Category Archives: Arrangements

Arrangements, CICC, foreign courts, foreign-related cases

Training foreign-related legal personnel for the Chinese courts

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President Zhou Qiang visiting the University of International Business & Economics

Since the Fourth Plenum of the 19th Party Congress, and especially since President Xi Jinping spoke about the need for China to train foreign-related legal personnel  (涉外法治人才), the Supreme People’s Court (SPC) press, SPC leadership, and others important to the SPC leadership, such as Shen Deyong, former executive vice president of the SPC and current leaders of the CPPCC have reiterated the importance of “foreign-related legal personnel” to China and the people’s courts.  Training “foreign-related legal personnel” is incorporated into the Party’s Plan for Building the Rule of Law (2020-2025), an indication of its importance.  Shen Deyong  criticized the way that “foreign-related legal personnel” is used within government institutions– “team is too small, their numbers are too few, they are scattered and the market is chaotic.””涉外法律服务人才队伍建设还存在一些问题和不足，主要呈现队伍“小”、人才“少”、分布“散”、市场“乱”的特点.  I would add to the issues that he flagged that policies directed towards attracting  “foreign-related legal personnel” to the courts inevitably encounter the special characteristics of the courts’ personnel system as it has evolved since the quota judge reform was implemented, both the training system and especially career advancement from judges assistant to quota judge.

Foreign-related legal personnel policy

The language about increasing “foreign-related legal personnel” in the courts is not new but dates back to at least 2015 and the  Opinion of the Supreme People’s Court on Providing Judicial Services and Safeguards for the Construction of the “Belt and Road” by People’s Courts (BRI Opinion #1). It was reiterated in the 2019  Opinions of the Supreme People’s Court on Further Providing Judicial Services and Guarantees by the People’s Courts for the “Belt and Road” Initiative (BRI Opinion #2) and the 2020 Guiding Opinions of the Supreme People’s Court on the People’s Courts Serving and Guaranteeing the Further Opening Up to the Outside World (Open Economy Guiding Opinion). Article 15 of BRI Opinion #1 calls for improving training for Chinese judges on their professional capacity (业务能力) and improving overall judicial quality. Article 38 of BRI Opinion #2 and Article 16 of the Open Economy Guiding Opinion both have language about cooperating with universities to develop training and teaching plans so as to train and prepare a pool of international legal practitioners….”  A knowledgeable person has reminded me that repetition in consecutive documents is an indication of importance (and I would add the difficulty of resolving the problem).

As readers of this blog know, the Chinese courts need “foreign-related legal personnel” in many areas. Those include working on cross-border cases across a broad range of procedural and substantive areas,  undertaking research related to cross-border judicial policy and cross-border legal issues that have an impact on the judiciary, as well as working on a range of issues related to the SPC’s and lower courts’ interactions with the outside world.

Court cooperation with universities

The SPC has designated a number of China’s leading law schools and legal research institutions as Belt & Road research bases, including: the International Law Institute of the China Academy of Social Sciences; Tsinghua University School of Law; Wuhan University School of Law, Southwest University of Political Science and Law; China University of Political Science and Law, Shanghai University of Political Science and Law; Dalian Maritime University, and East China University of Political Science and Law. The SPC is thus able to draw on the research capacities of China’s law schools and involve law students in the legal issues facing the Chinese courts. Participating in this research can also motivate students to enter the courts after graduation.

Law students apply to become judges assistants after graduation for a variety of reasons. Some become further interested after internships (see this blogpost on SPC interns–a version with more data may appear later).  Other law school graduates are motivated by presentations by outstanding judges at their law school (SPC Judge Gao Xiaoli’s 2015 talk at the Peking University School of Transnational Law earned her many new fans), while still others recognized that a job “in the system” would resolve their hukou problems and enable them to live in Beijing, Shanghai, or other major cities. Yet others are motivated to use their education in the service of the public. I can say with authority that law graduates with knowledge of transnational law, fluency in English (and other foreign languages) are working as legal assistants in courts all over China.  Recruitment of legal assistants is a local matter, so the #4 Civil Division of the SPC (in charge of foreign commercial matters) and likely the Political Department of the SPC (in charge of personnel) lacks statistics on the number of “foreign-related legal personnel” working in the local courts.

Special characteristics of the courts’ personnel system

I write about the judiciary’s personnel system with some trepidation as I am well aware that my knowledge of the regulatory system is incomplete. (Some of the relevant regulations cited in analyses of the personnel reforms are not accessible to those outside the court system.)   On the issue of placement of junior “foreign-related legal personnel,”  I have not heard from either knowledgeable persons, former students, or other junior personnel in the Chinese court system that specific policies have been implemented within the court system (the Political Department of the SPC is responsible at the national level, and locally, political departments of local courts are responsible) to channel judges assistants recruited from China’s law schools with transnational training and experience into roles in which their academic background can be used and their “foreign-related” legal skills can be developed. In the absence of specific policy, too many local court leaders appear to see the young people with a transnational legal background and experience merely as workers that can be put to work in the national judicial machine (司法民工). Judges assistants from higher courts are sometimes sent down to the local level to work for two years, in line with young cadre development policy.

Training

If the three documents cited above have language about training, it seems likely that a training plan is somewhere in the approval pipeline.  My guess is that this is yet another matter that requires coordination among multiple institutions within the SPC, including the #4 Civil Division–the ones asking for the training to be done, with the Political Division and the National Judges College.  As I wrote last year, a new national court training plan (2019—2023年全国法院教育培训规划)) is underway.  As senior leadership has called for cultivating  “foreign-related legal personnel,” it seems likely that the SPC will eventually issue (perhaps not publicly) a training plan for judges handling all sorts of foreign-related issues, both civil-commercial and criminal.

Career advancement

Another issue for foreign-related legal personnel in the courts is career advancement for judges assistants.  As I mentioned in passing in an earlier blogpost, career advancement from judges assistant to quota judge has slowed. Specific promotion criteria are set locally.   Local studies have been done on the role of the judges assistant but have not surmounted the language barrier (see this one from one of the Chongqing Intermediate People’s Courts)  that provide specific data and specific analysis deriving from local conditions.  From my observations, fixed quotas on the number of judges in a court can mean a talented, educated judges assistant in one court may wait significantly longer than a similarly qualified person in another court to become a judge.

Concluding thoughts

Unless the SPC can evolve better national policy directed towards a career for “foreign-related legal personnel,”  some of them will leave, disappointed with the failure of the judicial system to use their talents, despite the official publicity. There will be many companies and law firms, some dealing with the issues I described previously, that will value them.

 

 

Arrangements, bankruptcy

Mainland-Hong Kong Insolvency “Arrangement” Forthcoming

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For those for whom the timing is right, tomorrow’s (14 May afternoon) event gives the interested person an opportunity to watch a discussion in real-time concerning a new hard-law legal “Arrangement”  (it is now clear that the document is not so entitled) between the Mainland (presumably the Supreme People’s Court (SPC) and the Hong Kong Special Administrative Region (Hong Kong SAR) on bankruptcy (insolvency) law and learn about relevant recent updates. The document is the Conference Summary [Meeting Minutes] on Procedures for the Mutual Recognition of and Assistance in Insolvency Procedures by the Courts of the Mainland and the Hong Kong SAR (内地与香港特别行政区法院相互认可和协助破产程序的会谈纪要).  At the same time, the SPC is releasing an Opinion approving pilot projects to implement the Conference Summary  最高人民法院关于开展认可和协助香港特别行政区破产程序试点工作的意见.  A pilot project approach is usual when the SPC wants to test whether procedures are workable before implementing them nationwide.

A  social media posting by one of Hong Kong’s leading barristers chambers describes it as the “most momentous cross-border insolvency development in a generation. ”  Although it is not so stated, I surmise (by reviewing the press conference announcing the Supplemental Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region” (the Supplemental Arrangement (关于内地与香港特别行政区相互执行仲裁裁决的补充安排), that the official signing of the new insolvency Arrangement will be held in the morning, after which a press conference will be held. My guess, based on that press conference, is that  SPC Vice President Yang Wanming (杨万明副院长) will sign on behalf of the SPC and that Hong Kong SAR Secretary for Justice Teresa Cheng will sign on behalf of the Hong Kong SAR Government.  The link to the SPC’s press conference indicates that Vice President Yang Wanming will in fact sign and that Judge Si Yanli will participate in the signing ceremony and the press conference.

According to the social media posting above, Mr. Justice Jonathan Harris, current Companies and Insolvency Judge of Hong Kong’s High Court, will be delivering a keynote speech during the afternoon Forum announced above.   My guess (without any factual basis) is that Judge Si Yanli will give a keynote as well.  The Arrangement is likely to have involved a great deal of hard work on the part of all involved in the drafting.

Justice Harris’s judgments contain valuable insights into some of Hong Kong’s cross-border insolvency-related issues, such as the intersection between stock exchange listings and insolvency.  His decision in the Winding-Up Proceedings of China Huiyuan Juice Group is a good example:

As I explained at the outset of this decision the court is hearing many petitions to wind-up listed companies whose businesses are in the Mainland.  Since the court resumed hearings in May more than half the petitions I have heard have involved listed companies. Remarkably petitions to wind-up Hong Kong incorporated companies operating domestic businesses are currently a minority…  What is now quite clear is that the use of the group structures I have described present difficulties.  It will be useful if I describe these and what I anticipate will be their impact for creditors and shareholders in Hong Kong and other jurisdictions….

As will be apparent from this decision the practice has developed of Mainland businesses listing in Hong Kong using corporate vehicles which have no connection with the Mainland, which is commonly the COMI [Center of Main Interest], , or Hong Kong where the business is to be listed.  The structure is made more complicated by group architecture which involves inserting between the listed company and the mainland companies at least one, and my impression is commonly more than one, intermediate subsidiary incorporated in a different offshore jurisdiction.  As this decision demonstrates this structure creates a significant barrier to steps being taken by creditors and shareholders to enforce rights using the courts of Hong Kong, which is the legal system that they have probably assumed they will be able to access if they need to take steps to enforce their legal rights against a company listed here.

As I have previously written,  cross-border bankruptcy (insolvency) law is an area of particular focus of the SPC.  Phrases in two 2020 SPC Opinions signal this Arrangement. Article 16 of the November 2020 SPC Opinion  on Providing Support and Guarantees for Shenzhen to Build Itself into a Pilot Demonstration Zone for Socialism with Chinese Characteristics (最高人民法院关于支持和保障深圳建设中国特色社会主义先行示范区的意见) states:

Promote the establishment of a cross-border bankruptcy recognition and assistance mechanism推动建立跨境破产认可与协助机制.

Additionally, Article 12 of the September 2020 SPC  Guiding Opinions on Further Expanding People’s Court Service Safeguards for Expanding the Opening Up to the World (Open Policy Guiding Opinions)) (最高人民法院关于人民法院服务保障进一步扩大对外开放的指导意见) contains the following (translation thanks to Chinalawtranslate):

12. Properly handle cross-border bankruptcy [insolvency], financial, and enforcement cases. Adhere to the principle of equal protection for similar claims, actively participate in and promote the formulation of international treaties on cross-border bankruptcy [insolvency], improve the coordination mechanisms for cross-border bankruptcy [insolvency] and protect the rights and interests of creditors and investors in accordance with the law…12.妥善处理跨境破产、金融、执行案件。 坚持同类债权平等保护原则，积极参与和推动跨境破产国际条约的制定，完善跨境破产协调机制，依法保护债权人和投资人权益。

This single issue illustrates the close reading skills needed to understand SPC Opinions.

Further analysis of the implications of the Arrangement will need to follow its release.

Arrangements, Hong Kong

Soft and Hard Law Arrangements & Other Agreements Between the Mainland Authorities and the SAR Governments

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1st Joint conference meeting on the Hong Kong BRI Arrangement

If you have never heard of hard and soft law  Arrangements (安排) and other agreements between Mainland authorities and the Hong Kong and Macau Special Administrative Region (SAR) governments, do not be surprised.  The classification is my own and I see it as useful to capture the types of Arrangements and other soft law agreements that have been signed between certain Mainland authorities and the Hong Kong SAR and the Macau SAR, as well as Arrangements between the two SARs. This blogpost highlights several of the more important soft law Arrangements and other agreements between the mainland authorities and the SAR governments.  

This classification harmonizes with the analysis of Professor Wang Heng of the University of New South Wales concerning Belt & Road Initiative Agreements.  

Definition of Arrangements

Although I have written previously about Arrangements between the Supreme People’s Court (SPC) and the Hong Kong Special Administrative Region (SAR) Government, I have not seen an official definition of “Arrangement.”     It appears to be used as a form of agreement between certain Mainland authorities  (intended to include institutions such as the Supreme People’s Court and the Standing Committee of the National People’s Congress as well as ministries and commissions under the State Council ( and it seems some counterparts at the provincial level) and the government of the Hong Kong or Macau SAR.  Some are between the two SARs. I have not seen an equivalent to the Law on the Procedure for the Conclusion of Treaties.  Perhaps guidance exists internally. I surmise (from my blogpost on the recent SPC Arrangement) that the Hong Kong and Macau Affairs Office supervises Arrangements.

What I had not realized until recently that Arrangements are far more numerous and cover a broader range of areas than most legal professionals outside of China (including me) are generally aware of.   Both types of Arrangements can include affiliated measures, such as joint [steering] conferences 联席会议 (related to one of my recent posts ) and yearly implementation measures, such as agreed areas for cooperation.   

Hard and Soft Law Arrangements

 The “Hard Law Arrangements” often have content that is somewhat analogous to a treaty between sovereigns-that is, they have normative content, while the “Soft Law Arrangements” have more soft law content, some more analogous to the ones Professor Wang Heng discussed in the BRI content, while others have language found in domestic Chinese government documents.  I will borrow the definition that Professor Wang Heng uses in his article: soft law refers to quasi-legal obligations or law-like promises that are not legally binding but may affect state behavior.  His definition draws on earlier work, such as that of my colleague Professor Francis Snyder.  (My colleague has a forthcoming book chapter on soft law.)

Professor Wang Heng describes Belt & Road Initiative (BRI) primary agreements (soft law agreements) as largely emphasizing project development rather than rule development. This is also seen to some extent with “soft law Arrangements.” 

“Hard Law” Arrangements

“Hard Law Arrangements” and other “hard law” agreements between mainland authorities and the Hong Kong and Macau SARS are well-known, so this section only mentions a few of the most prominent: 

Professor Henry Gao noted in an article that during the negotiations leading to the conclusion of the CEPAs, it had been suggested that they should be called free trade agreements (FTAs) but they were named  “Closer Economic Partnership Arrangements” instead. He commented that in substance, the two CEPAs are no different from the other FTAs around the world.

For those interested, the Ministry of Commerce (MOFCOM) has a webpage that consolidates the related Macau supplemental agreements.

  •  Dispute Resolution Arrangements

Hong Kong’s Ministry of Justice has a webpage (available in multiple languages) with links to arbitration-related Arrangements as well as recognition and enforcement of civil and commercial judgments Arrangements.  The webpage also links to Arrangements involving other Hong Kong SAR government departments. It appears that some agreements mentioned on that webpage may be soft law documents, but I have not seen the full text of some of these documents and so cannot confirm.

An Arrangement on the Mutual Recognition and Enforcement of Arbitral Awards between the Supreme People’s Court and the Macau SAR Government also exists.

Many other hard law Arrangements have been signed, but I have not seen a single repository of these documents. It is my hope that the Hong Kong Government can do so.

Soft Law Arrangements and Other Soft Law Agreements

It appears that less attention has been paid to soft law Arrangements and other soft law agreements.  There are also memoranda of understanding (MOU), with analogous usage to those in BRI projects. A number of the important ones are highlighted below.

  • July, 2017 National Development and Reform Commission, People’s Government of Guangdong Province, Government of the Hong Kong Special Administrative Region, Government of the Macao Special Administrative Region Framework Agreement  on Deepening Guangdong-Hong Kong-Macao Cooperation in the
    Development of the Greater Bay Area Greater Bay Area (GBA Framework Agreement)

This Framework Agreement is a soft law agreement that links hard and soft law content. In discussing BRI soft law agreements, Professor Wang Heng mentions Project-Linked Agreements and Mechanism-Creating Agreements and mentions that some combine both. The GBA Framework Agreement mentions some of the above hard law Arrangements, with a great deal of new soft law content aimed at promoting the development of the GBA.  It flags what was then forthcoming BRI Arrangements. Among the goals cited:

deepen co-operation between the Bay Area and related countries and regions in… legal and dispute resolution services… and to build an important support area for pursuing the Belt and Road Initiative.for Hong Kong…

establish a centre for international legal and dispute resolution services in the Asia-Pacific Region…

This is the document that attracted my interest in “soft law Arrangements.”  Several articles relate to developing Hong Kong’s role in dispute resolution, such as:

2.To support Hong Kong in developing high value-added maritime services, including…maritime law and dispute resolution,

26. To support Hong Kong in establishing itself as a centre for international legal and dispute resolution services in the Asia-Pacific region to provide relevant services for the Belt and Road Initiative.

The Hong Kong BRI  Arrangement links to Article 34 of the SPC’s 2019  Opinion On Further Providing Judicial Services and Guarantees by the People’s Courts for the “Belt and Road” Initiative (BRI Opinion #2). That article contains language about supporting the Hong Kong SAR to develop as a regional legal service and dispute resolution center and Hong Kong playing a more important role in jointly developing the BRI:

The development of the regional legal service and dispute resolution center of the Hong Kong Special Administrative Region (“Hong Kong SAR”) shall be further supported, the cooperation between arbitration institutions in Hong Kong such as Hong Kong International Arbitration Centre and arbitration institutions in the Mainland, the arbitration institutions in the Hong Kong SAR shall be introduced to the construction of the “one-stop” dispute resolution platform of international commercial courts… and the Hong Kong SAR shall play a more important role in the joint development of the “Belt and Road” Initiative. 进一步支持香港特别行政区区域法 律服务和纠纷解决中心的建设，支持 香港国际仲裁中心等仲裁机构与内地 仲裁机构的合作，在国际商事法庭 “一站式”纠纷解决平台建设中适当 引入香港特别行政区仲裁机构…不断发挥 香港特别行政区在共建“一带一路” 中的重要作用。

The Arrangement establishes a joint conference mechanism (that features in a number of Arrangements) comprising responsible officials from the National Development and Reform Commission (NDRC), the Hong Kong and Macao Affairs Office of the State Council and other relevant departments as well as senior representatives of the HKSAR.  The SPC has participated in at least two of these meetings, but from the reports on the meetings, does not appear to be a joint conference member institution.

The  Hong Kong BRI Arrangement could be linked to the 2019 Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the Hong Kong Special Administrative Region and the 2020 Supplemental Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong SAR. Although  BRI Opinion #2 explicitly restates the Chinese government’s desire that more international commercial disputes (including BRI ones) be resolved in China, this clause is also a recognition that the Hong Kong International Arbitration Centre is often selected in contracts between Chinese companies and foreign companies, including in BRI disputes, as evidenced in Professor Matthew Erie‘s recently published article.

Under the Arrangement, the two sides have agreed, in related documents, upon major areas of work and in 2020, allocation of responsibilities and have established an annual joint conference. It is unclear whether a similar set of documents exist for the Hong Kong BRI Arrangement.

The Macau and Hong Kong BRI Arrangements are quite different from one another and deserve further analysis. Under the Macau BRI Arrangement, for example, the Macau SAR Government undertakes to be a platform for liaison with Lusophone countries.

It is unclear why there is no courtesy English translation of this Arrangement (as there is for the Hong Kong BRI Arrangement). The content of this Arrangement provides insights into plans for Hong Kong and the Mainland to cooperate in the area of science and technology, but time does not permit further analysis.

A final comment is that it appears to be difficult to locate the full text of some of the soft law Arrangements reported.

More to Come?

I surmise that the Hong Kong and Macau SARs’ futures will involve more hard and soft law Arrangements and other agreements with the Mainland.  The topic of these agreements deserves closer attention. I hope that someone with an interest, the time, and the language skills can take this research forward.