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Firms to pay lower court fees
Last Updated(Beijing Time):2008-12-04 16:57

Shanghai's medium and small enterprises battling a world economic downturn may now pay lower fees to defend lawsuits brought against them, the Shanghai Higher People's Court has said.

Providing they have financial problems, the firms will be allowed to have their expenses reduced, delayed or exempted, the court said.

It's a first for Shanghai firms. "Such judicial aid was only available to individuals," said Zhou Zanhua, deputy director of the Shanghai No.1 Intermediate People's Court.

Contract disputes and unpaid salary disputes are on the increase as the international crisis bites deeper, the higher court said. Some local enterprises had been forced to cut or suspend output or even go bankrupt.

Many enterprises with capital problems were being urged to return loans to banks, and their investors wanted to withdraw their investment, said Pan Furen, director of the Shanghai No.1 Intermediate People's Court.

Local courts said the number of cases involving exports has risen.

Foreign buyers were canceling orders, rescinding contracts or refusing to pay for various reasons as they had more difficulty in selling, which led to more local cases, Pan said.

"The initial disputes happened in foreign markets in many cases," said Wang Li, a presiding judge in the No.1 Intermediate People's Court.

"But when both sides don't want to bear expensive lawsuit costs abroad, they give up the chances to claim for losses from foreign businesses. Instead, they shift the blame onto each other and appeal to local courts."

Labor disputes also increase when some companies dismiss people and reduce salaries. The Shanghai No.1 Intermediate People's Court accepted 1,759 labor dispute cases since July, a 41.6-percent increase over the same period last year, Pan said.

In response, the higher court has ordered all lower courts to proceed with caution in litigation cases. Mediation will be used more often to solve problems, and the judicial process will be speeded up. In the case of salary disputes, courts need to protect the interests of both parties, the higher court said. "If we don't proceed properly, many firms will go bankrupt or withdraw capital even faster, and workers will not get paid," Pan said.

Source:Shanghai Daily 
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