I recently published a short article on the Perspectives blog of the New York University School of Law U.S. -Asia Law Institute, with the same name as this post, linked here. I am posting a “homemade” PDF version temporarily and will replace it when an official one is available. I am close to finishing a longer version of the same article. The research on which this article is based draws on discussions with many persons who cannot be thanked by name and others who will be whenever the longer version is published.
I’m honored to be speaking in a few days (remotely) in a webinar sponsored by the Pacific-Asian Legal Studies program of the University of Hawaii at Manoa’s William S. Richardson School of Law on how and why the Supreme People’s Court Serves the Belt & Road Initiative (sign up link is here).
The event will take place at 2 pm, 5 November, Hawaii time, which translates into 8 am on 6 November in the GMT +8 timezone (Hong Kong, mainland China, Singapore, etc.), 11 am in Sydney, and 8 pm on the US East Coast. The timing doesn’t work well for England (midnight) or Europe. I believe a recording will be available at a later date.
In academic and many professional discussions of Belt & Road Initiative (BRI) disputes, the focus is on disputes between the Chinese and foreign parties. Few mention disputes between two or more Chinese parties but linked with a BRI project. (Professor Vivienne Bath of the University of Sydney Law School is one of the few exceptions.) These are what I call “invisible BRI disputes,” because few in the academic world and a small group in the professional world have noticed them.
I mentioned these type of disputes during my keynote speech at the University of Pittsburgh School of Law and Asian Studies Center’s “Deals and Disputes: China, Hong Kong, and Commercial Law” webinar when I spoke about the role of the Supreme People’s Court (SPC) in developing “Chinese international commercial law” (as I defined the term).–as can be seen in the slide above.
Although I made inquiries with some authoritative persons in the world of Chinese arbitration and the judiciary, they were unable to give even a vague estimate of the number of these invisible BRI disputes, but all had the sense that they have been increasing and will continue to increase, both in arbitration and in the courts, as more projects undertaken by Chinese contractors overseas encounter unanticipated problems and enter into dispute settlement proceedings with one or more foreign counterparties and thereafter seek to claim their losses from their Chinese subcontractors (or sub-subcontractors) or suppliers or prevent their banker from paying out under a demand guarantee (or counter-guarantee).
This blogpost looks at three types of business risks leading to invisible disputes, as identified by the authors of the Engineering Contractors Book and others advising Chinese engineering contractors. I look forward to others taking this topic forward.
Invisible Dispute #1
The Engineering Contractors Book said of the risks of subcontracting to other Chinese companies: “illegal subcontracting and multilevel subcontracting has become one of the biggest risks to Chinese contractors nowadays…[T]he choice of subcontractor is very important, which will result in one honors all; one damns all.” The book gives this example of invisible dispute #1.
Company A is a large [Chinese] international contractor… Company A undertakes the general contracting, and completes sets of equipment, engineering consultation and engineering design, project management and engineering supervision, installation and debugging and technical services of various domestic industrial projects. A project in Country F in Southeast Asia was developed and executed by two subsidiaries of Company A: Company B and Company C. Company B is a trading company. This was the first time that it carried out foreign projects. Previously, Company B had no overseas project experience and personnel with relevant experience. Company C is an enterprise whose main business is project design, debugging and tests. In the selection of equipment suppliers, materials suppliers and other suppliers, Company B chose enterprises that had cooperated with Company A in other projects. Problems concerning these enterprises occurred during the installation, debugging and operation process, resulting in project delay, repeated procurement and increased costs. In the stage of commissioning and trial, Company C subcontracted the work to Company K, and Company K subcontracted to Company P, which was also a subcontractor of the employer. This subcontracting mode caused many problems, which led to project delay and triggered the employer’s claim.
According to a recent article in the Chinese press, about 70% of these disputes are heard in Chinese domestic arbitration. A legal adviser to a provincial-level state-owned engineering contractor wrote recently about several of such cases heard in the courts.
In correspondence, an arbitrator who has heard these cases commented:
subcontracting and multilevel subcontracting are common phenomena, especially overseas. When the contractor cannot finish on time, the employer looks to the local construction team….
these cases are troublesome. The problem is obtaining the crucial evidence, not because of any local restrictions, but because after projects go into operation, there are major changes to the site [of the construction project], so loss is difficult to determine. [In one case[ there were several boxes of peripheral and circumstantial evidence, in English, Arabic, and Chinese, but they did not form a chain of evidence.
Invisible Dispute #2
The authors of the Engineering Contractors Book wrote about demand guarantee risk. In their view, fraudulent claims by the employer (and beneficiary of a demand guarantee) in a construction project are a significant risk because some employers may make claims in bad faith; international legal harmonization on the issue of fraud in demand guarantees is insufficient. Invisible dispute #2 arises when an employer seeks to draw on the demand guarantee and the Chinese contractor files a claim against its bank, requesting the court to issue an injunction to stop payment under the demand guarantee on the basis of fraud. Sometimes the project owner’s overseas bank is added, involving demand guarantees given by a Chinese contractor operating overseas and its bank. One example was mentioned in an earlier blogpost and another example is found in the deal list of a leading Chinese disputes lawyer:
Represented Beijing xxxx International Engineering Technology Co., Ltd. in an overseas construction letter of guarantee dispute before the ….. High People’s Court (first instance) and the Supreme People’s Court (second instance)–
The hearing of cases involving demand guarantees (standby letters of credit) appears to be an important area in which Chinese style case law will supplement the principles in the Civil Code, its relevant judicial interpretation, and the SPC’s 2016 judicial interpretation on independent (demand) guarantees. At the end of last year (2020), the Shanghai Higher People’s Court issued a policy document on improving the hearing of foreign-related financial cases (上海法院服务保障进一步扩大金融业对外开放若干意见), one point of which calls for the courts to improve the hearing of demand guarantees. The policy document was accompanied by typical cases (典型案例), one of which was a demand guarantee case heard by the Shanghai Financial Court.
I expect two further authoritative decisions will harmonize how legal and finance professionals understand Chinese law related to demand guarantees. Those decisions will be made in two cases that the China International Commercial Court (CICC) has heard but has not yet decided. The cases involve demand guarantee (standby letter of credit) issues and the question of the standard for fraud and the issuance of an injunction. If the SPC takes a case as a CICC case, it means that the legal issue is considered important enough to require a panel of five Supreme People’s Court (SPC) judges to hear the case. The decisions will be soft precedents, ones that fill in a gap in statutory law and judicial interpretations.
Invisible Dispute #3
The authors of the Engineering Contractors Book wrote about supplier (often Chinese supplier) risk: “if contractors fail to enhance the selection and management of suppliers, they are likely to face difficulties during the project execution. In practice, there are many cases in which contractors suffer losses due to improper selection or poor management of suppliers…Some suppliers use various unreasonable means to guarantee their profits in the bidding and follow-up process, which will inevitably bring greater risks to contractors.” My comments here are limited to Chinese supplier risk.
One example that can be identified most easily is related to the construction of Justice House in Tbilisi, Georgia. Disputes over the quality of equipment and related issues ended up in litigation in the Sichuan Higher People’s Court.
It is understood that first and third type of disputes may be heard by Chinese arbitral tribunals or courts, depending on whether the contracts have arbitration clauses, while the demand guarantee cases are generally heard in the courts. Chinese legal professionals have commented that these cases are challenging for both arbitral tribunals and the courts to hear, particularly if much of the evidence is outside of China and especially if technical expertise is needed. Another issue raised by one of the authors cited is the choice (application) of law, as some jurisdictions may require that local law apply to any subcontracting, but Chinese courts tend to apply Chinese law.
Two recent articles in the Chinese professional legal press by a senior Chinese construction lawyer focused on a recent initiative to establish a qualification system for expert witnesses in construction engineering disputes. It is even more challenging for Chinese courts to hear disputes that may involve foreign technical expertise. Yet another issue relates to evidence formed abroad. A third issue, not mentioned in this blogpost, relates to the greater need for dispute adjudication boards in construction disputes heard in the Chinese courts. Both the China International and Economic and Trade Arbitration Commission (CIETAC) and the Beijing Arbitration Commission have such rules in place, although with different titles.
These invisible BRI disputes raise several of many areas of law that need further work as Chinese companies operate internationally but want to have related disputes heard at home, and China seeks to progress domestic and foreign-related legislation, or as the current slogan has it “筹推进国内法治和涉外法治.”
Many thanks to Sun Wei, partner with the Zhong Lun Law Firm, and some authoritative persons for sharing their insights. The author alone is responsible for the above views.
I am very honored to have been the first keynote speaker of the webinar “Deals and Disputes: China, Hong Kong, and Commercial Law” held on May 18-21 (2021). The webinar was organized by the University of Pittsburgh, with its School of Law’s Center for International Legal Education working together with its Asian Studies Center. Many thanks to Professors Ronald Brand and James Cook for the kind invitation. For those who missed it, the recording of my presentation is now available on the Youtube channel of the Center for International Legal Education.
I spoke on the Supreme People’s Court (SPC) and the Development of Chinese International Commercial Law (as I defined it). My presentation synthesizes many points that I have made separately on this blog and should be useful to students or others seeking to understand several aspects of the work of the SPC. Many thanks to Professor Pamela Bookman and Mary Buck Young for taking the time to make insightful comments on earlier drafts of my Powerpoint slides. Special thanks to (one of) my research assistants, Yuan Ye, for his work in transforming SPC statistics into a more understandable form and translating them into English.
On the afternoon of 25 September, the Supreme People’s Court (SPC) issued yet another guiding opinion providing services and guarantees, this one on providing services and guarantees in support of expanding opening to the outside world (Services & Guarantees to the Open Policy Guiding Opinions (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). It was approved by the SPC’s Party Group, as was BRI Opinion #2.
Senior legal officials from the Ministry of Commerce (MOFCOM) and the Ministry of Foreign Affairs (MFA) spoke at the SPC press conference, in what this observer views as a cross-institutional show of support for China’s policies of opening to the outside world. At a time that government officials are focused on “dual circulation,” it is a reminder that the opening to the outside world policy remains in place and that one of the SPC’s many responsibilities is to handle those issues properly. The photo is also one illustration of the place of the SPC within China’s system (体制).
SPC Vice President Yang Wanming (杨万明) spoke first at the press conference, with the officials from MOFCOM and MFA adding comments. This signalled to the careful observer that he has assumed the responsibility for overseeing the #4 Civil Division (responsible for foreign-related commercial and maritime matters) from Luo Dongchuan (who has been transferred to Fujian Province to serve as Political Legal Commission Party Secretary).
This brief (17 articles) guiding opinion providing judicial services and guarantees (not a judicial interpretation, see this explanation of what it is) is the latest judicial policy on foreign-related (this blogpost will use the term “cross-border”, to incorporate some Hong Kong-related) legal issues (inbound and outbound) relevant to the Chinese courts, drawing on BRI Opinion #2 (issued end 2019 and BRI Opinion #1) and the June, 2020 guidance on Covid-19 and cross-border commercial issues.
As to what those judicial services and guarantees are, Justice Yang said the following:
Wherever the national strategy is deployed, the judicial services and guarantees of the people’s courts will be there (国家战略部署到哪里，人民法院司法服务和保障就到哪里.)
How does this document relate to other Chinese legislation?
To clarify the relationship between this opinion on the one hand and legislation, judicial interpretations and other types of judicial documents (such as the two BRI Opinions), Justice Yang gave a quick summary in SPC jargon:
While maintaining consistency with existing laws and regulations, judicial interpretations, and judicial policy documents, the Guiding Opinions also strengthen the macro-guidance of the people’s courts’ services and guarantees opening to the outside world from a higher level, and are organically linked to other SPC judicial policy documents for major opening-up decisions, major strategies, and major initiatives, to further improve the system of judicial services and guarantees of the work relating to opening to the outside world与现有法律法规和司法解释、司法政策文件保持一致的同时，从更高层面加强人民法院服务保障对外开放工作的宏观指导，与最高人民法院出台的其他司法服务保障国家对外开放重大决策、重大战略和重大举措的司法政策文件有机衔接，进一步完善了司法服务保障对外开放工作体系。
What is means is:
The Guiding Opinions are intended to be consistent with current law and regulations, SPC judicial interpretations, and SPC judicial policy documents.
It is intended to provide comprehensive guidance and better support government policies on opening to the outside world.
The Guiding Opinions. like many of the documents analyzed on this blog, are written in SPC jargon. Decoding this language poses challenges to those are concerned or who should be concerned about the impact of how the Chinese courts interact with the rest of the world.
Decoding the language, however, enables the careful reader to understand outstanding issues and contemplated reforms or other measures, including possible judicial interpretations.
Summary and comments
This blogpost will summarize and make some brief comments on some of the issues mentioned in each of the six sections of the documents and make a few concluding comments. There are many more issues in this document that should be explored, but I’ve been delayed by a hand injury.
1. Political stance
The first section calls for judges to raise their political stance. This is standard language in the New Era. The first article frames the documents in current political language, including that frequently used in Chinese foreign policy documents and to relevant political documents. Therefore the first article (and elsewhere) refers to multilateralism, equally situated parties, and creating a legalized, internationalized convenient business environment.
The second section focuses on basic principles of foreign-related litigation–of which it sets out three: protecting the equal rights of parties; respecting the intent of the parties; and implementing (judicial) jurisdiction according to law.
The second principle, described in Article 4, includes the right of parties to choose governing law, a court with jurisdiction and arbitration, litigation, or mediation to resolve their disputes. However, as mentioned previously, Chinese law treats choice of arbitration and litigation differently, requiring litigants choosing a (foreign court) to have an actual connection to the foreign court (see Professor Vivienne Bath’s previous scholarship on this), although there isn’t a counterpart position for arbitration. As mentioned previously, the application of foreign law by Chinese courts is a work in process. The SPC has given a great deal of publicity to its platform for the ascertainment of foreign law. which includes determinations of foreign law on a certain issue by certain authorized organizations and opinions given by members of the international expert committee of the China International Commerce Court (CICC). As I wrote close to two years ago, the China International Commercial Court (CICC) rules do not clarify a number of practical questions. Could a court request an advisory opinion from an expert and from a designated ascertainment center, and if so, what relative weight will be attached to each? Presumably, a court would give it greater weight than an opinion from an expert provided by a party.
The third principle, described more fully in Article 5, is linked to protecting China’s judicial sovereignty and repeats the statement that conflicts in jurisdiction and parallel proceedings will be resolved properly (妥善解决). This has appeared in BRI Opinions #1 and #2, but specific measures to resolve parallel proceedings have not yet been noted. Parallel and conflicting proceedings are an ongoing issue (not only between the Chinese courts and other courts outside mainland China) and will be further mentioned below. As Professor Bath discussed, several scenarios are common. One involves situations in which parties had agreed to the exclusive jurisdiction of the courts of one country, but a party brings proceedings in the courts another country (China), which accepts the case and may issue a judgment before the original court. Another set of cases involves an alleged arbitration agreement which provides for arbitration overseas, but a party brings a case in a Chinese court nonetheless. A variation has recently been noticed by two leading practicing lawyers in China. In that case, an issue that had been pleaded in arbitration proceedings in Hong Kong and reviewed by the relevant Hong Kong court was not given res judicata effect in China. The ruling by the Shijiazhuang court has been reviewed by the SPC under its Prior Review proceedings.
Although parallel proceedings in courts outside of China and in China have previously been noted primarily in maritime law (and anti-suit and anti-anti-suit orders),the parallel/conflicting proceedings issues seem to be moving to the area of Intellectual property (IP) law, likely related to the multi-jurisdiction litigation between Huawei and Conversant concerning standard essential patents, including in the UK Supreme Court and the German courts. What has been noted is one of the SPC’s research topics includes protecting China’s judicial sovereignty (national interests) through anti-suit or anti-anti-suit injunctions. The SPC Intellectual Property Court has issued an anti-suit injunction order against Conversant and the Wuhan Intermediate Court issued an anti-suit injunction order against Intel Digital (the linked article has a summary of the facts in the Wuhan case, but reserve judgment on the author’s comments on the authority of Chinese courts to issue these order).
3. Modernizing China’s foreign-related and maritime litigation systems
This third section contains four articles: application of law; fully develop the advantages of service and guarantees to cross-border trade and investment; promote the integration with the internet of foreign-related litigation; and develop diversified dispute resolution related to international commercial dispute resolution. Many of the provisions in this section repeat provisions in the BRI Opinions #1 and #2. What appears to be new is a statement that the SPC will seek to integrate prestigious foreign arbitration and mediation organizations to be part of its one stop mediation/arbitration/litigation mechanism.
4. Increase judicial protections
Article 10 mentions foreign-related administrative litigation issues. They were mentioned briefly in BRI Opinion #2 and once in BRI Opinion #1, here seeing greater stress. Section 11 focuses on cross-border intellectual property issues. It has some important new content. It mentions improving (完善涉外知识产权诉讼制度) foreign-related IP litigation procedures, putting into judicial policy previous statements by former Vice President Luo Dongchuan about the need for special IP litigation rules. It again mentions researching and responding to parallel international litigation relating to intellectual property rights and becoming a preferred place for settling IP disputes. From comments made by several leading experts in a recent webinar the Chinese courts are an important jurisdiction in IP litigation. It is unclear whether the use of anti-suit (or anti-anti-suit )injunctions by the Chinese courts will be the way that litigants are encouraged to turn to the Chinese courts to settle their global IP disputes. According to comments by several persons with expertise in Chinese IP law and related commercial issues, a number of factors are leading to the Chinese IP courts becoming an important forum for the resolution of IP disputes. Related to this, see the analysis by Doug Clark, partner in the IP law firm Rouse in this article, in which he says that the Chinese courts are looking to take on the role of setting global FRAND rates. Also see related blogposts on Mark Cohen’s blog, Chinaipr.com. These issues are complex and important.
5. Prevent and resolve major risks
This section has only two articles. Article 13 focuses on perfecting risk control mechanisms for major cases and firmly establishing an overall national security concept. These phrases are not unique to the SPC, but reflect language in Party documents, with the “overall national security concept” attributed to Xi Jinping. This article also calls on courts to coordinate the overall international and domestic situations, adhere to bottom-line thinking and risk awareness, understand the domestic and international situation and risks and challenges facing China’s opening up. The final phrase in this article calls on courts to resolutely defend our (China’s) judicial sovereignty and national security. So it seems that the concept of “judicial sovereignty” (used several times in this document) is being used to protect China’s national sovereignty.
The second one (Article 14), on guaranteeing state security and economic and social order gives a different priority to possible cross-border criminal law issues from either BRI Opinion. Neither BRI Opinion mentioned infiltration (渗透), espionage (间谍), sabotage, subversion (渗透颠覆破坏). Infiltration and espionage are mentioned immediately after the article heading. (the sentence is: “thoroughly participate in the struggle against infiltration, espionage, separatism, terrorism, and cults, by strictly combatting crimes of infiltration, subversion, and sabotage, and crimes of espionage, violent terrorism, ethnic separatism, religious extremism, and other crimes that endanger national security” 深入参与反渗透反间谍反分裂反恐怖反邪教斗争，严厉打击各种渗透颠覆破坏、间谍、暴力恐怖、民族分裂、宗教极端等危害国家安全的犯罪. (Many thanks to Chinalawtranslate.com for this translation). Other concerns, such as violent terrorism, ethnic separatism, religious extremism have been seen previously in the other two BRI documents. and article 14 again stresses criminal justice cooperation between China and the rest of the world. The reason for the change in priorities is unclear. What signal does this send to the international commercial and judicial world (international community) that infiltration, espionage, sabotage and subversion are being mentioned?
6. Increasing judicial cooperation, increase the international influence of the Chinese judiciary
These three articles address judicial cooperation, judicial exchanges, and training of judges who can handle foreign-related cases.
Article 15 concerns judicial assistance treaties, encouraging Chinese judges to participate in the negotiation of bilateral and multilateral judicial assistance treaties.
Article 16, on judicial exchanges, including highlighting exchanges with the principal international legal organizations, also summarizes ongoing SPC practices in developing exchanges with BRI judiciaries, although it is not so specified.
Article 17 calls for the better training, recruitment and promotion of persons who can deal with specialized legal issues such as cross-border finance, environmental protection, maritime law, intellectual property. Measures include joint programs with universities, exchanges with international organizations and international commercial courts, with the objective of having judges who are able to participate in the drafting or amendment of relevant international rules [a glimpse into a judiciary certain special functions] and the creation of a group of Chinese judges with an international perspective. This appears to be directed to law schools and senior personnel in the lower courts and likely involved concurrence by the SPC’s International Cooperation Bureau. As has been mentioned in earlier blogposts, the career progression for legal professionals to become judges has slowed because of the personnel reforms in the previous round of judicial reforms, under which young professionals work as judges assistants for a number of years before applying (and passing relevant examinations)to become a judge. 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.
A few concluding comments
Perhaps it is not realized that multiple documents conveying many of the same messages, with references that need decoding, may not convey the intended message to the international business community that the Chinese courts welcome and will treat fairly foreign commercial litigants, and that Chinese law is stable, transparent and predictable.
The Guiding Opinions call for increasing publicity about and the international influence of Chinese justice, and international confidence in Chinese law, through translating guiding and typical (exemplary/model) cases into foreign languages. This echoes language in BRI Opinion #2. The international community outside of China may or may not consider those sources to be primary ones in forming a view about the Chinese courts. In my view, it is more likely that the international community will look to decisions and rulings of the Chinese courts in several categories of cases: enforcement or other proceedings involving foreign (and Hong Kong) arbitral awards; parallel or competing proceedings, whether with other courts or with international arbitration; difficult commercial ones, particularly involving Chinese state-owned enterprises, or other Chinese national champions and issues related to intellectual property, particularly as it relates to “cutting-edge” technology. This observer surmises that the international judicial community will also look for a spirit of mutual respect for foreign courts and their jurisdiction.
The Guiding Opinions repeats language about Chinese courts participating in the formulation of international rules, an ongoing theme since the 2014 4th Plenum of the 18th Party Congress decision. One example is the constructive role of the SPC negotiator as a member of the Chinese delegation that participated in the drafting of the Hague Judgments Convention. But what the international community will also look for is China’s capacity to harmonize its legislation to be able to ratify the international conventions whose drafting it participates in.
The introduction to Guiding Opinions notes that comments were sought from many sources. It is unclear whether the views of international users of the Chinese court system were solicited. Other developments in which the international community may display an interest are the creation of additional institutions within the Chinese judiciary to enable the Chinese judiciary to better understand the needs of（domestic and international) users.
Many thanks to several highly knowledgeable readers who commented on earlier drafts of this blogpost.
For a longer project, I am carefully analyzing the Supreme People’s Court’s (SPC’s) 2019 Opinions on the People’s Courts Providing Further Services and Guarantees for Belt & Road Construction (BRI Opinion #2) (关于人民法院进一步为“一带一路”建设提供司法服务和保障的意见, about which I previously wrote in January (at some length). Each phrase in an SPC Opinion has a particular meaning and usually a backstory. As I said in January, it takes knowledge of a constellation of related policies and practices to decode SPC Opinions. Those of us outside the Chinese court system realistically can be expected to identify only a portion of the references. This blogpost focuses on two phrases in Article 25 of BRI Opinion #2–“publish typical (model/exemplary) cases on an irregular basis, issue white papers at a suitable time (不定期公布典型案例, 适时发布白皮书).
In public speeches this month (August, 2020), two SPC judges revealed that the suitable time for issuing a white paper and model cases somewhat related to the BRI is “soon.” As I (and many others) have written, the SPC has used the political importance of the BRI to improve the legal infrastructure for and personnel handling the judicial review of arbitration. (As others have written, under Chinese arbitration law, the courts have a greater role in the review of arbitration.), Judge Shen Hongyu, deputy head of the SPC’s #4 Civil Division revealed in a speech in early August, reported in Legal Daily, that “in the future, a bilingual white paper annual report on the judicial review of arbitration in 2019 and analysis of typical cases on the judicial review of arbitration will be issued” (将发布《2019年度仲裁司法审查案件白皮书》（中英双语版）以及仲裁司法审查典型案例分析). The same news was repeated by #4 Civil Division Judge Ma Dongxu and Judge Shen Hongyu in a recent conference (held on-line) of the Chinese Arbitration Law Society.
Issuing a judicial review of arbitration white paper would be a first for the #4 Civil Division and a step forward in transparency about the work of the SPC and judicial review of arbitration in particular. From the title, I surmise that the white paper will be nationally focused, similar to the SPC’s annual bilingual intellectual property white paper and environmental protection white paper. Although I have previously written about difficulties in locating full text versions of Chinese court white papers, I am quite sure that this white paper will be made accessible.
Late last year, the Beijing #4 Intermediate Court (and China University of Political Science and Law) issued a big data study of cases involving the judicial review of arbitration cases (analyzed here in English) I surmise that the SPC’s white paper it will show the success of the new judicial interpretations that the SPC issued in late 2017 and related notices as well as the pro-arbitration policy of the SPC. Greater openness about the judicial review of arbitration would be welcome by all interested parties. It is unclear whether the #4 Civil Division will give consolidated information about the cases that it reviews through the Prior Approval system, which is its version of the qingshi (请示，request for instructions), about which I have previously written. This article in the Kluwer Arbitration Blog provides a good summary of Chinese practitioner objections to the request for instruction procedures in the Prior Approval system.
Publishing typical cases
As I wrote last month and many times previously on this blog, the SPC frequently uses typical/model/exemplary cases, in several ways, including to supplement judicial interpretations and legislation. That was made clear by last month’s guidance on similar case search. The #4 Civil Division (the cases are issued by the SPC itself, of course) and the Supreme People’s Court Intellectual Property Court (SPCIPC) often use typical cases in analogous ways–unifying judicial standards. The press release that the SPC released in June on typical cases involving ship crew members was by SPC standards, quite blunt in pointing out the inadequacy of related law. (“Our country has not formulated a special crew law.. it lacks more targeted regulations…Typical cases combine the characteristics of the protection of the rights and interests of seafarers, analyze the law and reasoning, and fill the gap between the norms and the facts by extracting the main points of the judgments (我国尚未制定专门的船员法…缺乏更有针对性的规定。典型案例结合船员权益保护的特点，析法说理，通过裁判要旨的提炼，填补规范与事实之间的空隙)
Justice Luo Dongchuan, formerly the SPC vice president responsible for both the #4 Civil Division and the SPCIPC pointed out the gap-filling role of typical cases more discretely. (He has since been transferred to Fujian Province to serve as Secretary of the Provincial Party Committee’s Political-Legal Commission).The SPC issued BRI-related typical/model cases in 2015 and 2017 and BRI guiding cases in 2019. (For those interested, Stanford Law School’s Guiding Cases Project has translated the model and guiding cases (note that there is a trademark symbol for B & R cases). The legal rules in typical/model cases and guiding cases may eventually be incorporated into a judicial interpretation or legislation (explained in my earlier article).
Importance of the White Paper
I wrote in December of last year that one aspect of being in a leadership role in the SPC (referring to the president, vice presidents, division heads, deputy heads, and their equivalents in the affiliated institutions of the SPC) is ensuring that policies, actions, initiatives, and other decisions hit the target of being politically correct (post 19th Party Congress and post 4th Plenum) while being “problem-oriented,” that is, addressing relevant practical issues. Judge Shen skillfully hit that target in her speeches. She linked her first presentation to language in the Decision of the 4th Plenum of the 19th Party Congress, stating that “promoting external publicity on the rule of law and spreading the voice of the rule of law in China is an important manifestation of serving the overall situation of the Party and the country ( 推进对外法治宣传，传播中国法治声音，是服务党和国家工作大局的重要体现). As I asked in January, does it hit the target with foreign audiences? Is engaging special publicity for foreigners in fact useful in reassuring foreign governments, foreign state-owned companies, commercial entities, and individuals that their dispute is best heard in China?
Rather than special publicity, the bilingual white paper and model cases, aimed at both domestic and foreign audiences, are in fact better vehicles by which the domestic and foreign legal communities can assess how Chinese courts supervise arbitration, and how that compares to other jurisdictions. Because many trade, investment, and licensing agreements involving Chinese parties have arbitration clauses, this white paper is sure to be reviewed carefully by many.
Belarus is an Eastern European country located between the European Union and Russia, recently in the news. This blogpost analyzes judicial cooperation between China and Belarus, under the Belt & Road Initiative (BRI), both bilaterally and through China-led international organizations such as the Shanghai Cooperation Organization and speculates on the possible impact of current events in Belarus.
Bilateral Judicial Cooperation between Belarus and China under the BRI
The scope of cooperation between China and Belarus has constantly been expanding in a broad range of areas, especially after China initiated the BRI. However, before 2016, the meetings and agreements rarely focused on judicial cooperation. Although the two countries signed a treaty on civil and criminal judicial assistance in 1993 , one of the only times the countries expressed the intent to expand judicial cooperation was at a 2007 meeting of the National People’s Congress (NPC) Standing Committee and Legislative Affairs Commission representatives with the judges of the Constitutional Court of Belarus. The sides discussed “the commonalities in the constitutional principles on which the two countries’ political systems operate”.
The meeting of the President of Belarus Aleksandr Lukashenko on September 29th 2016 with President Xi Jinping [in the photo above] appears to have served as the stimulus for a rapid increase in the level of judicial cooperation. At the meeting, the leaders signed a Belarus-China joint declaration on the establishment of relations of all-round strategic partnership and mutually beneficial cooperation. In the declaration, the sides agreed to continuously deepen mutual political trust and cooperation in various fields, to build up contacts between peoples and humanitarian exchanges, to enrich the component of the Belarusian-Chinese relations of comprehensive strategic partnership, and to develop “all-weather friendship.” Considerable attention in the declaration was also paid to joint promotion of the BRI. During that meeting, President Lukashenko expressed his admiration for the BRI, saying that he understands its importance in strengthening multipolarity of the world as the basis for its sustainability.
One and a half months after the two state leaders met, the cooperation between the Chinese and Belarus legal authorities began to improve. In November 2016, the Deputy Head of the Belarus Presidential Administration Valery Mitskevich held several meetings with senior Chinese officials concerning the cooperation in the area of the rule of law. The then Secretary of the Central Political- Legal Committee (and a Politburo member) Meng Jianzhu and Valery Mitskevich signed “The Cooperation Agreement in the Area of the Rule of Law between the Central Political and Legal Committee of the Communist Party of China and the Administration of the President of Belarus” 《中共中央政法委员会与白俄罗斯总统办公厅法治领域合作协议》. A representative from the SPC was among the officials from Central Party and government institutions who attended the signing ceremony. Although the text of the agreement has not been made public, official commentary stated that the agreement can “help successfully carry out the BRI”, as the project’s implementation requires “all countries to strengthen the legal protection through communication in the area of the rule of law, such as through mutual judicial assistance”.
On that visit, Mitskevich met with the Executive Vice President of the Supreme People’s Court of China Shen Deyong, who expressed hope that “this meeting will open a new chapter in the cooperation and communication between the two countries’ judiciary, and thus will improve the overall relations”; he also suggested that the two countries’ Supreme Courts engage in cooperation on a deeper level. The Belarusian representative agreed to make contributions to deepen judicial cooperation, and noted that “the Belarusian side highly values its relations with China”.
After the meeting in November 2016, interactions involving the judiciary of the two countries increased. Several Chinese judicial delegations visited Belarus. In June 2017, a delegation from the Shanghai courts visited the Belarus Supreme Court and the Belarus Constitutional Court, and discussed the use of new technology in courts (such as the development in Belarus of the national courts online database with archived info on legal proceedings). In December 2018, three senior judges from Gansu Province visited Belarus, where they met with justices of the Belarus Supreme Court, and several judges of the Minsk City Court. The Belarusian side shared some insights about the Belarusian judicial system, as well as about the judicial reforms’ results aimed at integrating e-justice elements into the process and making legal proceedings more time efficient. The Belarusian side expressed the interest in furthering cooperation and the exchange of legal information. In July 2018, Chief Justice of the Supreme People’s Court Justice Zhou Qiang met with Valery Mitskevich and suggested that “the two countries cooperate, promote judicial reforms, such as“intelligent courts”, provide judges with better quality training, support the idea of justice for people, etc.” Both sides agreed to “work together in the field of judicial reforms to implement the BRI”.
Since the BRI has begun, legal cooperation between China and Belarus has expanded in other ways. In March 2017, the Center for Belarusian Legal information was opened at Shanghai’s East China Normal University and in April 2018, the Director of the Belarusian National Center for Legal Information (NCLI) (a Belarus government agency) Evgeny Kovalenko met with Gan Zangchun, a Member of the Party Group of the Ministry of Justice of China. His visit was part of a three country visit (also to Mongolia and Russia) to discuss BRI dispute resolution. Gan and signed a Cooperation Memorandum with the NCLI. Gan Zangchun noted that “the signed memorandum will assist in continuing the judicial cooperation, […] increase the level of cooperation, and provide good legal services and legal protection to the development of the BRI.” According to the summary of the memorandum obtained by this author directly from the NCLI, the sides agreed to “cooperate in the areas of 1) creating and promoting legal info resources; 2) using IT in the regulation-making process, as well as in the process of the application and assessment of legislation; 3) creating a system of bilateral exchange of legal information that would provide support in the studying and implementation of regulations by the other party; 4) organizing conferences and seminars in the areas of mutual interest of the parties. The exchange of such information may possibly be used by the sides to assess the regulations that are related to the protection of the legal interests of the investors of the other side, as well as control and assess the application of such regulations by judges. At the same time, it can also make the process of applying foreign law in the lawsuits with international elements easier for foreign judges, as there will be online legal databases with the relevant information on foreign regulations as well as the guidelines for their application.
As Belarus is a member of the New York Convention and has signed “The Treaty Between the Republic of Belarus and the People’s Republic of China on Legal Assistance in Civil and Criminal Matters”, both court judgments and arbitral awards of one party can be recognized and enforced by the other party.
The Belarus-China Judicial Cooperation Within the Framework of the BRI through the Shanghai Cooperation Organization
Since 2015, Belarus has had the status of an observer state in the Shanghai Cooperation Organisation (it is the only European SCO observer state) which makes Belarus eligible to participate in the conferences and forums organized by the SCO members. In December 2015, Belarus sent its first delegation to the Session of the Council of the Heads of Governments of the SCO member states, at which the primary theme of discussion was the role of the SCO countries in implementing BRI.
The judicial cooperation of Belarus with China through the SCO began in 2018 at the 13th Conference of the Presidents of the Supreme Courts of SCO member nationas held in Beijing (which was attended by the judges of the Supreme Court of Belarus, Xi Jinping in his speech stated that the SCO and specifically the presidents of the SCO Supreme Courts are playing an important role in implementing the BRI, and should focus on creating the mechanisms that would improve the legal environment in their countries.
During the meeting of the Supreme Court judges of the SCO states in June 2019 in Sochi, Russia, attended by the Head of the Belarus Supreme Court Valentin Sukalo, SPC President Zhou Qiang stated that the SPC is willing to engage with the Supreme Courts that participated in the conference in order to improve the cooperation in the judicial sphere, and thus “make a new contribution to the BRI and their development strategies.”
Comparison of EU-Belarus & China-Belarus Judicial Cooperation
The European Union introduced in 2014 a new direction for cooperation called “Partnership for Good Governance” (“PGG”), under which the EU strived to help the EU’s six Eastern partner countries (among which is Belarus) seek to meet European standards on human rights, democracy and the rule of law. The first phase of the project took place from 2015 to 2017, and was implemented by the Council of Europe. One of the main aspects of that phase of the project was the promotion of the European human rights standards among Belarusian judges, law enforcement officials, etc.: The project created human rights training and reference materials that were translated into Russian and widely disseminated. Also, online courses and other remote learning materials were integrated into the curricula of Belarusian State University and the Institute for Retraining and Qualification Upgrading of Judges, Prosecutors and Legal Professionals at the Belarusian State University to introduce the European system of human rights protection to Belarusian law students, judges and other legal professionals. In 2018, after the first phase of PGG ended, cooperation with Belarusian judges continued: for example, on May 30th, the Council of Europe organized a panel discussion on the right to fair trial attended by Belarusian judges, prosecutors, lawyers, etc. In April, 2018, a Round Table on “Legal Aspects of the Abolition of Death Penalty” was held for Belarusian judges from the Supreme Court, the Constitutional Court, as well as officials from the Prosecutor’s General Office, and other public bodies.Recently the European Union launched the second phase of the program, called “Partnership for Good Governance Part Two 2019-2021” and continues to engage in discussions with Belarusian judges and other legal professionals on topics such as the abolition of death penalty, the right to fair trial, corruption, etc. The nature of the EU judicial cooperation is different from that of China.
Judicial cooperation of China with Belarus focuses on matters related to the BRI and Chinese investment in Belarus, such as the Great Stone Industrial Park. access to legal information, data gathering, as well as promoting integrating e-justice elements into the judicial system, etc.
Impact of the Current Political Situation on Judicial Cooperation with China
Taking into account the current political situation in Belarus, this author expects that some changes in the dynamics of China-Belarus judicial cooperation might take place if the incumbent president leaves office. For example, if power is transferred to Tikhanvoskaya (or to another opposition candidate), the role of the judiciary is likely to evolve to be more in line with EU principles. The popular opposition candidates promise to go back to the earlier version of the Constitution that gives greater powers to the Parliament and the judiciary, while the current Constitution that was amended in 1994 and 2004 provides for broad presidential powers, including the right to appoint the judges of the Supreme Court.
If the opposition comes to power, many Belarus citizens expect that Belarus will seek to build more balanced and transparent relations with both the EU and China. In the view of this author, good relations with China are beneficial for Belarus in many ways, including strengthening the Belarusian economy. So this author anticipates that judicial cooperation between the two countries will continue but may evolve if the new leaders reassess the role of Belarus under the BRI.
Safia Yablonskaia is from Belarus and studies law at Fudan University.