Severely Punishment of False Statements in Civil Litigations to Build a Honest and Exclusive International Civil Litigation System —Company M v. Wen, a case of dispute over the return of company licenses

Basic Facts

Wen was the former legal representative and executive director of Company M. But after the new Director and legal representative was selected in Shareholders Meeting by Company M, Wen refused to return the official seal, licenses and financial data of the company, thus Company M sued to the Qianhai Court to reclaim the company licenses. In the first instance and under a separate court investigation, Wen stated that the administrative official seal of Company M was kept by Tan who worked in personnel department. As for the statement proposed by Company M that Wen had produced the administrative official seal of Company M and had been examined in a public security, the agent ad litem of Wen said he was unaware and he failed to contact Wen to verify the statement. In the second instance, the Qianhai Court presented the examination records provided by the public security and the administrative official seal sample of Company M to Wen, and then in court Wen verified the authenticity, legitimacy and relevancy of the examination records and the official seal sample.  

Judgement

In accordance with the provisions of the Civil Procedure Law of the People's Republic of China and judicial interpretations, the Qianhai Court held that civil litigations shall comply with the doctrine of good faith and the guarantee letter signed by litigants before court’s examination shall specify that litigants are required to tell the truth, and false statements shall be punished. During the civil proceedings, the concerned parties and other litigants shall be honest and comply with the doctrine of good faith of civil litigations. The prohibition of false statement indicates that the concerned parties must fulfill their obligation to tell the truth and will not mislead and lie to the court, otherwise they shall bear the relevant civil legal liabilities. Wen’s dishonest conducts impaired the legitimate interests of the Company, hampered and delayed the process of litigations, caused a waste of judicial resources and tampered with judicial authority. Considering Wen’s malicious false statements and contempt of court, the Qianhai Court imposed a fine of 100 thousand Yuan on Wen. 

Significance

This case is the first severe “ticket” issued by the Qianhai Court for malicious false statements of litigants in civil litigations since its establishment. This case deeply analyzed the doctrine of good faith and the obligation of telling the truth which should be complied by all civil litigants and also analyzed how to properly fulfill the obligation of telling the truth. This case also stated the legal value of punishing false statements in accordance with the law and imposed severe punishments for false statements, thus maintained judicial authority, protected the legitimate interests of the other party and provided an example for courts to punish such dishonest conducts. The handling of this case provided help to guide concerned parties and their agent ad litem for honest and rational litigations to build a credit system of civil litigation in the Free Trade Zone, and create an honest, open and inclusive international commercial environment.