Research Of Setoff In Litigation

Setoff in litigation, one of the ways to exercise the setoff right, is a common practice in civil actionsin most of the countries or regions. It varies in terms of the legislative system and specific provisions. It isseen as defense in continental law systems and as counterclaim in common law systems. With the rapiddevelopment of China’s economy, there is a sharp rise in the number of the civil actions as well as thenumber of litigation setoff cases. However, China’s civil procedure law has not yet specified the setoff inlitigation and there is no uniform standard in judicial practice to handle the setoffs, leading to a chaoticsituation in handling such cases. The lack of specifications in this regard is detrimental to the protection ofthe legitimate interests of the parties and will lead to inefficiencies of the proceedings. Therefore, to copewith these problems, it is urgent to establish relevant laws to specify the proceedings. The thesis attempts tostudy the setoff in litigation and make an in-depth discussion about the system with an aim to provideinstruction for the abundant setoffs in litigation in China.The article introduces the situation of the setoff in litigation in China from legislative and judicialstatus quo. As for the legislative status quo, this part discusses the domestic specifications by the contractlaw, bankruptcy law and civil procedure law as well as the specifications by foreign laws and points outsome problems and defects in the current legislation of China. As for the judicial status quo, this partdiscusses stipulations in some documents by the Supreme People’s Court and other departments andanalyses the treatment of the setoff in litigation in judicial practice by local courts. In addition, this partmakes a brief analysis of the reasons of the setoff in litigation in China and affirms the significance toimprove China’s setoff in litigation.It discusses the selection of the setoff in litigation mode by China. This part begins with a comparativeanalysis of the setoff in litigation in continental law systems and that in common law systems. The setoff inlitigation is a common practice in the two law systems that share some mechanism. However, differentcountries vary in their specific legislation. In addition, most importantly, the two law systems see the natureof the setoff in litigation differently. The setoff in litigation is seen as defense in the continental law systemand as counterclaim in common law system. The difference makes it different for China to select the setoff in litigation. As for the mode selection, most of the domestic scholars propose that the setoff in litigationshould be part of the counterclaim system in accordance with the common law system, I also endorsed. Inthe meantime, the author discusses the relation between the setoff in litigation and counterclaim,the reasons,feasibility,the applicable scope and the precondition for the establishment of an independent setoff inlitigation system. But the author of the thesis maintains that an independent setoff in litigation systemshould not be established in China,which is still facing great difficulties, and the establishment of anindependent setoff in litigation system point of view to criticize.It deals with the problems related to the setoff in litigation. This part mainly discusses the followingproblems: between the setoff in litigation and repeated prosecution, the objective scope of setoff inlitigation and res judicata, plaintiff’s exercise of right of setoff in litigation during the procedure of secondinstance and enforcement. As for the relation between the setoff in litigation and repeated prosecution,there are mainly three types. To summarize the three types, the author prefers the affirmative theory andproposes three points. As for the plaintiff’s exercise of the setoff right, the author holds that the plaintiffshould exercise the right. The agent ad litem should also be given the setoff right except being bannedotherwise. The author also discusses the effect of the setoff on the defendant caused by the withdrawal ofcomplaint and the effect caused by the defendant’s withdrawal of the setoff right. The author maintains thatin principle the parties cannot exercise the litigation setoff during the procedure of second instance exceptwhen the defendant submits the request of setoff in second instance after the request has been denied byjudges during the first instance. Whether the setoff should be accepted is dependent upon the specificconditions.