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Statutory organs or "relative organizations" are the only eligible plaintiffs for prosecution in remedy for violated consumer's rights and interests.

At the seminar on the Law for Protection of Consumer Rights and Interests of Shanghai Law Society, held by SHUFE Law on March 11th, some jurists placed their emphasis on "financial consumers". Compared with ordinary consumers who suffered from counterfeits or commodities of poor quality, financial consumers often find it harder to seek remedy for their infringed rights. Several jurists spoke of the newly-enacted Civil Procedure Law, where clauses about "the System of Public Interest Litigation" were first added. Be that as it may, it is still a tough fight for financial consumers' rights in the application of these clauses.

Protecting Investors: A Legal Dilemma

Currently, an increasing number of people are joining the army of financial consumers, as stockholders or fundholders. The question now is whether the current Law for Protection of Consumer Rights and Interests could afford the remedies for the violated rights of financial consumers .

"Financial consumers ought to be protected by this Law. But no corresponding clauses could be found in the Law for Protection of Consumer Rights." pointed out by Hong Wu, the Dean of ECUPL Economic Law school. In days gone by, when encountered with wash sale or insider trading, it is quite hard for investors to initiate a prosecution, or demand an explanation from the investees for their wrongdoings.

"Relative Organizations": Not So Enthusiastic

According to the newly-implemented "System of Public Interest Litigation", "authorized organs or relative organizations are eligible to initiate prosecution against acts resulting in environmental pollution or infringement of consumers' lawful rights, or other acts infringing public interests, to the People' Court." This system provides medium and small investors with a novel approach for remedy-seeking. From the viewpoint of some jurists, however, this is not an easy approach, since authorized organs or "relative organizations" are the only eligible plaintiffs for the prosecution.

Wu explained that the so-called "relative organizations" are mainly refers to  social groups, private non-enterprise units and foundations. He noted that taking the motive of public interest litigation into account, those "relative organizations" are far less enthusiastic than individuals or enterprises. For instance, Financial Industry Association, as one of the "relative organizations", is legitimate to launch the lawsuit on behalf of investors. But the original intention of its establishment is to protect the interest of the financial industry, rather than that of financial  consumers. In that case, who would speak for these consumers?

On the NPC &CPPCC, the subject of financial pro bono litigation also aroused a heated discussion. A director of the Investor Protection Bureau in CSRC publicly stated that a research into the System of Public Interest Litigation, aiming at expanding the channels for the remediation of investors' violated rights and interests, is under way. At the seminar, some experts noted that it remained unclear whether the Investor Protection Bureau in CSRC or its subsidiaries are eligible subjects of the right to institute such a pro bono litigation.

Incentive Mechanism : A Driving Force for Pro Bono Litigation

It should be noted that in developed countries like the U.S., which developed a relatively mature pro bono litigation system, the corresponding incentive mechanism is also fully evolved.

As introduced by professor Liu Shuiling of SHUFE Law, in other countries, various NGOs could also perform the role as a qualified plaintiff to initiate a pro bono litigation on behalf of individuals. "It is not gratuitous, however, once they win the lawsuit, a portion of the fine would be allocated into the pro bono fund."

Speaking of pro bono litigation, some experts mentioned the case of Wang Hai, the once sensational "professional fraud fighter". Though Wang initially started the struggle for people's rights, there's also an element of greediness in his fights, which has lasted more than 10 years.

"Is there any internal force driving those relative organizations to launch a pro bono litigation?" Wu stated that there were no financial pro bono litigations in the past, and that these new lawsuits marked the great leap of the practice of law. What need further attention is the compensation for these pro bono litigations.

The 2008 Lehman Brothers’ Minibonds case had set a tricky problem for the Hong Kong Government. Over 33 thousand Hong Kongese had invested in the dim-sum bonds, which valued around 12.5 billion Hong Kong dollars. The final compensation scheme set to return 85% to 96.5% of the initial investment to eligible investors.

How to ascertain the amount for compensation and to allocate the compensation, were the case won? The scholars suggested that these significant issues, while minor, need further studies.

                     Reported in Wenhui Bao, written by Liping Fan, translated by Jade Cheung
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