The governance of litigation sources in corporate lawsuits urgently needs to be strengthened

2024-05-22

Deepening the governance of litigation sources for company related serial lawsuits requires strengthening comprehensive governance throughout the entire process. In the pre litigation stage, it is necessary to strengthen the coordination between litigation and mediation, and give full play to the mediation function of the Chamber of Commerce; During the litigation stage, it is necessary to improve the level of dispute resolution and substantially resolve disputes; Post litigation extension requires precise judicial diagnosis to eliminate hidden dangers from the source. The upcoming implementation of the new company law will play a significant role in improving corporate governance, resolving corporate deadlock, and reducing unnecessary litigation. However, corporate serial lawsuits are still a difficult trial problem that urgently needs to be solved. Here, the author discusses several opinions on how to comprehensively apply the substantive norms of the new company law and the procedural norms of the litigation law, and establish a sound mechanism for preventing and resolving multiple lawsuits related to corporate disputes. The harm of corporate serial lawsuits is not small. Corporate serial litigation is a complex form of litigation, usually composed of multiple single lawsuits with different litigation subjects. It may be multi-point lawsuits formed in multiple courts at the same time dimension, or multiple lawsuits with a long historical span formed in the same court. This type of lawsuit usually revolves around the competition for company control, and the number is increasing year by year. Taking the two-level courts in Nanjing as an example, from 2018 to 2023, there were as many as 2941 cases involving internal entities of the company, accounting for 23.64% of corporate litigation cases. On average, each company had 7.01 litigation cases, with the largest company having more than 60 lawsuits, and the longest period lasting more than ten years. Corporate serial lawsuits will have many adverse effects on the company, its shareholders, creditors and other related stakeholders, and have a certain degree of harm to the social and economic order. The repeated lawsuits have led to a decline in the company's decision-making ability, the inability to operate normally, and negative evaluations of the company's reputation and image. Shareholders, as well as between shareholders and directors, supervisors, and senior management, have long been caught in a stalemate, with endless lawsuits sometimes escalating into criminal charges, leading to one or more parties being imprisoned, the company being shut down, and even going bankrupt. In addition, multiple lawsuits have consumed limited judicial resources, and the disputes between the parties have not been well resolved. According to statistics, in disputes over company control, about 30% of first instance cases are concluded by withdrawing the lawsuit, while 10% of second instance cases are also concluded by withdrawing the lawsuit. This is not because the dispute has been substantially resolved, but because the parties withdrew the lawsuit due to tactical considerations. The active governance of corporate chain lawsuits is of great significance. Strengthening the proactive governance of corporate serial lawsuits has important practical significance. One is the inevitable requirement of practicing the people-centered development concept. Disputes that go through lengthy litigation cycles but cannot be substantially resolved will inevitably increase the burden of litigation on the parties involved. The governance of corporate serial litigation aims to not only handle cases fairly and efficiently, but also identify the causes of disputes, minimize unnecessary cases, and enhance the sense of judicial gain for the parties involved. The second is the practical need for people's courts to improve quality and efficiency. Corporate litigation has the characteristics of high demand for factual investigation and difficulty in legal application, with high case to case ratio, appeal rate, and development and reform rate. Strengthening the governance of corporate serial lawsuits can effectively resolve disputes, reduce the loss of judicial resources caused by idle procedures, and improve the quality and efficiency of trials. The third is to promote society

Edit:Ying Ying    Responsible editor:Shen Chen

Source:http://rmfyb.chinacourt.org

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