This year, the Supreme People’s Court (SPC) has not released its judicial interpretation agenda to the general public, so observers concerned about what the SPC is doing in specific areas of law must be attentive to what SPC leaders mention in either speeches in major conferences or articles in the media. Justice Liu Guixiang, a member of the judicial committee with deputy ministerial status, spoke in early September at the 4th Annual Conference on Serving Small and Medium Sized Investors . His speech was one of many leader’s speeches (visible in the link领导人讲话) delivered at this conference sponsored by the China Association for Public Companies, Securities Association of China and other securities industry associations. (For the careful listener (or reader) his speech provides insights on what can be expected from the SPC in the near future in the area of financial law. It is linked to China’s development of its securities market and dealing with the increasing number of financial fraud cases and civil disputes. Some of what he told the audience illustrate, in the area of financial and securities law, how the SPC operates in the New Era. Those include:
the SPC plans to issue a new conference summary on financial trials （金融审判座谈会纪要) before the end of the year, to unify trial standards. This is linked to government policies on the prevention and resolution of financial risks;
the SPC will guide the lower courts on the hearing of securities group cases (证券集体诉讼制度), particularly focusing on financial fraud, providing better relief to investors, and assisting to stabilize the market in its transition to a registration based listing system. He stressed that the SPC would require lower courts to apply the principle of harmonizing standards for fault and administrative penalties in financial fraud cases, distinguishing different types of fault, and “striking hard” in cases of intentional financial fraud (要求人民法院在处理财务造假等案件中，基于“过错与处罚相一致”原则，区分过错类型，依法严厉打击故意造假行为过错与处罚相一致);
The SPC will provide guidance to the local courts on strictly applying new rules (in the Civil Code and the SPC’s judicial interpretation) on guarantees provided by listed companies and will also provide further guidance on the bankruptcy (and reorganization ) of listed companies.
Finally, Justice Liu called for promoting the securities representative litigation mechanism (mentioned in Article 95 of the Securities Law and further developed in a 2020 judicial interpretation, Provisions of the Supreme People’s Court on Several Issues Concerning Representative Actions Arising from Securities Disputes). The Shanghai Financial Court has taken the lead in these cases. What Justice Liu means is using the results in representative litigation to resolve outside of the courts other similar securities & futures disputes, particularly group disputes. This is an example of implementing the SPC’s diversified dispute resolution policies. This mechanism is can also be characterized as linking to the Party Center’s current policy of mediating first and resolving disputes at their source to reduce the quantity of litigation (党中央关于“将非诉讼纠纷解决机制挺在前面，从源头上减少诉讼增量), as discussed in greater detail in the bilingual report.
Those with more specialized knowledge in Chinese securities law should provide corrections or comments by using the blog’s comment function.
On 29 July, I spoke briefly at an American Society of International Law webinar entitled “Charting the New Frontiers of International Dispute Resolution in the Asia-Pacific.” The post below is the (slightly edited) text of my comments on the China International Commercial Court (CICC). I have made some of the same points in earlier blogposts and this version includes those links.
Thank you for this opportunity to provide my thoughts on the CICC. As some people know, I am on the CICC’s international expert committee, but nothing I have to say should be attributed to the Supreme People’s Court (SPC) or the China International Commercial Court (CICC). I’m not going to comment on the numerous articles I have seen either in both English and Chinese but instead focus my remarks on what I understand the focus of the work of the CICC to be now, suggest some reasons, and identify some trends.
The CICC has thus far accepted 18 cases in the three years since it was established. Although I have never seen official confirmation of this, it appears that when the CICC was approved, it was approved as a part-time court. It can be seen from the biographical description of each judge that each of them has at least one other full-time responsibility additional to being a CICC judge. Some of the judges have two other full-time responsibilities. The Intellectual Property Court of the SPC, is instead is a full-time court—it is unclear whether they have additional headcount. I have not seen a discussion of why one was approved as a part-time court and the other a full-time court—perhaps the leadership decided that the Intellectual Property Court was the one that would make a more important national and international impact, given the critical importance of intellectual property at this stage at China’s development and the range of intellectual property law issues in contention between China and certain of its trading partners.
Based on the type of cases that the CICC has accepted and the language in the end 2019 2nd Belt & Road Opinion and the 2020 Open Economy document, my understanding that the short-medium focus of the CICC is to be a model or guide for China’s lower courts in unifying “foreign-related” substantive and procedural law —it is currently domestically focused, rather than focusing on hearing large numbers of foreign-related cases.
So far, most of the cases that the CICC has accepted have been referred from the lower courts. The CICC will take the cases if it meets its criteria and it can see that the case involves issues regarding which existing law and judicial interpretations are unclear and that involve issues that frequently arise in practice. This can be seen in Articles 22 and 25 of BRI Opinion #2 “and the role of the CICC in providing models and guidance shall be developed… the role of cases in determining rules and guiding behavior shall be leveraged (发挥国际商事法庭示范引领作用_…，发挥好案例的规则确定和行为指引作用). Therefore the CICC has accepted and decided at least 5 cases related to arbitration—filling in gaps in Chinese arbitration law and judicial interpretations—and has accepted two more related to demand guarantees/standby letter of credit fraud disputes. It has also issued a judgment on an issue related to product liability.
A second and it seems underappreciated aspect (outside of China) of the role of the CICC is in providing “models and guidance”– 示范引领作用– to guide the lower courts and to pilot reforms that are replicable (a Chinese judicial reform concept), as stated in Article 22 and 25 of BRI Opinion #2. That can be seen from reports on certain local courts:
The Beijing #4 Intermediate Court—promoting one-stop diversified dispute resolution (多元化解纷纠纷中心), with links to local arbitration (CIETAC & the Beijing Arbitration Commission) & mediation organizations, the goal being for this court to come up with new ideas in international commercial dispute resolution to focus on Beijing’s advantages;
Haikou/Hainan also—the SPC’s policy document supporting the Hainan Free Trade Port mentions an international commercial court, although it seems to be less developed.
I would like to mention also that it is possible that whatever guidance is developed may also draw on the memoranda concluded and other best practices discussed at the Standing Forum of International Commercial Courts, of which the SPC is a member.
From what I can see from these local initiatives, the themes may include:
promoting mediation (also in line with SPC policy on mediation taking priority);
Centralizing case acceptance;
Addressing additional arbitration-related issues;
Possibly considering rules regarding more complex commercial disputes.
From my own research and discussions with some local judges, it appears to be early days to see any further guidance coming out of these local courts.
I wouldn’t be surprised to see the CICC eventually developing further rules, for example, related to mediation, drawing on the work of the lower courts, as this is a pattern I have seen before in other areas of law with the SPC because it appears CICC regulatory infrastructure is less fully developed in comparison with other commercial courts in other jurisdictions. Experience from the lower courts could accelerate matters in part.
I surmise that either the CICC or local “international commercial courts” will eventually provide greater legal infrastructure related to what I call “invisible BRI disputes”–the increasing number of cases between two Chinese companies involving projects overseas, particularly in the area of construction engineering, often heard in the Chinese courts—that involve issues such as how to:
find and apply foreign law;
provide information and expertise about foreign technical standards; and
improve the role of expert witnesses (with the necessary expertise) in construction engineering disputes.
These types of disputes raise several of many areas of law that need further work as Chinese companies operate internationally but want to have related disputes heard at home, and China seeks to progress domestic and foreign-related legislation. I surmise that the Beijing #4 Intermediate Court will eventually come up with some guidance through its collaboration with the Beijing Arbitration Commission and other institutions.
Turning to the expert committee…the expert committee is an institution different from a user committee in jurisdictions such as US, Canada, the UK, Australia, New Zealand, Kenya etc. where they are often required by law and are primarily focused on incorporating input from users, including those practicing lawyers in evolving court rules. I note that Taiwan involved a user committee in working on its new commercial & intellectual property court. Court rules in China are entirely within the authority of the SPC, and lower courts in practice issue them as well, and there is no compulsory requirement in Chinese legislation for incorporating public input in the course of drafting court rules. The CICC expert committee and other Chinese court expert committees (such as that established by the Beijing Financial Court appear to be established to enable courts to access expertise among the experts on a flexible basis, and it appears intentionally not involving lawyers practicing in China. The link between the role of the expert committee members and the subject matter competence is weaker than with user committees, and thus far the few formal meetings of the entire expert committee have included speeches making general statements about international commercial dispute resolution in contrast to the more technically focused user committees in the jurisdictions I have mentioned.
From the BRI documents mentioned above that the SPC has issued, it appears that the SPC is still trying to determine a proper role for the expert committee (at least on the foreign side) as I don’t believe the roles mentioned in CICC regulations have turned out to fit with the SPC’s actual needs and the varied backgrounds of the experts. I’ve been in touch with several foreign members of the expert committee, none of whom has been approached by the CICC individually to provide expertise. One of many issues (as I’ve written about before) is that mediation outside China is considered to be its own type of expertise, different from arbitration (an area in which a number of experts are well known). Another question is whether the expert committee is made known internally within the SPC as a platform through which others in the SPC can access foreign expertise.
For all these reasons—the limited time that CICC judges have to devote to specific CICC matters, the focus on progressing Chinese substantive & procedural law through CICC decisions, the possible use of the lower courts to assist the CICC to evolve international commercial rules appropriate for China, and the flexible use of the expert committees–in the short to medium term I see the work of the CICC as more domestically focused, as the SPC does its part to progress Chinese domestic and foreign-related legislation, or as the current slogan has it “统筹推进国内法治和涉外法治.”
On the afternoon of 25 September, the Supreme People’s Court (SPC) issued yet another guiding opinion providing services and guarantees, this one on providing services and guarantees in support of expanding opening to the outside world (Services & Guarantees to the Open Policy Guiding Opinions (Guiding Opinions)) (最高人民法院关于人民法院服务保障进一步扩大对外开放的指导意见). It was approved by the SPC’s Party Group, as was BRI Opinion #2.
Senior legal officials from the Ministry of Commerce (MOFCOM) and the Ministry of Foreign Affairs (MFA) spoke at the SPC press conference, in what this observer views as a cross-institutional show of support for China’s policies of opening to the outside world. At a time that government officials are focused on “dual circulation,” it is a reminder that the opening to the outside world policy remains in place and that one of the SPC’s many responsibilities is to handle those issues properly. The photo is also one illustration of the place of the SPC within China’s system (体制).
SPC Vice President Yang Wanming (杨万明) spoke first at the press conference, with the officials from MOFCOM and MFA adding comments. This signalled to the careful observer that he has assumed the responsibility for overseeing the #4 Civil Division (responsible for foreign-related commercial and maritime matters) from Luo Dongchuan (who has been transferred to Fujian Province to serve as Political Legal Commission Party Secretary).
This brief (17 articles) guiding opinion providing judicial services and guarantees (not a judicial interpretation, see this explanation of what it is) is the latest judicial policy on foreign-related (this blogpost will use the term “cross-border”, to incorporate some Hong Kong-related) legal issues (inbound and outbound) relevant to the Chinese courts, drawing on BRI Opinion #2 (issued end 2019 and BRI Opinion #1) and the June, 2020 guidance on Covid-19 and cross-border commercial issues.
As to what those judicial services and guarantees are, Justice Yang said the following:
Wherever the national strategy is deployed, the judicial services and guarantees of the people’s courts will be there (国家战略部署到哪里，人民法院司法服务和保障就到哪里.)
How does this document relate to other Chinese legislation?
To clarify the relationship between this opinion on the one hand and legislation, judicial interpretations and other types of judicial documents (such as the two BRI Opinions), Justice Yang gave a quick summary in SPC jargon:
While maintaining consistency with existing laws and regulations, judicial interpretations, and judicial policy documents, the Guiding Opinions also strengthen the macro-guidance of the people’s courts’ services and guarantees opening to the outside world from a higher level, and are organically linked to other SPC judicial policy documents for major opening-up decisions, major strategies, and major initiatives, to further improve the system of judicial services and guarantees of the work relating to opening to the outside world与现有法律法规和司法解释、司法政策文件保持一致的同时，从更高层面加强人民法院服务保障对外开放工作的宏观指导，与最高人民法院出台的其他司法服务保障国家对外开放重大决策、重大战略和重大举措的司法政策文件有机衔接，进一步完善了司法服务保障对外开放工作体系。
What is means is:
The Guiding Opinions are intended to be consistent with current law and regulations, SPC judicial interpretations, and SPC judicial policy documents.
It is intended to provide comprehensive guidance and better support government policies on opening to the outside world.
The Guiding Opinions. like many of the documents analyzed on this blog, are written in SPC jargon. Decoding this language poses challenges to those are concerned or who should be concerned about the impact of how the Chinese courts interact with the rest of the world.
Decoding the language, however, enables the careful reader to understand outstanding issues and contemplated reforms or other measures, including possible judicial interpretations.
Summary and comments
This blogpost will summarize and make some brief comments on some of the issues mentioned in each of the six sections of the documents and make a few concluding comments. There are many more issues in this document that should be explored, but I’ve been delayed by a hand injury.
1. Political stance
The first section calls for judges to raise their political stance. This is standard language in the New Era. The first article frames the documents in current political language, including that frequently used in Chinese foreign policy documents and to relevant political documents. Therefore the first article (and elsewhere) refers to multilateralism, equally situated parties, and creating a legalized, internationalized convenient business environment.
The second section focuses on basic principles of foreign-related litigation–of which it sets out three: protecting the equal rights of parties; respecting the intent of the parties; and implementing (judicial) jurisdiction according to law.
The second principle, described in Article 4, includes the right of parties to choose governing law, a court with jurisdiction and arbitration, litigation, or mediation to resolve their disputes. However, as mentioned previously, Chinese law treats choice of arbitration and litigation differently, requiring litigants choosing a (foreign court) to have an actual connection to the foreign court (see Professor Vivienne Bath’s previous scholarship on this), although there isn’t a counterpart position for arbitration. As mentioned previously, the application of foreign law by Chinese courts is a work in process. The SPC has given a great deal of publicity to its platform for the ascertainment of foreign law. which includes determinations of foreign law on a certain issue by certain authorized organizations and opinions given by members of the international expert committee of the China International Commerce Court (CICC). As I wrote close to two years ago, the China International Commercial Court (CICC) rules do not clarify a number of practical questions. Could a court request an advisory opinion from an expert and from a designated ascertainment center, and if so, what relative weight will be attached to each? Presumably, a court would give it greater weight than an opinion from an expert provided by a party.
The third principle, described more fully in Article 5, is linked to protecting China’s judicial sovereignty and repeats the statement that conflicts in jurisdiction and parallel proceedings will be resolved properly (妥善解决). This has appeared in BRI Opinions #1 and #2, but specific measures to resolve parallel proceedings have not yet been noted. Parallel and conflicting proceedings are an ongoing issue (not only between the Chinese courts and other courts outside mainland China) and will be further mentioned below. As Professor Bath discussed, several scenarios are common. One involves situations in which parties had agreed to the exclusive jurisdiction of the courts of one country, but a party brings proceedings in the courts another country (China), which accepts the case and may issue a judgment before the original court. Another set of cases involves an alleged arbitration agreement which provides for arbitration overseas, but a party brings a case in a Chinese court nonetheless. A variation has recently been noticed by two leading practicing lawyers in China. In that case, an issue that had been pleaded in arbitration proceedings in Hong Kong and reviewed by the relevant Hong Kong court was not given res judicata effect in China. The ruling by the Shijiazhuang court has been reviewed by the SPC under its Prior Review proceedings.
Although parallel proceedings in courts outside of China and in China have previously been noted primarily in maritime law (and anti-suit and anti-anti-suit orders),the parallel/conflicting proceedings issues seem to be moving to the area of Intellectual property (IP) law, likely related to the multi-jurisdiction litigation between Huawei and Conversant concerning standard essential patents, including in the UK Supreme Court and the German courts. What has been noted is one of the SPC’s research topics includes protecting China’s judicial sovereignty (national interests) through anti-suit or anti-anti-suit injunctions. The SPC Intellectual Property Court has issued an anti-suit injunction order against Conversant and the Wuhan Intermediate Court issued an anti-suit injunction order against Intel Digital (the linked article has a summary of the facts in the Wuhan case, but reserve judgment on the author’s comments on the authority of Chinese courts to issue these order).
3. Modernizing China’s foreign-related and maritime litigation systems
This third section contains four articles: application of law; fully develop the advantages of service and guarantees to cross-border trade and investment; promote the integration with the internet of foreign-related litigation; and develop diversified dispute resolution related to international commercial dispute resolution. Many of the provisions in this section repeat provisions in the BRI Opinions #1 and #2. What appears to be new is a statement that the SPC will seek to integrate prestigious foreign arbitration and mediation organizations to be part of its one stop mediation/arbitration/litigation mechanism.
4. Increase judicial protections
Article 10 mentions foreign-related administrative litigation issues. They were mentioned briefly in BRI Opinion #2 and once in BRI Opinion #1, here seeing greater stress. Section 11 focuses on cross-border intellectual property issues. It has some important new content. It mentions improving (完善涉外知识产权诉讼制度) foreign-related IP litigation procedures, putting into judicial policy previous statements by former Vice President Luo Dongchuan about the need for special IP litigation rules. It again mentions researching and responding to parallel international litigation relating to intellectual property rights and becoming a preferred place for settling IP disputes. From comments made by several leading experts in a recent webinar the Chinese courts are an important jurisdiction in IP litigation. It is unclear whether the use of anti-suit (or anti-anti-suit )injunctions by the Chinese courts will be the way that litigants are encouraged to turn to the Chinese courts to settle their global IP disputes. According to comments by several persons with expertise in Chinese IP law and related commercial issues, a number of factors are leading to the Chinese IP courts becoming an important forum for the resolution of IP disputes. Related to this, see the analysis by Doug Clark, partner in the IP law firm Rouse in this article, in which he says that the Chinese courts are looking to take on the role of setting global FRAND rates. Also see related blogposts on Mark Cohen’s blog, Chinaipr.com. These issues are complex and important.
5. Prevent and resolve major risks
This section has only two articles. Article 13 focuses on perfecting risk control mechanisms for major cases and firmly establishing an overall national security concept. These phrases are not unique to the SPC, but reflect language in Party documents, with the “overall national security concept” attributed to Xi Jinping. This article also calls on courts to coordinate the overall international and domestic situations, adhere to bottom-line thinking and risk awareness, understand the domestic and international situation and risks and challenges facing China’s opening up. The final phrase in this article calls on courts to resolutely defend our (China’s) judicial sovereignty and national security. So it seems that the concept of “judicial sovereignty” (used several times in this document) is being used to protect China’s national sovereignty.
The second one (Article 14), on guaranteeing state security and economic and social order gives a different priority to possible cross-border criminal law issues from either BRI Opinion. Neither BRI Opinion mentioned infiltration (渗透), espionage (间谍), sabotage, subversion (渗透颠覆破坏). Infiltration and espionage are mentioned immediately after the article heading. (the sentence is: “thoroughly participate in the struggle against infiltration, espionage, separatism, terrorism, and cults, by strictly combatting crimes of infiltration, subversion, and sabotage, and crimes of espionage, violent terrorism, ethnic separatism, religious extremism, and other crimes that endanger national security” 深入参与反渗透反间谍反分裂反恐怖反邪教斗争，严厉打击各种渗透颠覆破坏、间谍、暴力恐怖、民族分裂、宗教极端等危害国家安全的犯罪. (Many thanks to Chinalawtranslate.com for this translation). Other concerns, such as violent terrorism, ethnic separatism, religious extremism have been seen previously in the other two BRI documents. and article 14 again stresses criminal justice cooperation between China and the rest of the world. The reason for the change in priorities is unclear. What signal does this send to the international commercial and judicial world (international community) that infiltration, espionage, sabotage and subversion are being mentioned?
6. Increasing judicial cooperation, increase the international influence of the Chinese judiciary
These three articles address judicial cooperation, judicial exchanges, and training of judges who can handle foreign-related cases.
Article 15 concerns judicial assistance treaties, encouraging Chinese judges to participate in the negotiation of bilateral and multilateral judicial assistance treaties.
Article 16, on judicial exchanges, including highlighting exchanges with the principal international legal organizations, also summarizes ongoing SPC practices in developing exchanges with BRI judiciaries, although it is not so specified.
Article 17 calls for the better training, recruitment and promotion of persons who can deal with specialized legal issues such as cross-border finance, environmental protection, maritime law, intellectual property. Measures include joint programs with universities, exchanges with international organizations and international commercial courts, with the objective of having judges who are able to participate in the drafting or amendment of relevant international rules [a glimpse into a judiciary certain special functions] and the creation of a group of Chinese judges with an international perspective. This appears to be directed to law schools and senior personnel in the lower courts and likely involved concurrence by the SPC’s International Cooperation Bureau. As has been mentioned in earlier blogposts, the career progression for legal professionals to become judges has slowed because of the personnel reforms in the previous round of judicial reforms, under which young professionals work as judges assistants for a number of years before applying (and passing relevant examinations)to become a judge. From my observations, fixed quotas on the number of judges in a court can mean a talented, educated judges assistant in one court may wait significantly longer than a similarly qualified person in another court to become a judge.
A few concluding comments
Perhaps it is not realized that multiple documents conveying many of the same messages, with references that need decoding, may not convey the intended message to the international business community that the Chinese courts welcome and will treat fairly foreign commercial litigants, and that Chinese law is stable, transparent and predictable.
The Guiding Opinions call for increasing publicity about and the international influence of Chinese justice, and international confidence in Chinese law, through translating guiding and typical (exemplary/model) cases into foreign languages. This echoes language in BRI Opinion #2. The international community outside of China may or may not consider those sources to be primary ones in forming a view about the Chinese courts. In my view, it is more likely that the international community will look to decisions and rulings of the Chinese courts in several categories of cases: enforcement or other proceedings involving foreign (and Hong Kong) arbitral awards; parallel or competing proceedings, whether with other courts or with international arbitration; difficult commercial ones, particularly involving Chinese state-owned enterprises, or other Chinese national champions and issues related to intellectual property, particularly as it relates to “cutting-edge” technology. This observer surmises that the international judicial community will also look for a spirit of mutual respect for foreign courts and their jurisdiction.
The Guiding Opinions repeats language about Chinese courts participating in the formulation of international rules, an ongoing theme since the 2014 4th Plenum of the 18th Party Congress decision. One example is the constructive role of the SPC negotiator as a member of the Chinese delegation that participated in the drafting of the Hague Judgments Convention. But what the international community will also look for is China’s capacity to harmonize its legislation to be able to ratify the international conventions whose drafting it participates in.
The introduction to Guiding Opinions notes that comments were sought from many sources. It is unclear whether the views of international users of the Chinese court system were solicited. Other developments in which the international community may display an interest are the creation of additional institutions within the Chinese judiciary to enable the Chinese judiciary to better understand the needs of（domestic and international) users.
Many thanks to several highly knowledgeable readers who commented on earlier drafts of this blogpost.
A brief notice appeared on the China International Commercial Court (CICC)’s websiteson 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.