Supreme People’s Court strengthens judicial review of arbitration

liu guixiang at arbitration summit

Judge Liu Guixiang speaking at the China Arbitration Summit

At China’s Arbitration Summit in late September, Liu Guixiang, Chief Judge of the #1 Circuit Court, called attention to a notice that the Supreme People’s Court (SPC) issued earlier this year to strengthen judicial review of arbitration. The notice (Notice concerning some questions regarding the centralized handling of judicial review of arbitration cases关于仲裁司法审件归口办理有关问题的通知) is linked to the likely increasing number of cases involving judicial review of arbitration matters, linked to the increasing number of arbitrations involving Chinese parties (and the One Belt One Road initiative) both in China and elsewhere in the world, including Hong Kong International Arbitration Centre.  (The notice highlights data collection problems).

The notice, reproduced below, is not an SPC judicial interpretation. Unlike judicial interpretations, notices are not required to be published. It seems that the SPC itself has not officially published it, but several official websites have published it, as have a number of Wechat accounts.

A quick search reveals that the notice drew on  a 2014 study by the Guangdong courts summarizing the results of pilot projects  (including Shenzhen) that the SPC commissioned, involving cooperation with the now independent Shenzhen Court of International Arbitration. As is usual, Guangdong and Shenzhen have led the way as pilot areas for judicial reform. The study highlighted a list of problems with the way lower courts review arbitration related issues, including lack of consistency in reviewing cases. The study also highlighted problems in tracking case data.

As Judge Liu also mentioned (as has this blog), the SPC is working on a comprehensive judicial interpretation on that subject).  That judicial interpretation is still being drafted, with the #4 Civil Division of the SPC taking the lead.

A very rough translation and some comments written in italics follow. (Many thanks to an anonymous and well-informed follower of this blog for bringing the notice to my attention and for some thoughts.) Please call translation glitches/mistakes to my attention.

最高人民法院
关于仲裁司法审查案件归口办理
有关问题的通知

法[2017]152号

Supreme People’s Court

Notice Concerning Some Questions regarding the centralized handling of judicial review of arbitration cases

Fa (2017) #152

各省、自治区、直辖市高级人民法院,解放军军事法院,新疆维吾尔自治区高级人民法院生产建设兵团分院:

To the provincial, autonomous region, directly administered municipality higher people’s courts, People’s Liberation Army Military Court,  Production and Construction Corps Branch of the Xinjiang Autonomous Region Higher People’s Court:

为依法正确审理仲裁司法审查案件,保证裁判尺度的统一,维护当事人的合法权益,促进仲裁事业健康有序发展及多元化纠纷解决机制的建立,现就各级人民法院办理仲裁司法审查案件的有关问题通知如下:

To try correctly judicial review of arbitration cases according to law and guarantee a unified yardstick for judicial decision-making, protect the legal rights of parties, promote the healthy and orderly development of arbitration matters and the establishment of a diverse dispute resolution mechanism, we notify the various levels of the people’s court handling judicial review of arbitration cases of the following:

一、各级人民法院审理涉外商事案件的审判庭(合议庭)作为专门业务庭(以下简称专门业务庭)负责办理本通知规定的仲裁司法审查案件。

I.  The trial divisions (collegial panels) trying foreign-related commercial cases shall be the specialized trial divisions (below, “specialized trial divisions) responsible for undertaking the judicial review of arbitration as set out in this notice.

This means that SPC is requiring trial divisions (or collegial panels, in smaller courts) handling foreign-related commercial matters to be responsible for reviewing the arbitration related matters described in the next paragraph. It is a plus for competency/consistency in arbitration-related matters.

二、当事人申请确认仲裁协议效力的案件,申请撤销我国内地仲裁机构仲裁裁决的案件,申请认可和执行香港特别行政区、澳门特别行政区、台湾地区仲裁裁决的案件、申请承认和执行外国仲裁裁决等仲裁司法审查案件,由各级人民法院专门业务庭办理。

II.  In cases in which a party applies to have the validity of an arbitration agreement recognized, cases in which application is made to cancel a domestic arbitration commission’s award, cases in which application is made to recognize (认可) and enforce a Hong Kong SAR or Macau SAR arbitration award, recognize (认可) and enforce a Taiwan area arbitration award, application is made to recognize (承认) and enforce a foreign arbitral award, shall be handled by the specialized trial divisions of each level of court.

This paragraph describes the types of cases covered by the notice–the types of judicial review of arbitration matters and that these cases should be handled by the specialized trial division of each level of court designated in the paragraph I. There is a difference in terminology (bolded above, but not in the original Chinese) when referring to the recognition of arbitral awards from Hong Kong, Macau, and Taiwan as distinguished from foreign arbitral awards, emphasizing that awards from these jurisdictions are considered part of “one country.”  Notice that cases involving domestic arbitration awards or disputes over the validity of an arbitration agreement to submit a dispute to domestic arbitration are also to be reviewed by the specialized trial division.  A big plus for consistency and competency in judicial review of arbitration matters.

专门业务庭经审查裁定认可和执行香港特别行政区、澳门特别行政区、台湾地区仲裁裁决,承认和执行外国仲裁裁决的,交由执行部门执行。

When a specialized trial division, after review, has ruled to recognize and enforce a Hong Kong Special Administrative Region, Macau Special Administrative Region, Taiwan Region arbitration award, recognize and enforce a foreign arbitral award, the enforcement shall be transferred to the enforcement departments for enforcement.

三、一审法院作出的不予受理、驳回起诉、管辖权异议裁定涉及仲裁协议效力的,当事人不服该裁定提起上诉的案件,由二审人民法院专门业务庭办理。

III.  When the first instance court makes a ruling which relates to the validity of an arbitration agreement relating not to accept, to reject a filing or objection to jurisdiction, and a party  disagrees with the ruling and appeals, the specialized trial division of the second instance court should handle it.

This  provision channels appeals relating to arbitration matters to specialists in the second instance courts, again a plus for competency and consistency.

四、各级人民法院应当建立仲裁司法审查案件的数据信息集中管理平台,加强对申请确认仲裁协议效力的案件,申请撤销或者执行我国内地仲裁机构仲裁裁决的案件,申请认可和执行香港特别行政区、澳门特别行政区、台湾地区仲裁裁决的案件,申请承认和执行外国仲裁裁决的案件,以及涉及确认仲裁协议效力的不予受理、驳回起诉、管辖权异议等仲裁司法审查案件的信息化管理和数据分析,有效保证法律适用的正确性和裁判尺度的统一性。此项工作由最高人民法院民事审判第四庭与人民法院信息技术服务中心具体负责。

IV. Each level of people’s court should establish a centralized administrative platform for the judicial review of arbitration awards, to strengthen the informatized management and data analysis of cases regarding applications to confirm the validity of an arbitation agreement, cases regarding applications to cancel or enforce arbitration awards of our domestic arbitration institutions, applications to recognize and enforce Hong Kong Special Administrative Region, Macau Special Administrative Region, Taiwan Region arbitration awards, cases regarding applications to recognize and enforce foreign arbitral awards, and cases relating to the judicial review of arbitration such as refusal to accept, reject the filing, or objection to jurisdiction and others relating to the confirmation of the validity of an arbitration agreement; the effective guarantee of the correct application of law and of a unified yardstick for judicial decision-making.  The #4 Civil Division of the Supreme People’s Court and the People’s Courts Information Technology Service Center shall be specifically responsible for this work.

IV. This paragraph requires a platform to be established to enable better data collection of arbitration related cases. Data collection appears to be an ongoing issue for the courts.  2015 SPC rules on case file numbers (thank you to Chinalawtranslate.com for this translation), are aimed to create more consistency in filing numbers for cases, and will also be helpful in this process. Inconsistency in case files numbers was identified as a problem in the Guangdong study.) The SPC’s #4 Civil Division (in charge of cross-border civil and commercial matters) and the Information Technology Service Center are the ones responsible for ensuring this platform works.  The notice does not require data results to be made public. The legal and professional public (in China and elsewhere in the world) would look forward to regular big data reports on this.

最高人民法院

2017年5月22日

Supreme People’s Court

May 22, 2017

_______________________________________

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SPC reveals new Belt & Road-related initiatives

Screen Shot 2017-10-06 at 11.05.55 AM

Judge Liu Guixiang (SPC judicial committee member & head of #1 Circuit Court) speaking at conference

In late September (2017), the Supreme People’s Court (SPC) held a Belt & Road judicial conference with senior judges from 16 jurisdictions in the desert oasis of Dunhuang, famed for its Buddhist caves.  As is its custom at its international conferences, the SPC released some information concerning previously unknown cross-border related initiatives, both of which have implications for the international business and legal communities.  The English language reports of the conference (in China Daily and related media outlets)  missed the implications.  A brief article in one of the SPC’s Wechat accounts reveals that:

  • SPC is drafting a judicial interpretation on the recognition and enforcement of foreign civil & commercial judgments (关于承认和执行外国法院民商事判决若干问题的规定);
  • SPC is considering establishing a Belt & Road International Commercial Court (literally “Tribunal”) (“一带一路”国际商事法庭). (chief of the SPC’s #4 Civil Division, Judge Zhang Yongjian, must have been speaking of this when he was interviewed during the 2017 National People’s Congress meeting).

Enforcing foreign civil judgments

A recent decision by a Wuhan court to enforce a California default judgment has received worldwide attention, both professional and academic. with some noting nothing had really changed and Professor Donald Clarke correctly wondering whether an instruction had come from on high.  With this news from Judge Liu, it is clear that the Wuhan decision is part of the Chinese courts’ rethink of its approach to recognizing and enforcing foreign court judgments.

Judge Liu revealed that the judicial interpretation will set out details regarding the meaning of “reciprocity” and standards for applying it (明确互惠原则具体适用的标准).  In another recent article, an SPC judge considered the matter of reciprocity in more detail.  Among the issues she mentioned were: 1) China not being a party to the Hague Convention on the Choice of Courts (this obstacle has been removed as China signed the Convention on 12 September 2017 (this article has a good overview); 2) China should actively participate in the drafting of the Hague Convention on the Recognition & Enforcement of Foreign Judgments (this seems to be happening, as this blog has reported).  The SPC judge recognized that the current Chinese position has significant limitations and can lead to a great deal of parallel litigation (see Professor Vivienne Bath‘s scholarship on this).  The SPC judge also suggested that the standards set out in mutual judicial assistance agreements could be useful in drafting standards for reviewing the recognition and enforcement of foreign judgments.

Belt & Road Commercial Court

Judge Liu also mentioned that the SPC would establish a Belt & Road dispute resolution mechanism and that the SPC was considering a Belt & Road commercial tribunal, to provide the parties of OBOR countries with fair, efficient, and low-cost one-stop legal services.  It is clear from discrete developments that the SPC is looking to Singapore’s International Commercial Court and the Dubai’s International Finance Centre Courts (DIFC).  One of those discrete developments is the cooperation agreement that the Shanghai Higher People’s Court and Dubai International Finance Centre Court signed in October 2016 (reported here), which must have required the concurrence of the SPC. The other discrete development is the memorandum of understanding on legal and judicial cooperation between the SPC and Singapore Supreme Court, signed in August 2017, relating to mutual recognition and enforcement of monetary judgments, judicial training for judges, and the Belt & Road initiative.

The details of the SPC’s  Belt & Road commercial court (tribunal) are yet unclear.  Both the DIFC and Singapore International Commercial Court have a panel of international judges, but a similar institution in China would be inconsistent with Chinese legislation.  The SPC is clearly interested in promoting mediation to resolve Belt & Road disputes. This interest is visible from the September 2017 International Mediation conference in Hangzhou, at which Judge Long Fei, director of one of the sections in the SPC’s Judicial Reform Office, spoke on the benefits of international commercial mediation.

Perhaps the SPC envisions an institution analogous to the Asian Infrastructure Investment Bank and plans to cooperate more on resolving Belt & Road commercial disputes with UNCITRAL and other international organizations.  We will need to see how this further develops.

It is also unclear whether the SPC will issue a draft judicial interpretation or draft regulations on the Belt & Road dispute resolution center for public comment.  Although President Zhou Qiang and Executive Vice President Shen Deyong speak of the benefits of judicial transparency, it seems the benefits of public participation in judicial interpretation drafting /rule-making have yet to be fully realized.

 

Supreme People’s Court ramps up its judicial responsibility system

Screen Shot 2017-08-12 at 7.04.09 AMIn April of this year (2017), the Supreme People’s Court (SPC) issued its judicial responsibility guidelines.  At the end of July, the SPC issued a 73 article implementing opinion (最高人民法院司法责任制实施意见(试行)(Implementing Opinion), which went into effect on 1 August.  There have been many summary reports in the legal press, but the full text was not found until 11 August. It has since been published by several Wechat accounts, but as of this writing, no official text has been issued.  The policy basis for the responsibility system links back to the 3rd and 4th Plenum Decisions. Senior Party leadership (the Central Leading Group for Comprehensively Deepening Reforms) approved the SPC’s responsibility system.

The document establishes operating rules for the SPC  after this latest round of court reforms, and therefore sets guidelines for the lower courts. It can be expected that the lower courts will issue corresponding documents. Through the Implementing Opinion, it is possible to see how much autonomy an individual judge/three judge panel has and what matters require approval by senior SPC leaders.

Opinions (as this blog has previously explained) are not judicial interpretations but a type of judicial normative document.   A recent Wechat post by an SPC commercial subsidiary, Faxin (法信), described them as judicial guiding documents (司法指导性文件). That is the terminology being used for them in a series of books published by the People’s Court Press. Inconsistent legal terminology is not a new phenomenon.

The basic principles of the Implementing Opinion are said to implement central authorities’ requirements, let those who hear cases bear responsibility, clarify how cases are to be dealt with and put in place the Party group’s responsibility for enforcement (the phrase “Party group” actually is mentioned three times) and case handling. It appears that some provisions memorialize current practice, while others set out new rules.

The  Implementing Opinion specifies roles of different personnel and institutions within the SPC such as the court president (and vice presidents), heads of divisions, professional judges committee, judicial committee, presiding judges, judges in charge of cases, clerks, and judicial assistants. It provides guidelines on how cases are to dealt with, from case acceptance, random case assignment, to issuing decisions.

The Implementing Opinion includes the following (selected) provisions:

  • Details on staffing for judges (one assistant and one clerk in the circuit courts, and some assistants and clerks at headquarters) (Article 3);
  • those with a leadership role (President/vice president/vice/heads of divisions) should generally be the presiding judge (Article 5), while the judges in collegial panels should change every 2-5 years;
  • leaders need to hear cases, that are difficult/important/guiding, etc., but specialists are designated to assist them (Article 7);
  • rules on who will issue judgments, mentioning that the president of the SPC signs the  order for the implementation of the death penalty (this was understood to be the case already)(Article 11);
  • court leaders may not give oral/written instructions concerning a case (except as otherwise provided (i.e. cases that are considered by the judicial committee)(Article 12);
  • responsibilities of professional judges committees (a committee put into place under the judicial reforms); judicial committee (can be split into specialist civil, criminal, enforcement subcommittees) (role said to have narrowed, but include major/difficult cases affecting national interests & social stability, but also other non-case related duties such as approving judicial interpretations/judicial normative documents, etc., the judicial committees requires  views be stated in the judgment (Articles 16-19);
  • the basic rule is random case assignment, with exceptions for major/difficult cases (Article 26-27), with electronic service of process & documents if agreed (Article 32);
  • basic rule is online broadcast of SPC court hearings, unless approved by leaders otherwise (Article 33), with requirements concerning the posting of rulings/judgments and other transparency requirements mentioned in the document;
  • circuit courts are prohibited (in general) from considering requests for instructions (the rule makes sense–it would defeat one of the purposes of having circuit courts (Article 25, this is an example);
  •  Articles 41-43 relate to precedent case review (as suggested in my recent article) and require approval by leaders if the ruling in a case will be inconsistent with prior SPC rulings on the topic (this has been criticized as being inconsistent with judicial autonomy). Approval is required in several other situations, see Article 40 (2-4));
  • Articles 46-50 set forth rules for a collegiate panel to consider a case and submit it to the division leadership/professional judges committee/judicial committee;
  • Article 51 requires the judge responsible for the case (承办法官) to draft the decision reached according to the majority view, indicating that the role of responsible judge has administrative overtones. If not so, the judgment would be drafted by one of the judges who agreed with the majority view.
  • Article 58 retains existing special procedures (including special standards for transparency) for certain criminal cases, such as death penalty cases, cases involving foreigners, overseas Chinese, Hong Kong, Macau, and Taiwanese Chinese.
  • Article 61 provides the Central Commission for Discipline Inspection (CCDI) representative stationed at the SPC can be a member of the judicial committee (this seems to be analogous to the procedure under law under which a representative from the procuratorate can take part in judicial committee meetings). Additionally, anti-corruption officials stationed in each division can participate in professional judges committee meetings and collegiate panel discussions.   Article 61 does not require their views to be adopted.  It could be that their views are considered more seriously if discussions relate to matters regarding which they are competent.
  • Article 64 requires certain types of cases to be submitted for approval to higher levels of the SPC, including cases involving mass incidents, that will have an effect on social stability; difficult and complicated cases that will have a major effect on society; cases that will conflict with prior SPC cases; those that indicate the judge violated the law; death penalty review, major criminal cases, cases involving requests for instructions involving foreigners, overseas Chinese, Hong Kong, Macau, Taiwanese Chinese.

The vision for the reformed SPC remains a court with administrative characteristics (官本位), with concepts derived from other jurisdictions (judge’s assistant would be an example), that enables Party guidance in sensitive cases and its operations to reflect changes in Party/government policy (serving the actual situation), but seeks to be a more professional and accessible institution, hearing cases in a professional manner. It can be surmised that certain provisions from the Implementing Opinion will be incorporated into the revisions of the Organizational Law of the People’s Courts currently being drafted.

 

 

Chinese courts & formality requirements

apostille

Hong Kong Apostille (from internet)

In February, 2017, the Supreme People’s Court (SPC) issued its second judicial transparency white paper, giving the official version of what the SPC has done to respond to public demands for greater transparency about the Chinese judicial system. But what are the voices from the world of practice saying? One of the issues (for a small but vocal group, foreign litigants) is inconsistent and non-transparent formalities requirements.

Chinese civil procedure legislation requires a foreign litigant to notarize and legalize corporate documents, powers of attorney & other documents. It is a time consuming and costly process, with some jurisdictions providing documents that do not meet the expectation of Chinese courts.   China is not yet a signatory to the Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents  (Hague Legalization Convention)   which substitutes the faster and cheaper apostille process (note that Hague Legalization Convention continues to be applicable to Hong Kong and Macau under the terms of the joint declarations and Basic Laws for each Special Administrative Region (SAR)).  About one year ago, a Ministry of Justice official published a Wechat article discussing the benefits of the Hague Legalization Convention (as well as the issues facing China in implementing it).

While this article addresses issues faced by foreign plaintiffs seeking to challenge Trademark Review and Adjudication Board decisions in the Beijing Intellectual Property Court (Beijing IP Court), according to other practitioners (who have asked not to be identified), these problems with inconsistent (and non-transparent) requirements concerning legalizing foreign corporate documentation are not limited to the Beijing IP Court, but face foreign parties appealing from intermediate courts to provincial high courts elsewhere in China. These requirements can have the effect of cutting off a party’s ability to bring an appeal, for example.

What is the solution?  The long-term solution, of course, is for China to become a signatory to the Hague Legalization Convention.  In the meantime, Chinese courts should be more transparent about their formalities requirements.  These requirements affect all foreign parties, whether they are from One Belt, One Road  (OBOR) countries or not. If China is seeking to become an international maritime judicial center or hear more OBOR commercial cases, the Chinese courts need to become more user friendly.  Courts with significant numbers of foreign cases (Beijing, Shanghai, Shenzhen….) can consider reaching out to the foreign chambers of commerce, many of which have legal committees, to understand in greater detail what specific problems foreign litigants face (and convey their views to foreign audiences). Resolving this issue can create some goodwill with the foreign business community with relatively little effort.

 

English language websites of Chinese courts

The Supreme People’s Court (SPC) and other Chinese courts have established or upgraded their English language websites to promote better the image of the Chinese courts to the outside world.  These websites are linked to policy goals set by the 4th Plenum, 4th Five Year Court Reform Plan, and other related documents. That can be seen from an announcement on the English language version of the Shanghai Maritime Court’s website:

Shanghai Maritime Court established a judicial translator team, aiming at having a bigger say in global judicial disputes and fostering judicial talents with a global vision.

“Establishing a professional translator team for maritime judiciary centers is a goal for building a global maritime judicial center,” said Zhao Hong, president of the Shanghai Maritime Court.

“It is aiming to serve a maritime powerhouse and laying a solid foundation for China’s Belt and Road initiative,” Zhao said.

A quick rating of the soft power of these English language websites follows below.

SPC English website

  1. SPC’s English website: http://www.english.court.gov.cn

Screen Shot 2017-05-08 at 1.53.41 PM.png

The SPC English website, while an improvement over the previous version, could be substantially improved.

Too much of the information is out of date, including much of the information on the landing page of the website. The “About” section, which could be useful to foreign courts, diplomats, journalists, researchers, students, etc. has an outdated description of the SPC leadership.  In the section on Resources, the SPC white papers are published as separate pages, rather than as one downloadable PDF (as some of the Chinese maritime courts have done). The scheduled hearings section is generally out of date and also provides no information as to how an interested person would attend a hearing. The link to issues of the SPC Gazette only contains the first two pages, rather than the full issue itself.  Moreover, the landing page lacks links to other English language court websites.

National Maritime Court site

China Maritime Trial: http://enccmt.court.gov.cn/chinamaritimetrial/index.html, the English language version of the national maritime court website (partial screenshot below), apparent partner to the Foreign Related Commercial website (similar look and feel) seems to be in beta mode.Screen Shot 2017-05-08 at 2.03.12 PM

Again, as with the national court website, the news on most of the landing page appears to be outdated.  The white paper page does not enable the user to download a PDF version of the report providing an overview of the first 30 years of the maritime courts.  Under the resources tab, under law & regs, are links to translations of SPC judicial interpretations relating to the maritime courts, but it is not apparent to anyone looking at the landing page. These translations are potentially a useful resource to all sorts of foreign readers. Under the resources tab, the cases menu is empty. The judgement tab links to translations of some judgments and rulings by the SPC and maritime courts, but without any headings or indications on the front page of the website.  These translations, too, are potentially a useful resource to foreign users. It does have links to the other maritime courts (some of which have English websites, but some of the links are out of date.

National Foreign-Related Commercial Cases Website

China Foreign Related Commercial Trial: http://enccmt.court.gov.cn/ChinaForeignRelatedCommercialTrial/index.html , the English language version of the national foreign-related commercial cases court website (partial screenshot below),apparent partner to the Maritime Courts website (similar look and feel) seems to be in beta mode.china foreign related trial

Again, as with the national court website, the news on most of the landing page appears to be outdated. Under the About tab is a list of courts that can accept foreign-related cases, but information about the jurisdiction of each court is missing. Under the Media Center, most of the information under Updates is irrelevant to the courts, the information under International Exchanges is missing, but the Specials has a translation of the SPC’s Belt & Road policy document (although followed by descriptions of the SPC’s cooperation with several Shanghai-area law schools).  There is no content under the Resources tab or the Judgement tab.  Translations of judicial interpretations related to foreign-related civil and commercial issues and a clearer explanation of how a foreign-related case progresses in China would be useful for the casual foreign user, including those from the Belt & Road countries.

Local court websites

Relatively few Chinese courts seem to have English language websites, but the Shanghai high court (http://www.hshfy.sh.cn/shfy/English/index.jsp) has one of them.Screen Shot 2017-05-13 at 3.24.23 PM

The Shanghai Higher People’s Court website is well organized, and relatively timely, although the litigation guide has little information to guide the foreign litigant, and too much of the information, whether cases or news, is badly edited.  The information on jurisdiction is not very helpful for a litigant or counsel, because it does not convey information on the jurisdiction of the Shanghai courts.  It appears that translators lacked understanding of who the potential users of the site were, and had English language challenges, unlike the Shanghai maritime court (see more below).

Local Maritime court websites

Several maritime courts have English language websites, with Guangzhou and Shanghai taking the lead in presenting useful and clear information to the foreign user.  The Shanghai maritime court website (http://shhsfy.gov.cn/hsfyywwx/hsfyywwx/index.html) does a good job of presenting official information clearly and in a timely manner. Screen Shot 2017-05-13 at 2.51.58 PM.pngThe Shanghai maritime court’s bilingual white paper for 2014 and 2015 is downloadable in PDF (under the Annual Report tab), the Court News is relatively timely,  The case digests are useful and calendar lists upcoming court hearings (however without information concerning how an interested person could attend them). Unusually for a Chinese court website, the Judges tab has photos of judges other than the senior leadership.  The Contact Us tab (unusual for a Chinese court) has only telephone numbers for the court and affiliated tribunals, rather than an email (or Wechat account).  Of course the information on the Chinese side of the website is more detailed (under the white paper tab, for example, a detailed analysis of annual judicial statistics can be found), and the laws & regulations tab might usefully set out maritime-related judicial interpretations, but most of the information is well organized and relevant.  Similar comments can be made about the Guangzhou maritime court’s website (http://english.gzhsfy.gov.cn/index.php).

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Comment

It appears that Judge Zhao Hong, president of the Shanghai Maritime Court (and former SPC #4 Civil Division judge) and her Guangzhou counterpart, Judge Ye Liudong, have a greater sense of what the world outside of China is interested to know about the Chinese courts than many other Chinese senior court judges. The team of judges (and other judicial personnel)  under her watchful eye does a good job of keeping the website current and useful.

Most of the court English language websites should be rated “room to improve,”  as they fail to convey useful and timely information to foreign users.Those running the website do not seem to have a sense of what the foreign audience wants to know. That could be solved in a couple of ways: looking at some foreign court websites, consulting with a web-development company focusing on the foreign market, or recruiting some foreign lawyers or law students to be a website focus group.

The websites need to convey to a foreign audience a range of useful information worded in accessible language if they are to accomplish their goal of promoting the image of the Chinese courts.  One useful piece of information that should be on a Chinese court website is a clear illustration of the steps in a civil or commercial case), aimed at individual or small business litigants.  How foreigners can use the Chinese courts to protect their rights, be they related to a contract, property, or employment relationship, is a practical issue both to the hundreds of thousands of foreign residents in China as well as those foreigners with cross-border disputes with a Chinese party.

Supreme People’s Court & foreign-related disputes

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Judge Zhang Yongjian, chief judge of the Supreme People’s Court (SPC)’s #4 Civil Division (responsible for foreign, Hong Kong, Macau, and Taiwan related commercial issues) previously featured on this blog, gave an interview to Legal Daily on the sidelines of the NPC meeting. This quick blogpost sets out some of the useful information from the interview:

He provided some data on the number of cross border cases:

  • Total number of foreign-related cases of all types (first, second instance, retrial, enforcement) heard and resolved: 25900, up 9.38%, among which 1061 were criminal,19200 civil and 3629 administrative, and about 2000 enforcement cases. The civil and commercial cases increased almost 11% compared to last year and accounted for about 75% of all foreign-related cases.
  • Total number of Hong Kong, Macau, Taiwan related civil and commercial cases closed: 27053 civil and commercial cases, Judge Zhang said that they accounted for 85% of all cases involving “greater China.”

The cases coming before the Chinese courts differ from the old trading and joint venture disputes, with many more cases involving demand guarantees, international factoring, private equity funds, stock options in companies listed overseas listed companies, cross-border telecommunications (fraud?), bonded trade disputes.

(As this observer has previously predicted), the number of cases related to One Belt One Road (OBOR) is increasing relatively quickly, while the number involving the United States, Britain, Germany, are decline. Cross-border project contracting and international logistics related cases are on the increase, as well as foreign-related intellectual property cases and maritime cases. Although Judge Zhang did not say so, it appears that many of these disputes are related to Chinese companies going out as well as OBOR, and may reflect inadequate documentation of the projects. The increase in maritime cases is linked to the ongoing decline in the shipping industry.  Chinese maritime courts have heard cases related to the Hanjin bankruptcy as well as large numbers of cases involving ship crew.

Challenges for the Chinese courts in hearing cross border cases:  encountering many “blank spaces” in Chinese legislation; conflict of laws with neighboring countries.  Other ongoing bottlenecks for Chinese courts in hearing cross-border cases–service of process to overseas parties; obtaining evidence crossborder; determining facts that have occurred abroad; determining and applying foreign law.

Judge Zhang highlighted the solutions for the Chinese courts in dealing with the difficulties:

  • SPC issuing judicial interpretations and other judicial guidance;
  • establishing a case guidance and reference system for the lower courts, including model cases, guiding cases, and selected cases (i.e. as selected by the SPC), to guide and limit judges’ discretion.
  • The SPC selecting some commercial cases (relating to free trade zones, internet finance, cross border investment financing) with an international impact as a model.
  • To enable correct and just hearing of cases, the higher and lower courts should be in touch in a timely matter and establish a system for supervision before, during and after a case. [What this means for judicial autonomy in hearing cases and the appeal system is not said.]
  • On the goals for 2017, those include establishing an OBOR dispute resolution center (推进设立“一带一路”争端解决中心的建立,促进“一带一路”建设). This is likely linked to the May, 2017 OBOR Conference to be held in Beijing.  Judge Zhang did not further specify, but it seems unlikely to mean establishing China’s own investment dispute resolution center. Perhaps this means increasing the role of Chinese courts in hearing cross-border cases involving OBOR jurisdictions.

Judge Zhang mentioned that he and his colleagues in 2017 have a variety of difficult issues that will be the subject of judicial interpretations or policy documents. This observer hopes that they will find it appropriate to consult the international legal community when drafting the following judicial interpretations that are on their agenda:

  • Enforcement of foreign civil and commercial judgments (possibly related the the Judgments Convention being negotiated under the auspices of the Hague Conference on Private International Law, and in the near term, to the enforcement of judgments through mutual judicial assistance treaties;
  • cross-border guarantees;
  • labor issues for ship crew;
  • damages in marine environmental cases;
  • jurisdiction in foreign-related cases, particularly civil and commercial cases;
  • judicial review of arbitration (this has been signalled for at least two years).

Judge Zhang signalled that they want to establish an English language website on foreign-related civil and commercial matters.  It is hoped that this new website will post information in a more timely manner than the current SPC English language website. An (unsolicited) recommendation is to hire an expatriate editor (similar to Xinhua and other Chinese media outlets) to assist in delivering content that meets institutional requirements and interests the foreign user.

All these developments relate back to one sentence in the Fourth Plenum Decision:

Vigorously participate in the formulation of international norms, promote the handling of foreign-related economic and social affairs according to the law, strengthen our country’s discourse power and influence in international legal affairs, use legal methods to safeguard our country’s sovereignty, security, and development interests.

 

 

 

What the Central Economic Work Conference means for the Chinese courts

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©China Daily

The day after the Communist Party Central Committee’s Central Economic Work Conference concluded, the Supreme People’s Court’s (SPC’s) Party Committee held a meeting to study the “spirit of the Central Economic Work Conference.”  According to SPC President Zhou Qiang, the Central Economic Work Conference has the following takeaways for the courts:

First, adhere to strict and impartial justice, and create an open, transparent and predictable rule of law business environment 

Among the points– “We must insist on protecting the lawful rights and interests of Chinese and foreign parties equally according to law and building a more competitive international investment environment.”

Note, of course, that the foreign chambers of commerce in China have other views of the current state of the business environment at the moment, but agree that rule of law, transparency, and predictability are critical for improving China’s economic performance.  The following is from the European Union Chamber of Commerce in China’s  Business Confidence Survey 2016 

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AmCham China: “Respondents now cite inconsistent regulatory interpretation and unclear laws as their No. 1 business challenge.”

Second,  use the rule of law to actively promote the supply side structural reform

Zhou Qiang called on the lower courts to work better on bankruptcy cases, give full play to the role of the information network of bankruptcy and reorganization of enterprises, actively and safely deal with “zombie enterprises”, to optimize the allocation of resources to resolve the excess capacity.

But actually, bankruptcy cases remain fraught.

According to SPC Senior Judge Du Wanhua, charged with making bankruptcy law work better, in China bankruptcy requires a unified coordination mechanism  with government and courts, under Party Committee leadership.

In recent high profile corporate bankruptcies, such as LDK Solar, the local governments say that they cannot afford to rescue the companies, and so the burden must fall on creditors. The LDK case has drawn complaints from bankruptcy practitioners that the local government-led restructuring was designed to force banks to swallow the losses. Another lawyer commented that local governments’ intervention in bankruptcy cases has often disrupted their fairness.

It is likely that we will see more developments in 2017 concerning bankruptcy.

The third is to further increase the protection of property rights

Among the points Zhou Qiang made:

  • We must strengthen the protection of property rights of various organizations and natural persons;
  • We should have the courage to correct a number of mistaken cases concerning infringement of property rights.

These statements relate to three documents issued in late November and early November on protecting property rights, linked to the Central Committee/State Council’s November 4 document on the same topic, following the document issued in late October (and describe in my recent blogpost). They include:

All three relate to (well-known) abuses of China’s justice system, including:

  • turning business disputes to criminal cases (a risk for both Chinese and foreign businesses);
  • courts freezing assets far exceeding the amount in dispute (this is one example);
  • court confiscating the personal property of the entrepreneur and his (her) family, failing to distinguish between corporate and personal property;
  • courts failing to give parties opposing freezing or confiscation order a chance to be heard;
  • courts failing to hear disputes between government and entrepreneurs fairly.

The first document (apparently drafted by the SPC Research Department, because its head explained its implications at the press conference at which the first two documents were released) repeats existing principles that state-owned and private litigants, Chinese and foreign litigants should be treated equally.  It repeats existing principles that public power must not be used to violate private property rights.

The Historical Property Rights Cases Opinion (apparently drafted by the SPC’s Trial Supervision Division, because its head explained its implications at that press conference) calls on provincial high courts to establish work groups to review mistaken cases and to avoid such tragedies in the first place, focusing on implementing the regulations restricting officials from  involving themselves in court cases and the judicial responsibility system.

The third document seeks to impose better controls on the use of enforcement procedures by the lower courts.

Comments

It is hoped that these documents can play some part in improving the quality of justice in China, despite the difficulties posed while the local courts remain under local Party/government control, and may lead to the release of unfairly convicted entrepreneurs and the return of unfairly confiscated property. Perhaps these documents may provide some protection to local judges seeking to push back against local pressure.  On the historical cases, the SPC Supervision Division should consider appealing to current or retired judges who may have been involved in these injustices to come forward (without fear of punishment), as they likely to be able to identify these cases. A defined role for lawyers would also be helpful.

On the equal protection of enterprises, it should be remembered that the SPC itself has issued documents that give special protection to some parties, such as “core military enterprises.”

It appears that these documents respond to the following:

  • years of criticism of  differential legal treatment of and discrimination against private entrepreneurs;
  • academic studies by influential institutions on the criminal law risk faced by private entrepreneurs;
  • Downturn in private investment in the Chinese economy;
  • Lack of interest on the part of private enterprise in private-public partnerships;
  • Increase in investment by private enterprise abroad, most recently illustrated by the Fuyao Glass investment in Ohio;
  • articles such as this one describing Chinese entrepreneurs as either in jail or on the road to jail.

Fourth, proactive service for the construction of “one belt one road” 

This section repeats many of the themes highlighted in the SPC’s earlier pronouncements on One Belt One Road (OBOR or Belt & Road), the maritime courts, and foreign-related commercial developments. The Chinese courts continue to grapple with the increased interaction and conflicts with courts in foreign jurisdictions. The OBOR jurisdictions are handicapped by a dearth of legal professionals with familiarity with the Chinese legal system.

We should expect to see more developments directly or indirectly linked to OBOR, including a more standardized approach to the judicial review of arbitration clauses.

Fifth, strengthen the judicial response to the risks and challenges of the economy

Among the issues that President Zhou Qiang mentioned

  •  Internet finance;
  • Internet fraud;
  • illegal fund-raising and other crimes;
  • real estate disputes;
  • cases involving people’s livelihood, increasing the recourse of migrant workers and other cases of wage arrears.

These are all ongoing, difficult issues for the courts. Legislation does not demarcate clearly the line between legal and illegal forms of financing as discussed here. Migrant workers, particularly in the construction industry, are often not hired under labor contracts but labor service contracts, which reduces their entitlements under the law. As the Chinese economy continues to soften, it is likely that complex real estate disputes (of the type seen in 2015) will burden the lower courts.

We are likely to see further developments in these areas.

President Zhou Qiang told the courts to make good use of judicial “big data” to detect trends and issues so the courts can put forward targeted recommendations for reference of the Party committee and government decision-makers. He has made this point repeatedly recently.

For foreign observers of China, judicial big data is in fact a useful source of indicating trends across the Chinese economy, society, and government.  This blog has flagged some analyses, but there is much more than can and should be done.