By Susan Finder with initial research assistance by Zhu Xinyue
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.
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.
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