57 of 2003) (“Japan Privacy Act”), states “in view of the fact that personal information should be handled cautiously under the philosophy of respecting the personalities of individuals, proper handling of personal information shall be promoted.” On this basis, the Japanese approach to data protection and privacy is less stringent than its civil law counterparts in the European Union (“EU”).

Further, Article 23 of the Japan Privacy Act permits the conditional transfer of personal information from a corporate entity to a third party.

In Summary

• Litigating in Japan should only be undertaken as a last resort. Even if a legal team can successfully request an order for document production, it is highly probable that the “smoking gun” will be protected under the “self-use exception”.
• When advising a Japanese multinational corporation, it is pertinent to confirm that the corporate culture is informed and ensure any document retention policy recognizes the need to preserve documents, including ESI, which may be required for discovery. This is a priority consideration in foreign jurisdictions where the Japanese corporation operates or litigates, and where discovery is not as limited and real penalties may apply (e.g. California).

The People’s Republic of China

Legal System

Similar to Japan, the legal system of People’s Republic of China (“PRC”) is largely founded on German civil law principles.  In contrast, following a transfer of sovereignty from the United Kingdom to the PRC in 1997, Hong Kong has acted as a Special Administrative Region (“SAR”) of the PRC with a legal system founded on English common law. This event has created a situation where, at least until 2047, the PRC will operate the Hong Kong SAR on the “one country, two systems” doctrine.

Judicial Structure

Intermediate People's Courts are typically the court of first instance for commercial claims involving, inter alia, a foreign interest in the PRC. However, such claims can be transferred by the Intermediate People's Court to the Higher People’s Courts or to the Supreme People’s Court in Beijing. Conversely, each claim can be heard at first instance and appeal at each Court level.

In the Hong Kong SAR, the High Court hears all commercial claims in excess of HKD$1M (USD$128K~) and acts as court of first instance and appeal, replacing the former Supreme Court. The Court of Final Appeal is the court of last resort.

Practice and Procedure

In the PRC, the Civil Procedure Law of the People’s Republic of China (“CPL”) introduced in 1991 and as amended in October 2007, governs civil procedure.

Evidentiary principles are contained in Chapter 6 (Articles 63-74 of the CPL) and largely reflect pre-reform Japan, that is, discovery is not codified and a party is limited to producing the documents on which they rely to prove a fact. Interestingly, recent reports suggest that more experienced members of the judiciary are beginning to uphold limited requests for discovery, where requested by an attorney.

Article 66 of the CPL provides protection from a party being required to produce a document, as evidence, that involves State secrets, trade secrets or personal privacy. The Law of the People's Republic of China on Guarding State Secrets came into effect in 1989.

The English translation defines a “State secret” as any information that has a vital bearing on state security or national interests. In many cases, such protection has been claimed in somewhat dubious circumstances. However, significant criminal penalties, including the death penalty, apply for any offence under the Law. In 2001, and per Article 25, the Supreme People’s Court interpreted the Law to expressly include the Internet as a prohibited method for such information transfer.

In the Hong Kong SAR, discovery and the inspection of documents is provided for under Order 24 of the Rules of the High Court. This process follows traditional English discovery law, in that a Court may order a party to disclose “relevant” documents in their possession, control or power (i.e. general discovery). Documents are generally particularized by the party in a “List of Documents” and accompanied by an Affidavit. In contrast to the United States, English discovery law imposes a positive, continuing obligation of discovery.

Data Protection and Privacy

In the PRC, State secrets law is seen as a “blocking statute” to strongly deter the production or cross-border transfer of any information. Whilst a number of personal privacy-like laws are discussed in the Civil Code, their practical effect is considered minimal.

In the Hong Kong SAR, Part VI the Personal Data (Privacy) Ordinance, introduced in 1996, conditionally prohibits the cross-border transfer of personal information.

In Summary

• Litigating in the PRC should be undertaken as a last resort where any discovery is required.  Further issues remain in relation to the enforceability of any judgment, even within the PRC itself.
• Can you effectively litigate in the Hong Kong SAR? Pending finalization of laws to codify the “Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region Pursuant to Choice of Court Agreements between Parties Concerned”, a party may seriously consider litigating a commercial contractual claim in the Hong Kong SAR and then enforcing the judgment in the PRC.

Republic of Singapore

Legal System

Singapore’s legal system has its origins in English common law. The nation has recently undertaken a number of legal reforms in an endeavor to surpass Switzerland as the international leader in the provision of financial services, including private and offshore banking. The Ministry of Law has also recently announced that it intends to liberalize the legal services market and license Qualifying Foreign Law Practices (“QFLP”) to support financial services growth.

Judicial Structure

The Supreme Court of Singapore, consisting of a High Court and Court of Appeal, hears all commercial claims in excess of SGD$250K (USD$180K~).

Practice and Procedure

Similar to the Hong Kong SAR, discovery and the inspection of documents is provided for under Order 24 of the Rules of Court.  However, Singapore adopts the modern version of English discovery law, where the scope of discovery is typically limited to “Standard Disclosure”. Standard Disclosure means disclosure is limited to documents that a party relies upon and those documents that are materially adverse to a party’s case.

Data Protection and Privacy

Singapore has no dedicated data protection or privacy legislation.

Notwithstanding, section 47 of the Banking Act, entitled “Banking secrecy” is seen as key to the success of the financial services sector in Singapore. It provides the general rule that customer information is not to be disclosed by a bank to any other person. Significant financial and criminal penalties apply for contravention.

In Summary

• Litigating in Singapore is a preferred option for both English and American litigators, due to the apparent familiarity in laws and judicial transparency.
• Did you know? Singapore is also home to the Singapore International Arbitration Centre (“SIAC”), which is gaining popularity as a neutral, third-nation venue for ADR prior to litigation.

Endnotes

1. The Act on Promotion of Use of Alternative Dispute Resolution (Act No. 151 of 2004) (Japan).
2. For example, Eisai Ltd v Dr Reddy’s Laboratories (S.D.N.Y Dec. 21, 2005).