Judicial interpretations & arbitration

Screen Shot 2018-04-08 at 8.35.58 PM

partial screenshot from SPC website of the most recently issued judicial interpretations

While Supreme People’s Court (SPC) judicial interpretations are unquestionably binding on the lower courts, one of the many questions that Chinese legislation does not answer clearly is the broader extent to which they are binding.  [2007 SPC regulations state that “the judicial interpretations issued by the Supreme People’s Court have the force of law (具有法律效力).  The issue poses both theoretical and practical questions and is one that I had been exploring earlier this week offline with several blog followers (and some others in the Chinese legal community), in relation to Chinese law governed arbitration.

Coincidentally on 5 April Wang Jun, former dean of the Law School of the University of International Business and Economics and senior consultant to Cyan Law (采安律师事务所) posted his analysis of a recent Chinese court case on the firm’s Wechat account that raises the issue of whether judicial interpretations are binding in a Chinese law governed arbitration (court cases, of course lack binding precedential value, as I wrote in my Tsinghua China Law Review last year).

The court case was a ruling in response to an application to cancel (set aside) an arbitral award of the Shangrao [Jiangxi] Arbitration Commission, one of the 250 or so domestic arbitration commissions, in a private lending dispute. The parties that applied to cancel  the award alleged that the arbitral tribunal’s failure to apply the cap on interest in the Supreme People’s Court 2015 interpretation on private lending evidenced that the arbitral tribunal had twisted the law in arbitration.

The court ruled:

the arbitral award is the result of the independent judgment of the arbitration tribunal. If it finally determines that there is a gap between the principal and interest of the loan owed by …[the debtor] and the judicial interpretation, that is within the scope of the arbitral tribunal’s understanding and application of law, not an act of twisting the law in arbitration. Moreover…[the applicants] did not provide this Court with evidence that the arbitrators had sought or accepted bribes, committed malpractices for personal benefits or perverted the law in the arbitration. Therefore, [the applicants] application ton cancel the arbitral award lacks a factual and legal basis. This Court does not support it according to law.

 Wang Jun (and his team) commented:

Whether the judicial interpretations of the Supreme People’s Court as a matter of course apply to arbitration cases has always been a controversial matter. We believe that judicial interpretations are what the Supreme People’s Court has promulgated regarding how specifically to apply the laws in the courts’ trial [adjudication] work. It is limited to court trials [adjudication] and does not necessarily apply in arbitration cases. And Article 7 of the Arbitration Law expressly provides that arbitration should be based on facts, in line with the law, fair and reasonable settlement of disputes. Therefore, it can be argued that arbitral tribunals do not necessarily have to be bound by the judicial interpretation of the Supreme People’s Court when hearing cases.

On the issue of applying judicial interpretations in arbitration

The initial response to my question of whether judicial interpretations are binding was that views differ among (Chinese) arbitrators, but that it is an issue arbitrators keep in mind because of the power of courts to review arbitral awards. A number of senior Chinese arbitrators, who have heard cases both inside and outside China, further shared their views with me.  One commented that because judicial interpretations in China serve as an important source of interpretation of law, as more detailed and convincing guidance on how Chinese legislation should be applied, that he usually followed (applied) judicial interpretations of Chinese substantive law in arbitration. He distinguished the rare case where he might think that the judicial interpretation was wrong.  Another arbitrator commented that in his experience in Chinese law governed arbitrations, judicial interpretations were considered binding.  A third prominent arbitrator sought to distinguish domestic arbitrations from foreign-related and international arbitrations, where the standards of review were different.

Is practice any different when non-Chinese arbitrators are sitting as arbitrators? Does it make a difference if the arbitration is seated outside of [mainland] China, or does it depend?  Those with further information, please share what you know through the comment function or by Wechat or email.

 

 

 

Accessing Chinese legal developments through Wechat (updated)

logoWechat, as most people with an interest in China know, has become the preferred form of social media in China.  The legal community in China has taken to it too.

Some are official accounts of government entities, including the courts and others are public accounts (公众账号) established by companies, law firms, individuals, and other organizations. Ir  Each has its benefits for the user located outside of China.

To access these public accounts, it does not matter where in the world you are located, but you need a smart phone to install the Wechat app. The accounts can be accessed through “search official accounts” or “Add contacts” and typing in either the Wechat ID or the name of the account. The accounts can also be accessed through computer or table as well, by searching for the account in question.

The official government accounts enable the user to keep current on the issues and latest government position in that area of law–new policy, new legislation, and new reforms.  The Supreme People’s Court, for example, has one, as does the Supreme People’s Procuratorate, as well as their local counterparts.

Another category is the less official public accounts.   Some are affiliated with official organizations, while others are not, while others are in a grey area. The writing tends to be aimed at the professional, with less bureaucratic language.   Some accounts are aimed at practicing lawyers, more focused on civil and commercial law than criminal law or administrative law, but both can be found. Some accounts publish writings by the account holder, while others accept articles submitted by followers.  One very popular type of article is one that reviews the law and cases in a particular area of law.

Some of the legal public accounts that I follow (or are highly recommended by those that I know) are listed below.  The list has now updated with further information provided by a 31 January article in Empire Lawyers and Lawread on the top 10 public accounts. Please use the comment function (or email me) to suggest additional accounts.

  • Arbitration:  Wechat ID: cnarb1, account of Lin Yifei, mentioned in an earlier blogpost.  I highly recommend it to both practitioners and others interested in arbitration.
  • Labor law:Wechat ID: laodongfaku (劳动法库) (with over 200,000 followers (this is mentioned in Empirelawyers top 10; Wechat ID: ldfview (子非鱼说劳动法);
  • Civil law 海坛特哥 (haitanlegal), account of Chen Te, formerly of the Beijing Higher People’s Court, now a lawyer (高衫legal) [his earlier posts focused on medical law], Wechat ID: gaoshanlegal;  审判研究, Wechat ID: spyjweixin; 法客帝国, Wechat ID: Empirelawyers; 审判研究, Wechat ID: msspck.
  • Criminal law: 辩护人 (bianhuren1993); 刑事实务, Wechat ID: xingshishiwu, with over 200,00 followers; 刑事审判参考 Wechat ID: criminailaw.
  • Judiciary: There are many, among them are: 法影斑斓 , account of He Fan, judge in the judicial reform office of the Supreme People’s Court, Wechat ID: funnylaw1978 and JunnyLaw (JunnyLaw1977) the newly established account of Jiang Qiang, a judge in the #1 Civil Division of the Supreme People’s Court, so far, articles focusing on civil law issues.
  • Civil litigation, 天同诉讼圈, Wechat ID: tiantongsusong (in the top 10), established by Tian Tong & Partners), with over 250,000 followers;
  • International law: Wechat ID: ciil 2015 国际法促进中心
  • IP law–知识产权那点事, Wechat ID: IPR888888.  The posting of 30 January, for example, includes the Supreme People’s Court judgment 11 January in its retrial of the Castel wine trademark infringement case and an article on indirect infringements of copyright on the Internet.
  • Aggregators/General–智和法律新媒体, Wechat ID: zhihedongfang; 法律博客, Wechat ID: falvboke,  法律读品, Wechat ID: lawread, 尚格法律人, wechat ID: falvren888 (followed by at least 130,000 legal professionals). 法律读库 Wechat ID: lawreaders, followed by 500,000 (in top 10); 法律讲堂, Wechat ID: yunlvshi, established by a partner with the Yingke Law Firm (also listed among the top 10).

This linked article written by Chen Te discusses how legal professionals can market themselves through a public account as well as some of the issues of having a public account.

Accessing Chinese legal developments through Wechat

logoWechat, as most people with an interest in China know, has become the preferred form of social media in China.  The legal community in China has taken to it too.  Some are official accounts of government entities, including the courts and others are public accounts (公众账号) established by companies, law firms, individuals, and other organizations.  Each has its benefits for the user located outside of China.

To access these public accounts, it does not matter where in the world you are located, but you need a smart phone to install the Wechat app. The accounts can be accessed through “search official accounts” or “Add contacts” and typing in either the Wechat ID or the name of the account. The accounts can also be accessed through computer or table as well, by searching for the account in question.

The official government accounts enable the user to keep current on the issues and latest government position in that area of law–new policy, new legislation, and new reforms.  The Supreme People’s Court, for example, has one, as does the Supreme People’s Procuratorate, as well as their local counterparts.

Another category is the less official public accounts.   Some are affiliated with official organizations, while others are not, while others are in a grey area. The writing tends to be aimed at the professional, with less bureaucratic language .   Some accounts are aimed at practicing lawyers, more focused on civil and commercial law than criminal law or administrative law, but both can be found. Some accounts publish writings by the account holder, while others accept articles submitted by followers.  One very popular type of article is one that reviews the law and cases in a particular area of law.

Some of the legal public accounts that I follow (or are highly recommended by those that I know) are listed below.  Please use the comment function (or email me) to suggest additional accounts.

  • Arbitration:  Wechat ID: cnarb1, account of Lin Yifei, mentioned in an earlier blogpost.  I highly recommend it to both practitioners and others interested in arbitration.
  • Labor law:Wechat ID: laodongfaku (劳动法库) (with over 200,000 followers; Wechat ID: ldfview (子非鱼说劳动法);
  • Civil law 海坛特哥 (haitanlegal), account of Chen Te, formerly of the Beijing Higher People’s Court, now a lawyer (高衫legal) [his earlier posts focused on medical law], Wechat ID: gaoshanlegal;  审判研究, Wechat ID: spyjweixin; 法客帝国, Wechat ID: Empirelawyers; 审判研究, Wechat ID: msspck.
  • Criminal law: 辩护人 (bianhuren1993); 刑事实务, Wechat ID: xingshishiwu; 刑事审判参考 Wechat ID: criminailaw.
  • Judiciary: There are many, among them are: 法影斑斓 , account of He Fan, judge in the judicial reform office of the Supreme People’s Court, Wechat ID: funnylaw1978 and JunnyLaw (JunnyLaw1977) the newly established account of Jiang Qiang, a judge in the #1 Civil Division of the Supreme People’s Court, so far, articles focusing on civil law issues.
  • International law: Wechat ID: ciil 2015 国际法促进中心
  • IP law–知识产权那点事, Wechat ID: IPR888888.  The posting of 30 January, for example, includes the Supreme People’s Court judgment 11 January in its retrial of the Castel wine trademark infringement case and an article on indirect infringements of copyright on the Internet.
  • Aggregators–智和法律新媒体, Wechat ID: zhihedongfang; 法律博客, Wechat ID: falvboke,  法律读品, Wechat ID: lawread

This linked article written by Chen Te discusses how legal professionals can market themselves through a public account as well as some of the issues of having a public account.

Supreme People’s Court and its normative documents

Court reply

Court reply

This blogpost discusses some of the documents that the Supreme People’s Court (Court) issues and what they mean, particularly to foreign legal professionals who may encounter them in practice. They reflect the bureaucratic way the Court operate (about which I (and others) have written). It is not a complete list, but a description of some of the ones I’ve written about on this blog.

The 4th Five Year Plan anticipates some reform in this area: “improve the Supreme People’s Court’s methods of trial guidance, increase the standardization, timeliness, focus and efficacy of judicial interpretations and other measures of trial guidance.”

Terminology–Some of these are described on the Court website as judicial documents (司法文件) or judicial normative documents (司法规范性文件).  They are not cited in judgments or rulings (unlike judicial interpretations), but judgments or rulings should be consistent with them. There do not seem to be clear rules on which of these documents should be made public.  Some of those documents include:

  1. Opinions (意见), issued by the Court and other institutions not authorized to issue judicial interpretations.

 Example:  Opinion on Handling Criminal Cases of Domestic Violence in Accordance with Law (Supreme People’s Court,(Law Release (2015) No. 4), The Supreme People’s Procuratorate, The Ministry of Public Security, and Ministry of Justice), discussed here, with normative provisions (instructions to the lower courts–“please implement conscientiously”).

2.  Opinions (意见), issued by the Court, but setting out judicial policy.

Opinions of the Supreme People’s Court on Fully Strengthening Environmental Resources Trial Work to Provide Powerful Judicial Safeguards for Promoting Eco-civilization Construction (最高人民法院关于全面加强环境资源审判工作 为推进生态文明建设提供有力司法保障的意见) and Opinions on Providing Judicial Services and Safeguards for the Building of One Belt One Road by People’s Courts” (关于人民法院为“一带一路”建设提供司法服务和保障的若干意见) (Instructions to the lower courts– “the following guiding opinion is set out”).

These may require further implementing regulations but judgments should be consistent with these opinions.

3. Conference summaries often address new issues or areas of law in which the law is not settled.  Conference summaries are not required to be made public, although with the internet and social media, they are now more widely available than in the early 1990’s, when I first wrote about them.

Example–the 2015  one on drugs (全国法院毒品犯罪审判工作座谈会纪要). (instructions to the lower courts-please implement this as reference, combined with the actual situation of trial work, if in implementation problems are encountered, please report in a timely manner to this Court) 请结合审判工作实际参照执行。执行中遇到问题,请及时报告我院)

4. Replies (请示复函).  Arbitration lawyers see these in published replies to the lower courts, such as those done under the Court’s reporting system relating to judgments/rulings concerning foreign-related and foreign arbitral awards.The response is binding on the lower court regarding the particular case.  The Court publishes these replies (and the report from the lower courts) in its periodical China Trial Guide: Guide on Foreign-Related Commercial and Maritime Trial, from which the following example is taken:

Example: This 2012 response to a report from the Hubei Higher People’s Court: SPC reply to Hubei High Court.

In the area of arbitration practice, the principles set out in these responses are persuasive, but not binding in later cases, and arbitration lawyers discuss these responses as a particular form of case law, such as this law firm client alert.

Replies (批复).  These are seen in requests for lower courts for approval of certain matters, such as having basic level courts hear foreign-related cases, based on relevant law and judicial interpretations.

Example, a 2013 reply by the Court to a request from the Anhui Higher People’s Court.  These are binding on the lower courts.

5. Decision (决定).  These are seen when the Court issues documents setting out an administrative approval.

Example: a 2015 decision designating certain courts as model courts for diversified approaches to dispute resolution, mentioned here.

Supreme People’s Court regulates private (shadow) lending

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private lending

On August 6, the Supreme People’s Court issued its long-awaiting judicial interpretation on private (shadow) lending.  Its provisions are applicable to P2P funding platforms and other lenders not under the jurisdiction of the financial regulators. My article in The Diplomat summarizes the judicial interpretation and its significance.

The Supreme People’s Court and interpreting the law, revisited

Marriage law judicial opinion

Marriage law judicial opinion

The topic of the Supreme People’s Court and the interpretation of law is one that vexes many, legal practitioners and academics alike.  Although the Chinese constitution vests the power to interpret law with the Standing Committee of the National People’s Congress (NPC SC), the Supreme People’s Court (the Court) and the Supreme People’s Procuratorate (SPP) actively issue interpretations of law. The Court more so than the SPP, because it deals with a broader range of legal issues.  These interpretations of law are critical to the operation of the Chinese legal system because national law tends to set out broad principles that require additional legal infrastructure to be workable and the courts, in particular, need that legal infrastructure to decide cases.

A 1981 decision by the NPC SC delegated to the Court the authority to interpret law relating to questions involving the specific application of laws and decrees in court trials, while the Supreme People’s Procuratorate (SPP) was delegated authority to interpret law relating to questions involving the specific application of laws and decrees in procuratorial work.  The Organic Law of the People’s Courts re-iterates the delegation of authority to interpret law to the Court. Oddly enough, the principle is not in the Organic Law of the People’s Procuratorates. Interpretations by both the SPP and the Court are known as “judicial interpretations.”

In 2015, the Legislation Law, which had previously not addressed interpretation of law by the Court and the SPP, addressed the issue in Article 104.  This article is taken as intended to codify existing practice, because the explanation of the law recognizes the practical necessity of judicial interpretations:

  • “Interpretations on the specific application of law in adjudication or procuratorate work issued by the Supreme People’s Court or Supreme People’s Procuratorate shall primarily target specific articles of laws, and be consistent with the goals, principles and significance of legislation.”
  • It requires the Court (or SPP) in the situation described in the second paragraph of Article 45 of the Legislation Law (where the NPC SC  gives interpretations of national law), to submit a request for a legal interpretation, or a proposal to draft or amend relevant law, to the NPC SC.

(The explanation of the law  (legislative history) provides further background).

The process for drafting Court interpretations described in the 2007 regulations requires that the views of the relevant special committee or department of the NPC SC be solicited during the drafting process, and there would be pushback from the NPC SC if it was considered that the judicial interpretation had gone ‘too far.’

What types of judicial interpretations are there?

The 2007 Court regulations on judicial interpretations (linked here)  limit judicial interpretations to the following four types:

Those 2007  regulations set out various procedures for drafting and promulgating judicial interpretations, including a requirement that they be approved by the Court’s judicial committee and be made public.  As discussed in earlier blogposts, broad public consultation may be done if it affects the “vital interests of the people or major and difficult issues. These regulations also provide that judges may cite judicial interpretations as the basis for a court decision or ruling. Article 23 of the 4th Five Year Court Reform Plan mentions reform of judicial interpretations:

Improve the Supreme People’s Court’s methods of trial guidance, increase the standardization, timeliness, focus and efficacy of judicial interpretations and other measures of trial guidance. Reform and improve mechanisms for the selection, appraisal and release of guiding cases. Complete and improve working mechanisms for the uniform application of law.

As discussed in earlier blogposts, the Court also issues other documents with normative provisions that do not fit the above definition.  Those will be discussed separately.

The tidal wave of Chinese shadow banking disputes

the "pyramiding" private lending  (potentially crushing the banks)

“Pyramiding” private lending (potentially crushing the banks)

My article in The Diplomat on shadow banking disputes was recently published. It highlights what few outside of China have noticed–that shadow banking/private lending disputes account for a substantial proportion of civil/commercial disputes in Chinese courts, creating a particular burden on the courts.  In some places, the percentage hovers close to 50%!  These disputes raise a range of issues and the law is particularly unclear.  Although some provincial (and municipal) courts have issued guidance in the absence of a more detailed judicial interpretation, the lower courts are looking to the Supreme People’s Court for a more comprehensive national legal framework.