In recent days, I had the opportunity to meet with Zhang Yongjian, chief of the #1 China International Commercial Court (CICC) who provided some updates about the cases accepted by that court. In addition to the three rulings (posted on the CICC website) that the #1 CICC had issued, he mentioned that a ruling in one of the cases was forthcoming, as was a judgment in another. He mentioned that in considering some of the cases, certain members of the expert committee have provided expert opinions, as is authorized by the CICC rules. Additionally, the #1 CICC has accepted a sixth case, filed directly with the court. Zhang Yongjian mentioned the issues in that case relate to entrusted/nominee shareholding. The other cases accepted thus far are ones that had been referred by lower courts.
In the last few months of 2018, the Supreme People’s Court (SPC) and China International Commercial Court (CICC) took measures to enable the CICC to start operating, although the CICC was established earlier in 2018. As SPC President Zhou Qiang reported to the National People’s Congress (NPC) in March 2018 that the CICC would be established, I expect that he will report to the NPC in March of this year that the SPC established the CICC and it has successfully begun operating. (It is likely that the National Appellate IP Court will merit a place in Zhou Qiang’s report as one of the SPC’s 2018 accomplishments, but see fellow blogger Mark Cohen (and co-authors)’s post on that development). This blogpost will summarize (and provide some commentary on) some of the recent CICC developments.
Those developments included:
- issuing rules on the international commercial expert committee;
- personnel measures–designating the heads of the of the #1 and #2 CICCs and the heads of the case management offices in the two offices and appointing seven additional judges;
- designating several (mainland) Chinese arbitration and mediation institutions to be part of its integrated one-stop dispute resolution;
- accepting several cases;
- issuing rules on CICC operations (to be discussed in a following blogpost).
Rules on the international expert committee
On December 5 the SPC General Office issued the working rules of the international commercial expert committee (expert committee) (approved by the SPC judicial committee in late October) (最高人民法院国际商事专家委员会工作规则). The date of the notice of the General Office is 21 November. It answers some frequently asked questions about the expert committee. My comments are in italics.
What do members of the expert committee do?
1) preside over mediations (Article 3 (1): This was clear from the CICC Provisions. It remains to be seen how many expert committee members will feel comfortable mediating disputes. It could be that some of the Chinese members will feel more comfortable mediating disputes than the foreign or Hong Kong-based members, as some of those members have long experience as arbitrators in China, where combining mediation and arbitration (med-arb) is usual. A significant number of expert committee members are from jurisdictions where being a mediator and mediating us regarded as separate profession and skill from arbitration and adjudicating. Articles 9-13 describe the mechanics for doing so.
(2) provide an advisory opinion on specialized legal issues such as those relating to international treaties, international commercial rules, finding and applying foreign law [foreign and greater China jurisdictions] relating cases heard by the CICC and the People’s Courts at all levels (Article 3 (2): This contains a surprising expansion of the role of the experts on the committee by authorizing Chinese courts at various levels to request an expert committee member to provide an advisory opinion on international legal, international commercial and foreign law issues. A note on terminology–the English version on the CICC website uses “foreign law” while the Chinese original uses the term “域外 ” (extraterritorial), intended to include the jurisdictions of Hong Kong, Macau, and Taiwan as well as the law of foreign jurisdictions. This blogpost will use the term “foreign law” as meaning “域外 ” extraterritorial law.
The fact that expert committee members have been so authorized indicates that ascertaining (determining) foreign law is a significant practical problem for Chinese judges. I previously mentioned in this 2017 blogpost that Judge Zhang Yongjian listed ascertaining foreign law（he uses the term 外国法·) as one of many problems confronting Chinese judges hearing cross-border issues. Several articles on the Chinese version of the CICC website (plus one on the English version (by CICC Judge Gao Xiaoli) discuss this problem. Judge Gao gently pokes fun at some Chinese scholars who fail to understand relevant judicial interpretations on ascertaining foreign law. The CICC website lists the methods available to a Chinese court in ascertaining foreign law. Among the alternatives include designating one of four authorized centers to provide an expert opinion on foreign law. Articles 14-15 describe some of the mechanics by which one or more expert committee experts can provide an advisory opinion.
Under Article 15, a litigant may request through the CICC’s Expert Office that the expert appear in court to explain his or her opinion. It is up to the expert to decide whether to appear. Presumably, expenses involved, including travel and translation, would be the responsibility of the requesting party.
The rules do not clarify a number of practical questions related to this. Could a court request an advisory opinion from an expert and from a designated discernment 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. It is unclear whether experts can charge for these services. Another concern for experts could be liability, and the standard for an opinion found to be negligently made. Additionally, for the many foreign experts on the committee who do not know Chinese, it is unclear who will be responsible for translation. Presumably, the court that requested the opinion or the International Expert Committee office (see 6 (2), which states that the office provides services to experts. Perhaps the forthcoming Code of Ethics of the Expert Members will address these questions.
(3) provide advice and suggestions on the development of the International Commercial Court; (4) provide advice and suggestions on the formulation of judicial interpretations and judicial policies of the Supreme People’s Court; (5) Other matters entrusted by the International Commercial Court; The first two provisions set out a formal structure for foreigners to provide advice, suggestions, and comments on judicial interpretations, judicial policy and other developments to the SPC, a first. Article 18 anticipates that the Expert Office will direct requests for comments or advice on specific draft judicial interpretations, policies, etc. to one or more experts, as the CICC considers useful rather than expert committee members being informed about ongoing developments. However, it does enable expert committee members to make suggestions or proposals on their own initiative.
The last few months have seen a number of CICC personnel developments, including the appointment of seven additional judges. In early November, Judge Zhang Yongjian, deputy head of the #1 Circuit Court and head of the #4 Civil Division, was appointed as head of the #1 CICC and Judge Zhang Ming, deputy head of the #6 Circuit Court, was appointed head of the #2 CICC.
Judges Xi Xiangyang and Ding Guangyu, presiding judges on the #1 and #6 Circuit Courts respectively, and CICC judges, were at the same time appointed heads of the case management offices of the two courts.
Judge Song Jianli has been appointed the head of the CICC Expert Office.
The additional seven judges are:
- Wang Shumei (deputy head of the SPC’s #4 Civil Division, specializing in maritime law);
- Wei Wenchao, who has had a number of roles at the SPC, most recently as deputy head of the #5 Circuit Court. He had previously served as deputy head of the Environmental and Natural Resources Division;
- Song Jianli, head of the Experts Office, who studied at Southampton Institute (now Solent University) (in addition to his studies in China), and was a visiting scholar at Cambridge, the University of Pennsylvania, and the Max Planck Institute of Comparative and International Law, and has primarily worked in the SPC’s #4 Civil Division;
- Zhang Xuemei, of the SPC #2 Civil Division (domestic commercial issues);
- Yu Xiaohan, also of the #4 Civil Division, and like Wang Shumei, a maritime law specialist;
- Ding Guangyu, who studied at the University of Manchester and has had a number of roles at the SPC, including at the China Institute of Applied Jurisprudence, and in the #4 Civil Division;
- Guo Zaiyu, who spent many years at the Hubei Higher People’s Court before transferring to the SPC’s #4 Civil Division.
It is clear from these announcements that at this time, the CICC is a part-time responsibility for the judges involved, who have their ongoing responsibilities at the SPC, either at one of the Circuit Courts, the new Intellectual Property Court, or SPC headquarters. And some senior people, such as Judge Zhang Yongjian, have triple administrative roles.
One-stop diversified dispute resolution mechanism
As an earlier blogpost flagged, the institutions clearly intended to be part of the one-stop diversified dispute resolution mechanism were the leading Chinese arbitration and mediation institutions handling foreign-related matters. Most of these institutions sent senior representatives to attend the first meeting of the experts committee, so I was not surprised to see the following institutions listed:
- China International Economic and Trade Arbitration Commission (CIETAC);
- Shanghai International Economic and Trade Arbitration Commission;
- the Shenzhen Court of International Arbitration (SCIA);
- Beijing Arbitration Commission;
- China Maritime Arbitration Commission;
- the Mediation Center of China Council for the Promotion of International Trade (CCPIT); and
- Shanghai Commercial Mediation Center.
SCIA has an arrangement with the Hong Kong Mediation Centre since 2014 by which Mediation Centre settlements may be enforced in mainland China through a consent award issued by SCIA.
At the end of December 2018, the CICC accepted several cases, all of which can be categorized as general international commercial disputes, with none specifically related to Belt & Road projects. The disputes include: an unjust enrichment dispute involving Fujifilm and several Chinese companies, a product liability dispute involving Italian pharmaceutical company called Bruschettini (which sells its products through Sinco Pharmaceuticals Ltd., a Hong Kong-listed company), several disputes related to Thailand’s Red Bull (from this report, I surmise that the case was referred by the Beijing Higher People’s Court), and several disputes involving the validity of arbitration clauses, including one involving China Travel Service (Hong Kong) and one of its hotels. ____________________________
The author is a member of the international commercial expert committee but her views do not represent the committee, the CICC, or the SPC.
Among the many developments flagged in Supreme People’s Court (SPC) President Zhou Qiang’s 2018 report to the National People’s Congress is that the SPC will establish an international commercial tribunal (court)(最 高人民法院国际商事审判庭), as approved by the Central Leading Group for Comprehensively Deepening Reforms. The timing is unknown. The international commercial tribunal (this post will use the term “court”) as is understood clearly, must fit political and technical requirements. This blogpost will look at those, particularly the technical ones, as those are the ones that have escaped the attention of most commentators outside of China.
Although many articles have been published in the media, both in and out of China after the public announcement to the press about the international commercial court in January, 2018, most of them have little detail on the issues. Some contain uninformed statements, such as the one that quotes an insider at the China Council for the Promotion of International Trade mentioning the use for dispute resolution of “the common law of the United States and European countries” (send the insider back to law school please!).
In the past three months, Judge Gao Xiaoli, deputy head of the SPC’s #4 civil division (photo above), and at least one other person at the SPC has released some information about the court, all of which seems to have eluded international discussions. For those who are not aficionados of Chinese foreign-related dispute resolution, Judge Gao (who often appears at UNCITRAL or international arbitration related conferences or seminars) outside as well as inside mainland China, is a formidable presence in the courtroom. Thanks to the SPC’s streaming of court hearings, it is now possible to see that from any corner of the world. She is also an impressive speaker. Judge Gao is representative of the judges engaged in technical legal work at the SPC, with a PhD in law from one of China’s leading law schools and experience studying abroad.
On the political requirements, there are at least two, both previously highlighted in this blog. The more general one was highlighted one year ago–the establishment of the international commercial court relates to a 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.
More specifically, it appears to be the civil and commercial counterpart to the efforts noted on this blog two years ago (concerning dispute resolution in maritime cases), part of a push to move the locus of China-related dispute resolution from London and other centers in Europe (or elsewhere) to China, where Chinese parties will encounter a more familiar dispute resolution system.
The other political requirement relates to the need to serve major government strategies, the BRI/OBOR one in particular, discussed in this blogpost. President Zhou Qiang’s 2018 NPC report, as his 2016 report (and presumably 2017 report) contain the phrase “provided service for the country’s major strategies.” As a central government institution, the SPC must do its part to support national major strategies. Since BRI/OBOR has been initiated, President Zhou Qiang’s report has mentioned BRI/OBOR as one of those major strategies for which the SPC has provided service.
The sources that previous commentators missed include the following:
- press interview with Judge Gao in February, 2018 (the most detailed and useful, Wechat version here);
- article published in Legal Daily in February, 2018 by the SPC’s China Institute of Applied Jurisprudence post-doctoral student Liao Yuyi;
- speech by Judge Gao and others at a conference in November 2017.
In the press interview, Judge Gao reviews what the SPC has done so far in this area, including several developments previously highlighted on this blog:
- SPC’s One Belt One Road (BRI/OBOR) policy document;
- SPC’s OBOR/BRI model/typical cases (see above link and translations by the Stanford Guiding Cases project found here);
- SPC’s judicial interpretation on demand guarantees, that blogpost explains that with so many Chinese companies focusing on infrastructure projects overseas, Chinese banks have issued billions of dollars in demand guarantees.
The SPC is looking at three types of investment and trade disputes:
- state-state disputes (for China, generally WTO);
- investor-state disputes (ICSID and other institutions, generally using UNCITRAL rules (note that CIETAC and the Shenzhen Court of International Arbitration (SCIA) also have amended their rules to be able to take investor-state disputes, with SCIA using the UNCITRAL rules;
- disputes between commercial parties.
Judge Gao mentioned that they at the SPC, too have noticed the worldwide trend of other jurisdictions establishing courts to hear investor-state disputes, citing Canada among them and that they are exploring whether the Chinese courts can do so as well. However, she notes that when China acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), it made a commercial reservation, and the SPC judicial interpretation concerning the New York Convention excluded investor-state disputes, so that currently it is not possible to enforce investor-state awards through the New York Convention. Judge Gao says they are considering solutions to this issue.
Definition of OBOR/BRI disputes
Although none of the authors have mentioned this (nor have I, until now), one unrecognized issues in discussing OBOR/BRI disputes is a definitional one–what is a OBOR/BRI related dispute? It seems that in court practice, the definition is broad, including cases between Chinese contractors and their demand guarantee issuing banks, as well as cross border cases involving Chinese and parties located in OBOR countries. In my research (including a discrete inquiry with a knowledgeable person), a formal definition is lacking.
Judicial cooperation/enforcement issues
As this earlier blogpost mentioned, enforcement of foreign court judgments is on the SPC’s agenda. As Judge Gao recognizes, there needs to be a structure for judgments of this international commercial court to be enforced outside of China. She mentions (as has this blog), that China is actively participating in negotiations on the Hague Convention on the Recognition & Enforcement of Foreign Judgments, and is studying ratification of the Hague Convention on the Choice of Courts Agreements. She flags also (as has this blog) that the SPC is drafting a judicial interpretation on the recognition and enforcement of foreign civil & commercial judgments.
Practice in other jurisdictions
Judge Gao mentions that the SPC is looking at the international commercial courts in several jurisdictions, including Dubai and Singapore (as mentioned in the earlier blogpost), but also Abu Dhabi, London’s Commercial Court (it appears that someone at the SPC has read this Financial Times article on foreign litigants there), and notes that the Netherlands, Germany, and Belgium are all establishing international commercial courts that use English.
Challenges for the Chinese courts
Judge Gao forthrightly flags a list of issues (my comments in italics) that the SPC faces in establishing an international commercial court. It is likely that she and her colleagues are aware of the additional issues raised as well.
- judges; she notes that Dubai and Singapore have foreign judges on their international commercial courts, but currently China’s Judges’ Law and People’s Court Organizational Law (being amended) present obstacles to having foreign judges, and without them, the court will not be international and will not be internationally credible (literally, be internationally influential) (但是如果不引进外籍专业性人才参与国际商事法庭的建设，则缺乏国际性，缺乏影响力). My earlier blogpost mentioned the nationality issue. Would qualified foreign judges (or those from Hong Kong) be willing to join the international commercial court? Judge Gao does not mention that the group of Chinese judges qualified to hear these cases is not that large, and they are overloaded with cases, judicial interpretation/other guidance drafting, and other work. Could highly qualified Chinese lawyers be appointed to this court? It is unclear, and relates to issues of how they would fit into the rigid structure of the judiciary, highlighted here.
- choice of law; she mentions that parties have freedom concerning choice of law in China, so that would not be a problem. However, relating to choice of court clauses, Professor Vivienne Bath’s research on parallel proceedings in China (previously mentioned on this blog) shows that Chinese courts do not recognize the validity of those clauses when the choice “lacks an actual connection with the dispute” because of provisions in the Civil Procedure Law.
- procedure; she queries whether there can be some breakthroughs in civil procedure in this area. Foreign lawyers are likely to query whether this could mean better discovery of documents. More importantly, what is not mentioned is that China’s failure to have acceded to the Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents will also be a major obstacle for the international commercial court. Under current Civil Procedure legislation, notarization and legalization of documents is often required. The first step is when a party files suit or when a foreign party responds. Additionally, in litigation, evidence from a foreign country often must be notarized and legalized. Notarization and legalization costs time and money and a great deal of effort. At an academic conference in 2017, experts from the institutions involved discussed how to proceed on this.
- language; Judge Gao notes that the Civil Procedure Law puts obstacles in the way of the international commercial court hearing cases in English. Note that the pool of Chinese judges able to hear cases in English is not large, and would even further require recruiting judges from outside China’s judicial system.
- counsel; She mentions the issue of having foreign lawyers handle cases is also an obstacle for the international commercial court, because China’s Civil Procedure Law currently does not permit it.
- transparency; Judge Gao notes that Chinese judicial transparency and informatization has made great strides, so should be useful to the international commercial court. However, Judge Gao and her colleagues could usefully look at the type of information accessible to both the parties and general public (and the level of detail in judgments) in other international commercial courts.
- enforcement; Judge Gao raises the issue of recognition and enforcement of judgments, discussed above.
Where does the SPC go from here?
The article by the post-doctoral student Liao Yuxi suggested that the SPC may want to request the NPC Standing Committee authorize it to suspend some of the problematic provisions of the Civil Procedure Law that Judge Gao flagged above, such as the use of language, and the qualification of judges. However many of the other issues cannot be resolved so easily, such as international enforcement and the requirement of notarization and legalization of evidence.
As for when we can expect to see some rules relating to the international commercial court, and whether drafts will be circulated for public (or even soft consultation), those are all unclear. What is clear is that many complicated legal issues face Judge Gao and her colleagues.
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.
Supreme People’s Court
Notice Concerning Some Questions regarding the centralized handling of judicial review of arbitration cases
Fa (2017) #152
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:
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:
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.
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.
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.
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.
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.
Supreme People’s Court
May 22, 2017
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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.
In 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 2017. There have been many summary reports in the legal press, but the full text was not found until 11 August. 2017 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.
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.