Secrecy and the Chinese courts

Party meeting on secrecy

Court Party meeting on secrecy

On 9 June, the Supreme People’s Court’s Party Committee held a meeting to transmit the latest Party policy on secrecy in the courts, as reported here.  It is intended to implement General Secretary Xi Jinping’s policy statement on secrecy and security, within the court system.  It appears to be linked to policy issued earlier this spring at the meeting of the National Security Commission (official report here and analyzed here).

President Zhou Qiang stressed the following issues:

  • maintaining state secrecy and advancing judicial openness, to implement “justice under sunshine” and promote justice and fairness for the people;
  • dealing with the relationship between secret and non-classified materials, so that secrecy standards are applied properly;
  • secrecy education and punishment, putting preventative training in place and strict punishment;
  • the relationship between software and hardware, stressing preventative measures as well as hardware controls.

It does not appear that new secrecy regulations are in the works.  Judicial personnel have secrecy obligations under secrecy regulations applicable to the courts (which apparently have not been made public) (but an English translation is found here), as well as set forth in the Judges Law and other sources.  Judging by the large number of articles on court websites on this topic, in the age of smartphones (whether iPhones or Xiaomis), it appears increasing difficult for those restrictions to be effectively implemented.

More on the Supreme People’s Court and Typical Cases

SPC announces model cases

SPC announces model cases

In a press conference on 30 April, the Supreme People’s Court (the Court) announced that it will more systematically use model (typical) cases (典型案例) to guide the lower courts. The Court is increasingly using model/typical cases.  My recent blogpost  explains what model cases are, which courts issue them and the authority of model cases.

One of the initiatives the Court highlighted in its October 2013 judicial reform plan is “expanding fully the important role of leading cases and cases for reference.” because its leadership considers model cases an important supplement to legislation, judicial interpretations, and “guiding cases” (a special category of cases so designated by the Court).  Mark Cohen, of chinaipr.com, has blogged on the Court’s use of model cases in the area of intellectual property law.

The Court will issue at least five model/typical cases on a monthly basis, selected from cases submitted by the lower courts.  The cases can be accessed through the Court’s Cases in Chinese Courts portal. The ones on the website are currently limited to those issued in 2013 and 2014.  Unfortunately, a search functions appears lacking.  Despite the limitations, it is a further development in the use of case law “with Chinese characteristics.”

 

Seen on the China Policy Institute Blog of the University of Nottingham

supreme_court_civil_case-400x210 The Supreme People’s Court Observer published (by invitation)  Using Model Cases to Guide the Chinese Courts on the blog of the China Policy Institute of the University of Nottingham. The post discusses:

  • what model cases are;
  • which courts issue them;
  • the authority of model cases;
  • recent model cases the Court;
  • why the Court (and the lower courts) are using them; and
  •  trends in the use of model cases.

Clearing the Backlog of Civil Disputes in the Chinese Military Courts

Zhou Qiang visiting PLA Military Court, 2013

Zhou Qiang visiting PLA Military Court, 2013


A short notice on the Supreme People’s Court’s websites and Wechat on 2 March (linked here) announced the launch of an 8 month campaign in the military courts to clear out a backlog of major civil disputes.  The announcement (and related information) gives the outside world a peek behind the curtain of the almost 100 military courts.  Any lawyer involved in due diligence projects in China in the last 15 or more years will have encountered issues related to Chinese military law, particularly land issues, but the issues targeted in the campaign are much broader.

This blogpost will look at:

  • the military court system;
  • transparency of the military courts;
  • judicial reforms in the military courts;
  • civil jurisdiction of the military courts; and
  • the clearup campaign.

Military Court System

The Chinese military court system, a system to itself within the Chinese court system, apparently has attracted little attention outside of China (or at least in open sources).  The military court system is headed by the PLA Military Court, which is under the Political Department of the Central Military Commission, and under the Supreme People’s Court.  Below the PLA Military Court there are courts in the military regions as well as the military services–Navy, Air Force, Armed Police and below those courts, basic level courts within each of these regions, military services, and other units  (see this description.

Transparency

Although several articles in the Chinese press suggest that the military courts are more transparent than before, national security concerns apparently mean that the transparency measures being pushed by the Court leadership have not yet extended to the military courts.  For example, the judgment debtor database established in the fall of 2013 includes all the courts but the military ones (although some military-linked companies can be found in the database). The Court’s websites link to websites of the provincial-level local courts, but not that of the military courts. However, internet searches (as well as searches of legal databases) will turn up many reports of cases involving both the civilian and military court systems.

Judicial reforms in the military courts

The Third Plenum Decision called for improvement in military legislation, and it is understood to include judicial reforms in the military courts.  The head of the PLA Military Court stated that judicial reforms included improving the quality of military justice, including the quality of cases handled. What that involves has not been revealed in the open press, although presumably these are issues for the leadership of the PLA military court.  It is likely that increased training of military judicial personnel will be part of the solution,both within the military system and outside it.

Civil jurisdiction of the military courts

Civil, rather than criminal cases, are the focus of the clear up campaign.  The military courts have heard over 2500 civil cases, most of which have been settled.  The Chinese military courts have civil jurisdiction, most recently under a judicial interpretation in the form of regulations issued by the Supreme People’s Court in 2012, “Provisions on Several Issues Concerning the Jurisdiction of Military Courts in Civil Cases” (Civil Cases Jurisdiction Provisions, linked here) and a previous 2010 notice.  The rationale for giving military courts civil jurisdiction is to enable certain types of civil disputes to be resolved more effective, because the local court have encountered difficulties in dealing with them.  Difficulties cited range from serving military personnel or military entities, freezing military assets, obtaining evidence held by military entities, having military personnel attend hearings in the civilian courts, and enforcing judgments against military entities.

The Civil Cases Jurisdiction Provisions deserve more discussion than this quick blogpost can provide, and stipulate:

  • certain civil cases must be exclusively heard in the military courts (including cases in which both parties are military personnel or military entities):
  • parties have the choice whether or not to file a civil suit in the military courts under certain circumstances:
  1. tort cases in which military personnel or entities are tortfeasors;
  2. family disputes in which one party is in the military;
  3. tort cases that occurred within a military facility; or
  4. military real property disputes with a military individual or entity as party.
  • civil cases can be transferred to and from the military and local courts, respectively.

    Head of Lanzhou Military District Court visiting local intermediate court

    Head of Lanzhou Military District Court visiting local intermediate court

The PLA Military Court has issued regulations further specifying the jurisdiction of various levels of military courts, that have been summarized in the press but not made public.

The clear up campaign

The campaign, undertaken with the concurrence of the Political Department of the  Central Military Commission, focuses on the following types of cases:

  • construction of military installations;
  • ownership of military land;
  • defense technology (and presumably other intellectual property-related cases);
  • family law cases involving military personnel;
  • torts;
  • condemnation of property; and
  • labor.

Although reports have not given further details on specific cases, the following is generally known or presumed:

  • In many cities, PLA entities hold real estate in prime areas and the ownership disputes may involve significant sums of money;
  • it is likely that military families have not escaped greater social trends of increased rates of divorce, particularly in the major cities, and some of those divorces are likely to involve disputes over valuable real property;
  • there are likely are disputes over the intellectual property rights held by military personnel and military entities (one reported case involved infringement of copyright (by civilian publishers) of writings by military personnel);
  • military entities have contract disputes involving construction of military installation as well as military goods and services procured.

Greater engagement with the outside world?

It is unclear whether military exchanges with foreign armed forces have included the military courts, or whether the PLA Military Court (or the Central Military Commission) would welcome further engagement with the outside world.  Presumably efforts aimed at increasing the role of law within the military and strengthening the military courts would benefit all.

Why the Supreme People’s Court is lobbying National People’s Congress Delegates?

Deputy court president in Ningbo, December, 2011

Deputy Court president in Ningbo, December, 2011

Since the end of Third Plenum in November, senior Supreme People’s Court (Court) officials have been racking up airmiles, traveling all over China to meet with National People’s Congress (NPC) and  Chinese People’s Political Consultative Conference (CPPCC) representatives.  Over forty meetings have been held over the past year. Although Court officials had met with NPC and CPPCC delegates in previous years, it is apparent that these meetings are taking on special significance this year. This blogpost will explain what occurs at these meetings and the rationale for having them.  It also illustrates one of the skills that an effective court president needs in China.

In recent months, senior Court officials, primarily the Court vice presidents, have traveled to the four corners of China, from Gansu to Guangxi and from Jilin to Yunnan. Zhou Qiang has also met with Beijing based delegates.

The stated purpose of these meetings is to “listen” (听取) (and respond) to the views and suggestions of NPC and CCPCC delegates. Court officials have either released to NPC and CPCC delegates a copy of the Court draft work report or summarized the developments in the courts in 2013 and plans for 2014.  Some meetings apparently involved more substance than others.  The meeting with Shanghai delegates, which included a leading law firm partner as well as the general manager of Shanghai Electric (listed on the Hong Kong Stock Exchange) raised the issues of:

  • quality of judicial personnel;
  • increasing judicial independence;
  • resolving local protectionism;
  • having more witnesses appear in court; and
  • cross-examination.

It is apparent from the extensive reports on these meetings that Zhou Qiang is taking a tactical approach to these meetings.  As the former governor of Hunan, former Party Secretary of Hunan and director of the Standing Committee of the Hunan People’s Congress, he has extensive experience in dealing with people’s congress and consultative congress deputies.

It appears that the rationale Zhou Qiang (and colleagues) have for these meetings is two-fold.  First, it is to diffuse criticism of the Court (and the work of the lower courts) at the upcoming NPC session and incorporate frequently issues into either the final version of the Court Work Report or the 2014 Court agenda.   The large number of votes against the 2013 Court Work Report was seen as a loss of face and it is likely that Court leadership wants to avoid that.

The second reason Zhou Qiang has for closely liaising with NPC delegates is to lay the groundwork for implementing  court reforms.  If the Court is able to obtain support for overhauling the structure for the funding of courts and appointment of judges at the local level (as foreseen by the Third Plenum Decision) this reform will require that the NPC amend the basic statute for the court system, the Organizational Law of the People’s Courts (人民法院组织法) and will  require NPC delegates support the reforms in large numbers.

Zhou Qiang listening to Hunan provincial people's congress delegates, 2011

Zhou Qiang listening to Hunan provincial people’s congress delegates, 2011

General Party Secretary Xi Jinping Issues Written Instructions (批示) to the Supreme People’s Court (Updated)

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On the eve of the Chinese New Year, a banner headline was posted on the  Supreme People’s Court (Court) websites:

Study the Important Written Instructions of  General Party Secretary Xi Jinping

A revised version of that banner has remained on those websites since (the photo above), apparently unobserved by outside commentators, who may have not realized its significance.   This blogpost will look at:

  • what written instructions (批示) are;
  • the significance of Xi Jinping giving written instructions;
  • what Xi Jinping’s instructions were;
  • why the instructions were issued on eve of the New Year; and
  • why Zhou Qiang, President of the Court called on the lower courts to study diligently Xi Jinping’s instructions.

What are written instructions (批示)?

”Written instructions“ (批示) means notes or comments made by a superior on a written document submitted for approval or comment.  It is used in reference to Party/government documents as well as documents within the court system (see the regulations on handling each type of document).  The term has been used throughout the history of the PRC as well as in Chinese history.  Analysis of Chinese political documents often mentions written instructions.

According to the reports on various Court websites and in the press, Xi Jinping gave his written instructions on 28 January in response to a report submitted by the Supreme People’s Court  entitled Situation Concerning the Work of the People’s Courts in 2013 and Proposals for their Work in 2014 (关于2013年人民法院工作情况和2014年工作打算的报告).  The report has not been made public.

What were Xi Jinping’s written instructions and what is their significance?

Xi Jinping wrote what to the outside observer appears to be a collection of slogans from the Third Plenum Decision.  However appearances can be deceiving.

He wrote that the courts had diligently implemented the Center’s policies and implemented their responsibilities and achieved new results.  He expressed his hope that the courts will make persistent efforts, implement the spirit of the 18th Party Congress, Third Plenum etc, uphold the Party’s leadership, promote judicial reform, advance the building of a judicial system that is fair, efficient, and authoritative..provide powerful judicial protection for reform, and continue to promote the building of the rule of law in China.

The significance of the written instructions is not so much in its content as the fact that Xi Jinping issued it to the Supreme People’s Court.  It is unusual for a Party General Secretary to have issued them.  By doing so, Xi Jinping expresses his support, praise, demands, and hopes for Zhou Qiang and the Court leadership.

Why were the written instructions issued on eve of the New Year?

The written instructions were issued on the eve of the Chinese New Year to approve what Zhou Qiang and the other Court leaders did in 2013, as well as confirm the planned policies of the Court for 2014.  The written instructions were issued before the Chinese New Year to enable the Court leadership to be better equipped when dealing with issues at the National People’s Congress (NPC) meeting in early March. Court leaders are likely anticipating that local opposition to judicial reforms under consideration may be expressed at the NPC meeting.

Why are the lower courts requested to study diligently Xi Jinping’s instructions?

Xi Jinping’s instructions summarize in one paragraph the Central Committee’s policy towards the courts and their role in the Third Plenum reforms as well as judicial reforms.  The written instructions enable the lower courts  to understand the political background against which they work and the political goals for their work in the near and longer term.

The more sophisticated lower court judges understand that the written instructions mean that the Party leadership values the work of the Court leadership, but recognize that this will not resolve their caseload.

Concluding Remarks

To the outside observer:

  • it illustrates what is meant by Party leadership of the courts at the highest level;
  • in the political context of China, it is a major coup for Zhou Qiang (and colleagues) and their reform policies for Xi Jinping to have issued those written instructions; and
  • It means the political leadership is behind those reforms.
  • At the same time, it places a great deal of pressure on the Court leadership to deliver results (as seen from the political leadership) in the judicial reforms.
  • It would not be surprising to hear voices opposing some of the reforms at the NPC meeting.

The Court’s September 2013 notice on the CIETAC split: When will greater transparency come to the Court?

In early September, 2013, the Supreme People’s Court (the Court) issued the Notice on Certain Issues Relating to Correct Handling of Judicial Review of Arbitration Matters (最高人民法院关于正确审理仲裁司法审查案件有关问题的通知)(Fa [2013] No. 194) (the Judicial Review Notice).  This clunky sounding notice relates to the split between CIETAC and its former sub-commissions, the Shanghai International Economic and Trade Arbitration Commission (the Shanghai International Arbitration Center) and the Shenzhen International Economic and Trade Arbitration Commission (the Shenzhen Court of International Arbitration). It is therefore relevant to the thousands of companies (and their lawyers) that have CIETAC Shanghai or CIETAC Shenzhen/South China arbitration clauses in their contracts.

The Judicial Review Notice dispute was not published on the Court’s official website or the website of the national court system (which it also operates)  but the text was distributed by local lawyers associations (one is linked here) and was published by Peking University’s Chinalawinfo service.   It became the subject of law firm alerts and other publications in Chinese and English (some English alerts are linked here and Chinese alerts are linked here).

The Judicial Review Notice is not a judicial interpretation and is not required to be made public.  It is a Court normative document (discussed in an earlier blogpost). Court normative documents address new issues or phenomena where the Court is of the view that the law is not settled enough for judicial interpretations. The Judicial Review Notice, which (as described in the above client alerts) requires certain lower court rulings related to the CIETAC split to be considered by lower court judicial committees and reported up level by level to the Court.  On the topic of judicial committee, see my earlier article on the subject–Article on judicial committees and as mentioned in an earlier blogpost, the Court is reconsidering)  These new procedures affect the rights of litigants in these cases as well as parties (or potential parties) to arbitration proceedings in the Shanghai International Arbitration Center and Shenzhen Court of International Arbitration.  However, relevant regulations do not require that all Court normative documents be made public.

The Court leadership is requiring more transparency of the lower courts.  They need also to turn their attention to their own documents and consider where the Court can be more transparent, because that will also be a step forward in (as the Court’s slogan has it) “Vigorously Strengthening a Fair Judiciary and Continuously Increasing Judicial Credibility”.

Brief report on mutual legal assistance developments between the mainland and Hong Kong, Macau, and Taiwan in 2013

On 13 January the People’s Court Daily published a report, linked here (and also issued on Wechat), with statistics and summaries of legal developments in 2013 concerning mutual legal assistance between mainland China and Hong Kong, Macau, and Taiwan.  These developments, which also have practical implications for lawyers and the judiciary in all four jurisdictions are highlighted below.

  • There were almost 11,000 cases involving delivery of judicial documents, taking of evidence, and other mutual legal assistance, with a significant increase since the conclusion in June, 2009 of a judicial assistance agreement between the mainland and Taiwan.
  • In 2013, the Supreme People’s Court (SPC) began work on a  judicial interpretation concerning the recognition of Taiwan court rulings and judgments, which the report says would be more comprehensive and expand the scope of judgments that can be recognized. The SPC also began work on a judicial interpretation for the transfer of mainland prisoners from Taiwan back to the mainland to serve out their sentences.
  • The SPC and the Hong Kong authorities [presumably the Department of Justice] have undertaken fruitful discussions on the recognition and enforcement of civil and commercial judgments  that lack jurisdiction agreements (相互认可与执行非协议管辖民商事判决) as well as an arrangement concerning criminal cases in which  the mainland and Hong Kong have concurrent jurisdiction.

The arrangements with Hong Kong have significant implications for the business and legal community in Hong Kong.  The Supreme People’s Court Monitor looks forward to more information from the Hong Kong government on both issues.

The Court Misses an Opportunity to Consult the Public on the Demand Guarantee Interpretation

On 6 December the Supreme People’s Court (the Court) issued for a nine day comment period for public consultation their draft “regulations concerning some issues related to the trial of disputes involving independent guarantees” (draft demand guarantee interpretation).   The Court missed an opportunity for real public consultation on a judicial interpretation with significant domestic and international commercial implications.

Why was it a missed opportunity?

In the best of worlds, what could have happened?

  • The Court could have used the draft to showcase the Court’s new openness and transparency (which had begun even before the Third Plenum of the 18th Central Committee of the Communist Party (Third Plenum)).
  • The Court could have set a public consultation period long enough for interested parties (domestic and foreign) to provide meaningful input on the draft.  Interested parties could have had a chance review and consider the draft in light of issues that often arise in transactions when demand guarantees are issued by Chinese institutions, and compare it to the “international  standard” on the subject,the  International Chamber of Commerce’s Uniform Rules for Demand Guarantees (URDG).

The reasons why are the Court did so are explained below.

The demand guarantee regulations are classified as a type of judicial interpretation, which, as explained in a prior blogpost, are an important source of legal rules in China.

Why is the draft demand guarantee interpretation important?   Chinese banks often issue demand guarantees to foreign companies on behalf of Chinese contractors, exporters, and investors. When projects go wrong, Chinese companies often go to Chinese court to try to stop payment on their guarantees.

This blogpost describes:

  • What a demand guarantee is;
  • Why the Court drafted this interpretation;
  • What issues the interpretation raises;
  • How the Court handled public participation and possible reasons for doing so; and
  • Avenues for advocating a greater role for public consultation.
  1. What is a demand guarantee?

A demand guarantee (most often called an independent guarantee in Chinese (独立保函)), is often used in construction, engineering and other projects, when the owner of the project requires a contractor to guarantee his performance, often with a guarantee issued by a bank, so that if the contractor fails to meet his obligations, the project owner can be easily compensated.

2. Why the  Court drafted this interpretation

The Court drafted the demand guarantee interpretation because the lower courts are faced with the situation of trying an increasing number of cases involving demand guarantees, with inadequate legislation.

These cases arise because Chinese construction and engineering companies, taking an increasing share of the contracting market outside of China, seek to avoid paying on the demand guarantee to the foreign project owner.  Large construction or engineering contracts are usually secured by a demand guarantee.  The Chinese construction and engineering companies usually obtain these demand guarantees from Chinese banks. When foreign project owners make demands under the demand guarantees, because the construction project does not meet specified standards, Chinese contractors often apply to the Chinese courts to withhold payment to the foreign project owner.  A recent article by a Dacheng Law Firm partner described his experience acting for a Pakistani project owner.

3.  What issues does the interpretation raise?

The issues below concern banks and project owners, Chinese and foreign:

  • Whether demand guarantees should be applicable to domestic transactions;

The Security Law takes a negative view but see further discussion on this issue here;

  • Whether the court should be able to review the underlying transaction when reviewing demand guarantee disputes;

(Article 27 of the draft states yes, that in relation to fraud (as characterized by Article 18), the court should be able to engage in limited review of the underlying transaction)

  • Governing law of and applicability of Chinese mandatory regulations to demand guarantees; and

(the law agreed by the parties, and if the guarantee is silent, the law of the habitual residence of the guarantor; the mandatory provisions of security given to foreign parties are applicable);

  • Procedures for proceedings to withhold payment under a demand guarantee.

4. How the Court handled public consultation and why

The Court handled the public consultation quickly and quietly.   The possible reasons are described below.  The Court did not publicize the draft on its Weibo or Wechat accounts, nor did the Court’s newspaper, the People’s Court Paper, feature an article calling attention to the draft interpretation.  The nine day public consultation did not violate the Court’s own rules, which do not set out consultation periods or methods of consultation.

Why the brief consultation period?

  • Court officials may have felt that they had solicited enough expertise to issue the draft.

The No. 4 civil division, in charge of foreign-related cases and arbitration, had been working on this judicial interpretation for over two years and had organized several invitation-only conferences in 2012 and 2013 to discuss the draft.  This is standard practice in Chinese legislative drafting (as discussed in a this blogpost) and this article. Participant experts at these conferences included:

    • the Ministry of Commerce;
    • CIETAC;
    • the Beijing Arbitration Commission;
    • leading Chinese lawyers.
    • and likely representatives from the principal Chinese banks and major state-owned companies.
  • Personnel changes slowed the issuance of the interpretation.  During 2013, the Court leadership nominated a new head of the No. 4 civil division, but his appointment was subject to National People’s Congress Standing Committee confirmation, delaying action on this and other matters.
  • There may be a push to issue the interpretation before year-end, so that the lower courts can rely on it to resolve cases, a performance indicator for the lower courts.

5.  Can the Bilateral Investment Treaty Negotiations Push for a More Public Consultation of Judicial Interpretations?

The Chinese government is negotiating Bilateral Investment Treaties (BITs) separately with the United States and the European Union.  The 2012 U.S. Model Bilateral Investment Treaty contains a framework for including this type of judicial interpretation in BIT transparency obligations.  Those obligations require (to the extent possible) giving interested parties the chance to comment on “proposed regulations of general application of its central level of government.”  The WTO has jurisprudence on what this means.

If the language ultimately agreed between the United States and China is broad enough to encompass judicial interpretations related to investment, this will ultimately trigger an amendment to transparency requirements for judicial interpretations.

Chinese and foreign individuals and businesses would benefit from greater transparency in judicial interpretations.

Dispute Resolution Reforms in the Shanghai FTZ Underway– Updated

Current plans for the new Shanghai Free Trade Zone (Shanghai FTZ) include  reforms to China’s dispute resolution systems, both the courts and commercial arbitration. Court reform developments, in particular, are moving rapidly.

On 5 November, the establishment of a tribunal (自贸区法庭) in the Shanghai FTZ was announced, with Judge Luo Dongchuan, the head of the #4 civil division of the Supreme People’s Court (Court) in attendance, among others.

It follows the announcement by the Court designating the Shanghai courts to be among the first in the country to implement certain judicial reforms.  These reforms are linked to the Supreme People’s Court  2013 Judicial Reform Opinion (discussed in this blogpost).

Professor Ding, Chairman of Legal Affairs Commission, Shanghai Municipal People’s Congress Standing Committee, identified some of the reforms contemplated as well as some of the obstacles to legal reform in the Shanghai FTZ.  in a thoughtful speech given at the opening of the China (Shanghai) Pilot Free Trade Zone Court of Arbitration (affiliated with the Shanghai International Arbitration Center).

This post, which updates my earlier blogposts on the subject, looks at two important developments affecting dispute resolution in the Shanghai FTZ:

  • the Court designating the Shanghai courts to take the lead in judicial reforms;
  • Professor Ding highlighting to the Shanghai political and legal leadership that the Shanghai FTZ provides an unprecedented opportunity for Shanghai to build itself into an international arbitration center.

A.             The Courts

The presence of Judge Luo of the Court is a signal that the Shanghai FTZ tribunal is an initiative that the Court backs.   According to a statement of the vice president of the Shanghai Higher People’s Court, the jurisdiction of the tribunal will include civil and commercial cases related to the Shanghai FTZ:

  • investment;
  • trade;
  • finance;
  • intellectual property; and
  • real estate.

According this statement by the President of the Pudong New Area People’s Court, the Shanghai FTZ tribunal will implement the following reforms:

  • case acceptance;
  •  pre-litigation mediation;
  • greater transparency;
  •  use of model cases, and
  • moving more litigation procedure on-line. 201311061401215050.

The decisions of the tribunal will be considered decisions of the Pudong New Area People’s Court and appeals will be made to the #1 Municipal Intermediate People’s Court.

The new reforms for all of Shanghai announced by the Court on 25 October, which build on previous work by  the Shanghai court leadership, include:

  • increasing judicial transparency, including judicial procedure, judicial decisions, and information concerning enforcement;
  • reforming the internal operating rules of the judiciary, so that it operates according to judicial rather than administrative principles;
  • motivating and providing protection to judges to enable them to decide cases fairly;
  •  improving the operating structures of the courts;
  • amending the operating rules for judicial committees;
  • providing a structure for the discussion of cases.

The Shanghai courts have started to take the first steps by issuing regulations to address one of the many issues facing litigants in the Chinese courts, the refusal to take cases (http://www.chinacourt.org/article/detail/2013/11/id/1116965.shtml).  We can expect many more regulations to come.

The reforms highlighted by the Court will be difficult to implement, particularly the reform of internal operating rules of the judiciary, because the PRC judiciary has operated according to those principles throughout its history (as many others inside and out of the Chinese judiciary and mainland China have pointed out (including this author)). Many of these reforms relate, indirectly, to the relationship of the courts and other government institutions, as well as the nature of Communist Party leadership of the courts.

The Court announced that it has established standards and metrics to evaluate the effectiveness of the announced reforms. On the basis of those reforms, The Court will gradually roll out those reforms throughout the entire country.

The announcement designating the Shanghai courts as one of the court designated to lead the way in judicial reforms indicates  the importance of Shanghai and the Shanghai FTZ.  The Court has put aside the scandal involving a group of senior judges of the Shanghai Higher People’s Court visiting prostitutes (that led the Supreme People’s Court to issue a statement that the judges had tarred the image of the nation’s judges and scarred judicial credibility (http://english.peopledaily.com.cn/90882/8356970.html)).

Designating the Shanghai courts to take the lead in court reform presents a challenge to the Shanghai Higher People’s Court—can they establish a court that will earn the credibility of both domestic and foreign litigants through having competent judges who are able to put into practice ethical standards?  The announcements related to the Shanghai FTZ tribunal indicate that the Shanghai court authorities are selecting well educated judges for the task.

B.             Arbitration

Among the challenges Professor Ding identified in building the Shanghai FTZ into an international arbitration center is challenges to the arbitral institution.  One of those challenges is internationalization.

Challenges to the arbitration institution—possible internationalization?

 In the September interview mentioned above, Lu Hongbing advocated that cooperation between foreign arbitration institutions and Shanghai based ones should be encouraged in the Shanghai FTZ.

Real cooperation involves the following questions (among others!), and a web of legal issues:

  • Should cooperation between foreign and Shanghai based arbitration mean allowing international arbitration institutions to establish offices in the Shanghai FTZ?
  • If that is permitted, should foreign arbitration institutions be permitted to hold arbitrations (seated) in China?
  • Would an arbitral award under those circumstances still be considered to be “international” and enforceable in China under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) or Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region (Arrangement with Hong Kong)

Enabling real cooperation between foreign arbitration institutions and Shanghai based ones will require profound analysis of and well-considered solutions to the complex of issues related to the Arbitration Law and Civil Procedure Law raised by the above questions.

An additional outstanding issue that the Court will need to resolve  is the issue of the validity and enforceability of arbitration clauses of the Shanghai Court of International Arbitration (and its predecessor, the CIETAC/Shanghai).  A draft of a judicial opinion resolving the matter is said to be under consideration by the Supreme People’s Court.  That also needs to be resolved if dispute resolution in the Shanghai FTZ (and all of Shanghai) is to serve the needs of disputing parties.

The Court, Professor Ding Wei (and other Shanghai government legal specialists) and the legal advisers for the People’s Government of Pudong District (lead outside counsel is understood to be the Zhong Lun Law Firm) need to work on designing solutions to untangle  the web of interconnected legal issues affecting the internationalization of arbitration.  Given that multiple central government institutions will need to be involved with any solution, it is likely progress on real cooperation with foreign arbitration institutions can only occur over the long term.

C.             Conclusion

The Shanghai FTZ provides the Chinese government an opportunity to experiment with Chinese dispute resolution reforms, both in the courts and arbitration.  The Court is taking steps in Shanghai to address the difficult legal and political issues that must be considered and resolved to make real progress.  Many are “watching this space”, particularly after the establishment of the Shanghai FTZ tribunal.


 

[ii] http://www.chinacourt.org/article/detail/2013/09/id/1080615.shtml

Dispute Resolution Reforms in the Shanghai FTZ Underway

Few are aware that current plans for the new Shanghai Free Trade Zone (Shanghai FTZ) include  reforms to China’s dispute resolution systems, both the courts and commercial arbitration. Court reform developments, in particular, are moving rapidly, because the Supreme People’s Court (the Court) has designated the Shanghai courts to be among the first in the country to implement certain judicial reforms (http://rmfyb.chinacourt.org/paper/html/2013-10/26/content_72024.htm?div=-1#).  These reforms are linked to the Supreme People’s Court  2013 Judicial Reform Opinion (discussed in my 30 October blogpost) and  announced on 29 October.

Reforms in dispute resolution were highlighted by Professor Ding Wei, Chairman of Legal Affairs Commission, Shanghai Municipal People’s Congress Standing Committee (http://www.cietac-sh.org/English/ResourcesDetail.aspx?tid=39&aid=571&zt=3) , in a thoughtful speech given at the opening of the China (Shanghai) Pilot Free Trade Zone Court of Arbitration (affiliated with the Shanghai International Arbitration Center) on 22 October.  Professor Ding identified some of the reforms contemplated as well as some of the obstacles to legal reform in the Shanghai FTZ.

This post, which updates my blogpost of 28 October, looks at two important developments affecting dispute resolution in the Shanghai FTZ:

  • the Court designating the Shanghai courts to take the lead in judicial reforms;
  • Professor Ding highlighting to the Shanghai political and legal leadership that the Shanghai FTZ provides an unprecedented opportunity for Shanghai to build itself into an international arbitration center.

A.             The Courts

Professor Ding’s made a statement in his speech that “judicial arrangements (for the FTZ) relate to the organization and authority of matters stipulated by the Organizational Law of the People’s Courts, and local government cannot make changes” makes it clear that substantial court reform in the FTZ is not in the hands of the Shanghai government, but rather the central government.  From its press announcement on 25 October (http://www.chinacourt.org/article/detail/2013/10/id/1113813.shtml), it is clear that the Court sees the opportunity presented by the dynamism of economic developments in Shanghai, including the Shanghai FTZ (although not mentioned).

Although currently there is no Shanghai FTZ court ( Lu Hongbing, vice president of the All China Lawyers Association and founding partner of the Shanghai-based Grandall Law Group,  mentioned in a September article the possibility  that one will be established (http://stock.sohu.com/20130924/n387092295.shtml)), the Court is calling on the Shanghai courts to make reforms that will benefit litigants in the Shanghai FTZ  (as well as the entire Shanghai court system.

The new reforms announced by the Court on 25 October, which build on previous work by  the Shanghai court leadership, include:

  • increasing judicial transparency, including judicial procedure, judicial decisions, and information concerning enforcement;
  • reforming the internal operating rules of the judiciary, so that it operates according to judicial rather than administrative principles;
  • motivating and providing protection to judges to enable them to decide cases fairly;
  •  improving the operating structures of the courts;
  • amending the operating rules for judicial committees;
  • providing a structure for the discussion of cases.

The Shanghai courts have started to take the first steps by issuing regulations to address one of the many issues facing litigants in the Chinese courts, the refusal to take cases (http://www.hshfy.sh.cn/shfy/gweb/xxnr.jsp?pa=aaWQ9MjkyMzQ0JnhoPTEPdcssz)(http://www.chinacourt.org/article/detail/2013/11/id/1116965.shtml).  We can expect many more regulations to come.

The reforms highlighted by the Court will be difficult to implement, particularly the reform of internal operating rules of the judiciary, because the PRC judiciary has operated according to those principles throughout its history (as many others inside and out of the Chinese judiciary and mainland China have pointed out (including this author)). Many of these reforms relate, indirectly, to the relationship of the courts and other government institutions, as well as the nature of Communist Party leadership of the courts.

The Court announced that it has established standards and metrics to evaluate the effectiveness of the announced reforms. On the basis of those reforms, The Court will gradually roll out those reforms throughout the entire country.

The announcement designating the Shanghai courts as one of the court designated to lead the way in judicial reforms indicates  the importance of Shanghai and the Shanghai FTZ.  The Court has put aside the scandal involving a group of senior judges of the Shanghai Higher People’s Court visiting prostitutes (that led the Supreme People’s Court to issue a statement that the judges had tarred the image of the nation’s judges and scarred judicial credibility (http://english.peopledaily.com.cn/90882/8356970.html)).

Designating the Shanghai courts to take the lead in court reform presents a challenge to the Shanghai Higher People’s Court—can they establish a court that will earn the credibility of both domestic and foreign litigants through having competent judges who are able to put into practice ethical standards?

B.             Arbitration

Among the challenges Professor Ding identified in building the Shanghai FTZ into an international arbitration center is challenges to the arbitral institution.  One of those challenges is internationalization.

Challenges to the arbitration institution—possible internationalization?

 In the September interview mentioned above, Lu Hongbing advocated that cooperation between foreign arbitration institutions and Shanghai based ones should be encouraged in the Shanghai FTZ.

Real cooperation involves the following questions (among others!), and a web of legal issues:

  • Should cooperation between foreign and Shanghai based arbitration mean allowing international arbitration institutions to establish offices in the Shanghai FTZ?
  • If that is permitted, should foreign arbitration institutions be permitted to hold arbitrations (seated) in China?
  • Would an arbitral award under those circumstances still be considered to be “international” and enforceable in China under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) or Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region (Arrangement with Hong Kong)

Enabling real cooperation between foreign arbitration institutions and Shanghai based ones will require profound analysis of and well-considered solutions to the complex of issues related to the Arbitration Law and Civil Procedure Law raised by the above questions.

An additional outstanding issue that the Court will need to resolve  is the issue of the validity and enforceability of arbitration clauses of the Shanghai Court of International Arbitration (and its predecessor, the CIETAC/Shanghai).  A draft of a judicial opinion resolving the matter is said to be under consideration by the Supreme People’s Court.  That also needs to be resolved if dispute resolution in the Shanghai FTZ (and all of Shanghai) is to serve the needs of disputing parties.

The Court, Professor Ding Wei (and other Shanghai government legal specialists) and the legal advisers for the People’s Government of Pudong District (lead outside counsel is understood to be the Zhong Lun Law Firm) need to work on designing solutions to untangle  the web of interconnected legal issues affecting the internationalization of arbitration.  Given that multiple central government institutions will need to be involved with any solution, it is likely progress on real cooperation with foreign arbitration institutions can only occur over the long term.

C.             Conclusion

The Shanghai FTZ provides the Chinese government an opportunity to experiment with Chinese dispute resolution reforms, both in the courts and arbitration.  The Court is taking steps in Shanghai to address the difficult legal and political issues that must be considered and resolved to make real progress.  Many are “watching this space”!


[i] My translation: The translation on the website states: the justice arrangement concerning duty allocation among people’s court is an important power under the “PRC People’s Organization Law.” No local organizations are permitted to change it.

[ii] http://www.chinacourt.org/article/detail/2013/09/id/1080615.shtml

The Supreme People’s Court 2013 Judicial Reform Opinion: A Flash Analysis (Part 1)

On 29 October 2013 the Supreme People’s Court (the Court) released Several Opinions Regarding the Actual Practice of Justice for the People, Vigorously Strengthening a Fair Judiciary and Continuously Increasing Judicial Credibility (关于切实践行司法为民大力加强公正司法不断提高司法公信力的若干意见)  ( 2013 Judicial Reform Opinion).  It is an immediate call for action by the Court leadership, who see this as a unique opportunity to make changes to the status quo of the Chinese courts.  The Court leadership is seeking to make changes in the real world of the Chinese courts, under the limitations that it works under, including:

  • The role of the courts in the Chinese political system;
  • Administrative nature of the Chinese courts;
  • Greater societal environment, with its focus on money and power;
  • Vast disparities in the quality of judicial personnel;
  • Vast disparities in judicial funding;
  • Deficiencies in Chinese legislation.

The 2013 Judicial Reform Opinion is significant for its timing, for what is says, for and what it does not say.  This post sets out a flash analysis (supplemented as time permits).

A.             Timing

The timing of the issuance of this document was no accident.  It was approved within the Supreme People’s Court on 6 September but not publicly released until 29 October.  This document requires approval by the Central Committee’s Political Legal Committee (much as a major initiative of a corporate business unit requires board approval).  It was issued after the conclusion of the Bo Xilai trial and before the Third Plenum of the 18th Communist Party Central Committee.  It further develops some of the issues raised by President Zhou Qiang in his August, 2013 interview in Seeking Facts.

B.             What does the 2013 Judicial Reform Opinion Say?

The 2013 Judicial Reform Opinion ties its content to the Party line as set out by General Secretary Xi Jinping.  This is a precondition for the rest of the opinion and the key to its success.

1.              Seize the Day!

In the beginning of the 2013 Judicial Reform Opinion, the Court leadership stresses that they need to seize this opportunity to make changes (历史机遇) and

the political leadership is providing the conditions to do so and ordinary people have great expectations.  However, the courts are facing the following difficulties:

  • complicated issues (i.e. political, legal, personnel related);
  • expectations of ordinary people for the court system are increasingly higher;
  • increasingly greater gap between the courts and expectations or ordinary people;
  • judges and other court personnel have to recognize their roles.

2.              Uphold judicial independence and implement the responsibilities of the courts under the law

The Court leadership wants to see the courts:

  • operating according to law;
  • Implementing judicial power independently without interference;
  • Improving the implementation of law by improving the quality of judicial guidance, including judicial policy, interpretations, guiding and reference court decisions; and
  • Improving the leadership role/prestige of the courts in society by deciding cases fairly and regularizing letters and visits.

The call on the courts in point 4 of the 2013 Judicial Opinion to operate according to law and to cease instances of courts violating the law is a sad commentary on the state of affairs  in the Chinese courts, but that is the Court leadership recognizes, is the reality.

The call on the lower courts to implement independent exercise of judicial power in accordance with law and prevent interference by such factors as power, money, “personal relations,” “relationships” will be difficult to realize, given the institutional reality of the Chinese courts, which makes them open to influence by all of these factors.  However, the Court leadership cannot change the structure of the courts in the short run.

3.              Integrate the courts with societal expectations

The Court leadership repeatedly calls on greater professionalism within the courts as well as greater sensitivity to differing demands for different sections of Chinese society.  One of the issues that needs to be dealt with is the differing application of judicial policy and judicial interpretations in difficult issues involving major discrepancies in economic and social development and the status of different interests, and the consequences that judicial decision-making affected by various external factors can have on social stability.  In this section, the Court leadership calls on the lower courts to separate themselves from the rest of the local bureaucracy, by not involving themselves in administrative matters such as joint law enforcement operations, development of local businesses, and land seizure/housing condemnation operations.

C.             What Doesn’t the 2013 Judicial Reform Opinion Say?

Other than the obvious points that are not practically possible in the real world of the Chinese judiciary, there are a number of proposals that have been made by the Court’s Judicial Reform Office and discussed within (and outside) the Chinese courts.  One of those is breaking the link between the provinces (administrative divisions) and the courts, and establishing circuit courts (analogous to the US federal system) that would hear major cases from several provinces.

D.             Conclusion

The Chinese public, the foreign business community in China, and the rest of the world awaits the successful implementation of this 2013 Judicial Reform Opinion.  Many obstacles face the Court leadership in doing so, including the political climate.  Lastly, institutional change is always difficult, particularly in China with its particular political-legal traditions.

Pentatonic themes from the Supreme People’s Court

Pentatonic themes emanate from five articles on the national court website (www.chinacourt.org), which is managed by the Supreme People’s Court (the Court).  Although these themes appear dissonant, they reflect where the Court is now and where it may be headed. The five articles (or interfaces) relate to the

  • Mass line education and practice campaign;
  • Defense of the new joint interpretation on Internet defamation;
  • Interview with Court President  Zhou Qiang ;
  • Judicial reform: should the judicial committee be abolished; and
  • The Enterprise Bankruptcy Law Interpretation (II).

The first two articles are the most political and the last is most technical.  The middle one is the most significant, although it inevitably requires some decoding, and the fourth is related to the third.

1.  The mass line education and practice campaign

The national court website includes a banner that links to further information about the mass line education and practice campaign.  There is likely an internal Party Propaganda department directive directing that this be done.  The Supreme People’s Procuratorate website has a similar banner, as do the websites of the lower court websites. Communist Party (Party) leadership of the courts means that the mass line education and practice campaign must be featured and implemented in the courts.  This section features articles on themes in the campaign stressed by the Party as well as action by the Court.

 2. Justifying the joint interpretation criminalizing the posting of internet rumors

Several articles on the national court website relate to the joint interpretation criminalizing the posting on the internet of false rumors.  Many others have examined the joint interpretation, the comments by a “responsible person,” and the related Party documents that preceded (and directed) its issuance, so I will not re-hash those issues. The articles on the national court website justify the joint interpretation (and could not do otherwise), including one stating that “freedom of speech” and criminal punishment of false rumors is not contradictory.  It would appear (from the posting of the comments of the responsible person on the judicial interpretation on the website of the Supreme People’s Procuratorate) that the Supreme People’s Court did not take the lead in drafting this interpretation that has drawn derisive comments from the legal community within China.

3.  Court reform under Party leadership: Interview with Court President Zhou Qiang published in Seeking Facts

This article, which links to an interview with Court President Zhou Qiang in the magazine Seeking Facts (the journal of the Central Committee of the Communist Party) is important because he identifies (within the constraints of his role and the audience that he is addressing) the major issues facing the court system and his vision of the development of courts, linking it, (as he must), to the Party line as set out by General Secretary Xi Jinping, including the mass line education and practice campaign.  He uses as his anchor the statement that Xi Jinping made earlier this year:

“In every single legal case in China, we should work hard to ensure that the mass of the public feel they have received fair justice.”

Among the issues that he raises in the interview, Zhou Qiang identifies the new challenges facing the courts—as he sees it, the demands of the people on the courts are continuously increasing, while the relatively retarded capabilities of the courts are unchanged, manifesting themselves in the following types of cases:

  • eminent domain,
  • environmental and
  • internet cases.

He said these types are cases that are particularly difficult to resolve, and the new media environment means that any case at any stage can become high profile—imposing particular pressure on the courts. He touches on a number of issues that relate to public perception of the courts:

  • Obstacles to litigation, such as court refusal to accept cases;
  • Legal aid for the poor;
  • Interference into court operations;
  • Localism and bureaucratic nature; and
  • Wrongful convictions.

On the latter point he says that the criminal justice system should work together to avoid them, and the victims should be compensated and those responsible punished. In a related development, the Party Central Political Legal Committee has issued guidelines on dealing with those cases, although the full text of those guidelines does not seem to have been released.

Zhou Qiang is (inevitably) less specific in suggesting specific solutions to the issues that he has raised.

4.  Judicial reform: should the judicial committee be abolished?

Related to the judicial reform issues discussed by Court president Zhou Qiang, an article on the national court website raises the issue of the role of judicial committees in the Chinese courts  (). This brief article further links to a website with a project jointly sponsored by the national court website and Qinghua University—designed to rekindle discussions on what should become of the judicial committee (see my 2010 article on judicial committees–Article on judicial committees).  Throughout the history of the PRC, court legislation has stated that judicial committees “practice democratic centralism” and that their task is to “sum up judicial experience and to discuss important or difficult cases or other issues relating to judicial work.”  Judicial committees operate according to Communist Party principles of leadership to decide cases that are too difficult or important for an individual judge or judicial panel to decide, to ensure the optimal substantive result (as seen from the institutional perspective of the courts.

The pluses and minuses of judicial committees have been debated within China and abroad for 20 or more years.

5.  Judicial Interpretation of the Bankruptcy Law (II)

This article is included because it relates to the ongoing technical role of the Court.  A second long judicial opinion (but shorter than the first) has been under consideration for some time, and according to reports a third judicial opinion is being drafted.  The Court has wisely included practicing lawyers as well as liquidators in discussions on the future draft.  A draft version of this second interpretation was released in 2012 for discussion by some lower courts as well as specialists.  Comments by the drafters to the press on the interpretation can be found here.

6.  Conclusions?

As to the pentatonic themes:

  • The courts are under the leadership of the Party and must act in accordance with its policy line;
  • The Chinese courts are facing ever more complicated social issues, requiring greater professional (and political) competence;
  • The Chinese courts are facing ever more complicated commercial issues, requiring a greater level of technical competence;
  • Court leadership is exploring more sensitive court reform issues (at a theoretical level);
  • Court leadership is taking concrete steps concerning less controversial reform issues that will benefit “the masses”, such as legal aid to the poor.

Consulting the public on judicial interpretations (向社会公开征求意见)

This post looks at the role of public consultation when the Supreme People’s Court (Court) drafts judicial interpretations.

This is an important area in which the Court can institute reforms, but has not yet focused on.

Since taking office, Zhou Qiang, the new Court president has made a push for greater transparency in the judiciary, recently urging courts to guarantee the public the right of access to judicial information and supervision.   Earlier this spring, the Court organized a conference on judicial openness, but the conference did not address judicial interpretations, but rather transparency in the area of judicial decisions. Recently the Court released a number of its judicial decisions, but not yet the regulations under which the decisions were released.

How does the Court consult now?

Since 2007, public consultation has been an optional step in drafting judicial interpretations.  Previously, there was no such requirement.

The 2007 judicial interpretation regulations require the drafting group within the Court to “extensively solicit opinions” as part of the drafting process. It means continuing with their customary practice of consulting with affected ministries and other selected organizations. The drafting group can only seek public consultation if the judicial interpretation “involves the vital interests of the people or important difficult issues” and a Court leader has approved.

I described the “customary practice” in my 1993 article on the Supreme People’s Court—after the drafting group within the Court had a draft, which it would often send to the lower courts for their views, the drafting group would send a draft to an invited group, such as affected ministries, and experts at research institutes and universities. In recent years international institutions, such as the Asian Development Bank, have provided technical assistance to the Court in drafting judicial interpretations.  The process is similar to that described by Jamie Horsley for other legislation, who has written extensively on public participation in China.

Chinese leaders, however, have traditionally made law and policy through selective consultations with trusted groups of government officials, academics and other identified experts, supplemented by orchestrated “field investigations” to ascertain the “will” of the people.

Both Chinese and foreign academics have called upon the Court to increase public consultation.

When has the Court consulted the public?

The Court launched its first formal public consultation at the end of 2003, by releasing a draft of the second interpretation of the Marriage Law for public consultation.

In the last few years, among the areas in which the Court has released a consultation draft include:

  • Finance lease contracts;
  • Sales contracts;
  • Internet copyright.

Why wasn’t the public consulted?

For many other interpretations, the Court did not issue a draft for public consultation.  One example is the judicial interpretation of the Law on Foreign-Related Civil Relations. The law and its interpretation relate to China’s body of conflicts (choice of law) and is aimed at developing a comprehensive set of conflict (choice) of law rules for China, based on international principles.  The judicial interpretation sets out legal rules on areas such as:

  • The meaning of mandatory provisions of Chinese law;
  • The applicability of Chinese conflicts of law rules to the jurisdictions of the Hong Kong SAR and Macau SAR; and
  • The meaning of “foreign related.”

These seemingly theoretical issues affect persons ranging from multinational corporations, companies trading with China, parties to arbitrations, to individuals married to Chinese nationals.

According to press reports and my contacts, the Court consulted certain academic experts and lower courts in areas with many foreign disputes.  However a draft was not publicly circulated.  Rationales for not circulating a draft that may easily identified include:

  • Court personnel considered that they and their stable of experts had a good grasp of the issues and did not require widespread input; or
  • Public consultation would require more staff time to sift through the submissions to sort out the ones with useful input.

The danger is that the Court promulgates rules that are inappropriate, unworkable, and are out of touch with the actual practice.

Start with the Civil and Commercial area

The Court should start with the easily doable. The civil and commercial area presents fewest politically sensitive issues.  It would be the easiest area of law in which to permit broad public consultation.


[1] “As for the judicial interpretations involving the vital interests of the people or major difficult problems, public opinions may be solicited upon the decision of the standing vice president or president after obtaining the approval of the leader of the court-in-charge.” Article 17, Provisions of the Supreme People’s Court on Judicial Interpretation Work.

 

The Supreme People’s Court: Interpretations of Law as a form of Official Document (公文)

This post explains why:

  • the Supreme People’s Court (Court) releases normative documents  inconsistent with the law and its own definition of “judicial interpretations;”
  • the Court issues normative documents that guide the judiciary in deciding cases but that are not publicly released;
  • the Court issues normative documents with government organs that are not authorized to issue judicial interpretations.

The explanation is based on recently issued Court regulations.

The practical implications of these phenomena depend on your role.  For those in policy roles, rule of law work, diplomatic or governmental role with the Chinese judiciary, or those otherwise those involved in dispute resolution strategy in China, it is critically important, because it explains why China has a system of non-public normative documents guiding judges in deciding cases. It is not a mode of operation beneficial for domestic or foreign litigants and their counsel.

Official documents—the key concept

The key to understanding how the Court treats interpretations of law is the recently issued Measures for Handling Official Documents of the People’s Courts (Court Official Documents Measures, linked here) (人民法院公文处理办法)。 They replace 1996 regulations on the same subject.

What are the Court Official Documents Measures?

 The Court reissued the Official Documents Measures at the end of 2012  because the Communist Party and State Council General Offices re-issued the Regulations on the Work of Handling Official Documents of the Party and Government (Party and Government Official Documents Measures) (党政机关公文处理工作条例).[2]  The Court Official Documents Measures state that they were drafted with reference to the Party and Government Official Documents Measures and a comparison of both reveals that the Court Official Documents Measures reveal are an iteration of those Official Documents Measures for the court system.

What do the Court Official Documents Measures do?

The Court Official Documents Measures define “court official documents” as “official documents of the people’s courts which are formed in the course of trials and enforcement and judicial administrative operations which have special effect and have a special form.”   (This definition is close to that in the Party and Government Official Documents Measures.) The definition further states:

“court official documents are important tools in transmitting the Party line, direction, and policy, implementing state law, issuing judicial interpretations…”

What are interpretations of law?

As for interpretations of law, the Court Official Documents Measures state:

“litigation documents, judicial interpretations and others are special legal official documents of the people’s courts which should be handled according to relevant provisions of law, regulations and judicial interpretations.”

This means that the Court regards judicial interpretations as “special legal official documents” (特定法律公文) of the courts.

Although the Chinese constitution vests the power to interpret  law with the Standing Committee of the National People’s Congress, a 1981 decision by that same organization delegated to the Court the authority to interpret law relating to questions involving the specific application of laws and decrees in court trials, while the Supreme People’s Procuratorate was delegated authority to interpret law relating to questions involving the specific application of laws and decrees in procuratorial work.  The Organic Law of the People’s Courts re-iterates the delegation of authority to interpret law to the Court.  Interpretations by both organizations are known as “judicial interpretations.”  In 2007, the Supreme People’s Court issued regulations on judicial interpretations (linked here)  limiting judicial interpretations to the following four types:

  • “interpretation” (解释); (a set of legal rules in a specific area of law, unrelated to a specific case);
  • “provision”(规定)  (often similar to court rules);
  • “reply” (批复)(a reply to a “request for instructions” from a lower court relating to a specific case); and
  • “decision”(决定) (a document abolishing or amending existing judicial interpretations).

Those 2007  regulations also mention judicial interpretations may be jointly issued by the Court and the Supreme People’s Procuratorate and requires that judicial interpretations be made public. These regulations also provide that judges may cite judicial interpretations as the basis for a court decision or ruling.

However, a review of the Gazette of the Supreme People’s Court, the official website of the Court, and lists of superseded judicial interpretations and judicial documents reveals the following phenomena:

  • a category of documents labelled “judicial documents” exists (a term not defined);
  • documents that the Court issues with administrative organs, such as the Ministry of Public Security and Ministry of Justice are published under that classification and contain normative provisions;
  • documents such as “conference summaries”(纪要) and “opinions” (意见) that are classified as types of official documents are also published under that classification or elsewhere on the Court website, and seem to have normative provisions, because many of which contain language that the lower courts should “implement their provisions” or “use them as guidance.”

Some of these normative documents address new issues or phenomena where the Court is of the view that the law is not settled enough for judicial interpretations.  Other normative documents have a more overtly political purpose and are more closely related to current Party policy.

However, there is no requirement in the Court Official Documents Measures that all Court normative documents be made public, although the Measures designate two forms of official documents as ones that will be released both domestically and internationally, either broadly or for limited circulation.  The Measures refer to the secrecy classification and secrecy level of court official documents and how those should be handled.  Moreover, an Internet search reveals that some Court official documents such as “conference summaries” which were never officially published have made their way into the public domain through unofficial sources such as law firm websites and blogs. (linked here)

What does this mean?

It means that judicial interpretations are considered by the Court to be a type of official document but that the courts often rely on official documents that are not “judicial interpretations” in deciding cases, in addition to the law and existing judicial interpretations, although (according to former judges), it will not be apparent from the face of the judgment or ruling.   However, there is no requirement that these normative documents be made public.

Some of these normative documents may be ones that the Court issues with administrative organs (for example the Ministry of Public Security) (although such documents do not fit the definition of “judicial interpretation”).  The rationale for this practice is that officials of the administrative organ involved will comply only if their administrative organ jointly issues it with the Court and requires compliance of its subordinates.

It means that there is no assurance for any party, domestic or foreign, corporate or individual, that the legal rules on which the court has relied in his case have been made known to him.   It is not an issue in every case, of course, but is more likely in new or sensitive areas.

This is an area for the new Court president to turn his attention, and for foreign and international institutions to encourage the Court to make positive changes to implement regulations requiring the publication of all normative documents.

The Supreme People’s Court and the Interpretation of Law

This post that focuses on the Supreme People’s Court’s (Court) authority to interpret law. My intent is to avoid the quicksand of academic discussion on the topic, which has run for over 20 years in Chinese, English, and other languages and focus instead, on what the Court is doing. This topic also gives me an opportunity to provide a historical perspective, because I examined this topic in detail 20 years ago.
This seemingly theoretical topic is relevant to the work of a broad range of people (among others);
• Lawyers reviewing memoranda from their China-based lawyers;
• Journalists;
• Consular officials stationed in China;
• Regulatory officials who are charged with monitoring exports from China; an
• Foreign and international judicial officials charged with international judicial assistance; and
• Arbitrators in cases involving Chinese law.
These posts will explain (with some historical perspective):
• Why Court interpretations are important;
• Important functions of Court interpretations;
• What they look like;
• The Court’s legal basis for issuing them;
• On-going issues (and suggestions for reform).

Why are they important?
Court interpretations are an important source of legal rules in China, particularly for the courts, and have been for most of the history of the PRC. The number of client alerts by major international law firms is testimony to their importance to the international commercial world, but the Court interprets on many other areas of law of critical importance to ordinary Chinese citizens and the domestic economy. In the last 6 months, Court interpretations in the following areas have achieved international prominence include:
• Labor (employment) law;
• Conflicts of law (private international law);
• Civil trademark disputes and
• Criminal bribery.
Many other interpretations have missed the glare of international scrutiny , although they are significant for the substantive or procedural area involved (as well as the persons affected).
Some important functions of Court interpretations
Among the important functions of Court interpretations are to:
• supply missing definitions;
• supply missing concepts;
• set out missing procedures;
• embody political policy as relevant to the court system;
• refine the discretion of the lower courts; and
• generally fill in the gaping holes or glitches in Chinese legislation.
The Chinese judiciary and legal system would be unable to function without them.
It is an area of Court operation where the Court has changed what it does, for the better, particularly in comparison to 20 years ago. Subsequent posts will also explain what “better” is but also point out some “areas of concern.”

The Supreme People’s Court: Reforming the Chinese courts the Party Way

On April 8, 2013, the Supreme People’s Court announced that its Communist Party (Party) Committee was implementing an  “educational movement to improve judicial work style” (judicial work style movement)  in the second quarter of 2013. Zhou Qiang, the newly appointed president of the Supreme People’s Court, is also the head of its Party Committee.

This clunkily named announcement, written in densely packed Party jargon, is has critical implications for the Chinese court system and all those affected by it, domestic and foreign.  Unpacking the announcement requires a Chinese political jargon decoder and a strong cup of coffee.

This posting will explain why the announcement is so important by highlighting:

  • The meaning of an “educational movement” and “judicial work style.”
  • The impetus for the movement.
  • The goals of the movement.
  • How will it be done?
  • What are its implications?

What is an “educational movement” and  “judicial work style”?

Both phrases are frequently used in Chinese political jargon.

  • An “educational movement”  refers to a political initiative with both educational and punitive aspects, focused on correcting certain ways of thinking while “work style” means the standards of conduct of officials.
  • Work style issues cover a broad range of activity, from deciding cases to womanizing, to luxurious banquets.

Impetus for the movement:

At the 18th Party Congress, the Communist Party leadership identified “judicial credibility” (司法公信力) as a critical area for improvement because of its political implications, particularly the profound loss of confidence in the ability of the Chinese judiciary to provide competent and fair justice.  This was symbolized by the vote  by 20% of National People’s Congress deputies against the Work Report of the Supreme People’s Court.

Goals of the movement:

As announced by the Court’s Party Committee, this education movement has the following goals:

  • Implement the ideal that justice is for the people, so that litigants will not feel they are despised;
  • Decide cases according to law, so that litigants will feel that justice has been done;
  • Improve judicial responsibility, so that judicial laziness, delays, indifference, arbitrariness, failure to hear both sides, and gross errors are avoided.
  • Improve judicial self-discipline and establish a clean judiciary, stop cases decided by money, connections, and sympathies.

Implementing the movement

The Court has called on the lower courts to implement the movement by the following:

  • Study relevant Party and Court documents;
  • Have court leadership take responsibility for implementing the required measures;
  • Implement appropriate internal systems to avoid conflicts of interests, institute training and monitoring programs;
  • Analyze issues in each local court, taking account of the views of various parts of society, identify the weak spots in the judicial system and evolve effective means to deal with them;
  • Use good and bad examples, including instances of judicial irresponsibility and other judicial action that harms judicial prestige;
  • Stop major abuses in the courts, such as taking gifts and money, using court vehicles for private business, using judicial posts to engage in business, and lavish eating and entertainment at public expense.  Violators should be exposed, ordered to change, and if they do not, be dealt with.

What does this educational movement mean?

The implementation of this “educational movement” means that Party leadership recognizes that corruption and abuses in the court system are causing dissatisfaction and resentment among a substantial number of Chinese citizens, including among the political and business elite, and the leadership has called on the new Court leadership to do something about it. The Court leadership recognizes (more than any outside observer) that the Chinese judiciary often delivers a poor quality of justice, but that the issues are different in different parts of the country and even within the same city or province.

What may result from this “educational movement”?

  • Expect a spate of judicial scandals to hit the Chinese media and blogosphere.
  • Behind the scenes there may be a pushback from lower court judges, who feel they cannot make ends meet if they are honest.
  • Expect greater engagement between the Supreme People’s Court and the outside legal world, including greater dialogue between the courts and other parts of the legal profession in China, such as lawyers and academics in evolving reforms.  President Zhou Qiang has led the way by holding a meeting with leading academics and lawyers in late April.
  • Because this educational movement does not deal with the structural issues that have created the conditions under which judicial abuses flourish, expect incremental institutional changes to be gradually rolled out in the next few years.