In recent days, I had the opportunity to meet with Zhang Yongjian, chief of the #1 China International Commercial Court (CICC) who provided some updates about the cases accepted by that court. In addition to the three rulings (posted on the CICC website) that the #1 CICC had issued, he mentioned that a ruling in one of the cases was forthcoming, as was a judgment in another. He mentioned that in considering some of the cases, certain members of the expert committee have provided expert opinions, as is authorized by the CICC rules. Additionally, the #1 CICC has accepted a sixth case, filed directly with the court. Zhang Yongjian mentioned the issues in that case relate to entrusted/nominee shareholding. The other cases accepted thus far are ones that had been referred by lower courts.
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.
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.