The Supreme People's Court ("SPC") has recently distributed the Circular on Lawfully and Properly Trying Private Lending Cases (the "Circular").
The Circular expressly states that where the people's court reasonably suspects any violations or crimes, and the agent ad litem is unable to explain relevant case facts, the people's court shall summon the litigant to appear in person before the court and respond to questions raised about relevant case facts. Further, the Circular states that, where the private lending itself involves any violation or crime, the people's court shall rule to dismiss the lawsuit and refer clues and materials of the suspected crime to the public security organ or to the procuratorial organ. Where a criminal ruling establishes that the lender has committed a crime, such as the crime of fraud by laying loan traps, the people's court shall promptly correct the effective ruling that has been rendered to take the problematic behavior as an ordinary dispute over private lending, through the trial supervision procedures. Moreover, the Circular emphasizes that fees in different forms, such as "interest", "default penalties", "service fees", "brokerage fees", "deposits" and "late payment fees", shall not be upheld under the law, as long as they surpass either directly or in a disguised manner the statutory upper limit on the interest rate.