No Way Out page – 5

China Labour Bulletin and Rights & Democracy

Workers’ Quest for Judicial Redress

27 On the basis of China’s existing legal framework, it is entirely feasible for SOE privatization disputes likewise to be fairly settled in court. However, in reality this rarely happens. Since these disputes arise as a consequence of local government policy, they generally involve issues of administrative law as well as of civil law. This was especially problematic in cases that affected the personal interests of enterprise managers and government officials. Government departments and officials acted as organizers and decision-makers throughout the SOE restructuring process and were often direct beneficiaries of the final outcome.

Judicial Discrimination against Laid-off Workers

As the number of privatization dispute cases rose rapidly around the turn of the century, China’s senior judicial authorities simply took the line of least resistance and instructed the courts to stop hearing such cases. On 28 October 2000, the Supreme Court’s deputy chief justice Li Guoguang stated:

When enterprises make workers redundant, all issues relating to unpaid wages are specific phenomena arising from the process of enterprise and employment system reform. They are not issues arising from the performance of labour contracts. Therefore, such disputes should be resolved by the competent authorities in line with overall policy provisions for enterprise reform. These cases are not labour conflicts and so should not be heard in the civil courts.28

And on 26 March 2003, Huang Songyou, also a deputy chief justice of the SPC, stated at a session of the All-China Civil Law Working Conference:

No collective disputes triggered by wage arrears at SOEs due to state industrial policy or corporate restructuring can be accepted [by the courts] for the present… Persuasion must be used, conflicts must be defused, and settlements reached in coordination with the branches of government concerned.29

These rulings meant, in effect, that tens of millions of laid-off workers were arbitrarily stripped of their constitutional right to seek legal redress through the courts. Instead, they were to be “persuaded” – and if necessary coerced – into accepting their fate. At around the same time, provincial and local courts lengthened the list of cases they would not accept. The Guangdong Provincial Higher People’s Court, for example, in its Guiding Opinion on Various Questions Concerning the Hearing of Labour Dispute Cases, issued in September 2002, indicated that it would refuse to accept any cases involving wage arrears’ disputes triggered by worker redundancies following government-led SOE restructuring. Similarly, in the Guangxi Zhuang Autonomous Regional Higher People’s Court’s Circular on Categories of Cases Subject to Temporary Rejection by the Courts, issued in September 2003, 13 categories of case were listed as off-limits on grounds of their “deep and wide-ranging sensitivity and social concern.” They included: “disputes involving wages in arrears for laid-off workers due to corporate restructuring and poor profitability, redundancy disputes arising in the wake of labour system reform,” and also “cases involving violation of democratic principles or re-employment of workers after [enterprise] restructuring.” To date, the court authorities have shown no indication that they intend to repeal these decrees stripping SOE workers of their right to judicial redress.

On 27 July 2007, Wu Guangjun filed a lawsuit against the Liaoning Cotton and Hemp Company seeking reinstatement of his employment contract at Unit 804. The Huanggu District Court in Shenyang initially accepted the case and issued a summons to Liaoning Cotton and Hemp; but after a “communication” between the company and court officials, Wu was told that the court “could not accept” the case after all. The court refused to give a reason or to provide any supporting documentation. After the 2008 Spring Festival, Wu again approached the district court and this time was told explicitly by the presiding judge that “the court cannot handle this case.”

Because Wu was unable to get a written copy of the rejection ruling, he could not initiate legal proceedings, and had no means of appealing to a higher court. His arbitrary and illegal treatment by his former employer in effect had left him destitute. Since being forced out of Unit 804 in April 2001, he had been unable to obtain either basic social security benefits or even the government-provided “minimum subsistence allowance” for those with no means of support. By April 2008, Wu had sold his home to meet the costs of endlessly petitioning the authorities, his wife had left him, and finally – in weather conditions of under minus 100C – he was reduced to becoming a street sleeper.30

In April 2003, over 400 retired or “internally retired” workers of the Tieshu Textile Factory reacted to a decision by the bankruptcy liquidator team to cancel their 127-yuan monthly subsistence, transportation and utilities allowance by bringing the matter to mediation and then filing a lawsuit. Both applications were rejected by the relevant authorities. In February 2004, the workers then staged a series of high-profile public protests, notably involving a several-hour blockade of the local railway line, in an attempt to draw the local government’s attention to their case. As a result, two of the workers’ leaders, Wang Hanwu and Zhu Guo, were arrested and prosecuted for “gathering a crowd to disturb public order,” and several others later received arbitrary sentences of “re-education through labour.” As one worker commented at the time:

They say it’s illegal for us to blockade the railway, picket the factory entrance or appeal to the government. But when we try to do things the legal way, first by mediation and then through litigation, our case is always rejected. We couldn’t resolve matters through blockades or picketing, or even by talking with city leaders, but taking the legal route got us nowhere either! 31

Shortly before taking their complaint to the streets, the Tieshu workers learned to their dismay that between 1996 and 2002 the company had consistently underreported total worker salary payments to the local Social Security Bureau, and as a result the Bureau had allowed insurance premiums to fall below the minimum level required to provide standard retirement pensions. In December 2003, the more than 1,500 forcibly and “internally” retired workers whose pensions had thus gone up in smoke launched an administrative lawsuit against the Suizhou Municipal Labour and Social Security Bureau. The case dragged on for 18 months and the workers lost their case at the initial trial. At the appeal hearing in June 2005, however, the Suizhou City Intermediate Court ordered the Social Security Bureau to recheck all its figures on the pension and social security payments made by Tieshu during the years in question, and moreover instructed the bankruptcy liquidator team to ensure that the company’s pension obligations to all retired workers were duly honoured.32 But the government departments concerned refused to comply with the court’s ruling, claiming that they “lacked the capacity to implement it” (wu zhixing nengli).

The retired workers then embarked on the long road of petitioning in an effort to secure enforcement of their pension rights. Finally, in March 2007, they issued an appeal to the National People’s Congress stating that they had “no means of making a living” and expressing despair at their situation. The petition letter read:

What is the point of suing under the Administrative Procedure Law promulgated by the National People’s Congress if officials can get away with things even when they lose the case, pleading inability to enforce the court ruling and using administrative devices to avoid compliance? 33

To make matters worse, the legal profession itself, at the government’s behest, took steps to block potential litigants’ access to legal representation in cases of this type. The Guiding Opinion of the All-China Lawyers Association [ACLA] on the Handling of Collective Incidents, issued on 20 March 2006,34 covers collective incidents relating to “land appropriation levies, [home] demolitions and relocation, displaced migrants from major project areas, enterprise restructurings, environmental pollution and rural workers’ rights and interests.” According to the directive:

When lawyers agree to take on collective cases, they must enter into prompt and full communication with the judicial authorities and give a factual account of the situation, highlighting any points needing attention. They must actively assist the judicial authorities in their verification work.

The directive further stated:

After accepting a collective case, lawyers must promptly explain the facts through the appropriate channels to the government organizations involved, and if they discover a major issue that could intensify conflict or escalate the situation, the emergence or potential emergence [of such a situation] should immediately be reported to the higher-level judicial administrative organs.

In other words, in a wide range of cases involving citizens’ disputes with government authorities, including any and all SOE privatization-related cases, plaintiffs’ lawyers are now obliged to report to and, in essence, collaborate with the accused party in the case. The ACLA directive thus severely limited the rights of Chinese workers to secure independent legal counsel in privatization dispute cases and obtain a fair and impartial hearing of their grievances. In addition, it violates the basic legal principle of lawyer-client confidentiality.35 In a system already heavily biased against worker litigants, such arbitrary measures by the authorities served only to drive workers adversely affected by SOE restructuring further in the direction of extra-legal protest activity.



27- For example, the Shenzhen Commercial Daily reported that on 16 October 2007, a 36 year old migrant worker was awarded 440,000 yuan (around US $50,000) in compensation by a court in Shenzhen after being paralyzed in an accident on a construction site the previous year. The award was more than twice the government’s recommended compensation for the families of workers killed in coal mining accidents. Other recent cases have significantly broadened the scope of labour rights litigation. The Southern Daily (Nanfang Ribao) reported that on 22 October 2007, a Guangdong court awarded a migrant worker named Song 45,000 yuan in compensation even though he had signed a labour contract waiving his rights to work-related compensation. The court deemed the contract to be invalid.

28- Taken from Opinion Concerning Various Problems in the Hearing of Labour Dispute Cases (Trial Implementation) (Hubei Sheng Gaoji Renmin Fayuan “Guanyu shenli laodong zhengyi anjian ruogan wenti de yijian’ [shixing]), Hubei Province Supreme People’s Court, issued 21 March 2004.

29- Supreme People’s Court deputy chief justice Huang Songyou, “Fengfu he wanshan xiandai minshi shenpan zhidu wei quanmian jianshe xiaokang shehui tigong sifa baozhang?jiu quanguo minshi shenli gongzuo fang zuigao renmin fayuan fuyuanzhang Huang Songyou” (A fully equipped and comprehensive modern civil judicial system provides the judicial safeguards for establishment of a basically affluent society), Supreme People’s Court deputy chief justice Huang Songyou,, 3 April 2003, from Xuzhou City government website

30- In a surprise move, in July 2008, the Beining Municipal Court agreed to accept Wu’s case, with a hearing scheduled for 11 August. No legal reason was given for this sudden about-face. At the time of going to press, the hearing had not yet taken place.

31-“Yi faweiquan yaoqiu fahuan tuixiujin butie_Tieshu babai tuixiu zhigong jixu kangzheng” (800 retired workers of Tieshu company continue their legal campaign demanding payment of retirement benefits), 9 July 2003, on CLB website.

32. Administrative Judgment No. 6 (2005), issued by Suizhou City Intermediate People’s Court.

33- CLB case notes.

34- See ACLA website:

35- See: A Great Danger for Lawyers: New Regulatory Curbs on Lawyers Representing Protesters, Human Rights Watch, December 2006; available at