Category Archives: international commercial court

Communist Party and the Courts, Court Operations, Greater Bay Area, international commercial court, Maritime courts, NPC

Supreme People’s Court’s Specialized Report on Foreign-Related Adjudication Work

Leave a comment

By Susan Finder with initial research assistance by Zhu Xinyue

President Zhou Qiang delivering the report

The Supreme People’s Court’s (SPC) October 2022 specialized report on foreign-related adjudication work (最高人民法院关于人民法院涉外审判工作情况的报告)  provides an overview of the SPC’s and the lower courts’ work related to foreign-related matters over the past 10 years. This blogpost uses the term “adjudication work” to encompass the multiple functions of the SPC (see my U.S.-Asia Law Institute article for a refresher) as well as the lower courts. (My previous blogpost gives a detailed explanation of the significance of specialized reports of the SPC and other institutions to the NPC Standing Committee). The report is intended to showcase the SPC’s work in supporting Xi Jinping era fundamental changes in foreign policy, or as the concluding section words it,  “vigorously serving the greater situation of the Party and State’s external policy work” (积极服务党和国家对外工作大局).  An analysis of the content of this specialized report provides insights into the role of the SPC and its relationships with other Central institutions as well as the current and evolving concept of “foreign-related rule of law” (涉外法治). Concerning the link between “foreign-related rule of law” and the foreign-related adjudication work of the people’s courts,  as President Zhou Qiang said: “the foreign-related adjudication work of the people’s courts is an important part of foreign-related rule of law work (人民法院涉外审判工作是涉外法治工作的重要组成部分).”  

I surmise that the NPC Standing Committee requested the SPC submit a specialized report on the SPC’s foreign-related work because the political leadership is prioritizing developing China’s foreign-related body of law and takes the view that SPC expertise is needed to that end.  As in any legal system, issues that come before the Chinese courts highlight the gaps in current legislation (broadly defined).  

1. Overview of the Report

The report covers all areas of SPC work–criminal, civil and commercial, maritime, intellectual property, administrative, and other areas, as well as the recognition and enforcement of foreign judgments, recognition and enforcement of foreign arbitral awards, and other forms of international judicial assistance.  Because cases involving Hong Kong, Macau, and Taiwan are considered by reference to the principles for foreign-related cases, the report provides highlights of those developments as well. 

Following some background material, this blogpost follows the structure of the report and therefore the blogpost is much longer than usual.  A more comprehensive analysis of many aspects is found in my “never-ending article,” currently on its meandering way to publication.

2. Drafting of the Specialized Report

Because most of the cases involving foreign-related matters tend to be in the commercial area generally (incorporating maritime,  recognition and enforcement of foreign judgments and arbitral awards), it is likely that the #4 Civil Division took the lead in drafting the report, worked closely with the International Cooperation Bureau,  and involved other divisions and offices of the SPC as needed, including those working on criminal law issues.  Although this report appears to be just another anodyne official report, what underlies it is likely to be hundreds of hours of drafting, soliciting data and comments from related offices, including the Research Office (with a department in charge of Hong Kong and Macau issues), comments from the vice president in charge of the #4 Division (it now appears to be Justice Tao Kaiyuan),  President Zhou Qiang’s office, and the NPC Standing Committee itself. It is unclear whether the Ministry of Foreign Affairs and the Ministry of Comments also provided input.  It incorporated the SPC’s response to a research report on foreign-related adjudication work prepared by the NPC Standing Committee’s Supervisory and Judicial Affairs Committee (mentioned in the previous blogpost).

3. Summary of the Report

The report highlights the SPC’s work in foreign-related cases in support of related policies. The structure of the report is the usual one for such reports–a long list of accomplishments,  followed by a summary of outstanding challenges and suggestions to the NPC Standing Committee for future work.  It reveals some previously unknown developments and clearly sets out the official conceptual structure underpinning the SPC’s foreign-related adjudication work and therefore China’s “foreign-related rule of law.”   The report takes an inclusive view of accomplishments: judicial interpretations, policy documents, typical and guiding cases, as well as correctly deciding important cases.  This blogpost decodes the details in the report, with brief comments and links to some of my earlier blogposts.

a.  Selected Statistics

 The report provides selected statistics. As I have said when I have spoken on the Belt & Road and the SPC, the number of foreign-related cases heard in the Chinese courts has increased substantially over the past ten years, but even now they constitute a tiny percentage of cases heard in the Chinese courts.  The report reveals some of the challenges, as seen officially.

From 2013 to June 2022, Chinese courts heard a total of 384,000 foreign-related (including Hong Kong, Macau, and Taiwan-related) cases. These numbers are tiny compared to the large number of cases accepted by the Chinese courts annually. For example, in 2021, that number reached over 33 million cases. The number of first-instance foreign-related civil and commercial cases nationwide increased from 14,800 in 2013 to 27,300 in 2021.  The SPC has not released more detailed statistics about the types of civil and commercial cases or foreign-related cases in other areas of law, such as criminal cases.  

b.  Protecting China’s National Security and Sovereignty


As is usual with SPC official reports and documents, matters relating to national security and sovereignty take a prominent place.  The SPC reiterates that its foreign-related adjudication work serves the domestic and external greater situations.  This section highlights two areas of service in protection of national security and sovereignty:

  • striking at crime: and

The crimes mentioned are harmonized with the priorities seen in other official reports and documents, so that national security, particularly political security is listed first.  The crimes are similar to those listed in the 2020 Guiding Opinions on Services and Safeguards of the People’s Courts on Further Expanding Opening-Up to the World (Open Policy Guiding Opinion 最高人民法院关于人民法院服务保障进一步扩大对外开放的指导意见).  Accomplishments listed include the 2017 Provisions on Several Questions Concerning the Application of the Procedure of Confiscating Illegal Gains in Cases Where the Criminal Suspects or Defendants Absconded or Died and the 2021 comprehensive judicial interpretation of the Criminal Procedure Law (my book chapter concerns its drafting), which contains basic principles relating to foreign-related cases.  

  • protecting China’s investments abroad. Cases so classified include infrastructure-related cases, trade cases, and shipping cases. The principal accomplishment is issuing a judicial interpretation on the hearing of independent letter of guarantee (demand guarantee) disputes and unifying the rules governing such disputes. These developments, which have come through several SPC cases (discussed here) and the end 2021 Conference Summary, have been flagged on this blog. A long-pending China International Commercial Court (CICC) case may provide additional guidance. 

c. Creating a Legalized International Business Environment

This section is relatively long and highlights much of the SPC’s foreign-related adjudication work in the past 10 years. The focus is on international commercial dispute resolution rather than intellectual property disputes. 
i. Foreign investment: The courts have supported the revised Foreign Investment Law and Implementing Regulations with two interpretations (including one on the application of the Foreign Investment Law, mentioned here), as well as a policy of centralizing the hearing of such cases, seeking to ensure greater competency.
ii. Pilot free trade zones and ports: The courts have supported these policies through several services and safeguards opinions (one general one, discussed in my book chapter, as well as ones on Lingang, Hainan, and new zones in Beijing). The SPC also issued related typical cases and encouraged local courts to establish additional measures to support national free trade zone policy.
iii. The courts have supported national policies supporting a competitive market order, and to that end have issued regulations on bankruptcy, normative documents on improving the business environment (including services and safeguards opinions and a conference summary), and established financial courts (see Mark Jia’s related article).
iv. Supported national policy concerning economic development and COVID-19 pandemic control (I have a related article that will be published in Italian).  The SPC promulgated four guiding opinions (policy documents) on the trial of civil cases related to the Covid-19 pandemic, one of which focused on foreign-related commercial and maritime cases.  This document was included in UNCITRAL’s CLOUT database.

v.  Respecting international conventions and international practices (customs or usage, by which is meant trade/commercial practices or usages).  As mentioned here, the SPC is drafting a judicial interpretation on the application of international conventions and treaties and international practices and has issued related typical cases.
vi. Application of (foreign (non-mainland) governing law.  Since 2013, the courts have applied foreign law in 542 cases. My draft article discusses related issues briefly.
vii. Cross-border recognition and enforcement of judgments: Since 2013, the courts nationwide have considered 7,313 cases of applications for recognition and enforcement of civil and commercial judgments from foreign courts.  My draft article discusses the evolution of this policy. The report mentions the enforcement of Chinese judgments abroad.

d. Serving national maritime policy


The report underlines that the SPC’s maritime adjudication work directly serves foreign trade shipping and marine development to maintain national [judicial] sovereignty and related national interests. The report mentions that the SPC issued judicial interpretations on maritime litigation jurisdiction, and issued judicial interpretations for hearing cases of compensation for damage to marine natural resources and ecological environment. The SPC and the Supreme People’s Procuratorate issued regulations on handling public interest litigation cases on marine natural resources and ecological environment, and released related typical cases.
The report mentions China’s work on becoming an international maritime justice center  (See my article in the Diplomat).   Related accomplishments include the SPC expanding the network of maritime courts and their dispatched tribunals and the report highlights that more parties without a jurisdictional link with China have chosen the jurisdiction of the Chinese maritime courts (for a different view from the official one, see Professor Vivienne Bath’s research on parallel litigation involving the Chinese maritime courts). 

e. Improving international commercial dispute resolution mechanisms to serve high-quality development of the BRI


According to the report, the SPC is implementing the deployment of the political leadership in this area.  Those include:

the CICC and related developments, including: the CICC’s bilingual website, the  CICC’s expert committee; two BRI Services and Safeguards Opinions, and typical BRI cases, as well as establishing local international commercial courts. (This blog has discussed these developments in some detail, with more contained in my draft article).

f. Establishing diversified dispute resolution of international commercial disputes 

i. The SPC reports that it established a “one-stop” diversified international commercial dispute resolution mechanism, which integrates litigation, arbitration, and mediation.  The report mentions the accomplishments of several local courts and the incorporation of arbitration and mediation institutions into the SPC’s (CICC’s (Chinese version)) one-stop platform.  
ii. Arbitration: The SPC issued judicial interpretations on judicial review of arbitration cases and enforcement of arbitral awards, and introduced a mechanism and reporting system for judicial review of arbitration cases; since 2013, Chinese courts have heard over 110,000 judicial review cases (presumably the vast majority domestic). 
iii. Mediation: The report describes local developments and accomplishments related to the mediation platform of the people’s courts (see the related white paper). 

g. Serving national Hong Kong, Macao and Taiwan policy

On the details of SPC and Greater Bay Area policy, please see my earlier blogpost and presentation at a November, 2022 conference held at the Law Faculty of the University of Hong Kong.

This blogpost summarized earlier developments related to Taiwan. The  SPC issued judicial interpretations on the recognition and enforcement of Taiwan civil judgments and arbitration awards.
The SPC mentioned that the courts have supported national policy on integrating Hong Kong and Macao into Greater Bay Area policy by supporting [Ministry of Justice led policy] to permit lawyers from Hong Kong and Macao to practice in the Greater Bay Area (note, such lawyers must be Chinese citizens). The courts are also supporting the initiatives related to integrating Hong Kong, Macau, and Taiwan legal professionals (again, foreign professionals registered in these jurisdictions are not included).

f. Improving the quality and credibility of  China’s foreign-related adjudication


i. Jurisdiction: the report mentions a notice on jurisdiction on foreign-related cases (flagged in this blogpost) and centralized jurisdiction.
ii. Service of process: The SPC amended the judicial interpretation of the Civil Procedure Law to enable more flexible service of process abroad and established a platform with the Ministry of Justice (discussed in this blogpost) to enable more efficient handling of service of process requests from abroad. (There is no mention of greater flexibility in foreign service of process into mainland China.)
iii. Determination of foreign law: the SPC established a unified platform for the determination of foreign law (accessible through the CICC website, see the links above), which links to SPC-authorized institutions providing such services.  My draft article provides additional details. 

iv. Improving cross-border litigation services.  This integrates with the SPC’s smart courts policy.  One of the major accomplishments mentioned in the SPC’s judicial interpretation on cross-border online litigation.  
iv. Training foreign-related adjudication talents (涉外审判人才.  See my earlier blogpost.

g.  Promoting the development of the domestic and foreign-related legal systems

Matters so classified include: vigorously supporting the development of foreign-related legislation (mentioned in this blogpost); application of foreign-related law; and undertaking related research.  The foreign-related legislation that the report mentions (Civil Procedure Law and several maritime-related laws), is actually only one small part of what the SPC has done.  The application of foreign-related legislation gives the SPC an opportunity to reiterate its accomplishments in issuing judicial interpretations; policy documents;  conference summaries; and typical cases.  The SPC also mentions its BRI research center and establishing research centers at 15 universities and research institutions.

h. International judicial exchanges to promote the establishment of a community with a shared future of mankind

The SPC includes in this category the following: judicial exchanges in the form of memoranda of understanding and large-scale conferences; international judicial assistance in both civil and criminal matters; participation in the formulation of international rules (negotiating international conventions and bilateral treaties, as mentioned here, as well as providing support to China’s initiatives in various matters, including railway bills of lading (see my student Zhang Huiyu’s article); and “telling China’s rule of law story well.”  The latter category includes certain conferences and meetings with foreign judiciaries.   I have either been a participant or an observer in some of those “telling China’s rule of law story well” events, such as the CICC international conferences and the 2019 third meeting of the UK-China Joint Judicial Expert Working Group on Commercial Dispute Resolution.  

4. Challenges in foreign-related work

The report listed the following challenges:
a. Limited ability of some courts to engage in foreign-related adjudication work, as evidenced by the lack of experience of some courts in foreign-related work.  When I spoke at a Hong Kong International Arbitration Centre event in October, 2022, my co-panelist Arthur Dong illustrated that with his accounts of how several local courts handled applications for interim measures.
b. Ongoing difficult issues: difficulties in service of process, extraterritorial investigation and evidence collection; determining foreign (non-mainland Chinese) law;  shortening the trial period for hearing foreign-related cases (also note that at least one CICC case has been outstanding for over two years).
c. The “one-stop” diversified international commercial dispute resolution mechanism needs improving and China needs to accelerate the drafting of a commercial mediation law.  The need for a commercial mediation law has been discussed within central institutions since at least 2019 (as I have observed). So it seems that the SPC is in line with the view of the Ministry of Commerce that such a law is needed to promote more professional mediation.
d. A significant shortage in the number of judicial personnel with foreign-related expertise (discussed here).

5. Future developments

The report emphasized adhering to the leadership of the Party to ensure foreign-related adjudication is politically correct and in line with the deployment of the political leadership.
The practical measures (directed towards the NPC Standing Committee) included:

  •  Accelerating the process of amending the foreign-related part of the Civil Procedure Law (this has been accomplished). Incorporating the amendment of the Special Maritime Procedure Law into the [NPC’s] legislative plan;  amend the NPC Standing Committee decision establishing the maritime courts, to give maritime courts in coastal cities jurisdiction over certain criminal cases (an issue under discussion since at least 2014);
  • improving certain matters related to the CICC to resolve certain “bottleneck” issues (unspecified). 
  • At an appropriate time, drafting a commercial mediation law to provide a sufficient legal basis for China’s competitive position in international commercial dispute resolution;
  • Delegating authority to Guangdong and other courts that hear a large number of cases involving Hong Kong and Macau cases to simplify civil litigation procedures, such as proof concerning the identity of the party and authorization of its representative. (These issues are linked to the fact that China has not yet signed the Hague “Apostille Convention” (see my earlier blogpost) and has not yet created an analogous procedure for Hong Kong and Macau);
  • Improving training of foreign-related legal personnel through implementing an exchange policy with international institutions. As I have observed, much of the discussion of training foreign-related legal personnel has involved training in China, with minimal foreign involvement.  

Concluding comment

As this report has illustrated, the SPC (and the court system) are taking an active part in the evolving project of creating a foreign-related legal system that better reflects both the demands of the political leadership and the practical needs of the users of the Chinese legal system.  It should be clear from this analysis that China’s foreign-related rule of law is a work in progress involving a multitude of issues, and that the SPC has a multifaceted and crucial role in its creation.

About Me, Expert Committee, international commercial court

Supreme People’s Court Monitor 2022 Year-end Report

Leave a comment

Screenshot 2018-12-07 at 5.48.29 PM
The Monitor as “Fargo North” Decoder

The Supreme People’s Court Monitor published 21 posts in 2022 (including this one), with close to 40,000  page views. The most number of views came from the United States, with three jurisdictions having almost the same number of views:

  • (Mainland) China;
  • India; and
  • Hong Kong (Hong Kong SAR).

The United Kingdom, Germany, and Canada trailed the others by a significant margin.   I wish I knew the distribution of my readers in mainland China–from my discussions with Chinese judges this year, it seems I have a significant number of readers in the System (体制), seemingly more than among Chinese academics, with several important exceptions.

Why did I do less blogging in 2022?   It can be attributed to focusing on longer academic articles and writing several short ones (one still to be published), as well as preparing for several challenging presentations.  The presentation at the China International Commercial Court meeting in August was among those. It was a great pleasure to participate in an in-person event at the University of Hong Kong Faculty of Law this fall. I look forward to doing the same starting in January. I am very pleased that New York University School of Law’s U.S.-Asia Law Institute published my article on decoding the Supreme People’s Court’s Services and Safeguards Opinions and appreciate Katherine Wilhelm’s skillful editing.

Comments and discussions with several good friends, including in and out of the System, have helped me to gain additional insights, restructure and finish writing what I have called the “neverending article.” It will certainly need revising, as I will need to incorporate references to the latest batch of guiding cases and several items of legislation that the National People’s Congress (NPC) Standing Committee is considering.  A second draft article will need to be restructured when the NPC Standing Committee promulgates some of that legislation.

Since the blog was founded almost ten years ago:

Page views: approximately 280,000
Jurisdictions: 200?
Posts: 341

A special thank you to my anonymous “peer reviewers”, who have always given forthright, insightful, and helpful comments on draft blogposts.

About Me, arbitration, CICC, international commercial court

Supreme People’s Court Monitor & the China International Commercial Court

Leave a comment

On August 24 and 25, 2022,  the  Supreme People’s Court (SPC) held a China International Commercial Court International Commercial Expert Committee (Expert Committee) reappointment ceremony and seminar on cross-border dispute resolution.   The SPC reappointed my former colleague, Emeritus Professor Peter Malanczuk and me to the International Commercial Expert Committee (Expert Committee) of the China International Commercial Court (CICC).   For those who read Chinese, the CICC website has posted the speeches or articles of those who presented. I’ll summarize the proceedings in slightly more detail than the official English reports. Then I’ll follow separately with a few comments on the ceremony and seminar and my experience as a CICC expert thus far.

Professor Malanczuk and I joined 21 other CICC experts in the hybrid reappointment ceremony, with many residing in Beijing attending in person.  All others, including Professor Malanczuk and I, attended online.

President Zhou Qiang and Vice President Tao Kaiyuan of the Supreme People’s Court spoke at the reappointment ceremony, over which Executive Vice President He Rong presided. Senior officials of the Ministry of Foreign Affairs, Ministry of Commerce, National Reform and Development Commission, and China Council for the Advancement of Foreign Trade spoke thereafter.  Excerpts from their official speeches are available here.

Representatives of the National People’s Congress and Chinese People’s Political Consultative Conference then spoke, followed by Expert Committee members Professor Zhang Yuejiao, Rimsky Yuen SC (former Secretary for Justice of the Hong Kong Special Administrative Region and Co-Chair of the Hong Kong International Arbitration Centre (HKIAC)), and Sir William Blair, retired head of the London Commercial Court.

Professor Zhang provided an overview of the first four years of CICC, including some of her thoughts and suggestions,  She pointed out that due to inadequacies in the mechanism (organizational establishment)  [inadequate] budget, and the impact of pandemic controls, the role of the members of the Expert Committee is limited, few opportunities have been created to enable members to interact and the members to interact with CICC judges,  and finally, foreign experts have rarely participated. She had a number of suggestions, including that the expertise of members should be better used and that training sessions be organized at which members would speak.

Rimsky Yuen spoke about the CICC facilitating greater interactions between the Chinese judiciary and judiciaries of other jurisdictions, such as participating in the activities of the Standing Forum of International Commercial Courts. As the Co-Chair of HKIAC, he thanked the SPC for including HKIAC in the One-Stop Diversified Dispute Resolution Mechanism.

Following the reappointment ceremony, the first panel addressed “the Latest Developments and Frontier Issues of  International Commercial Courts,” with a mix of Chinese and foreign speakers, including Justice Tao Kaiyuan.

The last group of speakers on the first day, for the most part, Chinese expert committee members, discussed resolving complex commercial disputes. Judge Wang Shumei provided a very useful summary of Chinese judicial practice in complex cases.

On the second day, the first session, “Functioning within the “One-stop” Diversified International Commercial Dispute Resolution Mechanism” had presentations from all the members of the CICC’s One-Stop Mechanism.

I spoke as part of the last panel, on civil legal assistance, which was chaired by Professor Lu Song. Judge Shen Hongyu, deputy head of the #4 Civil Division and CICC judge,  gave closing observations.  I gave an update on trends in civil international judicial assistance and their challenges. Among the many speakers on my panel was Judge Gao Xiaoli, who gave an update on what the SPC is doing in judicial assistance in civil and commercial matters. She included statistics and an explanation of the platform that enables the SPC and Ministry of Justice (the designated Central Authority in most judicial assistance treaties and conventions) to communicate more quickly.

Judge Wang Shumei (head of the #4 Civil Division and CICC judge) and Justice Tao Kaiyuan gave concluding remarks.

Comments

Reappointment ceremony and seminar

I was disappointed that Beijing and central institution Covid-19 restrictions did not permit those of us living outside of mainland China to participate in person.  In my view, the in-person event in 2018 was important for all, as well as for me personally.  I surmise that for the SPC organizers, it was important that at least some portion of the people from outside China appointed as experts appear in person because it demonstrated to other institutions and the SPC leadership that the foreign/offshore experts valued the appointment.   It was also an opportunity for people to connect, albeit briefly. So the experts could meet other experts, the CICC judges, and others attending the ceremony on that hot August morning in Beijing.  For me personally, it was an opportunity to experience a high-level official event on-site, observe the dynamics, and connect with others. A Zoom event cannot substitute for an in-person meeting but in the current circumstances, it was the only alternative.

The reappointment ceremony and seminar had takeaways for the careful observer.  The speeches of the officials of the “relevant central institutions” (有关中央部门) as actually delivered appeared to reflect the official discourse of the institution involved.  I surmise some of the discourse may have been less sharp if the person anticipated he would see the foreign experts in person.  Justice Tao Kaiyuan’s presentation sent needed signals about the ongoing importance of openness, the role of the CICC in integrating China with international practice, and the role of CICC expert committee members as bridges to the international commercial world.

Of course, I found the presentations and comments by SPC judges particularly significant. As for the other seminar presentations, the ones I found most interesting were the ones in which I learned something new and did not require me to use my homemade  “useful content detector” to find the nuggets of insights inside layers of slogans.  There were quite a few, but not all, that fit that bill.

The Chinese versions of my and other speakers’ papers were published on the Chinese version of the CICC website under “最新资讯 and are accessible from the landing page.  It is unclear to me why the English versions are hidden under “Research Articles.”

On the topic of my own presentation, my suggestion that China (mainland) accede to the Hague Convention Abolishing the Requirement of Legalization for Foreign Public Documents (Apostille Convention) was reported in the official press.

Some thoughts on my own experience on the CICC Expert Committee thus far

I will not repeat the comments I made over a year ago on my blog about the CICC.  I would echo the sentiments that several Expert Committee members expressed at the seminar, that four years is not long in the development of a judicial institution, particularly when it coincides with a global pandemic. I would add that it has also coincided with important reforms to the institution of which it is a part.

When I spoke at the SPC in 2019, I made a number of modest suggestions concerning the Expert Committee (some previously mentioned on this blog), such as using the Expert Committee as a bridge between the SPC and the international legal world,  to assist persons engaged in judicial interpretation drafting or judicial reform to understand better a foreign legal provision or mechanism that they were considering,  or for the experts to be invited to speak at a  judicial training session. These suggestions require those doing the actual work of administering the Expert Committee to make this resource known within the large bureaucratic institution of the SPC.  It is possible that this proposal was lost or forgotten.  Another possibility is that those responsible are more accustomed to dealing with routine bureaucratic matters rather than anything out of the ordinary.

Following up on my proposal (some of which were echoed by Professor Zhang in her remarks) means dealing with the concept and reality of “内外有别” (there are differences between the insiders and outsiders, often used to distinguish the foreign from the domestic) and the bureaucratic foreign affairs system if the Expert Committee member is foreign. I had also suggested inviting Expert Committee members visiting Beijing to present at the SPC, as this would have helped demonstrate the varied types of expertise among Expert Committee members, but the pandemic has mooted this suggestion, at least for the foreseeable future.  This seminar should have compensated, in part.

As for my personal involvement with Expert Committee matters, I have been involved in some translation reviews for the SPC, as my social media followers would know, and have commented on some draft judicial interpretations and other draft rules.

My view is that with any institutional change in China, taking the long view and continuing communications with thoughtful people in the System are crucial.   I echo my friend Jeremy Daum’s comments of a year ago, published on his blog:

regardless of how actively we [the United States] pursue opportunities to engage with China on legal reform, China will continue to learn from the US. Active collaboration and exchanges merely gives us an opportunity to better ensure that our own system is correctly understood, and an opportunity to learn from what is happening in China. As mentioned above, it also helps us better understand China itself, both the problems it is addressing and the goals it is working towards.

Legal exchanges of course also inform China and help them understand us. Mutual understanding is a valuable goal in its own right, but we further learn about ourselves (and about others) from hearing their perceptions of our own legal system fed back to us.

I hope I can be considered to have done something positive for better understanding and engagement through this blog and my involvement with the CICC.

Finally, I want to take some time to focus on my longer writing projects, particularly consolidating almost ten years of blogposts and almost that many years of interviews into something more accessible.  For that reason, I will post to my blog going forward about once a month going forward.  If any readers have written articles (in either Chinese or English) related to the SPC, especially its operations, please feel free to email them to: supremepeoplescourtmonitor@gmail.com or send them via social media.

arbitration, conference summary, Expert Committee, international commercial court

Supreme People’s Court Issues New Guidance on Cross-Border Commercial & Procedural Legal Issues

Leave a comment

In January 2022, the Supreme People’s Court (SPC) issued a Conference Summary [also translated as “Meeting Minutes”] of the National Symposium on Foreign-Related Commercial and Maritime Trial Work (Foreign-Related Commercial  & Maritime Law Conference Summary (bilingual version here) (全国涉外商事海事审判工作座谈会会议纪要).  From unauthorized versions released, it can be seen that it was another SPC year-end accomplishment.  Although this document is not a judicial interpretation and cannot be cited in Chinese court judgments, it is crucially important for legal professionals outside of China dealing with cross-border commercial issues involving China and for Chinese legal professionals focusing on cross-border commercial issues involving the rest of the world.

The conference summary has  111 provisions.  The focus is on legal issues because the target audience of domestic judges understands the political framing.  The conference summary applies to foreign-related cases and to Hong Kong, Macau, and Taiwan-related cases by reference (see Article 111,  set out at the end of this post).  They are in the following categories:

  • foreign-related commercial (涉外商事部分), the longest:
  • Maritime (海事部分); 
  • Judicial review of arbitration (仲裁司法审查部分).

This blogpost will explain why the conference summary was issued, its legal and policy basis, and why it addressed those particular issues and will leave the majority of the content of the conference summary for the experts in practice and academia.

Why this conference summary?

The conference summary (meeting minutes) is based on a national conference on foreign-related commercial and maritime trial work held in Nanjing in June of last year and the issues that the SPC would have heard raised by lower court judges.

When asked the question of why this conference summary was issued, an SPC judge is likely to say “to resolve difficult issues in practice and unify judgment standards.” But a fuller answer to this question for a larger audience requires further details. 

As to why a conference summary and not rely on “case law” with Chinese characteristics, including China International Commercial Court cases, SPC cases, and various types of typical or SPC selected cases as “soft precedents,” the answer is that the SPC is issuing this conference summary to guide lower court judges (and possibly judges in other divisions of the SPC) practically and efficiently and for some additional reasons.  The simple answer is that “case law” is not effective enough to practically guide lower court judges.  If it were, the SPC would not have issued this document. I have seen a number of academic articles (in English) that illustrate a misunderstanding of what the SPC is doing.   

Additionally, I surmise that at the Nanjing conference, behind closed doors, SPC judges heard about inconsistent approaches or requirements from lower court judges.  I surmise they also heard from lower court judges uncertainty in the approach that they should take concerning issues where the law is unclear.   The judicial evaluation system values deciding cases correctly. Moreover, the most recent SPC policy focuses on unifying the application of law. Its leadership has established a leading small group to that end.  So for all these reasons, lower court judges would look to the SPC for clarification.   What is contained in the conference summary is the SPC’s current consensus on major cross-border commercial, maritime, and arbitration review-related issues, based on their further research and consideration.

In the busiest courts where many of these cases arise, judges are under enormous pressure to decide cases timely and accurately, especially after the recent changes to the jurisdiction of lower courts under the reorientation of the four levels of the people’s courts and the issuance of other documents changing the jurisdiction of the lower courts in commercial cases.  “Codifying” the principles from cases and issues considered by the SPC in the form of a conference summary is the most useful and efficient form of guidance for lower court judges. As mentioned here, although conference summaries are not judicial interpretations and cannot be cited in a court judgment document as the basis of a judgment, they provide important guidance to the work of the courts concerning issues about which existing law and judicial interpretations are unclear.  Judges will rely on its provisions to decide cases.

The legal basis for the conference summary derives from the SPC’s authority under Article 10 of the Organic Law of the People’s Courts to supervise the lower courts. 

As for an answer to the question of why not issue a judicial interpretation–time, fluidity, and attenuated basis for some of the conference summary’s provisions do not permit a judicial interpretation to be issued.  One example of the attenuated basis and fluidity is Article 100,  which”codifies” the Guangzhou Intermediate People’s Court decision in the Brentwood case (discussed here).   It establishes welcome certainty to the enforceability of arbitral awards made by overseas arbitration institutions arbitrations seated in Mainland China.  It provides that such awards are regarded as foreign-related arbitral awards (rather than foreign awards) in Mainland China.  It is likely to be helpful to the overseas arbitration institutions that are considering establishing case management offices in China, as is now possible under Shanghai and Beijing regulations.   As mentioned before, the Arbitration Law being revised, the current draft addresses the issue, and the SPC is likely to issue a comprehensive judicial interpretation thereafter.  

Moreover, for some of the procedural provisions, such as those relating to the recognition and enforcement of foreign judgments, it gives the SPC a chance to pilot its guidance, before formalizing it in the form of a judicial interpretation.   A recent Wechat article (with further details) flags that in 2021, three foreign judgments and nine Hong Kong, Macau, and Taiwan judgments were recognized and enforced.  Likely more applications were made but not decided.

Other provisions consolidate existing guidance in a form that is easier for the lower courts to grasp quickly.  Article 22, on obtaining an opinion on foreign or international law from a China International Commercial Court (CICC) expert committee expert, for example, repeats what is to be found in CICC guidance.  The same can be said about Article 11, on the topic of electronic service of process, promoted in several Belt & Road-related SPC Opinions.  It should be noted that China maintains its traditional approach to service of process from foreign jurisdictions.

It appears that some clauses reflect a change in the negotiating position of Chinese financial institutions, in contrast to “back in the day. ” Article 2, on the topic of asymmetric jurisdiction clauses, states that Chinese courts will uphold them unless they violate Chinese rules on exclusive jurisdiction or relate to the interests of consumers or workers.   (For those with no background on these clauses, according to Herbert Smith Freehills: “asymmetric jurisdiction clauses are common in the financial sector, and typically require one party to bring proceedings in one jurisdiction only, while the other (usually the financial institution) may choose to bring proceedings in other jurisdictions.”  From this position, I surmise that Chinese banks use asymmetric jurisdiction clauses as well.

Articles 18-20 address a few of the ongoing issues related to the application of international conventions and treaties in the Chinese courts. Article 18 answers the question of what a court should do if the relevant treaty or convention is silent or China has made a reservation on that issue.  The answer is to use the Law on the Laws Applicable to Foreign-Related Civil Relations to determine the applicable law.  Article 20 focuses on what a Chinese court should do if it is applying Chinese law if Chinese law has conflicting positions and China has acceded to a relevant treaty or convention.  A report on a recent workshop involving the SPC, the Beijing #4 Intermediate People’s Court, and academics from the China Academy of Social Sciences and other institutions flags some of the many other unresolved issues.

Article 30 addresses an important question for Chinese and foreign banks, suppliers to Chinese EPC contractors, and project owners, particularly in Belt & Road jurisdictions–how easily can a Chinese court stop payment on a demand (independent) guarantee?  The answer is, strictly according to the provisions of the relevant judicial interpretation. Article 30 provides that when a court hears an application to stop payment on the basis of fraud (which can be filed as a preliminary matter or during the course of litigation or arbitration),  it must examine the independent letter of guarantee stop payment application submitted by the parties in according to Article 14 of the (updated) Provisions on Several Issues Concerning the Hearing of Independent Letter of Guarantee Dispute Cases, and conduct a preliminary substantive examination on whether there are fraudulent grounds for stop payment in accordance with the provisions of Article 12 and set out its finding of facts and reasoning as required by  Article 16.

The Bigger Picture

This conference summary is another form of SPC soft law. It harmonizes the decisions of the Chinese courts to be consistent with SPC policy (or said another way, strengthens the firm guiding hand of the SPC). 

This document reflects the awareness of its drafters, the judges of the #4 Civil Division of the SPC, that the issues that come before the Chinese courts far outpace the infrastructure of Chinese foreign-related commercial law. Given the larger trends I described in my brief article last fall, we can expect the SPC to continue to play an important role in developing China’s body of law related to cross-border commercial matters.

_____________________________________

111.【涉港澳台案件参照适用本纪要】涉及香港特别行政区、澳门特别行政区和台湾地区的商事海事纠纷案件，相关司法解释未作规定的，参照本纪要关于涉外商事海事纠纷案件的规定处理)。111. [The application by reference of this conference summary to cases involving Hong Kong, Macao and Taiwan]. As for commercial and maritime cases involving the Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan, which are not otherwise stipulated in relevant judicial interpretations, shall be handled with reference to the provisions of this conference summary on foreign-related commercial and maritime cases.

About Me, Expert Committee, international commercial court

Supreme People’s Court Monitor 2019-2021 Year-end Reports

Leave a comment

Screenshot 2018-12-07 at 5.48.29 PM
The Monitor as “Fargo North” Decoder

The Supreme People’s Court Monitor published 35 posts in 2019, 26 posts in 2020, and 26 in 2021, with about 34,000  page views each year,  primarily from:

  • United States;
  • (Mainland) China;
  • Hong Kong SAR;
  • United Kingdom.

Germany, Australia and Singapore trailed the others by a significant margin. Mainland China was in second place in 2019.  In 2020 and 2021, the Monitor had almost the same number of views from mainland China and Hong Kong.  I wish I knew the distribution of my readers in mainland China–whether they are working in the System (体制), or are academics, students, or lawyers. I was very pleased to meet some readers when I spoke in November 2019 at the Fourth Qianhai Legal Intelligence Forum, (a conference held annually in Shenzhen, supported by the Supreme People’s Court (SPC)).

Why did I do less blogging in 2020  and 2021 as compared to 2019? Perhaps it can be attributed to competing professional obligations–including writing several academic-style articles and one academic blogpost.  Fortunately, 2021 saw the academic blogpost and three long articles emerge from the academic publishing machine.  I have yet to see the third long article (book chapter), which has been published. I presume that one is stuck in a warehouse, awaiting the resumption of flights from the rest of the world to Hong Kong.

One draft academic article, in which I have invested too much time,  is back on the back burner after two perceptive readers pointed out what I was feeling, that it had gone down too many research rabbit holes (掉进无底洞).   I now know that an SPC document will be issued soon that I presume will change some of the article’s content, so it is just as well that the draft is back on a slow simmer. I’m instead following the advice of one reader to spin off parts of the draft into separate articles. One will soon be ready for the editorial sausage machine.  A second one, on a topic separate from the “rabbit hole” article,  is affected by documents issued to implement the recent reforms to the four levels of the Chinese courts as well as the Civil Procedure Law amendments.  When I return to that “rabbit hole” article, it will benefit from what I have learned in researching the one that I expect can enter the editorial sausage machine soon.

In the New Era (and the Covid-19 Era), it is an even greater challenge to decode for readers outside of mainland China SPC developments insightfully in under 1500 words.  I hope I have gone some way to meeting that target.  I sometimes have my doubts.

Since the blog was founded almost nine years ago:

Page views: 233, 109
Jurisdictions: 200? (per WordPress)
Posts: 323

Most followers use Twitter to follow the Monitor. Although Twitter is not accessible in mainland China without a VPN, 16% of the Monitor’s Twitter followers are based there.

A special thank you to my anonymous “peer reviewers”, who have given forthright (in one case very blunt), insightful and helpful comments on draft blogposts.

Court Operations, international commercial court, judicial committees

Reorienting the Four Levels of China’s Court System–Part 1

Leave a comment

At the end of September, the Supreme People’s Court (SPC) issued Implementing Measures for the Pilot Reform of Improving the Positioning of Four Levels of Courts in Terms of Adjudication Levels and Functions  (Four Level Court Reform Pilot Measures). The only translation available seems to be behind Westlaw China’s paywall.  A quick summary of its backstory, provisions, and implications as related to the SPC follows below. The impact on the lower courts will be significant, but this reform needs to be analyzed together with other current reform documents to see the larger picture.

Backstory

As the NPC Observer previously wrote, this reform was included in both the 2019 SPC’s fifth five-year court reform plan and the recent Plan for Building the Rule of Law in China (2020–2025).  The National People’s Congress Standing Committee granted the authorization for this Pilot Reform in the summer.  SPC President Zhou Qiang highlighted the principal reforms in his explanation to the NPC Standing Committee. The Party leadership (the Central Deepening Reform Commission) approved the reform in June, based on submission documents from the SPC. The drafters of the reform stated the proposal (改革方案稿) was based on research and specialist discussions  (调研论证, although neither the approval document nor the submissions are available).  I surmise that the research draws on earlier work by predecessors of the drafters. The roots of this reform can be seen in the SPC’s fourth five-year court reform plan, for which the SPC issued extended commentary (thankfully for the researcher).  SPC research on this issue dates back to the spring of 2012, if not earlier.

This reform is one of many court (and other political-legal system) reforms that the Party leadership approved in January 2019, as part of its Implementing Opinion On the Comprehensive Deepening Reforms of the Political-Legal Sector《关于政法领域全面深化改革的实施意见. That meant that the measures approved in that document became important reform responsibilities (tasks) for the institutions involved (确定的重要改革任务).

The outside analyst of this and another court (and other Chinese legal) reforms is at a disadvantage in seeking to be thorough as might be possible in more transparent jurisdictions. It is not possible to know, for example, what the Party leadership reviews when it considers these submissions (my guess is a detailed executive summary, while responsible aides read more extended reports) and whether the SPC’s submission was approved unchanged.

What It Means for the SPC

The Four Level Court Reform Pilot Measures cover civil, administrative, and criminal cases, with the focus on civil and administrative cases. Among the objectives of the Four Level Court Reform Pilot Measures is to make the SPC a supreme court (with Chinese characteristics), rather than just China’s highest court.

As I wrote in my short article on the U .S.-Asia Law’s website and earlier on this blog, the SPC considers large numbers of retrial applications, primarily in the circuit courts.  This document narrows considerably the flow of retrial applications that can be submitted to the SPC, although the new standards incorporate necessary flexibility.   (Ironically, I have just written an article on this process).

The intent is for the SPC to focus on a smaller number of more important cases. As stated in Article 1: “the Supreme People’s Court shall focus on supervising and guiding adjudication work at the national level and ensuring the correct and uniform application of the law.”

According to the drafters’ commentary, the intent is for the SPC to focus on (judicial/legal) policy formulation (政策制定) and social governance (社会治理), about which I spoke recently, and is a subject of another forthcoming article. This has been the thinking of the SPC leadership for over five years, if not longer–Judge He Xiaorong, current head of the #2 Circuit Court (and former head of the SPC’s judicial reform office) stated six years ago–when writing about the circuit courts:”

…the center of the work of SPC headquarters will shift to supervision and guidance, primarily trying cases that have a major guiding function in unifying the application of law, that can become guiding cases.”

The drafters of the Four Level Court Reform Pilot Measures state that the intent is to establish a working mechanism in which the Supreme People’s Court judgments are directly transformed into guiding cases and promote relevant judgments to become an important source for optimizing the formulation and content of judicial interpretations, as well as modifying and abolishing judicial interpretations.  We will need to wait for further measures from the SPC on this.

Narrowing the Flow of Retrial Cases

The 2021 reforms change the standard of review for civil and administrative cases. The reforms set out a two-branch test: compulsory and permissive jurisdiction. Under Article 14, compulsory jurisdiction includes cases in which:

  1.  the higher court’s ruling or judgment was erroneous and the case has guiding significance in the application of law; or
  2. in the past three years, higher people’s courts have unresolved major differences in the application of the law in similar cases for which binding judgments or rulings have been rendered by the SPC or different high people’s courts; or
  3. any other circumstances where the SPC considers it should here the cases.

The language of #3 is familiar language to anyone who spends time reading Chinese legislation.

Article 11 sets forth conditions under which applicants can apply to the SPC for retrial, but the SPC has flexibility in accepting the cases:

  1. applicants consider that the higher people’s court applied the law erroneously, but do not object to the facts determined, principal evidence, and procedures of the higher people’s court, or
  2. if the court’s judicial (adjudication) committee considered the case.

Article 13 authorizes the SPC to remand a case back to the higher people’s court if it considers that there are unclear facts or procedural errors, or alternatively, the higher people’s court erred in applying the law, but the issue does not merit SPC consideration.

Applicants must make an undertaking when applying for reconsideration that they undertake not to object to the above matters, and are directed to focus their application on the disputed issues and the grounds for their argument. At this point, detailed implementing measures have not yet been issued.

Inconsistent Decisions

One issue that the drafters mentioned in their commentary is inconsistent judgments or rulings made by different divisions of the SPC.  In practice, that issues relating to the same body of law may be determined by different divisions of the SPC or different teams of SPC judges in the circuit courts and headquarters. They arise either through litigation or court administrative-type procedures. While SPC judges  (as I understand it) search for similar cases, it is inevitable that different people have different views on legal issues.  An example of this arose recently in the area of arbitration law, in which the SPC’s Intellectual Property Court ruled that the arbitration agreement in a software contract providing for foreign arbitration was invalid, because the dispute lacked a “foreign element,” while the SPC’s #4 Civil Division has upheld arbitration agreements providing for foreign arbitration between two Chinese parties.

In that earlier blogpost  I wrote that, unlike some other legal systems, the SPC has not evolved an en banc or enlarged panel of judges, but the Four Level Court Reform Pilot Measures illustrates that someone involved with court reform has looked to other jurisdictions and borrowed but not transplanted the concept. For the avoidance of doubt, borrowing legal concepts from abroad is consistent with Xi Jinping Legal Thought.  The Plan for Building the Rule of Law in China (2020–2025) includes among its main principles: “learn from the useful experience of foreign rule of law (借鉴国外法治有益经验).”

Articles 18  and 19 set forth two options for resolving cross-division differences in views on legal issues.  Article 18 involves the creation of an enlarged collegial panel with five or more members from different divisions.  Consistent with the SPC’s administrative nature, the divisions (circuit courts, or intellectual property court) must apply to the SPC’s Trial Administration Office, which in turn must seek the approval of the SPC President.  The  President may designate a Justice (SPC Vice President) to sit as the presiding judge.  The alternative set out in Article 19 is to apply to the Trial Administration Office to establish a cross-division specialized judges committee (its functions discussed here). I surmise that the second alternative will be used more frequently.

What to expect?

I surmise that there will be a transition period, as the cases accepted under the old retrial system are processed by SPC headquarters and circuit courts.  So my guess is that 2022 will see fewer cases than 2021 and 2020, and 2023 will see even fewer cases.  I expect that the SPC’s Intellectual Property Court to continue to have a large number of cases (over 3000 in 2020).  In 2020, the greatest proportion of their cases were civil and administrative appeals. My uninformed guess is this trend will continue.

It is possible that as a consequence of this reform, the China International Commercial Court will hear more cases than before.  But as I said and wrote earlier this year, I surmise that they will continue to pick their cases carefully, focusing on those which raise issues in which existing law and judicial interpretations are unclear and involve issues that frequently arise in practice. These CICC principles are consistent with those in the Four Level Court Reform Pilot Measures.

As for the other divisions of the SPC, my guess is that they will be able to find enough major cases to keep themselves busy while also spending more time on judicial policy and judicial interpretations, not to mention other matters.  The principles in this reform do not affect long-standing mechanisms of the SPC, such as death penalty review or the prior review of arbitration-related decisions by the #4 Civil Division. As I hinted in a recent blogpost, I believe that in the next year or two, a great deal of time will be invested in issuing judicial interpretations to fill out the broad principles of the Civil Code, but the interpretations will themselves be issued in a codified fashion.

alternative dispute resolution, CICC, diversified dispute resolution, Expert Committee, international commercial court

Brief comments on the China International Commercial Court

Leave a comment

On 29 July, I spoke briefly at an American Society of International Law  webinar entitled “Charting the New Frontiers of International Dispute Resolution in the Asia-Pacific.” The post below is the (slightly edited) text of my comments on the China International Commercial Court (CICC). I have made some of the same points in earlier blogposts and this version includes those links.

Thank you for this opportunity to provide my thoughts on the CICC.  As some people know, I am on the CICC’s international expert committee, but nothing I have to say should be attributed to the Supreme People’s Court (SPC) or the China International Commercial Court (CICC). I’m not going to comment on the numerous articles I have seen either in both English and Chinese but instead focus my remarks on what I understand the focus of the work of the CICC to be now, suggest some reasons, and identify some trends.

The CICC has thus far accepted 18 cases in the three years since it was established.  Although I have never seen official confirmation of this, it appears that when the CICC was approved, it was approved as a part-time court.  It can be seen from the biographical description of each judge that each of them has at least one other full-time responsibility additional to being a CICC judge.  Some of the judges have two other full-time responsibilities.  The Intellectual Property Court of the SPC, is instead is a full-time court—it is unclear whether they have additional headcount. I have not seen a discussion of why one was approved as a part-time court and the other a full-time court—perhaps the leadership decided that the Intellectual Property Court was the one that would make a more important national and international impact, given the critical importance of intellectual property at this stage at China’s development and the range of intellectual property law issues in contention between China and certain of its trading partners.

In my view, the fact that the CICC is not a full-time court—means that the SPC’s #4 Civil Division, which provides leadership for the  CICC, must be strategic about what the CICC does.  Based on the language in some of the recent SPC documents,  particularly the September 2020 policy document on the Open Economy, I surmise that the #4 Civil Division is considering the best way forward with the CICC, as there is this language–“promote the construction of the CICC” (推进最高人民法院国际商事法庭建设). Additionally, the SPC has designated two senior Chinese academics (Shan Wenhua of Xian Jiaotong University and Liu Xiaohong of the Shanghai University of Political Science and Law), who are expert committee members to provide research on this topic.

Based on the type of cases that the CICC has accepted and the language in the end 2019 2nd Belt & Road Opinion and the 2020 Open Economy document, my understanding that the short-medium focus of the CICC is to be a model or guide for China’s lower courts in unifying “foreign-related” substantive and procedural law —it is currently domestically focused, rather than focusing on hearing large numbers of foreign-related cases.

So far, most of the cases that the CICC has accepted have been referred from the lower courts. The CICC will take the cases if it meets its criteria and it can see that the case involves issues regarding which existing law and judicial interpretations are unclear and that involve issues that frequently arise in practice. This can be seen in Articles 22 and 25 of BRI Opinion #2 “and the role of the CICC in providing models and guidance shall be developed… the role of cases in determining rules and guiding behavior shall be leveraged  (发挥国际商事法庭示范引领作用_…，发挥好案例的规则确定和行为指引作用).  Therefore the CICC has accepted and decided at least 5 cases related to arbitration—filling in gaps in Chinese arbitration law and judicial interpretations—and has accepted two more related to demand guarantees/standby letter of credit fraud disputes.  It has also issued a judgment on an issue related to product liability.

A second and it seems underappreciated aspect (outside of China) of the role of the CICC is in providing “models and guidance”– 示范引领作用– to guide the lower courts and to pilot reforms that are replicable (a Chinese judicial reform concept), as stated in Article 22 and 25 of BRI Opinion #2. That can be seen from reports on certain local courts:

  1. The Beijing #4 Intermediate Court—promoting one-stop diversified dispute resolution (多元化解纷纠纷中心), with links to local arbitration (CIETAC & the Beijing Arbitration Commission) & mediation organizations, the goal being for this court to come up with new ideas in international commercial dispute resolution to focus on Beijing’s advantages;
  2. The Suzhou International Commercial Court (approved by the SPC, and involving cooperation with the Singapore government through the China-Suzhou Suzhou Industrial Park )；
  3. Haikou/Hainan also—the SPC’s policy document supporting the Hainan Free Trade Port mentions an international commercial court, although it seems to be less developed.

I would like to mention also that it is possible that whatever guidance is developed may also draw on the memoranda concluded and other best practices discussed at the Standing Forum of International Commercial Courts, of which the SPC is a member.

From what I can see from these local initiatives, the themes may include:

  1. promoting mediation (also in line with SPC policy on mediation taking priority);
  2. Centralizing case acceptance;
  3. Addressing additional arbitration-related issues;
  4. Possibly considering rules regarding more complex commercial disputes.

From my own research and discussions with some local judges, it appears to be early days to see any further guidance coming out of these local courts.

I wouldn’t be surprised to see the CICC eventually developing further rules, for example, related to mediation, drawing on the work of the lower courts, as this is a pattern I have seen before in other areas of law with the SPC because it appears CICC regulatory infrastructure is less fully developed in comparison with other commercial courts in other jurisdictions.  Experience from the lower courts could accelerate matters in part.

I surmise that either the CICC or local “international commercial courts” will eventually provide greater legal infrastructure related to what I call “invisible BRI disputes”–the increasing number of cases between two Chinese companies involving projects overseas, particularly in the area of construction engineering, often heard in the Chinese courts—that involve issues such as how to:

  1. find and apply foreign law;
  2. provide information and expertise about foreign technical standards; and
  3. improve the role of expert witnesses (with the necessary expertise) in construction engineering disputes.

These types of disputes raise several of many areas of law that need further work as Chinese companies operate internationally but want to have related disputes heard at home, and China seeks to progress domestic and foreign-related legislation.  I surmise that the Beijing #4 Intermediate Court will eventually come up with some guidance through its collaboration with the Beijing Arbitration Commission and other institutions.

Turning to the expert committee…the expert committee is an institution different from a user committee in jurisdictions such as US, Canada, the UK, Australia, New Zealand, Kenya etc. where they are often required by law and are primarily focused on incorporating input from users, including those practicing lawyers in evolving court rules.  I note that Taiwan involved a user committee in working on its new commercial & intellectual property court. Court rules in China are entirely within the authority of the SPC, and lower courts in practice issue them as well, and there is no compulsory requirement in Chinese legislation for incorporating public input in the course of drafting court rules. The CICC expert committee and other Chinese court expert committees (such as that established by the Beijing Financial Court appear to be established to enable courts to access expertise among the experts on a flexible basis, and it appears intentionally not involving lawyers practicing in China.  The link between the role of the expert committee members and the subject matter competence is weaker than with user committees, and thus far the few formal meetings of the entire expert committee have included speeches making general statements about international commercial dispute resolution in contrast to the more technically focused user committees in the jurisdictions I have mentioned.

From the BRI documents mentioned above that the SPC has issued, it appears that the SPC is still trying to determine a proper role for the expert committee (at least on the foreign side) as I don’t believe the roles mentioned in CICC regulations have turned out to fit with the SPC’s actual needs and the varied backgrounds of the experts. I’ve been in touch with several foreign members of the expert committee, none of whom has been approached by the CICC individually to provide expertise. One of many issues (as I’ve written about before) is that mediation outside China is considered to be its own type of expertise, different from arbitration (an area in which a number of experts are well known). Another question is whether the expert committee is made known internally within the SPC as a platform through which others in the SPC can access foreign expertise.

For all these reasons—the limited time that CICC judges have to devote to specific CICC matters, the focus on progressing Chinese substantive & procedural law through CICC decisions, the possible use of the lower courts to assist the CICC to evolve international commercial rules appropriate for China, and the flexible use of the expert committees–in the short to medium term I see the work of the CICC as more domestically focused, as the SPC does its part to progress Chinese domestic and foreign-related legislation, or as the current slogan has it “统筹推进国内法治和涉外法治.”

 

Communist Party and the Courts, Expert Committee, foreign investment law, foreign-related cases, international commercial court

Supreme People’s Court updates its Belt & Road policies

4 Comments

Screen Shot 2019-12-29 at 9.15.50 PMAt a press conference on 27 December (2019) the Supreme People’s Court’s (SPC) #4 Civil Division (the division focusing on cross-border commercial issues) announced it had issued three documents: a judicial interpretation and two judicial policy documents. The documents are connected directly or indirectly to the Belt & Road Initiative (BRI) and improving China’s foreign investment environment.

  1. Interpretation on Several Issues Regarding the Application of the “People’s Republic of China Foreign Investment Law” (FIL Interpretation) (最高人民法院关于适用〈中华人民共和国外商投资法〉若干问题的解释);
  2. Opinion on providing services and guarantees for the Belt & Road (BRI Opinion #2) (关于人民法院进一步为“一带一路”建设提供司法服务和保障的意见); and
  3. Opinion on providing services and guarantees for Construction of the Lingang area of the Shanghai Pilot Free Trade Zone (Lingang FTZ Opinion) (关于人民法院为中国（上海）自由贸易试验区临港新片区建设提供司法服务和保障的意见).

The two Opinions update two of the SPC’s two major policy documents on cross-border issues: the 2015 Opinion on Providing Services and Guarantees for the Belt & Road (BRI Opinion, and Opinion on Providing Guarantees for the Building of Pilot Free Trade Zones (FTZ Opinion). Policy documents do not have the force of law. They are examples of how the SPC supports the Party and government by issuing documents to support important strategies or initiatives (serving the greater situation (服务大局). In the New Era, the SPC has issued over dozen policy documents that provide “judicial services and guarantees” for major government strategies or initiatives, many more than before.  These Opinions are intended to harmonize the two earlier policy documents with post 19th Party Congress developments and priorities, including those mentioned in the Fourth Plenum Decision. I had previously reviewed the two earlier documents in detail.  My analysis of the Pilot FTZ Opinion can be found here and I have previously written and spoken about the BRI Opinion.  This blogpost draws on correspondence I had recently with Professor Vivienne Bathof the University of Sydney, but I am solely responsible for the views expressed here.  This blogpost discusses BRI Opinion #2.

2.  Belt & Road Opinion #2

This document is longer than the other two put together and has much more substantive and political content. Comments on the first section will focus on the political issues, while comments on the rest of the document will discuss the other content in the document:

  • political signaling on discrete issues;
  • judicial policy changes;
  • signaling to various audiences;
  • instructions and guidance to the lower courts;
  • highlighting future possible changes to SPC positions on legal issues;
  • promoting or supporting certain government initiatives within the courts;
  • reiterating basic policies.

New requirements and tasks (Section 1)

In keeping with post 19th Party Congress trends and the spirit of the 2019 Political-Legal  Work conference, BRI Opinion #2 has more politically oriented content and references than the 2015 BRI Opinion. As it must be harmonized with the latest Party and government policy, it includes the latest judicial policy jargon, such as “improving the business environment” and “creating an international, law-based and convenient business environment with stability, fairness, transparency, and predictability.”

The first section includes a long paragraph on working principles. For the casual reader, the principles are an odd hotpot of political, substantive, procedural, and administrative matters but in keeping with its role in the document. It is all about political signaling. To the person unfamiliar with these documents, it gives the reader the impression that if she put her chopsticks in one place in the hotpot, she would pull up support for international arbitration and if in another, support for constructing litigation service centers.

Policy changes and signaling (section 2)

This section contains seven apparently unconnected provisions. They are linked by their political and practical importance: judicial cooperation in criminal law; protecting the right of domestic and cross-border parties; supporting multilateralism; supporting the development of international logistics; supporting opening up in the financial sector; supporting the development of information technology, intellectual property, and green development. This section is a combination of signaling to the political authorities and the lower courts.

One notable provision is on judicial cooperation in the area of criminal law. Article 4 mentions the Beijing Initiative for the Clean Silk Road, and zero tolerance for corruption.  Doing something about cross-border corruption offenses is not a matter primarily of the SPC, as this analysis notes and has greater implications for state-owned enterprises (SOEs). This provision calls for the people’s courts to work with the judicial organs of other countries and regions along the “Belt and Road” to build jointly a judicial anti-terrorism mechanism, and curb the spreading of terrorism.  The link to the SPC is that we can anticipate that some staff from the SPC would be involved in negotiating regional or bilateral arrangements relevant to anti-terrorism (along with the Ministry of Foreign Affairs and Public Security Ministry). In an indirect way, it illustrates how the SPC works with other Party and government departments on legal issues, one of the distinctive functions of the SPC that rarely receives much attention.

On signaling to the lower courts, in addition to the section on financial cases, discussed in the previous blogpost, Article 6 is a reminder to the lower courts to apply the relevant rules of determining contract validity and liabilities in civil and commercial cases involving free trade agreements or cooperation documents signed between China and other countries. In any case, it is their obligation in applying relevant law.  Perhaps the SPC has issued the reminder because lower courts have failed to do too often.

Although Article 11 (on environmental protection) has received attention from a prominent environmental lawyer who saw the inclusion of cross-border environmental public interest litigation in the Opinion as ground-breaking, knowledgeable persons suggested it is a merely a reminder to local courts that they can take such cases provided current legal requirements are met, such as jurisdiction over the defendant, location of the pollution, and the social organization meeting specified requirements.

Specific policy (Section 3)

Section 3 contains signals on changes to specific judicial policies, reminders to the lower courts and also political signals, including highlighting SPC accomplishments. Article 13 signals to the lower courts some new policy on contract interpretation. It addresses situations that commonly arise when one party alleges fraud or collusion to avoid contract liability. The SPC reminds lower courts that evidence should be reviewed carefully, and the evidentiary standard should be beyond a reasonable doubt（根据排除合理怀疑的证据规则严格认定欺诈、恶意串通).  Article 13 directs courts to apply foreign law if the choice of foreign law would uphold contract validity.

This section has quite a few reminders to the lower courts to do what they should already be doing, such as: actively applying international conventions applicable to China; respecting international practices and international commercial rules; fully respecting parties’ governing law choice and explaining how they determined it; taking a restrictive approach towards declaring contracts invalid. Governing law is a sore spot in certain maritime matters, where the Chinese courts in a number of cases have set aside parties’ choice of law for a failure to have an actual connection.

Extending the influence of Chinese law abroad is a policy that received new impetus in the November, 2019 Decision of the 4th Plenum of the 19th Party Central Committee, and therefore it is found in Article 20 and again in Article 21 (in the following section).  Linked to this is language on increasing the prestige of the Chinese courts and the China International Commercial Court in particular. The language echoes and extends the 4th Plenum of the 18th Party Central Committee and BRI #1 Opinion, by calling on the people’s courts to extend the influence of Chinese law, publish typical cases tried by Chinese courts in multiple languages, lay a solid foundation for courts and arbitration institutions to correctly understand and apply Chinese laws, and strengthen the understanding and trust of international businesses of Chinese law. From the fact that the SPC envisions Chinese courts as having a role in assisting foreign courts and arbitration institutions to “correctly understand and apply Chinese law” shows that the SPC has a distinctive understanding of the role of a court.

On related accomplishments, one relates to typical cases in foreign languages and the other to the creation of the foreign law ascertainment platform. In 2019, the SPC published typical cases on cross-border issues in English, by publishing a pair of books on China Foreign-Related Commercial Cases and Maritime Cases (in China). It has also published a book of Chinese cases translated into English through Springer. On foreign law ascertainment, the accomplishment is the SPC having established a bilingual foreign law ascertainment platform, that assembles in one platform the available resources for ascertaining foreign law and a number of cases that involve ascertaining foreign law. There has been discussion in China as to whether courts should take such an active role in ascertaining foreign law, but the SPC has made a policy decision that it should.

International Commercial Court and One-Stop Dispute Resolution (Sections 4 and 5)

The BRI Opinion #2 contains several provisions related to the China International Commercial Court (CICC), with some mention of its expert committee.  Article 23 mentions working with international commercial courts outside of China to establish various types of exchanges and cooperation, including training judges. It is unclear whether this a reference to increasing cooperation under the Standing International Forum of Commercial Courts or other future initiatives.

These two sections also signals to the lower courts policy changes and policies to be stressed. One policy to be noted is implementing the policy of mediating first (贯彻调解优先原则), which is already incorporated into the CICC rules.  Some of the difficulties in mediating cross-border disputes involving state-owned enterprises were discussed in this earlier blogpost and at the workshop on implementing the Singapore Mediation Convention that I attended in December (2019).

Some new developments underway are mentioned in this section, linking to the central government’s policy of supporting Hong Kong’s role as an international dispute resolution center. Article 34 calls for support for increased cooperation with the Hong Kong International Arbitration Centre and other Hong Kong-based arbitration institutions, and appropriately involving Hong Kong-based institutions in CICC’s one-stop model. Article 35 mentions supporting offshore arbitration institutions being able to hear cases in China. (a development underway in recent months).

An important practical issue is raised in Article 31, which mentions improving the mechanism of coordinating cross-border bankruptcy (insolvency), and exploring (探索) applying the systems of the principal bankruptcy procedures and the center of the debtor’s main interests. This is likely linked to domestic development of bankruptcy law and the recognition that with BRI and thousands of Chinese companies investing abroad, some number will (or have) gone into bankruptcy (insolvency) proceedings. “Improving” and “exploring” mean that they are on the agenda of the SPC. It appears that the first related development occurred in Hong Kong in January 2020, when Judge Jonathan Harris granted recognition and assistance to mainland liquidators of CEFC (description of the case and link to judgment found here).  He concluded his judgment by stating” the extent to which greater assistance should be provided to Mainland administrators in the future will have to be decided on a case by case basis and the development of recognition is likely to be influenced by the extent to which the court is satisfied that the Mainland, like Hong Kong, promotes a unitary approach to transnational insolvencies.”

As I discussed in a recent blogpost and earlier, the SPC is seeking to use the CICC and its decisions (judgments/rulings) to guide the lower courts and to pilot reforms that are replicable (a Chinese judicial reform concept), as stated in Article 22 and 25: “the role of cases in determining rules and guiding behavior…and the role of the CICC in providing models and guidance shall be developed.  (发挥国际商事法庭示范引领作用…发挥好案例的规则确定 和行为指引作用).

Article 24 concerns presumptive reciprocity and mentions gradually promote reciprocity between commercial courts. This may signal that the judicial interpretation on enforcement of foreign court judgments is further delayed and that the SPC is taking a gradual approach by working towards mutual recognition and enforcement of international commercial court judgments, which would involve a smaller group of foreign judgments.

Themes that are not new in this section include supporting parties’ right to choose an appropriate dispute resolution forum.  It can be imagined that the #4 Civil Division judges considered that this basic principle needed repeating. Another ongoing theme, with more political coloration, is encouraging BRI dispute resolution, including investor-state dispute resolution to be heard in China. This is mentioned explicitly in Article 28, which lists measures “so that more international commercial disputes can be efficiently resolved in China.”  This is not new, but is part of a push that this blog noted as early as 2016, 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.

Article 32 mentions investment dispute resolution, and supporting “relevant departments in improving international investment dispute resolution mechanisms and organizations, respecting the dispute resolution clauses in bilateral and multilateral investment agreements, and resolving international investment disputes in a fair and efficient manner.”  This appears to be an acknowledgment that the SPC is in discussions with the Ministry of Foreign Affairs and other institutions on dealing with difficult issues related to enforcing international investment dispute arbitration awards in China (discussed here).

Personnel & Institutional Matters

The concluding section includes a notice in Article 37 to the lower courts that they shall “strengthen and improve the mechanism of coordination and guidance, and step up communication and cooperation with the relevant entities and departments.” This is a theme seen in many of the opinions issued by the SPC and reflects one of the many functions of the Chinese courts.

As discussed in the preceding blogpost, references in Article 38 and 39 to exchanges and training send signals within the SPC and its institutions, as well as lower courts about the types of programs that may be promoted, permitted or explored. It is likely that the National Judges College, its provincial branches, and its partners will continue to train foreign judges, as has expanded greatly in recent years. It appears that there could be greater possibilities for Chinese judges to go on exchange with other countries than has been possible in recent years. From my own contacts and experience with It may also provide the basis for a local court or division of the SPC to apply for funding to hold a legal roundtable or host an international exchange.

Concluding remarks

This Opinion is typical of New Era SPC policy documents providing guarantees and support for specific Party and government strategies and initiatives.  For a reader from outside the Chinese government system (体制), it takes knowledge of a constellation of related policies and practices to decode. This blogpost has been able to identify some of them.

BRI Opinion #2 has a great deal of content, not all discussed in this blogpost. Some have practical importance for practitioners in China and elsewhere.  But a larger question to consider, that likely was not in minds of the drafters, is whether this type of policy-oriented document is useful in reassuring foreign governments, foreign state-owned companies, and commercial entities that their dispute is best heard in China?  From my discussions with practitioners in various parts of the world, they may not be aware that BRI Opinion #2 even exists.

 

 

 

 

Communist Party and the Courts, Expert Committee, foreign investment law, foreign-related cases, international commercial court

How are Supreme People’s Court Opinions structured?

1 Comment

Screen Shot 2019-12-29 at 9.15.50 PM
27 December SPC Press conference：from left, Li Guangyu (spokesperson); Justice Luo Dongchuan (vice president); Judge Wang Shumei (head of #4 Civil Division); Gao Xiaoli (deputy head, #4 Civil Division)

When the Supreme People’s Court (SPC) issues an “opinion” (意见), it is not issuing a judgment or ruling.  It is issuing a policy document, without the force of law.  In the New Era, the SPC has issued over dozen policy documents that provide “judicial services and guarantees” for major government strategies or initiatives, many more than before. They are examples of how the SPC supports the Party and government by issuing policy documents to support important strategies or initiatives (serving the greater situation (服务大局). What few, if any have written about is the structure of these opinions that support important strategies or initiatives as they relate to civil and commercial law issues. Understanding the structure is key to understanding the documents. Understanding opinions is important for understanding current issues in the courts and the future direction of judicial policy.

This blogpost uses the two opinions announced at the 27 December 2019 press conference pictured above, at which Justice Luo Dongchuan and Judges Wang Shumei and Gao Xiaoli (head and deputy head of the #4 Civil Division) introduced the two opinions (and a judicial interpretation). A subsequent blogpost will highlight what is new in these three documents. All three are connected directly or indirectly to the Belt & Road Initiative (BRI) and improving China’s foreign investment environment. The two opinions are:

  1. Opinion on providing services and guarantees for the Belt & Road (2) (BRI Opinion #2) (关于人民法院进一步为“一带一路”建设提供司法服务和保障的意见); and
  2. Opinion on Providing Services and Guarantees for Construction of the Lingang area of the Shanghai Pilot Free Trade Zone (Lingang FTZ Opinion) (关于人民法院为中国（上海）自由贸易试验区临港新片区建设提供司法服务和保障的意见).

The Opinions update two of the SPC’s two major recent policy documents on cross-border issues: the 2015 Opinion on Providing Services and Guarantees for the Belt & Road (BRI Opinion, and Opinion on Providing Guarantees for the Building of Pilot Free Trade Zones (FTZ Opinion).

The BRI Opinion #2 and Lingang FTZ Opinion are intended to harmonize the two earlier policy documents with post 19th Party Congress developments and priorities, including those mentioned in the  2019 19th Party Central Committee Fourth Plenum Decision. I had previously reviewed the BRI Opinion and FTZ Opinions in detail.  My analysis of the Pilot FTZ Opinion can be found here and I have previously written and spoken about the BRI Opinion.

Lower courts may issue documents that supplement the SPC’s policy documents, as is true with these Opinions.  This is a subject that I have written about on this blog and elsewhere before. The Shanghai Higher People’s Court has already issued a guidance document that provides related services and guarantees, with important content.

The two Opinions also link to three different events or matters–the promulgation of the Foreign Investment Law; the Second Belt & Road Forum for International Cooperation; and Xi Jinping’s visit to Shanghai and establishment of the Lingang Special Area of the Shanghai FTZ.

Structure of these Opinions

The structure of the two opinions is typical for SPC civil and commercial opinions “providing judicial services and guarantees” for major government strategies and initiatives.  Opinions often (but not always) start out with a first section with titles analogous to the section titles of these two Opinions:

I. Comprehensively grasping the new requirements and new tasks in serving the “Belt and Road” Initiative

I. Enhance understanding and get aligned with the mission of offering judicial services and guarantees to the New Area

A sample of the language of the first section is quoted below, from the second paragraph of the BRI Opinion #2:

Keeping committed to the concept of further providing judicial services and
guarantees by the people’s courts for the “Belt and Road” Initiative: The people’s courts shall firmly take the Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as the guideline; study and fulfill the spirit of the 19th CPC National Congress and the Second, Third, and Fourth Plenary Sessions of the 19th CPC Central Committee, as well as the essence of the key speech of General Secretary Xi Jinping on the Second Belt and Road Forum for International Cooperation; strengthen consciousness of the need to maintain political integrity, think in big-picture terms, follow the leadership core, and keep in alignment…

The purpose of this initial section is two-fold. The first is to notify the lower courts of the political goals, background, and principles of the Opinion. The second to signal to the political-legal hierarchy that the policies that the SPC sets out in the body of the opinion are harmonized with the latest Party/government policies.

There are no hard and fast rules concerning the body of opinions, as analogous sections may occur in different order.  It may depend on the drafters and the topic involved.

The second section of the BRI Opinion has its counterpart in the third section of the Lingang FTZ Opinion:

II. Further performing the role of judicial trials, and serving and guaranteeing the joint construction of the “Belt and Road” with high quality in all aspects

III. Strengthen judicial trial function and maintain an institutional regime in the New Area focusing on investments/trade liberalization

These sections are meant to notify the lower courts about current relevant judicial policy, and implicitly inform them of any changes from previous policy and what the lower courts must do in support of that policy goal. The policies are likely to be linked to current Party/government policy.  From the BRI Opinion #2:

The people’s courts shall support the opening-up policy in the financial sector; the exemplary role (示范作用) of financial courts shall be maximized; eligible courts shall be encouraged to build special trial teams for financial cases; the application of law in foreign-related financial cases shall be further regulated and standardized;…valuable experiences of foreign countries in efficiently hearing financial cases shall be drawn upon…

Article 10, in Section III of the Lingang FTZ Opinion calls for

closer ties and communication mechanisms with the financial regulatory authorities shall be built to facilitate the construction of an integrated and efficient financial management system, in a bid for a better environment for doing business, for prevention of financial risks and for better national financial security.

In support of the opening-up policy in the financial sector, the SPC is promoting the role of financial courts (currently Shanghai, others to follow) in providing new mechanisms or methods in hearing cases or in their operations.  That is visible from the Shanghai Financial Court’s innovations in class actions in the sphere of securities law claims (claims against issuers, underwriters, directors and management, control parties, etc. for false and misleading disclosure upon initial issuance or in periodic reporting).  The Shenzhen intermediate court has established a special trial team for financial cases but not a separate court. From Article 10 of the Lingang FTZ Opinion, it can be anticipated that the Shanghai Financial Court has or will establish special communication channels with the financial regulators.

The titles of the third section of the BRI Opinion #2 is:

III . Further improving the application of law in cases involving the Belt and Road Initiative, and building a stronger rule-based business environment that is governed by law

From BRI Opinion #2:

13. The people’s courts shall vigorously carry forward the contract spirit and the good faith principle, and determine the acts of fraud and malicious collusion based on the rules of evidence beyond a reasonable doubt. If, in a civil or commercial case involving the construction, operation, purchasing, or bidding process of a project, there is a discrepancy on contract validity between the laws of the relevant countries, the people’s courts shall apply the law that holds the contract valid without damaging the honest party or benefiting the dishonest one, and promote mutual trust and benefits between the participants in the Belt and Road Initiative.

Each article in the third section of the BRI Opinion #2 focuses on a specific policy that the SPC wants the lower courts to promote.  In article 13, the SPC is seeking to control the tendency of lower courts to find a contract invalid because of allegations of fraud or malicious collusion, likely made by a Chinese litigant seeking to avoid contractual liability.  The Lingang FTZ Opinion does not have an exact counterpart to section III of the BRI Opinion #2, but has articles that focus on specific policies to be promoted, such as “properly handling cross-border bankruptcy cases….”

The title of the final section of BRI Opinion # 2 is:

VI. Further strengthening the organizational structure and team building to coordinate efforts to serve and guarantee the Belt and Road Initiative.

The last section relates to institutional and personnel matters. Take the following paragraph in the BRI Opinion #2 as an example:

39. The role of international exchange and research platforms such as international forums, legal roundtables..shall be further strengthened, and the exchanges and cooperation with the judicial systems of other countries shall be conducted. Training and studying programs for foreign judges shall be supported, and foreign legal service providers and think-tanks for the Initiative shall be invited to China to exchange views with Chinese counterparts so as to promote the formation of a diverse and interactive platform for legal exchanges….

Content in the last paragraph of the Lingang FTZ Opinion has some analogous provisions:

Establish a study training program and talent cultivation mechanism in line with international standards…Efforts shall be made to…(2) further expand international judicial communication channels, organize international judicial forums….

These provisions send signals within the SPC and its institutions, as well as lower courts about the types of programs that may be promoted, permitted or explored.  It is likely that the National Judges College, its provincial branches, and its partners will continue to train foreign judges, as has expanded greatly in recent years.  It appears that there could be greater possibilities for Chinese judges to go on exchange with other countries than has been possible in recent years.   It may also provide the basis for a local court or division of the SPC to apply for funding to hold a legal roundtable or host an international exchange. For the Lingang FTZ Opinion, it gives the Shanghai courts priority in organizing international programs and establishing programs to send outstanding young judges focusing on cross-border commercial issues on educational programs either in China or abroad.

The official report states that the SPC Party Group approved the two Opinions.  It appears from my previous research that pre-19th Party Congress, SPC policy documents did not necessarily require SPC Party Group approval. I surmise since the Party Political-Legal Work Regulations were promulgated in January 2019, it has now become a requirement, because Article 15 requires Party Groups/Committees to be responsible for setting major policies and directions.

______________________________

My thanks to a knowledgeable person for triggering my thinking about this and for insightful comments on an earlier draft.

Communist Party and the Courts, international commercial court, Structure of the Court

Central Inspection Group gives feedback to the Supreme People’s Court (2020 edition)

3 Comments

Photo of CIG feedback meeting

In September, 2019, this blog reported that Central Inspection Group (CIG) #4 would inspect the work of the Supreme People’s Court (SPC) Party Group for approximately two months.  On 10 January 2020, Chinese media reported on CIG #4’s feedback to the SPC’s Party group. The summary and brief analysis below is based on the press release published in state media, rather than the full report given to the SPC.  Palpably better judicial transparency does not include Party documents of this nature. This process signals to the world outside of China that the SPC has a different role in the Chinese political system from the supreme courts of other major jurisdictions.

Chen Xi, Politburo Member, head of the Organization Department, and deputy head of the Leading Small Group on Central Inspections chaired the meeting. In the audience was: the head of the CIG #4 Group and its leader; members of the supervision office ( 监督检查室) of the CCDI/National Supervision Commission, leaders from relevant bureaus of the Party Organizational Department, leaders from the CCDI/Supervision Commission office stationed at the SPC, leaders of the SPC, and other responsible persons from the SPC. The results and the recommendations of what needs to be improved, as in 2017, were conveyed to the Standing Committee of the Politburo. The inspection group found that:

the study and implementation of Xi Jinping’s new era of socialist thinking with Chinese characteristics are not deep enough, the implementation of the Party’s line, direction, and policies and the Party’s central decision-making and deployment were not satisfactory.  There is insufficient focus on Party political construction;  the strengthening of political ideology and professional ethics of the cadre team (加强干部队伍思想政治和职业道德建设还不够到位) is not satisfactory; it insufficiently fulfills the duties and mission of the state’s highest judicial organ (履行国家最高审判机关职责使命还不够). The requirements of “justice for the people and fair justice” have not fully penetrated the entire court work process.   In every aspect, the trial management system and the supervision mechanism for the operation of judicial power are incomplete (各方面，审判管理体制和审判权力运行监督机制还不够健全完善). The strict implementation of the Party’s main responsibilities has not been put in place in a comprehensive manner, and minor problems are ignored; there are still problems with violations of the spirit of the Central Eight Point Regulations. There are still gaps in implementing the Party’s organizational policies for the New Era; leadership building and cadre construction are not in place. Party-building work of the institution and at the basic level is weak. Issues identified in the last inspection have not been corrected and corrective mechanisms are not in place.

In 2017, the CIG found: “four consciousnesses” need to be further strengthened; political discipline and political rules are not implemented strictly enough; the leadership role of the Party group is insufficiently developed;  there are some gaps in the coordination of the advancement of the system of judicial system reform; the implementation of responsibility system for ideological attitude (意识形态责任制落实不够有力); there are weak links in Party construction; organizational construction is not systematic enough; internal Party political life is not strict enough; relevance of ideological-political work is not strong; some Party leading cadres’ Party thinking is diluted (有的党员领导干部党的观念淡漠); the role of the basic level Party organization as a fighting fortress is insufficient; comprehensive strict governance of the Party is not strong, the implementation of the central eight-point regulations is not strict enough; formalism and bureaucratic issues still exist; tourism using public funds, abuse of allowances and subsidies still occurs; personnel selection is not standardized; cadre management is not strict enough; there are some areas of clean government risk.

This report revealed that some information involving leaders had been referred to the CCDI/National Supervision Commission, Party’s Organization Department, and other departments for further handling. The 2017 report contained similar language as well.

Chen Xi made demands of Zhou Qiang and other members of the SPC Party leadership. Among those is to implement the Party’s absolute leadership over the work of the courts, strengthen its “service and guarantees” to the work of the Party and state (see my 2019 article on one aspect), and implement judicial reforms. One of the demands he made with significant practical significance (flagged by a Wechat account popular among judges) is for measures for SPC judges (and likely lower court judges as well) that further restrict the employment of judges who have resigned and stricter conflict of interest rules for relatives of judges who are lawyers. [It is unclear whether these future measures will slow the resignation of SPC (or lower court) judges.]

He called upon the Party Group to raise their political position (提高政治站位) and arm their brains with Xi Jinping New Era Socialism with Chinese Characteristics thinking (用习近平新时代中国特色社会主义思想武装头脑–a current slogan, for those not aware of recent developments).

Comments

For the outside observer, handicapped by a limited ability to decode Party jargon, the summary of the feedback raises many questions but also provides insights.

Although the feedback appears to be devastating criticism of the SPC, a quick comparison to CIG feedback to the Supreme People’s Procuratorate and the Ministry of Justice indicates that the language (at least in the press reports) is standard for CIG feedback to Party and state institutions. It thus provides insights into the thinking of the political leadership about how it views the law and legal institutions, including the courts.  It appears to treat the SPC as just another Party/state institution to be inspected.

Part of current Party policy seeks to bolster domestic and international confidence in the SPC and the lower courts.  At the same time, this press release describes the SPC as insufficiently fulfilling the duties and mission of the state’s highest judicial organ, and that some of its operations are inadequate.  No specific examples are provided. What are the qualifications of the CIG members to make this decision and what type of evaluation mechanism have they used?  What will be the impact of this feedback within the institution, within the Chinese legal community, and on the views of people in and outside of China towards the SPC?

The feedback also reveals continuing concern about Party building, political ideology, the Party thinking of senior SPC personnel, and implementation of Party policy.  It can be seen from my recent blogpost that SPC leaders seek to craft their policies, actions, initiatives, and other decisions to hit the target of being politically correct (post 19th Party Congress and post 4th Plenum) while being “problem-oriented” (坚持问题导向) that is, addressing relevant practical issues facing the court system.  The practical issues facing the court system are primarily civil disputes. We do not have overall statistics for the number of cases in the Chinese courts in 2019, but if the Shenzhen courts are any indication, the number of cases they accepted increased by 24%, with most of the cases being civil or commercial disputes. That means a substantial part of the work of the SPC must be directed towards creating a framework for dispute resolution in which domestic (and international) civil and commercial litigants can have greater trust.

 

CICC, foreign-related cases, intellectual property, international commercial court

The China International Commercial Court & the development of case law with Chinese characteristics

4 Comments

Screen Shot 2019-12-31 at 11.06.28 AM
Article in 30 December edition of People’s Court Daily

On 30 December 2019, I was quoted in an article that appeared in Supreme People’s Court (SPC) media (see the screenshot above).

“中国国际商事法庭的运作时间不长，但从迄今为止的运作中可以清楚看到，其受理案件非常慎重，会选择对中国相关法律发展产生影响的案件。”最高人民法院国际商事专家委员、北京大学国际法学院常驻知名学者Susan Finder表示，从首批案件的裁判文书可以明显看出，中国国际商事法庭的判决和裁定对于下级法院的法官和法律界人士来说，可能是重要的“软先例”，即权威性的裁判。

The CICC has been in operation a short time…What is clear from its operations so far is that it is carefully choosing its cases, only selecting cases that will have an impact on the development of relevant Chinese law. What seems evident from the initial rulings, at least, is that the judgments and rulings of the CICC are likely to be significant for lower court judges and members of the legal community as “soft precedents,” authoritative decisions….

It is an excerpt from a brief article that I am setting out below as I wrote it in English (I have added (Chinalawtranslate.com’s) translation of excerpts from certain documents) and Chinese translation (many thanks to a knowledgeable person who took a break from year-end case closing to do this elegant translation).

I am honored to have this opportunity to comment on some of the first rulings and judgments of the China International Commercial Court (CICC). This brief commentary will address the significance of CICC judgments and rulings and the CICC arbitration-related rulings.

The CICC has been in operation a short time and it is early days to provide a more detailed analysis of its operations. What is clear from its operations so far is that it is carefully choosing its cases, only selecting cases that will have an impact on the development of relevant Chinese law. What seems evident from the initial rulings, at least, is that the judgments and rulings of the CICC are likely to be significant for lower court judges and members of the legal community as “soft precedents,”  authoritative decisions that are highly persuasive although not binding on the lower courts. Authoritative commentators in China and abroad have noted that the arbitration rulings fill a gap in Chinese arbitration law. The rulings are also consistent with the position taken by courts in some major jurisdictions that also find that the parties expressed their intent to arbitrate any dispute although their contract was never finalized. In the view of this commentator, they are part of China developing its own case guidance system, highlighted in item #26 of the 5th Judicial Reform Outline, in particular the phrase “Improve working mechanisms for mandatory searches and reporting of analogous cases and new types of cases” “完善类案和新类型案件强制检索报告工作机制” . It was previously mentioned in Opinions on Putting a Judicial Responsibility System in Place and Improving Mechanisms for Trial Oversight and Management (Provisional) –“on the foundation of improving working mechanisms such as consulting similar cases and judgment guidance a mechanism is to be established requiring the search of similar cases and relevant cases, to ensure a uniform judgment standard for similar cases, and the uniform application of law “最高人民法院关于落实司法责任制完善审判监督管理机制的意见（试行）, (六) 在完善类案参考、裁判指引等工作机制基础上，建立类案及关联案件强制检索机制，确保类案裁判标准统一、法律适用统一 .

Moreover, thus far, five judges formed the members of the collegial panel, all of whom are the Chinese court’s most outstanding specialists on cross-border issues, including the judicial review of arbitration. This indicates the importance to which the Supreme People’s Court attaches to CICC cases.

In this commentator’s view, addition to CICC cases, other cases decided by or selected by the Supreme People’s Court would be classified as such. For example, cases decided by the Supreme People’s Court Intellectual Property Rights Court 最高人民法院知识产权法庭 would also be allocated to the category that I call “Supreme People’s Court soft precedents.” Other Supreme People’s Court soft precedents would include cases in the Supreme People’s Court Gazette 最高人民法院公报案件,  cases in the trial guides published by the various operational divisions 各个业务庭发表的审判业务指导丛书选的案件，and cases of the specialized judges committees of the SPC operational divisions 和各个业务庭专业法官会议案件。

In my view, cases decided by the collegial panels of the Supreme People’s Court are also persuasive, but not as persuasive as Supreme People’s Court cases in the categories described above. Supreme People’s Court circuit court cases are very persuasive to the courts within their jurisdiction. This case law is needed to supplement law and judicial interpretations and guide the lower courts correctly, as many new issues come before the courts before the legislative organs have time to amend legislation. I see China evolving its own case law, looking to traditional law and foreign jurisdictions for reference, but settling upon rules that fit China’s special situation, that may include some of the points I mention above. CICC decisions, whether rulings or judgments, will send important signals to the market, and are likely to be significant worldwide, as there is a documented increase in international arbitration cases where either the contract in dispute is governed by Chinese law or Chinese law is relevant in various ways.

The Chinese version:

中国国际商事法庭与有中国特色判例法的发展

我很荣幸有这个机会就中国国际商事法院(CICC)的首批裁定和判决发表意见。本短评将侧重中国国际商事法庭的判决和裁定以及仲裁司法审查裁定的重要性。

中国国际商事法庭的运作时间不长，对其运作进行更详细的分析还为时过早。 但从其迄今为止的运作中可以清楚看到的是，中国国际商事法庭选择其受理的案件非常慎重，只选择会对中国相关法律发展产生影响的案件。 至少从首批裁定可以明显看出，中国国际商事法庭的判决和裁定对于下级法院的法官和法律界人士来说，可能是重要的“软先例”，即权威性的裁判，虽然对下级法院没有约束力，但具有很强的说服力。 国内外权威专家均指出，这批裁定填补了中国仲裁法的一项空白。 这些裁定也与一些主要法域法院的立场保持了一致，也即尽管双方当事人的合同并未最后敲定，但双方都表示有意将争议提交仲裁。 在本文作者看来，这些裁判构成中国发展自己的案例指导制度的一部分，正如第五个司法改革纲要第26项所强调的，特别是“完善类案和新类型案件强制检索报告工作机制” 。 此前，最高人民法院关于落实司法责任制完善审判监督管理机制的意见（试行）曾提及“(六) 在完善类案参考、裁判指引等工作机制基础上，建立类案及关联案件强制检索机制，确保类案裁判标准统一、法律适用统一 。”

此外，到目前为止，合议庭均由五名法官组成，全部都是中国法院在跨境问题（包括仲裁司法审查）方面最杰出的专家。 由此可见最高人民法院对国际商事法庭案件的重视程度。

本文作者认为，除国际商事法庭案件外，最高人民法院审理或选取的其他案件也将被归入此类案例。例如，最高人民法院知识产权法庭判决的案件，也可归为所说的“最高人民法院软判例”，最高人民法院其他软判例还包括最高人民法院公报案例、各个业务庭发表的审判业务指导丛书选的案例和各个业务庭专业法官会议案例。我认为，最高人民法院合议庭判决的案件也具有说服力，但是没有上述几类案例的说服力强。 最高人民法院巡回法庭案例对其辖区内的法院具有很强的说服力。 由于立法机关往往来不及修改立法，许多新问题就摆在了法院面前，因此需要以判例来补充法律和司法解释以正确指导下级法院。 我看到中国正在发展自己的判例法，参考传统法律和外国司法管辖区的做法，但最终确定适合中国特殊国情的规则，这可能包括上文提到的一些要点。 国际商事法庭的裁判，无论是裁定还是判决，都将向市场发出重要信号，而且很可能在全球范围内产生重大影响，因为已有相关文件显示，争议合同适用中国法，或者中国法在不同方面予以适用的国际仲裁案件不断在增加。

Happy New Year!

alternative dispute resolution, CICC, diversified dispute resolution, international commercial court, Women in the judiciary

CICC Expert Committee Office Renamed

Leave a comment

A brief notice appeared on the China International Commercial Court (CICC)’s websites on 9 August, announcing that the Office of the International Commercial Expert Committee (Expert Committee) of the Supreme People’s Court (SPC) (国际商事专家委员会办公室) had been renamed the Coordination and Guidance Office (协调指导办公室) for the CICC from 21st June 2019. The main duties of the Office are described as directing and coordinating construction, adjudication management and external exchange (负责指导协调国际商事法庭建设、审判管理、对外交流; 负责国际商事专家委员日常工作等) of the CICC, and also in charge of the routine work of members of the Expert Committee. I surmise that these functions are meant to convey that the office will not only support activities related to the Expert Committee but also be responsible for a variety of matters, such as coordinating the drafting of rules and the wide variety of administrative matters that go along with any administrative entity in China, particularly one that deals with foreigners. The notice also announced that from 23rd July 2019, Ms. Long Fei, who has a Ph.D. from China University of Political Science and Law, has been appointed as the Deputy Director (Person in Charge) of the Coordination and Guidance Office. She had formerly been the Director of Department of Guidance Service, Judicial Reform Office of the SPC. She brings to the new role many years of work on diversified dispute resolution related issues.

circuit courts, foreign-related cases, international commercial court, judges

China International Commercial Court starts operating

2 Comments

IMG_4147
The author in front of CICC #1,  December 2018

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.  

Personnel developments

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:

  1. Wang Shumei (deputy head of the SPC’s #4 Civil Division, specializing in maritime law);
  2. 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;
  3. 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;
  4. Zhang Xuemei, of the SPC #2 Civil Division (domestic commercial issues);
  5. Yu Xiaohan, also of the #4 Civil Division, and like Wang Shumei, a maritime law specialist;
  6. 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;
  7. 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:

  1. China International Economic and Trade Arbitration Commission (CIETAC);
  2. Shanghai International Economic and Trade Arbitration Commission;
  3. the Shenzhen Court of International Arbitration (SCIA);
  4. Beijing Arbitration Commission;
  5. China Maritime Arbitration Commission;
  6. the Mediation Center of China Council for the Promotion of International Trade (CCPIT); and
  7. 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.

First cases

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.

 

About Me, Expert Committee, international commercial court

Supreme People’s Court Monitor 2018 Year-end Report

Leave a comment

Screenshot 2018-12-07 at 5.48.29 PM
The Monitor as “Fargo North” Decoder

In 2018, the Supreme People’s Court Monitor published 25 posts and had almost 39,009 page views, from 146 jurisdictions, primarily from:

  • United States;
  • (mainland) China;
  • Hong Kong;
  • United Kingdom.

with Germany, Australia and Singapore trailing. Mainland China is in second place for the first time.

Why did I do less blogging when compared to 2017, when I published 41 posts?  Perhaps it can be attributed to competing professional obligations–including writing several academic-style articles (all in the production pipeline), and the significant effort required to unpack SPC documents and initiatives in under 1500 words.  Perhaps also attributable to failing to realize that the “perfect is the enemy of the good.” The many developments in 2018 have left me with a large backlog of documents and issues to discuss.

In 2018, the work of the Monitor resulted in several official and semi-official honors (listed in chronological order):

  1. in June, the honor (and the challenge) of giving lecture #19 (in Chinese) as part of the lecture series (大讲堂) sponsored by the Supreme People’s Court (SPC)’s China Institute of Applied Jurisprudence, as reported in this earlier blogpost. It was the last lecture that Judge Jiang Huiling chaired before he was transferred from the Institute to the National Judicial College and I’m not aware that another lecture has been held since he was transferred.  I am very grateful to Judge Jiang (for his invitation and comments) and the two commentators, Professor Hou Meng, now of Renmin University Law School, and Huang Bin, senior editor of Journal of Law Application, for their thoughtful comments;
  2. In August, the honor of being selected to the China International Commercial Court’s International Expert Committee (Expert Committee), and the challenge of giving an eight-minute speech with substantive content that struck the right tone at the first meeting of the Expert Committee.  As reported in this earlier blogpost, the attendees at that first meeting included senior officials from within the SPC and related institutions, including the Ministry of Foreign Affairs and the Ministry of Commerce.
  3. In November, speaking at the third annual UK-China Rule of Law Roundtable, sponsored by the Great Britain China Centre (GBCC) (an introduction to GBCC is found here) and the China Law Society (CLS). The Roundtable focused on international commercial dispute resolution (CDR) Fortunately, GBCC takes an inclusive approach to its high-powered and congenial delegations. The delegation included a number of us with other than UK passports.

Since the blog was founded almost six years ago:

Page views: 108,990
Jurisdictions: 183
Posts: 212

Most followers use Twitter to follow the Monitor. Although Twitter is not accessible in mainland China without a VPN, 21% of the Monitor’s Twitter followers are based there.

Thank you to:

  • the many judges and other staff members currently or formerly affiliated with the SPC (and its institutions) and local courts, who helped me understand how the SPC and lower courts operate and nuances of life in the Chinese court system in countless ways;
  • my colleagues and students at the School of Transnational Law, Peking University (Shenzhen);
  • my fellow bloggers Jeremy Daum (Chinalawtranslate.com), Wei Changhao (npcobserver.com, Mark Cohen (Chinaipr.com), and Eugene Fidell (globalmjreform.blogspot.com);
  • the law schools and other institutions around the world, that have listed my blog as a Chinese law resource;
  • law and political science professors who have recommended the Monitor to students and many others in other institutions who have provided support in various ways;
  • journalists and scholars writing about the Chinese judiciary who have cited the Monitor;
  • organizers of conferences and other events in Beijing, Changsha, Shanghai, Washington, DC and New York.

A special thank you to those who had the fortitude to read drafts of articles and blogposts and give frank comments.

 

Expert Committee, international commercial court

China International Commercial Court & the Supreme People’s Court Monitor

Leave a comment

IMG_3582I am prefacing this blogpost with a statement that nothing in it (or future blogposts, for that matter) represents the Supreme People’s Court (SPC), the China International Commercial Court (CICC), or its newly established International Commercial Expert Committee (Expert Committee).

As can be seen from the above photo taken in the SPC, with President Zhou Qiang, Vice President Luo Dongchuan and others, I was among the first group of experts appointed to the CICC’s International Commercial Expert Committee. Former World Trade Organization Appellate Judge Zhang Yuejiao and I were the only two women who attended the initial meeting on 26 August.  I’ll set out some comments on the Expert Committee and the initial meeting.

The Expert Committee is the first official SPC committee that includes foreigners and others from outside of mainland China, and it may be the first of its nature within the Chinese justice (司法) system.  The Expert Committee was established as a way to involve foreigners in the CICC.  As I wrote earlier this year, unlike Singapore or Dubai, because of the restrictions of Chinese law, the CICC could not invite foreign judges to serve on the court.  Among the 32 experts appointed to the Expert Committee include many leading specialists in international arbitration and dispute resolution, including judges, arbitrators, scholars and practitioners from inside and outside China.  The detailed rules on how the CICC and the Expert Committee will operate (and interact) are still being drafted.  The provisions on the establishment of the CICC anticipate that the experts on the Expert Committee will be able to mediate disputes and provide opinions on foreign law, among other functions.

The initial meeting was held on a Sunday morning, likely to accommodate President Zhou Qiang’s schedule or that of the other senior officials who attended the meeting.  SPC  newly appointed Vice President Luo Dongchuan chaired the proceedings.  Future events will reveal his relationship, if any with the CICC.  He had previously headed the SPC’s #4 Civil Division and was most recently the head of Xinjiang’s Supervision Commission. The senior officials who attended from outside the SPC included Mr. Xu Hong, head of the Department of Treaties and Law of the Ministry of Foreign Affairs (MFA), several officials from the Department of Treaties and Law of the Ministry of Commerce (MOFCOM), as well as representatives from China’s major arbitration institutions.  A large group of officials from the SPC also attended, seated in the row behind the experts.  The CICC judges sat separately.  President Zhou Qiang presented all the experts present with their letters of appointment, followed by speeches by officials from MFA and MOFCOM, and several of the most prominent experts on the Expert Committee, including Huang Jin, President of the China University of Political Science and Law, Sir William Blair, former High Court judge and judge in charge of the Commercial  Court in London, and Rimsky Yuen, former Hong Kong Secretary for Justice.

The remaining two hours of the meeting consisted of brief presentations by some of the SPC judges involved and several experts, while other experts provided comments.  Both Judge Zhang Yuejiao and I spoke.  My brief presentation was on “the CICC: An Important Step in the Internationalization of the Chinese Courts.”  I raised a few of the legal issues that I had raised in earlier blogposts.  I concluded by reminding the attendees that the CICC could be a great opportunity to train a new generation of Chinese international judicial personnel, and that I was looking forward to the CICC giving a chance to some of my students at the Peking University School of Transnational Law to intern there!

 

arbitration, circuit courts, international commercial court

Comments on China’s international commercial courts

2 Comments

IMG_3420
photo from the First International Commercial Court’s opening ceremony (the grey suits are the new court summer uniforms)

At the end of June, the Supreme People’s Court (SPC) held ceremonies to mark the establishment of its international commercial tribunals (国际商事法庭)(this post will use the phrase “international commercial court,” or “CICC” as the official media are using both terms). The provisions establishing the international commercial courts went into effect on July 1. As I wrote earlier this year,  political and technical requirements shaped the CICC, as will be explained below.

These (partial) comments do not set out an overview of the court, as that has already been done by several law firms (and there are likely to be more), including Zhong Lun (published on the Kluwer Arbitration blog) and Herbert Smith Freehills.

Comments

In my view, those drafting the structure of the CICC were constrained by Chinese law, the nature of the Chinese court system and related regulatory systems. Although some Chinese commentators have referred to the CICC privately as a “mini-circuit court,” the CICC incorporates innovations, some of which have not been recognized by commentators thus far and provisions from the latest round of judicial reforms. The brief judicial interpretation establishing the CICC leaves related questions unanswered, some of which I will raise below.  I expect some of those questions to be gradually answered as regulations underpinning the CICC are issued.

The small team of judges and limited jurisdiction of the court are likely to mean that overall trends in Belt & Road dispute resolution are unlikely to be significantly affected by its establishment.  As a court focused on international commercial issues staffed by some of China’s most knowledgeable judges in that area, the court is likely to have a positive effect on the competence of the Chinese judiciary regarding international trade and investment issues, particularly as the SPC leadership knows that the international legal community is monitoring the court’s operation.  It is unclear from recent reports whether the SPC will allocate additional resources to support its operation, which to this outside observer would be a shortsighted approach to take, as even something as apparently simple as translating judgments into English (as appears to be the intention of the court) is time-consuming.

Structure of the court

From Judge Gao’s press interview earlier this year (the subject of that earlier blogpost, a full English translation of which is found on the CICC website,) it is clear that she and her other colleagues involved in drafting the judicial interpretation were well aware of international commercial courts that had been or were being established elsewhere in the world.  This research was provided by the China Institute for Applied Jurisprudence, the SPC’s in-house think tank (briefly described in this earlier blogpost).

However, the political imperatives of establishing the CICC as a priority matter meant that the SPC was constrained by the realities of current Chinese law.  Because judicial interpretations of the SPC cannot contravene the civil procedure, judges and other national law (National People’s Congress legislation) [and there appeared to be insufficient time and possibly appetite for promulgating legislation piloting exceptions to these provisions]. This meant that the language of the court could not be English, the procedural law had to be Chinese civil procedure law, and the judges had to be judges so qualified under current Chinese law.

Jurisdiction of the court

As has explained elsewhere, under Article 2 of its Provisions, the CICC has jurisdiction over five types of cases, three of which are rather flexible (cases under a higher people’s court jurisdiction that it applies to have the SPC hear; first instance international commercial cases that have a nationwide significant impact; any other international commercial cases that the SPC considers appropriate to be tried by the CICC).  This enables the CICC to control its caseload, as the eight judges on the CICC are likely to have their existing caseload in the SPC division or circuit court in which they are working, plus major obligations in drafting judicial interpretation or analogous judicial guidance.  I am personally unaware of cases in which a higher people’s court has required the SPC to hear a case within its jurisdiction (please contact me if you have such information) but it can be anticipated that a higher people’s court may prefer to rid itself of a difficult case (either legally or more likely institutionally) to avoid a mistaken decision.

Judges of the court

As has been noted elsewhere, the eight judges appointed to the CICC are all SPC judges, although Article 4 of the CICC provisions appears to permit qualified judges from the lower courts to be selected.  Those provisions do not mention whether a selection committee (one of the current judicial reforms) was used to select the current CICC judges, or whether a selection committee will be used for future appointments.  There are in fact experienced judges in some of the lower courts who are able to use English as a working language.  However, the exigencies of needing to appoint judges in a brief period of time (and possible SPC headcount restrictions, after the SPC has cut headcount under the quota judge system) meant that all CICC judges are from the SPC.  This means a number of judges are relatively junior.

Expert committee

The expert committee to be established (rules yet to be issued) is an innovation under Chinese court practice.  Unlike many other major jurisdictions, the Chinese courts lack user committees or advisory committees.  This could be a useful way of bringing international input before the Chinese courts in a formal way. although the usefulness of the institution may depend on how often the committee meets and how familiar its members are with the Chinese court system.  Presumably acting as a mediator or providing an expert opinion on a matter of foreign law will be optional (further details to be revealed when those rules are issued).  Some persons may prefer to provide general advice to the SPC rather than involve themselves in the specifics of a particular dispute.

Evidence before the court

The CICC will not require translations into Chinese of evidence, if the parties so agree, or require evidence to be notarlized and legalized. As I wrote previously,  China has not yet acceded to the Hague Convention Abolishing the Requirement of Legalization for Foreign Public Documents,  so in Chinese court litigation, notarization and legalization of documents is often required., starting when a party files suit or when a foreign party responds. It is not clear whether the CICC will require notarization and legalization of foreign party authorization of counsel.  It is an innovation possible within the constraints of current law, that the CICC will consider evidence even if evidence from outside of China has not been notarized and legalized. Notarization and legalization costs time and money and a great deal of effort. It is understood that China is considering acceding to the Hague Legalization Convention.

Mediation and arbitration linking mechanism

The mechanism to link mediation, arbitration and litigation is an important part of the judicial reform measures (mentioned in this blogpost on diversified dispute resolution).  Which mediation and arbitration institutions will link to the CICC are unclear (and the rules for selecting those institutions), but the policy document underpinning the CICC refers to domestic rather than foreign or greater China institutions.  The Shenzhen Court of International Arbitration and Hong Kong Mediation Centre have entered into a cooperative arrangement to enable cross-border enforcement of mediation agreements, so presumably, this is a model that can be followed for Hong Kong.

Enforcement

The CICC provisions do not add new content on the enforcement of their judgments. As this earlier blogpost mentioned, enforcement of its own (and that of Chinese lower courts abroad) and foreign court judgments in China is on the SPC’s agenda.  As I have written (and spoken about) previously, China (with SPC participation in its delegation) has been taking an actively part in negotiations on the Hague Convention on the Recognition & Enforcement of Foreign Judgments, (the link includes the draft convention) and has signed but not yet ratified the Hague Convention on the Choice of Courts Agreements.

Borrowing beneficial ideas from abroad

It appears that the drafters of the CICC provisions considered some of the practices of Frankfurt High Court International Commercial Chamber in their draft: No translation of documents which are drafted in the English language (if there is consent); witnesses can be heard in English;and extensive use of video conferencing or other electronic means.

Some outstanding questions

  1. Will the mediation and arbitration linking mechanism be able to link with jurisdictions outside of mainland China?  Under Chinese law, preliminary measures (interim measures) such as injunctions, property or evidence preservation are not available for offshore arbitration. Will the CICC mechanism be able to change this, or will changes to current law be required, as seems more likely?
  2. Will difficult issues before the CICC be referred to the SPC’s judicial committee or other institutions within the SPC?  As I wrote about a year ago, the SPC has adopted new judicial responsibility rules, setting out guidance under which cases heard by a collegiate panel are referred to a professional judges committee or the SPC’s judicial committee.  Query whether difficult cases that have been discussed by the entire body of CICC judges will be referred further. The CICC includes several of the SPC’s most knowledgeable judges on cross-border matters (as well as the head  (chief judge) and deputy heads of the #4 Civil Division, the division focusing on cross-border/international matters).  These details are likely to be worked out over time.
  3. Will the two CICC courts have their own support staff?  Will it have its own case acceptance office?  Is the intention to give more work to existing staff, or will there be an increase in headcount to support the new institution?  The CICC judges need resources to support their work, whether it be in translation or research assistance.  If the consequence of the establishment of the CICC is to give additional work to existing personnel, it is not out of the question that someone involved may collapse from overwork.  SPC President Zhou Qiang noted in his most recent report to the NPC that there have been deaths from overwork in the lower courts. Some of the Chinese courts’ most experienced and knowledgeable judges in the area of cross-border commercial law have been appointed to the court.

Concluding Comments

The establishment of the court and its English language website gives foreign outside observers a chance to monitor how a Chinese court deals with and decides commercial cases, creating even greater pressure on the SPC and a small team of its most competent international commercial judges.

In my view, the establishment of the CICC will not affect how highly sophisticated lawyers draft dispute resolution clauses for large-scale Belt & Road projects. Many of those lawyers will still draft clauses providing for offshore arbitration because of the New York Convention (and the corresponding arrangement between Hong Kong and the mainland) and some concern about Chinese arbitration institutions.  I have personally found it is difficult to get an accurate grasp of what current practice is with Belt & Road related dispute resolution clauses, given the range of deals under the Belt & Road Initiative. It is difficult to predict how the CICC may change those practices. The CICC and its associated dispute resolution mechanism provide an alternative to existing dispute resolution mechanisms. Will it show itself to be a more attractive way to resolve international commercial disputes, efficient and cost-effective, while maintaining high quality? We will need to monitor how it develops.

__________________________________

Many thanks to those who commented on earlier drafts of this blogpost.