In January 2022, the Supreme People’s Court (SPC) issued a Conference Summary [also translated as “Meeting Minutes”] of the National Symposium on Foreign-Related Commercial and Maritime Trial Work (Foreign-Related Commercial & Maritime Law Conference Summary (bilingual version here) (全国涉外商事海事审判工作座谈会会议纪要). From unauthorized versions released, it can be seen that it was another SPC year-end accomplishment. Although this document is not a judicial interpretation and cannot be cited in Chinese court judgments, it is crucially important for legal professionals outside of China dealing with cross-border commercial issues involving China and for Chinese legal professionals focusing on cross-border commercial issues involving the rest of the world.
The conference summary has 111 provisions. The focus is on legal issues because the target audience of domestic judges understands the political framing. The conference summary applies to foreign-related cases and to Hong Kong, Macau, and Taiwan-related cases by reference (see Article 111, set out at the end of this post). They are in the following categories:
- foreign-related commercial (涉外商事部分), the longest:
- Maritime (海事部分);
- Judicial review of arbitration (仲裁司法审查部分).
This blogpost will explain why the conference summary was issued, its legal and policy basis, and why it addressed those particular issues and will leave the majority of the content of the conference summary for the experts in practice and academia.
Why this conference summary?
The conference summary (meeting minutes) is based on a national conference on foreign-related commercial and maritime trial work held in Nanjing in June of last year and the issues that the SPC would have heard raised by lower court judges.
When asked the question of why this conference summary was issued, an SPC judge is likely to say “to resolve difficult issues in practice and unify judgment standards.” But a fuller answer to this question for a larger audience requires further details.
As to why a conference summary and not rely on “case law” with Chinese characteristics, including China International Commercial Court cases, SPC cases, and various types of typical or SPC selected cases as “soft precedents,” the answer is that the SPC is issuing this conference summary to guide lower court judges (and possibly judges in other divisions of the SPC) practically and efficiently and for some additional reasons. The simple answer is that “case law” is not effective enough to practically guide lower court judges. If it were, the SPC would not have issued this document. I have seen a number of academic articles (in English) that illustrate a misunderstanding of what the SPC is doing.
Additionally, I surmise that at the Nanjing conference, behind closed doors, SPC judges heard about inconsistent approaches or requirements from lower court judges. I surmise they also heard from lower court judges uncertainty in the approach that they should take concerning issues where the law is unclear. The judicial evaluation system values deciding cases correctly. Moreover, the most recent SPC policy focuses on unifying the application of law. Its leadership has established a leading small group to that end. So for all these reasons, lower court judges would look to the SPC for clarification. What is contained in the conference summary is the SPC’s current consensus on major cross-border commercial, maritime, and arbitration review-related issues, based on their further research and consideration.
In the busiest courts where many of these cases arise, judges are under enormous pressure to decide cases timely and accurately, especially after the recent changes to the jurisdiction of lower courts under the reorientation of the four levels of the people’s courts and the issuance of other documents changing the jurisdiction of the lower courts in commercial cases. “Codifying” the principles from cases and issues considered by the SPC in the form of a conference summary is the most useful and efficient form of guidance for lower court judges. As mentioned here, although conference summaries are not judicial interpretations and cannot be cited in a court judgment document as the basis of a judgment, they provide important guidance to the work of the courts concerning issues about which existing law and judicial interpretations are unclear. Judges will rely on its provisions to decide cases.
The legal basis for the conference summary derives from the SPC’s authority under Article 10 of the Organic Law of the People’s Courts to supervise the lower courts.
As for an answer to the question of why not issue a judicial interpretation–time, fluidity, and attenuated basis for some of the conference summary’s provisions do not permit a judicial interpretation to be issued. One example of the attenuated basis and fluidity is Article 100, which”codifies” the Guangzhou Intermediate People’s Court decision in the Brentwood case (discussed here). It establishes welcome certainty to the enforceability of arbitral awards made by overseas arbitration institutions arbitrations seated in Mainland China. It provides that such awards are regarded as foreign-related arbitral awards (rather than foreign awards) in Mainland China. It is likely to be helpful to the overseas arbitration institutions that are considering establishing case management offices in China, as is now possible under Shanghai and Beijing regulations. As mentioned before, the Arbitration Law being revised, the current draft addresses the issue, and the SPC is likely to issue a comprehensive judicial interpretation thereafter.
Moreover, for some of the procedural provisions, such as those relating to the recognition and enforcement of foreign judgments, it gives the SPC a chance to pilot its guidance, before formalizing it in the form of a judicial interpretation. A recent Wechat article (with further details) flags that in 2021, three foreign judgments and nine Hong Kong, Macau, and Taiwan judgments were recognized and enforced. Likely more applications were made but not decided.
Other provisions consolidate existing guidance in a form that is easier for the lower courts to grasp quickly. Article 22, on obtaining an opinion on foreign or international law from a China International Commercial Court (CICC) expert committee expert, for example, repeats what is to be found in CICC guidance. The same can be said about Article 11, on the topic of electronic service of process, promoted in several Belt & Road-related SPC Opinions. It should be noted that China maintains its traditional approach to service of process from foreign jurisdictions.
It appears that some clauses reflect a change in the negotiating position of Chinese financial institutions, in contrast to “back in the day. ” Article 2, on the topic of asymmetric jurisdiction clauses, states that Chinese courts will uphold them unless they violate Chinese rules on exclusive jurisdiction or relate to the interests of consumers or workers. (For those with no background on these clauses, according to Herbert Smith Freehills: “asymmetric jurisdiction clauses are common in the financial sector, and typically require one party to bring proceedings in one jurisdiction only, while the other (usually the financial institution) may choose to bring proceedings in other jurisdictions.” From this position, I surmise that Chinese banks use asymmetric jurisdiction clauses as well.
Articles 18-20 address a few of the ongoing issues related to the application of international conventions and treaties in the Chinese courts. Article 18 answers the question of what a court should do if the relevant treaty or convention is silent or China has made a reservation on that issue. The answer is to use the Law on the Laws Applicable to Foreign-Related Civil Relations to determine the applicable law. Article 20 focuses on what a Chinese court should do if it is applying Chinese law if Chinese law has conflicting positions and China has acceded to a relevant treaty or convention. A report on a recent workshop involving the SPC, the Beijing #4 Intermediate People’s Court, and academics from the China Academy of Social Sciences and other institutions flags some of the many other unresolved issues.
Article 30 addresses an important question for Chinese and foreign banks, suppliers to Chinese EPC contractors, and project owners, particularly in Belt & Road jurisdictions–how easily can a Chinese court stop payment on a demand (independent) guarantee? The answer is, strictly according to the provisions of the relevant judicial interpretation. Article 30 provides that when a court hears an application to stop payment on the basis of fraud (which can be filed as a preliminary matter or during the course of litigation or arbitration), it must examine the independent letter of guarantee stop payment application submitted by the parties in according to Article 14 of the (updated) Provisions on Several Issues Concerning the Hearing of Independent Letter of Guarantee Dispute Cases, and conduct a preliminary substantive examination on whether there are fraudulent grounds for stop payment in accordance with the provisions of Article 12 and set out its finding of facts and reasoning as required by Article 16.
The Bigger Picture
This conference summary is another form of SPC soft law. It harmonizes the decisions of the Chinese courts to be consistent with SPC policy (or said another way, strengthens the firm guiding hand of the SPC).
This document reflects the awareness of its drafters, the judges of the #4 Civil Division of the SPC, that the issues that come before the Chinese courts far outpace the infrastructure of Chinese foreign-related commercial law. Given the larger trends I described in my brief article last fall, we can expect the SPC to continue to play an important role in developing China’s body of law related to cross-border commercial matters.
111.【涉港澳台案件参照适用本纪要】涉及香港特别行政区、澳门特别行政区和台湾地区的商事海事纠纷案件，相关司法解释未作规定的，参照本纪要关于涉外商事海事纠纷案件的规定处理)。111. [The application by reference of this conference summary to cases involving Hong Kong, Macao and Taiwan]. As for commercial and maritime cases involving the Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan, which are not otherwise stipulated in relevant judicial interpretations, shall be handled with reference to the provisions of this conference summary on foreign-related commercial and maritime cases.