SHANGHAI: The Shanghai No 1 Intermediate People's Court recently rejected a claim by a man for compensation of more than 1.3 billion yuan ($171 million) for mental stress, the first of its kind in China.

The case stemmed from a contractual dispute between 34-year-old Cai and his employers in which he claimed 380,000 yuan in compensation at the Shanghai Xuhui District People's Court.

The court ruled Cai had missed the 60-day deadline to file for labor arbitration, an indispensable process prior to court proceedings.

According to Chinese law, when labor-related disputes occur, employees have to first go through an intermediation process organized by his or her employer.

If this fails, they can apply to the local labor bureau for arbitration within 60 days of the dispute. If this also fails, they can take the case to court.

Cai's contract ended on November 3, 2005, and he did not seek arbitration until the middle of last year.

He told the labor bureau that his employer, the Shanghai branch of PolyPhaser Corporation, paid him less than the contract had promised, and demanded the employer and the agent, China International Intellectech Corporation, through which his contract was signed, to compensate him the difference, 380,000 yuan.

Cai signed a one-year contract as a purchasing engineer in November 2004.

He failed in his arbitration bid and in his case before the district court.

Cai then appealed to the Shanghai No 1 Intermediate People's Court. He added 1.3 billion yuan to his claim for mental suffering brought on by the contractual dispute.

The claim was also dismissed for failing to abide by the proper process. Cai was ordered to pay 50 yuan in court fees.

According to Chinese law, plaintiffs pay litigation fees in accordance with the amount of compensation claimed, but it is always 50 yuan in cases involving salary disputes.

(China Daily 06/21/2007 page5)