Central Inspection Group inspecting the Supreme People’s Court (again)

Mobilization meeting for the #4 CIG inspection

This week the Supreme People’s Court’s (SPC’s ) media outlets are carrying this 10 September report of the Central Inspection Group (CIG) #4’s mobilization meeting to inspect the SPC’s Communist Party group.  The same group is also inspecting the Supreme People’s Procuratorate (SPP). Senior leaders (that with a bureaucratic rank of deputy bureau chief and above 副局级以上干部) of the SPC and its institutions attended in person (as well as related personnel). Those in the SPC’s six circuit courts  (巡回法庭) attended by videolink.  Zhao Fengtong is heading  (this English biography is outdated) the inspection group. He gave a speech at the mobilization meeting. President Zhou Qiang, who chaired the meeting, spoke as well. A search of Caixin’s website reveals that Zhao Fengtong has headed many such inspection groups. News of the inspection was announced on the Central Commission for Discipline Inspection (CCDI) website last week and other media outlets. The inspection is part of the current round of CIG inspections, which total 37 Party, government, and other entities.  A CIG group last inspected the SPC almost three years ago. The previous mobilization meeting and inspector results were previously mentioned on this blog.

The China Law Society (a mass (government-organized non-government organization)) and the Ministry of Justice are being inspected in this round of inspections. Each has held its own mobilization meeting.

The inspection appears to be one example of the strengthening of Party leadership in the SPC. The inspection appears to be linked to language in earlier documents to strengthen the leadership of the Communist Party (加强党的领导) and to strengthen Party political construction (党的政治建设).  The Party Center issued a document on political construction earlier this year.

The remarks that Zhao Fengtong made are consistent with the document on political construction. Some of the points that Zhao Fengtong and Zhou Qiang made are highlighted below (along with my brief comments in italics):

  • the SPC, as a central organ, assumes a major political responsibility and glorious historical mission (重大政治责任和历史使命).  This phrase is to be found in SPC policy documents supporting important government initiatives;
  • Inspections are political supervision and a comprehensive political examination of the implementation by the Party Group of a Central and national organ of its political responsibility and duties (巡视是政治监督,是对中央和国家机关党组织履行政治责任和职责使命情况的全面政治体检). The term “political inspection” appears to be used frequently since earlier this year–the report on the previous mobilization meeting did not use this term.
  • The focus is on inspecting how the SPC is implementing the Party line, direction and policies and the major decisions that the Party Center has announced (重点监督检查落实党的路线方针政策和党中央重大决策部署情况);
  • The inspection will search out political deviance (深入查找政治偏差).  This phrase is found in the document on political construction–“put efforts into discovering and correcting political deviation” (着力发现和纠正政治偏差).

President Zhou Qiang stated that the Party group fully supports the work of the inspection group, will correct the problems found, will not delay or blame.  He mentioned that the institution will combine support for the work of the inspection group with current work (要把配合做好巡视工作与抓好当前工作结合起来).  The SPC is a court, to whom the public looks for justice. Informal inquiries indicate that the SPC has an even larger civil and commercial caseload this year.  Although earlier this year it raised the minimum amount in dispute for cases that it will take, the current state of the economy means that the SPC is facing a large increase in civil/commercial disputes. Domestic cases have a six-month deadline for resolution, placing a great deal of pressure on judges to resolve them timely, either by encouraging settlement or issuing judgments (or rulings).  

As in the previous round, the CIG is inspecting the SPC for approximately two months. The inspection group has provided an email and telephone number for those wishing to provide further information.

Background on CIGs and how they operate can be found in a 2016 New York Times article (focusing on the Ministry of Public Security’s inspection) and this scholarly article by Professor Fu Hualing of the University of Hong Kong’s law faculty.

 

Rooting the Singapore Mediation Convention in Chinese soil

tree planting in Fujian ©xinhua

The signing of the  UN Convention on Enforcement of Mediated Settlement Agreements (Singapore Mediation Convention) in early August by the United States, China, and 44 other countries is one of the significant events for international commercial lawyers, although it has been lost in the roar of more major geopolitical events.  Signing the convention appears to have been a last-minute decision by the government of the People’s Republic of China, as this post by Zhong Lun partner Sun Wei in the third week of July does not give a clear signal as to whether China would sign. In several events at which I spoke or attended this month, the topic of the Singapore Mediation Convention came up.  So I’d like to draw on the wisdom of others (and add some of my own thoughts) to talk about the challenges to be faced in rooting the Singapore Convention in [mainland] Chinese soil.

I’ll note that Professors Peter Corne and Matthew Erie have written about the same topic recently for the well-regarded blog Opinio Juris about the background and some of the challenges that China faces in implementing the Singapore Mediation Convention.  I appreciate their link to my March, 2019 blogpost on the closed-door workshop held at the International Law Institute of the Chinese Academy of Social Sciences on the Singapore Convention. They have written in detail about the lack of commercial mediation legislation, inconsistencies between the Convention and domestic PRC law, and the lack of private-sector or other robust mediation centers.  I’ll add to the analysis several (generally unrecognized) factors:

  • taking a more flexible approach to mediation legislation;
  • changing state-owned enterprise (SOE) and SOE senior manager metrics and performance indicators to facilitate mediated settlements;
  • convincing senior SPC personnel that settlement agreements (as defined by the Singapore Mediation Convention) are more likely to lessen rather than increase the workload of the courts (this has been flagged by Sun Wei in one of his posts);
  • having persons committed to making change within bureaucratic institutions.

Flexible approach to mediation legislation

A number of people have written (and even more have spoken) about the obstacles posed by the lack of a Chinese commercial mediation law or general mediation law.  But perhaps it is best to follow the usual Chinese legislative approach, and test what is needed through [possibly temporary] [State Council] regulations. Once the outlines of what needs to go into a law are clear, drafters can look to China’s own experience, the 2018  UNCITRAL Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation and experience abroad (characterized as beneficial foreign experience).

Implications for SOEs

On changing SOE (and manager) metrics and performance indicators, Professors Jack Coe, Jr. (Pepperdine University School of Law) and Lucy Reed (National University of Singapore(NUS)) made the comments below on investor-state mediation earlier this year in a conference in Hong Kong on investor-state dispute settlement (ISDS). Although they were not speaking specifically of China, in my view, the principles are also applicable to China and also apply to settlement agreements of SOEs with commercial entities in other jurisdictions:

Relatedly, governments ought to more fully embrace principles of resource management and prudent stewardship in considering how in a given case mediation might bring an end to a risk-laden dispute, allowing the government officials legitimately to declare victory, and then return to the State’s other business. Additionally, we need to study domestic corruption laws and other municipal disincentives to government settlements with foreign investors. State officials [and senior SOE managers] ought to be free to end disputes without fear of corruption charges later being brought against them, in turn putting the settlement itself at risk.

Professor Lucy Reed discussed a 2016 survey that NUS’ Centre for Investment Law (which she headed) conducted on obstacles to settlement in ISDS (for those who aren’t familiar with her, she is one of the leading international commercial and investment arbitrators):

the top obstacle to settlement in ISDS, by far, is the State’s desire to avoid responsibility for a settlement and to defer decision making to third-party arbitrators. The second greatest obstacle is the political risk involved. The third one is the difficulty of getting budget approval when there is a voluntary settlement instead of an arbitral award. Fourth is,as Jack Coe mentioned, a fear of public criticism, media criticism,
and even allegations of corruption in taking a bribe in order to settle a case with a potentially hated investor. Fifth was the fear of setting a precedent, meaning opening the floodgates to being sued again and again because you make a settlement. Then there are structural inefficiencies; because there are so many agencies involved, it is just hard to get approval.

The survey also looked at what might incentivize governments to invite a mediator to participate. Professor Reed said:

By far the most important factor was the desire to save time and money, so, please remember this one.  Second, obviously, is when the case is known to be weak and might be lost. Third is appreciating the certainty of a settlement, over which they have some control, as compared to the uncertainty of an arbitration decision, which you might win but you also mightlose and lose big. And the fourth factor actually was the desire to preserve a long-term relationship, if the relations are not already fractured as they often are in big investments.

All of these obstacles and incentives have their Chinese characteristics. One incentive, a variation of the fourth factor that Professor Reed identified, is that it enables a Chinese contractor that has a dispute with a host country (or state-owned company) to resolve a dispute (to its satisfaction) without losing its eligibility for future work in that market. This is a real concern for Chinese contractors, who are major players in the international construction/contracting market.

Resolving issues for SOEs is likely to require a commitment by multiple institutions involved in administering SOEs and its managers (State-owned Assets Supervision and Administration Commission (SASAC), the Communist Party’s Organization Department (组织部), and the Ministry of Finance among others. In a mock mediation session (based on an actual case) that was part of a Great Britain China Centre event that I attended this spring, the benefits of mediated settlements in achieving the goals of all parties involved in a BRI project was brought home.  Convincing the SOEs and their regulators will be an important part of making the Singapore Mediation Convention work in China.

Implications of the Singapore Convention for the Chinese courts

As Sun Wei wrote earlier, the Chinese courts are concerned that overworked [I would add, and very studious] Chinese judges will need to deal with a flood of enforcement cases when China ratifies the Convention. He cited data to show that generally parties comply with a mediated settlement and rarely seek compulsory enforcement proceedings. Another major concern of the Chinese courts is that Chinese judges will need to review claims of fraudulent cross-border mediation as well as fraudulent litigation and mediation. But the evidence so far would indicate that the Singapore Mediation Convention would reduce rather increase the workload of the Chinese courts. But the deeper question is the reliability of that data and relevance to China’s legal environment and the legal environment outside of China in which Chinese companies operate. There are more minor issues, such as an additional cause of action (if I understand Chinese civil procedure law correctly), but those aren’t the principal concerns.

Who is committed?

Planting the Singapore Convention in Chinese soil requires work by many related government institutions.  The hard work in determining what needs to be done cannot be done one person (or even a team of people) in one institution, but requires persuasion and appeals to institutional self-interest of multiple institutions, and persons committed to making the Singapore Convention work in their regulatory area.

Many thanks to a knowledgeable person for his thoughtful comments on an earlier draft of this blogpost.