Risks Related to the Jurisdiction Objection

Company A and Company B entered into a sales and purchase contract, in which it prescribed that the disputes should be under the jurisdiction of the court where Company B is located. Later, Company B filed a lawsuit to the court for the dispute on the payment under this contract. Company A immediately filed a jurisdiction objection, with the reason that the contract was performed where Company A is located. The court of the first instance dismissed the jurisdiction objection. Company A filed an appeal. At this time, Company B got to know that Company A might be transferring important assets. However, Company B could do nothing to speed up the lawsuit against Company A.

Article 127 of “Civil Procedure Law” stipulates the jurisdiction objection system, in which it mentions that where a party raises any objection to jurisdiction after a case is accepted by a people’s court, the party shall file the objection with the people’s court during the period of submitting a written statement of defense. ……where a party raises no objection to jurisdiction and responds to the action by submitting a written statement of defense, the people’s court accepting the action shall be deemed to have jurisdiction, unless the provisions regarding hierarchical jurisdiction and exclusive jurisdiction are violated. Frankly speaking, the jurisdiction objection system does help the parties to correct the jurisdiction errors or curb local protectionism. However, because there is no precondition for filing an jurisdiction objection, some defendants have taken advantage of this system to delay the trial, transfer assets, and so on.

It has been reported that according to a statistics of a local court, only 2% of cases on jurisdiction objection have been supported, which means the majority cases have been dismissed. However, the majority defendants still chose to appeal. This phenomenon shows that the jurisdiction objection has been abused.

In recent years, occasionally, there are some news mention that in some individual cases, the courts had punished the defendants by fines and etc.. For example, in 2017, for a serials of real estate disputes which shall be under the jurisdiction of the people’s court at the place where the real estate is located, the defendant filed an jurisdiction objection in the last day of the statutory time limit, and after the court dismissed the file, this defendant filed the jurisdiction objection in another dozens of similar cases. Finally, the court decided that the defendant had violated the principle of honesty and credit in civil litigation, which has seriously wasted the resources of the trial, hindered the normal conduct of judicial activities, and constituted the abuse of litigation rights, and the defendant was fined 100,000 yuan.

Therefore, as a plaintiff, if the defendant has similar behaviors (especially when the defendant has entrusted a lawyer), the plaintiff could try to claim to the court. Even if the defendant might not be punished, the court may have bad impression on the defendant, which might have a certain impact on the hearing and the receipt of evidence.

On the contrary, as a defendant, it is recommended to file a jurisdiction objection when it is real reasonable and necessary. The following points should be noted when filing a jurisdictional objection:

Firstly, on the arrangement of time, despite those IP infringement cases which needs more time to collect evidence, normally it is not recommended to file a jurisdictional objection on the last day.

Secondly, regarding the reason for a jurisdictional objection, although there is no special legal restriction, a reasonable and evidence-based reason is still important. Otherwise, it might have a bad impact on the trial.