A brief notice appeared on the China International Commercial Court (CICC)’s websites on 9 August, announcing that the Office of the International Commercial Expert Committee (Expert Committee) of the Supreme People’s Court (SPC) (国际商事专家委员会办公室) had been renamed the Coordination and Guidance Office (协调指导办公室) for the CICC from 21st June 2019. The main duties of the Office are described as directing and coordinating construction, adjudication management and external exchange (负责指导协调国际商事法庭建设、审判管理、对外交流; 负责国际商事专家委员日常工作等) of the CICC, and also in charge of the routine work of members of the Expert Committee. I surmise that these functions are meant to convey that the office will not only support activities related to the Expert Committee but also be responsible for a variety of matters, such as coordinating the drafting of rules and the wide variety of administrative matters that go along with any administrative entity in China, particularly one that deals with foreigners. The notice also announced that from 23rd July 2019, Ms. Long Fei, who has a Ph.D. from China University of Political Science and Law, has been appointed as the Deputy Director (Person in Charge) of the Coordination and Guidance Office. She had formerly been the Director of Department of Guidance Service, Judicial Reform Office of the SPC. She brings to the new role many years of work on diversified dispute resolution related issues.
I was very honored (and gratified) that the workshop pictured above was able to take place on 18 March at the International Law Institute of the Chinese Academy of Social Sciences (CASS). Unbeknownst to most of the attendees, who included persons from the Ministry of Foreign Affairs, Supreme People’s Court, and National People’s Congress, I was one of the organizers. Other participants came from the Foreign Affairs College and Shanghai office of the Singapore International Arbitration Centre. The workshop could not have taken place if not for the efficient work of Professor Liu Jingdong and assistant research fellow Sun Nanxiang. I had previously gotten to know Mr. Wen Xiantao, of the Department of Treaties and Law of the Ministry of Commerce (MOFCOM) and official Chinese negotiator of the United Nations (UN) Convention on International Settlement Agreements Resulting from Mediation (Singapore Mediation Convention or Convention) and Sun Wei, Zhong Lun partner and participant in the Convention negotiations as part of Beijing Arbitration Commission’s delegation to the negotiations as with observer status.
The Singapore Mediation Convention is intended to complement the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention, and when it goes into force, will enable international commercial settlement agreements that result from (third party) mediation to be enforced. A summary of the Convention can be found here, and the United States negotiator, Timothy Schnabel, who proposed the Convention, wrote (in his own capacity) a definitive overview of its text, structure, history, and purpose. As Mr. Schnabel’s article explains, the Convention is intended to promote the use of mediation in resolving cross-border commercial disputes, because it is more likely to work faster, cost less, and preserve the business relationship. From Mr. Schnabel’s article, it is clear that Mr. Wen ”vigorously participated in the formulation of international norms,” and his views had a positive impact on the eventual text of the Convention, supporting the drafting of a convention rather than only a model law and enabling enforcement of settlements that include both pecuniary and non-pecuniary elements.
From reading Sun Wei’s blogpost on the Kluwer Mediation Blog (part 2 found here) it was clear that multiple institutions need to come to an agreement that signing and ratifying the Singapore Mediation Convention would be beneficial for China. I noted many misconceptions about the Convention flying around the Wechatosphere. Messrs Wen and Sun (and I) realized that representatives from the institutions involved needed to be in the same room to be able to hear more about the Convention, ask questions and discuss concerns in a congenial environment. As a former practitioner, I thought it would be useful to have Adrian Hughes, QC and Helen Tang (Shanghai-based disputes partner of Herbert Smith Freehills) in the room to be able to speak first hand about the process of and advantages of commercial mediation in international commercial dispute resolution, as well as the enforcement process in the courts of England and Wales.
Wen Xiantao and Sun Wei took the lead in discussing the provisions of the Convention and related issues, Adrian Hughes spoke as a highly experienced international commercial mediator and litigator, and Helen Tang contributed comments from her experience representing Chinese parties in international commercial disputes. The closed-door and invitation-only format enabled an interactive discussion among all participants. Among the many issues discussed were the implications for the courts, preventing the enforcement of fraudulent mediation settlements, and the lack of a law relating to commercial mediation.
The official report on the workshop is found here.
The Supreme People’s Court (SPC) is gradually building the infrastructure for the China International Commercial Court (CICC). An important part of it was put into place in December 2018, when the SPC issued the Procedural Rules for the China International Commercial Court of the Supreme People’s Court (For Trial Implementation) (CICC Procedural Rules). Other rules are yet to be issued. From the Chinese original of the CICC Procedural Rules, they were issued by the SPC’s General Office 最高人民法院办公厅关于印发《最高人民法院国际商事法庭程序规则（试行）》的通知 (document number (法办发〔2018〕13号). The SPC’s judicial committee discussed the draft CICC Procedural Rules in late October, indicating the importance that the SPC leadership attaches to the CICC. However, the SPC did not issue the CICC Procedural Rules as a judicial interpretation.
As to why they were issued with the indication “For Trial Implementation” and by the SPC’s General Office rather than as a judicial interpretation, the Monitor has her theories (readers are welcome to propose alternative explanations). As for why “For Trial Implementation,” it is likely that the SPC intends to further amend the CICC Procedural Rules once it has greater experience using the rules and has more reaction from counsel that has litigated before the CICC and the market generally. As to why the SPC issued the CICC Procedural Rules as a General Office normative document rather than a judicial interpretation, it may be surmised that it is linked to the SPC practice of issuing judicial interpretations when judicial policy has stabilized (this practice is discussed in another article in the academic article production pipeline), and the judicial interpretation can be in place for a relatively long period. Additionally, issuing the CICC Procedural Rules as a judicial interpretation would involve more formalities and scrutiny under the 2007 SPC rules on judicial interpretation work.
As this blog (and other commentators have mentioned), the drafters of the China International Commercial Court rules had to draft carefully to remain within the constraints of existing law and judicial interpretations, as judicial normative documents (司法规范性文件) of which this is an example, may not conflict with either source of law. The CICC Procedural Rules reflect a number of themes seen in SPC cross-border matters:
- a focus on efficient dispute resolution;
- institutional rather than individual judge orientation;
- interaction with mediation and arbitration (as part of the SPC‘s Diversified Dispute Resolution policy);
- on-line procedures (part of the SPC’s intelligent (smart) courts project);
- promoting the use of Chinese institutions (part of the push to move the locus of China-related (and Belt & Road) dispute resolution to China (as mentioned earlier)); and
- reference to beneficial experience in other jurisdictions.
As noted here also, The CICC Procedural Rules are not long (40 articles), with one-quarter of its provisions devoted to mediation. In comparison, the DIFC court rules. Singapore International Commercial Court (SICC) Practice Directions, and Netherlands Commercial Court Rules of Procedure are much longer. But the length of the CICC Procedural Rules is consistent with the length of other SPC rules.
A few specific comments and general comments follow below.
Article 8 lists the documents that a plaintiff needs to provide when filing suit, highlighting the new and old in Chinese cross-border dispute resolution. The old is the documentary requirements that a foreign (offshore) plaintiff and his/her foreign agent must provide. Because China has not yet acceded to the Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents, an offshore plaintiff must provide notarized/certified and legalized versions of corporate or individual identification documents,
As to what is new, requiring a plaintiff to submit a Pretrial Diversionary Procedures Questionnaire (in addition to a statement of claim and other such documents) is a type of document that is often required by courts in other jurisdictions and reflects background research that the drafters had done on other jurisdictions.
The CICC emphasizes the importance of mediation and promotes the concept of a one-stop integrated model through integration with the leading foreign-related mediation organizations within China. The three international commercial court rules mentioned above also encourage the use of mediation but do not limit the mediation institution used to domestic ones.
Article 17 and 18, Pre-trial Mediation: Article 17 relates to a case management conference called by the Case Management Office of the relevant CICC rather than the judge assigned to the case, as set out the SICC Practice Directions (and other international commercial courts). The institution of a case management conference appears to be a concept borrowed from outside of China. It is to be convened within seven working days from the date of the service of the plaintiff’s documents on the defendant. In other jurisdictions, however, case management conferences are generally scheduled after the defendant has served his documents on the plaintiff. Query whether an exchange of documents would be more conducive to effective mediation.
Article 17 mentions that the time limit for mediation should generally not exceed twenty working days. This deadline puts pressure on the mediators and parties to come to an agreement quickly. It appears “generally should not exceed” language contains flexibility so that if parties are in negotiations, the deadline could be extended. As to what occurs in practice, Danny McFadden, Managing Director of the Centre for Effective Dispute Resolution (CEDR) Asia Pacific, well-known as a mediator (and trainer in mediation) )and former interim UN Director of Mediation) commented that in his experience: “When parties are keen to hold a mediation it can be administered and take place within a matter of days. However on average, from when CEDR is initially contacted by the parties/lawyers, the mediator and date of the mediation is agreed, mediation documents are exchanged and to the end of the actual mediation, it takes 5 to 6 weeks.”。
Under the CICC Procedural Rules, mediation will be conducted by one or more members of the CICC Expert Committee or one of the Chinese mediation institutions designated by the CICC. The case management conference is to be held online (assuming the videolink from the CICC will be good enough). The resulting memorandum is then issued by the Case Management Office. Under the SICC Practice Directions (and rules of some of the other international commercial courts), the case memorandum is prepared by the parties. It is not mentioned in the CICC Procedural Rules whether the parties will have an opportunity to comment on the memorandum.
The section on trial procedures primarily focuses on the pre-trial conference. Article 27 contains a long list of items that should be included in the pre-trial conference (indicating the drafters of the CICC Procedural Rules made reference to the practices of other international commercial courts.) Either the entire collegial panel or a single judge may convene the pre-trial conference, which may be held either online or in person.
Article 31 sets out the procedure under which the collegial panel can request one or more member of the International Commercial Expert Committee (Expert Committee) provide an expert opinion on international treaties, international commercial rules, or foreign law.
Trial procedures, therefore, will follow those set out in the Civil Procedure Law.
A few (and not comprehensive) general comments follow below.
Challenges for the CICC
There are no small matters in foreign affairs (外事无小事)( Zhou Enlai’s saying) –both domestically and internationally, foreign-related matters, because they involve relations with other countries and the prestige of the Chinese state, are sensitive. For the CICC judges, particularly the leaders, this imposes particular pressure to handle these disputes in a way that is acceptable to SPC leadership and to the outside world.
CICC judges have many other cases to deal with–As may be apparent from the previous blogpost on the CICC, the CICC is not a full-time job for any of the judges involved. That means that judges need to deal with possibly complex international commercial cases on a part-time basis.
Limitations of Chinese substantive law–To the extent that the CICC needs to apply Chinese substantive law, that also presents a challenge. As CICC Judge (and deputy head of the #1 Circuit Court) Zhang Yongjian mentioned almost three years ago: “there are numerous types of foreign-related cases, with many difficult cases. On the one hand, there are many legislative “blank spaces.” 涉外案件类型多样化，疑难案件层出不穷.一方面，会出现更多的立法空白.” Chinese contract law (even with related judicial interpretations) is considered by Chinese legal professionals to lack insufficient detail（see comments here, for example。
To the extent that a CICC judgment needs to be enforced outside of China, it will involve enforcement issues (previously discussed on this blog).outside of China. One important development since the blogpost is the conclusion of the Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region. Implementing legislation has not yet been promulgated in Hong Kong.
Opportunities for the CICC
Piloting new rules and procedures–The CICC also presents the SPC with opportunities to pilot new rules and procedures in cross-border cases and to make appropriate reference to foreign beneficial experience. (For the avoidance of doubt, the Monitor is not advocating that the SPC import foreign law wholesale (照搬外国法).) This earlier blogpost mentions my encounter several years ago with a senior Beijing academic who made this accusation against some SPC personnel).
One important area that would be beneficial for the CICC to focus on is discovery procedures. CICC judges are aware of US lawyers and overly broad requests for documents in discovery, but they should be able to find an appropriate solution that fits Chinese reality, perhaps using the pre-trial case management conference as a forum to require parties to provide documents and other evidence to opposing counsel. Without some sort of discovery, foreign plaintiffs may be reluctant to use the CICC as a forum.
I plan to come back to the topic of the CICC from time to time, as more information about CICC cases becomes available (and as I have my own personal experience with CICC operations),
The author is a member of the CICC’s Expert Committee but her views do not represent the committee, the CICC, or the SPC.
On July 24, the Chinese authorities held the first post-19th Party Congress national conference on judicial reform in Shenzhen, entitled “Promoting Comprehensive Deepening of Judicial Reform.” Holding the conference in Shenzhen is significant, because it is considered synonymous with reform and openness. The leaders on the podium in the photo above (members of the Leading Small Group on Judicial Reform) (all men), include:
- Secretary of the Central Political Legal Committee, Guo Shengkun (Guo);
- President of the Supreme People’s Court (SPC), Zhou Qiang;
- Chief Procurator General Zhang Jun;
- Central Military Commission Political Legal Committee Party Secretary;
- Minister of Public Security;
- Minister of State Security;
- Commander of the People’s Armed Police.
Attendees of the conference included the Party Secretaries of the Political Legal Committees of all provinces/autonomous regions/cities, and likely senior leaders from all of the systems.
Readers of this blog will not be surprised that comprehensive deepening of judicial reform was the subject of the conference as a December, 2017, blogpost flagged that the new phraseology is “deepen the reform of the judicial system with comprehensive integrated reforms” (深化司法体制改革综合配套改革) (and there is a significant overlap with some of the issues Judge Jiang mentioned). The language is found deep in Xi Jinping’s 19th Communist Party Congress Report.
The quick (and incomplete) summary below is of some of the court-related issues from the report of Guo’s speech at the conference that He Fan (head of the planning section of the SPC’s judicial reform office) posted on his Wechat public account. He was one of the many attendees. None of the analysis below (in italics) should be attributed to him.
It can be expected that the court-related issues will be incorporated into the next judicial reform plan outline. What is on the court-related reform list? What issues remain unresolved?
- Strengthen and optimize Communist Party leadership, Scientifically position the responsibilities and boundaries of the Party Committee, Political and Legal Committee, strengthen functions such as overall coordination, planning and deployment, supervision and implementation. This of course listed first.What does this mean in practice for judicial system and particularly the operation of the criminal justice system, such as the ongoing campaign against organized crime (see this earlier blogpost)?
- Clarify the functions of the four-level courts,–improve the SPC circuit courts’ working mechanism; establish the Shanghai Financial Court, steadily expand the Internet Court pilots; explore the deepening of the reform of cross-administrative district courts and procuratorates, and explore the establishment of a national-level intellectual property appeal hearing mechanism.
Developments have occurred on some of these. The Shanghai Circuit Court will start operations soon, with regulations on its jurisdiction just issued and well-regarded judges appointed to senior positions. The mention of an intellectual property appeals court is significant, as that has been mentioned in earlier government documents and it is on the wish list of the intellectual property law community. The cross-administrative district courts are mentioned in the previous court reform plan, with some pilot projects. On SPC’s circuit courts are taking on a greater percentage of the SPC’s cases, (as mentioned earlier on this blog) SPC judges work in the circuit courts while their families remain in Beijing, so at some personal cost to judges involved.
3. Improve institutional management, promote a combination of flat management and professionalization, adhere to the simultaneous transformation of comprehensive and operational entities, and promote the return of judicial personnel to the front line. As this blog has repeatedly mentioned (and He Xin/Kwai Hang Ng have detailed in their new book, Embedded Courts), Chinese courts (as courts and political/legal institutions) have large “comprehensive offices” (engaging in functions not directly related to judicial work). A recent study of several courts in Zhejiang province published in an academic journal affiliated with the China Institute of Applied Jurisprudence detailed the percentages. With the reduction in the number of judges and the explosion in the number of cases, there is a great amount of pressure to allocate more judges to the “front line” of handling cases. Judges with some measure of seniority inevitably have both administrative and judicial responsibilities.
4. Improve the supervision management mechanism of the president and division chiefs, and standardize the functions of the judicial committee, the committee of court leaders, which has a number of functions, often serving to diffuse responsibility for difficult cases (Embedded Courts has more insights on this, and this blog has an earlier post on proposed reforms and related problems). Improve the professional judges meeting (mentioned in last year’s SPC regulations, I hope to have something more to say on this in a later blogpost). Improve the disciplinary mechanism of judges. (It would be an improvement to have greater transparency on the results.) Accelerate the construction of an electronic file with the simultaneous generation of the case and the entire process online case handling system. This has been an ongoing proposal. Shenzhen is taking the lead with this. Also it would be an improvement to have greater transparency on cases filed.
6. On judicial “standardization” –improve reference to similar cases, case guidelines, the guiding case mechanisms, implement mandatory search system for similar cases and related cases. We will carry out an in-depth national judicial standardization inspections. This is sending two signals–greater implementation of China’s case law system (as I have written about earlier), and the continued use of government/Party inspection campaigns (reflecting the administrative aspects of the Chinese courts).
7. Improve the performance appraisal system. Scientifically set the performance appraisal indicator system for handling cases, and guide judicial personnel to handle more cases, handle cases quickly, and handle cases well. Use big data technology to accurately measure the quality of the case and strive for convincing results. The assessment results are used as an important basis for the level of salary, job promotion…This is an important and unresolved issue for the Chinese courts–how to appraise judges. Outside of China, many scholars have written about this, including Carl Minzner, William Hurst & Jonathan Kinkel. A good deal of research has been done within the Chinese court system concerning this (see this summary of a report published earlier this year by a team of Guangdong Higher People’s Court judges–discussing how the “civil servant/administrative model” predominates and suggesting that China should be looking to other jurisdictions for models, as judicial evaluation is a worldwide issue. Case closing percentages continues to be very important for Chinese judges. Is big data technology the answer? Is this consistent with encouraging judges to write more reasoned decisions? This appears to signal a continuation of the judge as factory worker system described in this blogpost.
8. In the area of criminal law, and criminal procedure, there are mixed developments. On the one hand, greater encouragement for using the plea bargaining with Chinese characteristics (please see Jeremy Daum’s deep dive into the pilots). The merging of the arrest and prosecution stages is also mentioned. Guo also mentioned measures to enable appointing defense counsel in death penalty cases, having full coverage of defense counsel in criminal cases (Jeremy Daum has comments also on the system of stationing lawyers in detention houses), requiring lawyers to represent petitioners in criminal collateral appeals cases, as well as greater use of live witnesses at trial。 The National Judges College academic journal Journal of Law Application just published an article by a Beijing Higher Court judge, reviewing the duty lawyer scheme, with analogous findings to Jeremy’s.
9. For those interested in how the supervision commission is/will affect criminal cases, Guo mentions establishing a system for linking the supervision’s investigatory system with the criminal procedure system (said to improve the battle against corruption, the question is the extent to which individual rights are protected).
10. On foreign related matters, Guo mentions innovating foreign-related work, and improving cooperation on international enforcement and judicial cooperation. These continue to be difficult issues, with no likely resolution in sight, particularly criminal and also civil. As I have mentioned before China is participating in the drafting of the Hague Convention on the Recognition and Enforcement of Foreign Judgment, but there are major inconsistencies between the provisions of the draft convention, and the Choice of Court Convention which China signed last September.
Guo highlights improving an initial appointment system for judges and procurators, expanding open recruitment so that talented people will be attracted to becoming and remain judges. He calls for better coordination between the law schools and professional training, systems for provincial level appointment of judges (and procurators), with better policies on temporary appointment (挂职) (a system used for academics to work in the system for a period of one or two years, and judges/procurators from higher levels to work at the basic level or in a poorer area), exchanges, promotions, and resignation.
In his recommendations, Guo tips his hat to judicial (and procurator) dissatisfaction with status and pay with his statement “uphold resolving a combination of ideological and practical issues, motivate cadres and police to the greatest extent possible.” 坚持解决思想问题和解决实际问题相结合，最大限度调动政法干警积极性”-as this blog has reported, a combination of those issues, excessive work, and significant amounts of time allocated to “studying documents” has led younger experienced judges (and procurators) to decide to resign.
In late September (2017), the Supreme People’s Court (SPC) held a Belt & Road judicial conference with senior judges from 16 jurisdictions in the desert oasis of Dunhuang, famed for its Buddhist caves. As is its custom at its international conferences, the SPC released some information concerning previously unknown cross-border related initiatives, both of which have implications for the international business and legal communities. The English language reports of the conference (in China Daily and related media outlets) missed the implications. A brief article in one of the SPC’s Wechat accounts reveals that:
- SPC is drafting a judicial interpretation on the recognition and enforcement of foreign civil & commercial judgments (关于承认和执行外国法院民商事判决若干问题的规定);
- SPC is considering establishing a Belt & Road International Commercial Court (literally “Tribunal”) (“一带一路”国际商事法庭). (chief of the SPC’s #4 Civil Division, Judge Zhang Yongjian, must have been speaking of this when he was interviewed during the 2017 National People’s Congress meeting).
Enforcing foreign civil judgments
A recent decision by a Wuhan court to enforce a California default judgment has received worldwide attention, both professional and academic. with some noting nothing had really changed and Professor Donald Clarke correctly wondering whether an instruction had come from on high. With this news from Judge Liu, it is clear that the Wuhan decision is part of the Chinese courts’ rethink of its approach to recognizing and enforcing foreign court judgments.
Judge Liu revealed that the judicial interpretation will set out details regarding the meaning of “reciprocity” and standards for applying it (明确互惠原则具体适用的标准). In another recent article, an SPC judge considered the matter of reciprocity in more detail. Among the issues she mentioned were: 1) China not being a party to the Hague Convention on the Choice of Courts (this obstacle has been removed as China signed the Convention on 12 September 2017 (this article has a good overview); 2) China should actively participate in the drafting of the Hague Convention on the Recognition & Enforcement of Foreign Judgments (this seems to be happening, as this blog has reported). The SPC judge recognized that the current Chinese position has significant limitations and can lead to a great deal of parallel litigation (see Professor Vivienne Bath‘s scholarship on this). The SPC judge also suggested that the standards set out in mutual judicial assistance agreements could be useful in drafting standards for reviewing the recognition and enforcement of foreign judgments.
Belt & Road Commercial Court
Judge Liu also mentioned that the SPC would establish a Belt & Road dispute resolution mechanism and that the SPC was considering a Belt & Road commercial tribunal, to provide the parties of OBOR countries with fair, efficient, and low-cost one-stop legal services. It is clear from discrete developments that the SPC is looking to Singapore’s International Commercial Court and the Dubai’s International Finance Centre Courts (DIFC). One of those discrete developments is the cooperation agreement that the Shanghai Higher People’s Court and Dubai International Finance Centre Court signed in October 2016 (reported here), which must have required the concurrence of the SPC. The other discrete development is the memorandum of understanding on legal and judicial cooperation between the SPC and Singapore Supreme Court, signed in August 2017, relating to mutual recognition and enforcement of monetary judgments, judicial training for judges, and the Belt & Road initiative.
The details of the SPC’s Belt & Road commercial court (tribunal) are yet unclear. Both the DIFC and Singapore International Commercial Court have a panel of international judges, but a similar institution in China would be inconsistent with Chinese legislation. The SPC is clearly interested in promoting mediation to resolve Belt & Road disputes. This interest is visible from the September 2017 International Mediation conference in Hangzhou, at which Judge Long Fei, director of one of the sections in the SPC’s Judicial Reform Office, spoke on the benefits of international commercial mediation.
Perhaps the SPC envisions an institution analogous to the Asian Infrastructure Investment Bank and plans to cooperate more on resolving Belt & Road commercial disputes with UNCITRAL and other international organizations. We will need to see how this further develops.
It is also unclear whether the SPC will issue a draft judicial interpretation or draft regulations on the Belt & Road dispute resolution center for public comment. Although President Zhou Qiang and Executive Vice President Shen Deyong speak of the benefits of judicial transparency, it seems the benefits of public participation in judicial interpretation drafting /rule-making have yet to be fully realized.
On 29 June 2016, the Supreme People’s Court (SPC) issued a policy document on diversified dispute resolution (Opinion on the people’s courts more deeply reforming the diversified dispute resolution mechanism) (Diversified Dispute Resolution Opinion)(关于人民法院进一步深化多元化纠纷解决机制改革的意见). The document uses the term “diversified dispute resolution” (consistent with Chinese practice) rather than “alternative dispute resolution” (more often used outside of China) to reflect the central place of mediation, arbitration, and conciliation in Chinese dispute resolution. (This updated version reflects comments by an authoritative person (and a very careful reader).
It was accompanied by regulations on court-appointed mediators. For those interested in the way the SPC works, it is another example of an SPC policy document in the form of an “opinion” (discussed here) accompanied by regulations (a type of judicial interpretation, discussed here).
The policy document sets out in a consolidated form the SPC’s latest policies on mediation, arbitration, and its relationship with litigation. It provides a framework for further reforms. It is intended to inform the lower courts as well as related Party/government agencies of forthcoming reforms. It signals to the central leadership that the SPC is on course to achieve one of the reform targets set out in the 4th Court Reform Plan. The current head of the SPC’s judicial reform office, Judge Hu Shihao, spoke at the press conference announcing the Diversified Dispute Resolution Opinion, indicating that the office took the lead in drafting it.
A summary follows below, highlighting, based on a quick reading, focusing on its:
- objectives and origin;
- signals and practical implications.
A very useful academic article on diversified dispute resolution, with survey data and more on the political background, can be found (behind a paywall) here. (To the many academics and practitioners who have written on this topic, please feel free to use the comment function or email to expand/contradict, or correct this).
Objectives & origin
The SPC issued the Diversified Dispute Resolution Opinion as a way to implement one of the targets in the 4th Judicial Reform Plan:
46. Complete diversified dispute resolutions mechanisms.Continue to promote mediation, arbitration, administrative rulings, administrative reconsideration or other dispute settlement mechanisms with an organic link to litigation, mutually coordinate and guide parties to choose an appropriate dispute resolution. Promote the establishment of dispute mechanisms that are industry-specific and specialized in the areas of land requisition and property condemnation, environmental protection, labor protection, health care, traffic accidents, property management, insurance and other areas of dispute, dispute resolution professional organizations, promote the improvement of the arbitration systems and administrative ruling systems. Establish an operating system that links people’s mediation, administrative mediation, industry mediation, commercial mediation, and judicial mediation. Promote the legislative process of a diversified dispute settlement mechanism, establish a system for a systematic and scientific diversified dispute settlement system.
The Diversified Dispute Resolution Opinion is a product of the 4th Plenum decision. Its underlying approach was approved by Xi Jinping and other top leaders. Judge Hu, who mentioned at the press conference that at a 2015 meeting, the Leading Small Group on Comprehensive Reform approved a framework policy document (not publicly available) on improving the diversified resolution of disputes (关于完善矛盾纠纷多元化解机制的意见) and the General Offices of the State Council and Central Committee followed with an implementing document. The principal reason that this topic merited top leadership time and involvement is because of its direct links to maintaining social stability and reducing social disputes.
Similar to other SPC policy documents discussed on this blog, comments on the draft were sought from the central authorities, lower courts, relevant State Council ministries and commissions, industry association, arbitration organizations, scholars, and the Legislative Affairs Commission of the National People’s Congress Standing Committee. The Diversified Dispute Resolution Opinion was approved by the SPC judicial committee.
The objective of the document is to promote a more sophisticated, efficient, and effective approach to dispute resolution that will reduce social tensions. Part of the objective is to reduce the number of cases filed, heard, and tried by courts. For commercial disputes, it is intended to push disputes to institutions that can more competently, efficiently and timely mediate cases. These institutions include those affiliated with industry associations, arbitration commissions, or specialized mediation associations. The Diversified Dispute Resolution Opinion also calls for better mediation of cases within the courts by involving court-annexed mediators, before or after the person or entity files suit. The implications of this document for the reform of labor and rural land contract dispute resolution remain to be seen.
The Diversified Dispute Resolution Opinion requires better linkages between other diversified dispute resolution institutions and the courts and particularly stresses the role of mediation. Depending on the type of mediation, it may be done by mediation commissions affiliated with government, people’s mediation committees, arbitration commissions, or other institutions (further information here). One particular issue that is addressed is easing procedures for enforcing mediation agreements by courts. (Because a mediation agreement is a type of contract, it cannot be enforced directly without further procedures, such as being notarized, issued as an arbitration award, or recognized by the courts (through a special procedure under civil procedure law). It emphasizes that the courts can leverage forces outside the judiciary to resolve disputes. The document calls for reasonable borrowing of dispute resolution concepts from abroad.
Practical implications to expect in the medium to long term
- For the foreign investment community (and their lawyers), a signal that the SPC is working on a judicial interpretation concerning the judicial review of foreign and foreign-related arbitral awards (“standardize judicial review procedures for foreign-related and foreign commercial arbitration awards”) (规范涉外和外国商事仲裁裁决司法审查程序). As this blog has reported earlier, this was signaled at the November 2014 National Conference on Foreign-related Commercial and Maritime Adjudication and last year’s One Belt One Road Opinion. It is unclear whether the future interpretation will change the prior reporting procedure, for example, to give parties a chance to submit arguments orally or in writing, or whether it is intended to consolidate the principles the SPC sets out in its responses to lower courts (released to the public in one of the SPC’s publications), summarized in comprehensive overviews of Chinese arbitration law, such as this one.
- Changes to labor dispute resolution, as highlighted by the 2015 Central Committee/State Council document mentioned earlier. This is important in light of the uncertain economy and increasing number of workers being made redundant. in recent years, judges in different areas of China have published devastating criticism of the current labor arbitration system and labor dispute resolution generally. The judges pointed out the current labor arbitration system is not independent of the government, fails to protect labor interests equally, and . The judges also criticize the brief statute of limitations in labor disputes and lack of a specialized labor tribunal. It appears from reports that Zhejiang Province is taking the lead in providing greater choices and professionalism in labor dispute resolution, but it unclear how far those reforms go.
- Further attention to rural land arbitration.The Diversified Dispute Resolution Opinion mentions better linkages between the courts and rural land arbitration. This area is important, as the government seeks to encourage farmers to expand their landholdings and mortgage their land, but the merits of the system are not the SPC’s issue. A 2014 report highlights the lack of independence of these arbitration commissions, lack of arbitrators, and absence of qualified arbitrators. A 2016 paper by several China Banking Regulatory Commission staff on the mortgage of rural land notes that those arbitration commissions need improving.
- Local courts to establish “court-annexed mediation centers” to encourage and give parties “one stop shopping” for choices in mediating some of the cases most often seen in the courts–family, conflicts between neighbors, consumer, small claims, consumer, traffic accident, medical disputes;
- “Improving” criminal conciliation and mediation procedures. Reforms in this area bear close monitoring because, as discussed in earlier blogposts, criminal conciliation and mediation procedures are often used to avoid embarrassing more powerful institutions (such as schools) and people especially in cases involving claims of rape, sexual assault, and child molestation;
- Recognizing the results of and encouraging litigants to use neutral valuation organizations, for civil and commercial disputes such as medical, real estate, construction, intellectual property, and environmental protection, the results of which could be used as the basis of mediation；
- More small claims and expedited procedures for minor civil disputes;
- more lawyers to be appointed as court-appointed mediators；
- Improvements to administrative dispute resolution procedures.