Court warns against collusion in lawsuits

Xuhui District People's Court has warned that plaintiffs and defendants who collude to fabricate facts or forge evidence can face detainment, fines or criminal charges, according to a press release issued Monday.

The warning comes at time when local courts have become increasingly aware of such cases, known as malicious lawsuits, which disrupt the court system, undermine judicial credibility and waste the court's time and money, according to a press release from the court.

"Although no one involved with a malicious lawsuit has been fined or charged criminally, the courts are trying to put an end to these cases by informing both plaintiffs and defendants about their legal consequences," said Wu Yanyan, a press officer with Xuhui District People's Court.

In one recent case, nine workers sued their employer for 13.5 million yuan ($2.14 million) in unpaid salaries, the press release said. The court threw out the case after an investigation found that the company had engineered the lawsuit as a means to avoid paying its creditors.

Investigators found flaws and contradictions in the evidence presented by both the company and the nine employees as labor contracts and other documents showed signs of being altered.

The court determined that the company and the employees colluded so that the plaintiffs could win compensation from the company, though their purpose had nothing to do with unpaid salaries.

"The court later found that the company was in a lot of debt," Wu told the Global Times. "It tried to use an employee lawsuit to avoid paying back its debts."

Under Chinese law, if a company declares bankruptcy and owes its employees wages, the employees become creditors of the bankrupt company. Among the company's other creditors, the employees have first claim to the bankrupt company's assets.

Parties involved in malicious lawsuits can be charged with fraud or perjury, said Gao Ming, director of Shanghai Wanfang Law Firm.

A fraud charge carries a maximum sentence of 10 years in prison, depending on the amount of money involved, Gao said. A perjury charge can be punished with up to seven years in prison if the charge is serious enough.

"Although the motives behind malicious lawsuits vary, making money is the most prevalent," Gao told the Global Times.　

In a recent amendment to the Civil Procedure Law, a third party can appeal a verdict if it has evidence showing that its interests have been damaged by a court or mediation ruling in a malicious lawsuit.