Category Archives: One belt one road

BRI, One belt one road

China-Belarus Judicial Cooperation under the Belt & Road Initiative

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Official meeting of President Xi Jinping with Belarus President Lukashenko, 2016

Guest post by Safia Yablonskaia*

Belarus is an Eastern European country located between the European Union and Russia, recently in the news. This blogpost analyzes judicial cooperation between China and Belarus, under the Belt & Road Initiative (BRI), both bilaterally and through China-led international organizations such as the Shanghai Cooperation Organization and speculates on the possible impact of current events in Belarus.

Bilateral Judicial Cooperation between Belarus and China under the BRI

The scope of cooperation between China and Belarus has constantly been expanding in a broad range of areas, especially after China initiated the BRI. However, before 2016, the meetings and agreements rarely focused on judicial cooperation. Although the two countries signed a treaty on civil and criminal judicial assistance in 1993 , one of the only times the countries expressed the intent to expand judicial cooperation was at a 2007 meeting of the National People’s Congress (NPC) Standing Committee and Legislative Affairs Commission representatives with the judges of the Constitutional Court of Belarus. The sides discussed “the commonalities in the constitutional principles on which the two countries’ political systems operate”.

The meeting of the President of Belarus Aleksandr Lukashenko on September 29th 2016 with President Xi Jinping [in the photo above] appears to have served as the stimulus for a rapid increase in the level of judicial cooperation. At the meeting, the leaders signed a Belarus-China joint declaration on the establishment of relations of all-round strategic partnership and mutually beneficial cooperation. In the declaration, the sides agreed to continuously deepen mutual political trust and cooperation in various fields, to build up contacts between peoples and humanitarian exchanges, to enrich the component of the Belarusian-Chinese relations of comprehensive strategic partnership, and to develop “all-weather friendship.” Considerable attention in the declaration was also paid to joint promotion of the BRI. During that meeting, President Lukashenko expressed his admiration for the BRI, saying that he understands its importance in strengthening multipolarity of the world as the basis for its sustainability.

One and a half months after the two state leaders met, the cooperation between the Chinese and Belarus legal authorities began to improve. In November 2016, the Deputy Head of the Belarus Presidential Administration Valery Mitskevich held several meetings with senior Chinese officials concerning the cooperation in the area of the rule of law. The then Secretary of the Central Political- Legal Committee (and a Politburo member) Meng Jianzhu  and Valery Mitskevich signed “The Cooperation Agreement in the Area of the Rule of Law between the Central Political and Legal Committee of the Communist Party of China and the Administration of the President of Belarus” 《中共中央政法委员会与白俄罗斯总统办公厅法治领域合作协议》. A representative from the SPC was among the officials from Central Party and government institutions who attended the signing ceremony. Although the text of the agreement has not been made public, official commentary stated that the agreement can “help successfully carry out the BRI”, as the project’s implementation requires “all countries to strengthen the legal protection through communication in the area of the rule of law, such as through mutual judicial assistance”.

On that visit, Mitskevich met with the Executive Vice President of the Supreme People’s Court of China Shen Deyong, who expressed hope that “this meeting will open a new chapter in the cooperation and communication between the two countries’ judiciary, and thus will improve the overall relations”; he also suggested that the two countries’ Supreme Courts engage in cooperation on a deeper level. The Belarusian representative agreed to make contributions to deepen judicial cooperation, and noted that “the Belarusian side highly values its relations with China”.

After the meeting in November 2016, interactions involving the judiciary of the two countries increased. Several Chinese judicial delegations visited Belarus. In June 2017, a delegation from the Shanghai courts visited the Belarus Supreme Court and the Belarus Constitutional Court, and discussed the use of new technology in courts (such as the development in Belarus of the national courts online database with archived info on legal proceedings). In December 2018, three senior judges from Gansu Province visited Belarus, where they met with justices of the Belarus Supreme Court, and several judges of the Minsk City Court. The Belarusian side shared some insights about the Belarusian judicial system, as well as about the judicial reforms’ results aimed at integrating e-justice elements into the process and making legal proceedings more time efficient. The Belarusian side expressed the interest in furthering cooperation and the exchange of legal information. In July 2018, Chief Justice of the Supreme People’s Court Justice Zhou Qiang met with Valery Mitskevich and suggested that “the two countries cooperate, promote judicial reforms, such as“intelligent courts”, provide judges with better quality training, support the idea of justice for people, etc.” Both sides agreed to “work together in the field of judicial reforms to implement the BRI”.

Since the BRI has begun, legal cooperation between China and Belarus has expanded in other ways.  In March 2017, the Center for Belarusian Legal information was opened at Shanghai’s East China Normal University and in April 2018, the Director of the Belarusian National Center for Legal Information (NCLI) (a Belarus government agency) Evgeny Kovalenko met with Gan Zangchun, a Member of the Party Group of the Ministry of Justice of China. His visit was part of a three country visit (also to Mongolia and Russia) to discuss BRI dispute resolution. Gan and signed a Cooperation Memorandum with the NCLI. Gan Zangchun noted that “the signed memorandum will assist in continuing the judicial cooperation, […] increase the level of cooperation, and provide good legal services and legal protection to the development of the BRI.” According to the summary of the memorandum obtained by this author directly from the NCLI, the sides agreed to “cooperate in the areas of 1) creating and promoting legal info resources; 2) using IT in the regulation-making process, as well as in the process of the application and assessment of legislation; 3) creating a system of bilateral exchange of legal information that would provide support in the studying and implementation of regulations by the other party; 4) organizing conferences and seminars in the areas of mutual interest of the parties. The exchange of such information may possibly be used by the sides to assess the regulations that are related to the protection of the legal interests of the investors of the other side, as well as control and assess the application of such regulations by judges. At the same time, it can also make the process of applying foreign law in the lawsuits with international elements easier for foreign judges, as there will be online legal databases with the relevant information on foreign regulations as well as the guidelines for their application.

As Belarus is a member of the New York Convention and has signed “The Treaty Between the Republic of Belarus and the People’s Republic of China on Legal Assistance in Civil and Criminal Matters”, both court judgments and arbitral awards of one party can be recognized and enforced by the other party.

The Belarus-China Judicial Cooperation Within the Framework of the BRI through the Shanghai Cooperation Organization

Since 2015, Belarus has had the status of an observer state in the Shanghai Cooperation Organisation (it is the only European SCO observer state) which makes Belarus eligible to participate in the conferences and forums organized by the SCO members. In December 2015, Belarus sent its first delegation to the Session of the Council of the Heads of Governments of the SCO member states, at which the primary theme of discussion was the role of the SCO countries in implementing BRI.[6]

The judicial cooperation of Belarus with China through the SCO began in 2018 at the 13th Conference of the Presidents of the Supreme Courts of SCO member nationas held in Beijing (which was attended by the judges of the Supreme Court of Belarus, Xi Jinping in his speech stated that the SCO and specifically the presidents of the SCO Supreme Courts are playing an important role in implementing the BRI, and should focus on creating the mechanisms that would improve the legal environment in their countries.

During the meeting of the Supreme Court judges of the SCO states in June 2019 in Sochi, Russia, attended by the Head of the Belarus Supreme Court Valentin Sukalo, SPC President Zhou Qiang stated that the SPC is willing to engage with the Supreme Courts that participated in the conference in order to improve the cooperation in the judicial sphere, and thus “make a new contribution to the BRI and their development strategies.”

Comparison of EU-Belarus & China-Belarus Judicial Cooperation

The European Union introduced in 2014 a new direction for cooperation called “Partnership for Good Governance” (“PGG”), under which the EU strived to help the EU’s six Eastern partner countries (among which is Belarus) seek to meet European standards on human rights, democracy and the rule of law. The first phase of the project took place from 2015 to 2017, and was implemented by the Council of Europe. One of the main aspects of that phase of the project was the promotion of the European human rights standards among Belarusian judges, law enforcement officials, etc.:  The project created human rights training and reference materials that were translated into Russian and widely disseminated. Also, online courses and other remote learning materials were integrated into the curricula of Belarusian State University and the Institute for Retraining and Qualification Upgrading of Judges, Prosecutors and Legal Professionals at the Belarusian State University to introduce the European system of human rights protection to Belarusian law students, judges and other legal professionals. In 2018, after the first phase of PGG ended, cooperation with Belarusian judges continued: for example, on May 30th, the Council of Europe organized a panel discussion on the right to fair trial attended by Belarusian judges, prosecutors, lawyers, etc. In April, 2018, a Round Table on “Legal Aspects of the Abolition of Death Penalty” was held for Belarusian judges from the Supreme Court, the Constitutional Court, as well as officials from the Prosecutor’s General Office, and other public bodies.Recently the European Union launched the second phase of the program, called “Partnership for Good Governance Part Two 2019-2021” and continues to engage in discussions with Belarusian judges and other legal professionals on topics such as the abolition of death penalty, the right to fair trial, corruption, etc. The nature of the EU judicial cooperation is different from that of China.

Judicial cooperation of China with Belarus focuses on matters related to the BRI and Chinese investment in Belarus, such as the Great Stone Industrial Park. access to legal information, data gathering, as well as promoting integrating e-justice elements into the judicial system, etc.

Impact of the Current Political Situation on Judicial Cooperation with China

Taking into account the current political situation in Belarus, this author expects that some changes in the dynamics of China-Belarus judicial cooperation might take place if the incumbent president leaves office.  For example, if power is transferred to Tikhanvoskaya (or to another opposition candidate), the role of the judiciary is likely to evolve to be more in line with EU principles. The popular opposition candidates promise to go back to the earlier version of the Constitution that gives greater powers to the Parliament and the judiciary, while the current Constitution that was amended in 1994 and 2004 provides for broad presidential powers, including the right to appoint the judges of the Supreme Court.

If the opposition comes to power, many Belarus citizens expect that Belarus will seek to build more balanced and transparent relations with both the EU and China. In the view of this author, good relations with China are beneficial for Belarus in many ways, including strengthening the Belarusian economy. So this author anticipates that judicial cooperation between the two countries will continue but may evolve if the new leaders reassess the role of Belarus under the BRI.

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Safia Yablonskaia is from Belarus and studies law at Fudan University.

Commercial law, foreign-related cases, Hong Kong, International law, One belt one road

Supreme People’s Court’s New Policy on Cross-border Commercial Issues and Covid-19

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From left, Li Guangyu, SPC spokesperson; SPC Vice President Justice Luo Dongchuan; Judge Wang Shumei, head of #4 Civil Division

On 16 June, the Supreme People’s Court (SPC) held a news conference (pictured above), to announce that it had issued “Guiding Opinion on the Proper Handling of Civil Cases Involving the Novel Coronavirus Outbreak in Accordance with the Law (III)” (SPC Guiding Opinion III).” SPC Guiding Opinion focuses on the most important cross-border commercial issues that have arisen in the Chinese courts this spring as a result of the Covid-19 pandemic.  This brief blogpost provides some comments and an overview of the document, leaving the detailed analysis to the law firms that are sure to analyze it.

What is this document?

SPC Guiding Opinion III is a judicial policy document (司法政策性文件). As this blog has often commented, the Supreme People’s Court (SPC) must serve the greater situation and deal with practical legal issues, so that the SPC itself and its senior leadership are correct, politically, and professionally. One of those ways is by providing properly calibrated guidance to the lower courts and other related authorities with the appropriate political signals.  For this document, Justice Luo Dongchuan provided the political background and signals in his introductory remarks at the SPC news conference. The document itself is practically oriented (as those in the system say “problem-oriented”–“问题导向”)（and the practitioners say “干活”).

From the photo above it is clear that the #4 Civil Division, headed by Judge Wang Shumei, which focuses on cross-border commercial and maritime issues, took the lead in drafting. That division is one of the smaller divisions of the SPC and “punches above its weight.”

A judicial policy document is not a judicial interpretation but as the SPC editors of a collection of these documents noted, “it is generally recognized that they have an important guiding impact on the trial and enforcement work of the courts at every level.”  SPC Guiding Opinion III is one example of the many types of SPC “stealth” guidance to the lower courts.  I describe it as “stealth guidance” because it affects how cases are handled, heard, and decided, but cannot be cited in a court judgment or ruling. For that reason, only the highly observant will note the impact of judicial policy documents.

I anticipated that the SPC would issue further Covid-19 pandemic guidance when I spoke [links to video] in April at a virtual event sponsored by Berkeley Law School’s Center for Law & Technology. Some of the guidance reveals frequently used litigation tactics of Chinese parties.

Selected comments on the content

The document is divided into four sections:

  1. Civil procedure mechanics–parties, evidence,  deadlines, and statutes of limitations (Articles 1-5): This section draws on the recently amended and effective civil evidence rules

Article 1 directs Chinese courts to approve applications for extensions for foreign (cross-border) parties who are delayed in being able to provide notarized and authenticated documents to evidence the identity.  Delays in obtaining notarized and authenticated powers of attorney are to be treated similarly. If China had acceded to the 1961  Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents, for all of China, this requirement would no longer be necessary. The Convention is applicable to Hong Kong because of UK-PRC handover arrangements, which enabled conventions originally applicable to Hong Kong pre-1997 to continue in effect.

Article 3 reveals one of the frequently used litigation tactics of Chinese parties in cross-border litigation in China–that is disputing the authenticity of a document because it has not been properly notarized and legalized. The SPC Guiding Opinion III advises lower courts to notify parties that they may reserve their arguments concerning these formalities, and focus their arguments on relevance and persuasiveness of the evidence.

      2. Ascertainment (determination) and application of law

These articles remind Chinese courts to use the Law of the People’s Republic of China on the Law Applicable to Foreign-Related Civil Relationships to determine governing law (assuming a contract does not designate a governing law), and to look to the SPC Guiding Opinion I for guidance on force majeure under Chinese law.  The SPC also reminds lower court judges not to substitute Chinese law if foreign law governs.  This is not the first time that this type of reminder has appeared in SPC policy documents, indicating this is an ongoing problem.  This section also includes guidance on the application on the UN Convention on the Sale of Goods.

Articles 8 and 9 relate to letters of credit, standby letters of credit, and demand (independent) guarantees. It reminds lower courts to correctly apply the International Chamber of Commerce (ICC)’s UCP 600 (Uniform Customs and Practice for Documentary Credits), the ICC’s URDG 758(demand guarantee rules), and the related SPC judicial interpretation concerning demand guarantees.

This likely means that Chinese contractors who have provided independent guarantees or standby letters of credit for construction projects overseas are seeking to prevent the owner of the projects from drawing on these guarantees through litigation in the Chinese courts. This case decided by the SPC in April, 2020, reverses the judgment of the Shandong Higher People’s Court in favor of the Chinese contractor.  The dispute relates to a Shandong Electric Power Company (SEPCO) project in India. Previous reporting in the Indian press seen here.

3. Transport contracts

Articles 11-17 relate to various types of transportation contracts as well as shipbuilding contracts.

4. Green channel.

This last section reminds courts to use online procedures and cross-administrative region arrangements if convenient and that Hong Kong, Macau, and Taiwan related commercial cases should be handled with reference to this guidance.

How was the document drafted?

As to how the SPC determined the FAQs of the lower courts, it did what all corporates and institutions around the world do these days–convened a video conference. The participants presumably came from the maritime courts and the foreign-related civil divisions of the provincial courts.

Why did the SPC issue it?

The number of cases directly affected by this guidance is relatively small. According to statistics released with President Zhou Qiang’s report to the NPC in May, there were 17,000 first instance foreign-related commercial cases and 16,000 foreign-related maritime cases in the Chinese courts in 2019, compared with 31.5 million cases in the Chinese courts overall.

However, foreign-related cases tend to be more sensitive because, as Zhou Enlai said “外事无小事” (foreign matters are never small matters” –foreign-related matters, because they involve relations with other countries and the prestige of the Chinese state, are sensitive. That means that judges hearing cross-border cases have a particular pressure to handle these disputes in a way that is consistent with the law (of course), acceptable to the leadership of their court & to the outside world.  One important aspect of SPC Guiding Opinion III  is the impact on Belt & Road projects, In many of these projects Chinese companies are often contractors, or also contractors and equipment suppliers (and Chinese banks provide financing). On the civil/commercial side cross-border cases possibly involve treaty/convention obligations (or treaty-like arrangements, in the case of Hong Kong).

As issues dealt with in SPC Guiding Opinion III relate to the most important Chinese cross-border commercial issues that have arisen during the pandemic, it has an impact on the Chinese (and foreign) business community, far beyond the number of foreign-related cases in the Chinese courts, and is likely to have an impact on related arbitrations governed by Chinese law.

foreign courts, foreign investment law, foreign-related cases, One belt one road

Update on China’s international commercial court

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Judge Gao Xiaoli

Among the many developments flagged in Supreme People’s Court (SPC) President Zhou Qiang’s 2018 report to the National People’s Congress is that the SPC will establish an international commercial tribunal (court)(最 高人民法院国际商事审判庭), as approved by the Central Leading Group for Comprehensively Deepening Reforms. The timing is unknown. The international commercial tribunal (this post will use the term “court”) as is understood clearly, must fit political and technical requirements. This blogpost will look at those, particularly the technical ones, as those are the ones that have escaped the attention of most commentators outside of China.

Background

Although many  articles have been published in the media, both in and out of China after the public announcement to the press about the international commercial court in January, 2018, most of them have little detail on the issues. Some contain uninformed statements, such as the one that quotes an insider at the China Council for the Promotion of International Trade mentioning the use for dispute resolution of “the common law of the United States and European countries” (send the insider back to law school please!).

In the past three months, Judge Gao Xiaoli, deputy head of the SPC’s #4 civil division (photo above), and at least one other person at the SPC has released some information about the court, all of which seems to have eluded international discussions. For those who are not aficionados of Chinese foreign-related dispute resolution, Judge Gao (who often appears at UNCITRAL or international arbitration related conferences or seminars) outside as well as inside mainland China, is a formidable presence in the courtroom. Thanks to the SPC’s streaming of court hearings, it is now possible to see that from any corner of the world.  She is also an impressive speaker. Judge Gao is representative of the judges engaged in technical legal work at the SPC, with a PhD in law from one of China’s leading law schools and experience studying abroad.

Political requirements

On the political requirements, there are at least two, both previously highlighted in this blog.  The more general one was highlighted one year ago–the establishment of the international commercial court relates to a sentence in the Fourth Plenum Decision:

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

More specifically, it appears to be the civil and commercial counterpart to the efforts noted on this blog two years ago (concerning dispute resolution in maritime cases),  part of a push to move the locus of China-related dispute resolution from London and other centers in Europe (or elsewhere) to China, where Chinese parties will encounter a more familiar dispute resolution system.

The other political requirement relates to the need to serve major government strategies, the BRI/OBOR one in particular, discussed in this blogpost.  President Zhou Qiang’s 2018 NPC report, as his 2016 report (and presumably 2017 report) contain the phrase “provided service for the country’s major strategies.” As a central government institution, the SPC must do its part to support national major strategies. Since BRI/OBOR has been initiated, President Zhou Qiang’s report has mentioned  BRI/OBOR as one of those major strategies for which the SPC has provided service.

Technical requirements

Further background

The sources that previous commentators missed include the following:

In the press interview, Judge Gao reviews what the SPC has done so far in this area, including several developments previously highlighted on this blog:

  • SPC’s One Belt One Road (BRI/OBOR) policy document;
  • SPC’s OBOR/BRI model/typical cases (see above link and translations by the Stanford Guiding Cases project found here);
  • SPC’s judicial interpretation on demand guarantees, that blogpost explains that with so many Chinese companies focusing on infrastructure projects overseas, Chinese banks have issued billions of dollars in demand guarantees.

 Technical issues

The SPC is looking at three types of investment and trade disputes:

  • state-state disputes (for China, generally WTO);
  • investor-state disputes (ICSID and other institutions, generally using UNCITRAL rules (note that CIETAC and the Shenzhen Court of International Arbitration (SCIA) also have amended their rules to be able to take investor-state disputes, with SCIA using the UNCITRAL rules;
  • disputes between commercial parties.

Judge Gao mentioned that they at the SPC, too have noticed the worldwide trend of other jurisdictions establishing courts to hear investor-state disputes, citing Canada among them and that they are exploring whether the Chinese courts can do so as well.  However, she notes that when China acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), it made a commercial reservation, and the SPC judicial interpretation concerning the New York Convention excluded investor-state disputes, so that currently it is not possible to enforce investor-state awards through the New York Convention. Judge Gao says they are considering solutions to this issue.

Commercial disputes

Definition of OBOR/BRI disputes

Although none of the authors have mentioned this (nor have I, until now), one unrecognized issues in discussing OBOR/BRI disputes is a definitional one–what is a OBOR/BRI related dispute?  It seems that in court practice, the definition is broad, including cases between Chinese contractors and their demand guarantee issuing banks, as well as cross border cases involving Chinese and parties located in OBOR countries.  In my research (including a discrete inquiry with a knowledgeable person), a formal definition is lacking.

Judicial cooperation/enforcement issues

As this earlier blogpost mentioned, enforcement of foreign court judgments is on the SPC’s agenda.  As Judge Gao recognizes, there needs to be a structure for judgments of this international commercial court to be enforced outside of China.  She mentions (as has this blog), that China is actively participating in negotiations on the Hague Convention on the Recognition & Enforcement of Foreign Judgments, and is studying ratification of the Hague Convention on the Choice of Courts Agreements.  She flags also (as has this blog) that the SPC is drafting a judicial interpretation on the recognition and enforcement of foreign civil & commercial judgments.

Practice in other jurisdictions

Judge Gao mentions that the SPC is looking at the international commercial courts in several jurisdictions, including Dubai and Singapore (as mentioned in the earlier blogpost), but also Abu Dhabi, London’s Commercial Court (it appears that someone at the SPC has read this Financial Times article on foreign litigants there), and notes that the Netherlands, Germany, and Belgium are all establishing international commercial courts that use English.

Challenges for the Chinese courts

Judge Gao forthrightly flags a list of issues (my comments in italics) that the SPC faces in establishing an international commercial court. It is likely that she and her colleagues are aware of the additional issues raised as well.

  • judges; she notes that Dubai and Singapore have foreign judges on their international commercial courts, but currently China’s Judges’ Law and People’s Court Organizational Law (being amended) present obstacles to having foreign judges, and without them, the court will not be international and will not be internationally credible (literally, be internationally influential) (但是如果不引进外籍专业性人才参与国际商事法庭的建设，则缺乏国际性，缺乏影响力). My earlier blogpost mentioned the nationality issue. Would qualified foreign judges (or those from Hong Kong) be willing to join the international commercial court? Judge Gao does not mention that the group of Chinese judges qualified to hear these cases is not that large, and they are overloaded with cases, judicial interpretation/other guidance drafting, and other work. Could highly qualified Chinese lawyers be appointed to this court?  It is unclear, and relates to issues of how they would fit into the rigid structure of the judiciary, highlighted here.
  • choice of law; she mentions that parties have freedom concerning choice of law in China, so that would not be a problem.  However, relating to choice of court clauses, Professor Vivienne Bath’s research on parallel proceedings in China (previously mentioned on this blog) shows that Chinese courts do not recognize the validity of those clauses when the choice “lacks an actual connection with the dispute” because of provisions in the Civil Procedure Law.
  • procedure; she queries whether there can be some breakthroughs in civil procedure in this area.  Foreign lawyers are likely to query whether this could mean better discovery of documents. More importantly, what is not mentioned is that China’s failure to have acceded to the Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents will also be a major obstacle for the international commercial court. Under current Civil Procedure legislation,  notarization and legalization of documents is often required. The first step is when a party files suit or when a foreign party responds. Additionally, in litigation, evidence from a foreign country often must be notarized and legalized. Notarization and legalization costs time and money and a great deal of effort. At an academic conference in 2017, experts from the institutions involved discussed how to proceed on this.
  • language; Judge Gao notes that the Civil Procedure Law puts obstacles in the way of the international commercial court hearing cases in English.  Note that the pool of Chinese judges able to hear cases in English is not large, and would even further require recruiting judges from outside China’s judicial system.
  • counsel; She mentions the issue of having foreign lawyers handle cases is also an obstacle for the international commercial court, because China’s Civil Procedure Law currently does not permit it.
  • transparency; Judge Gao notes that Chinese judicial transparency and informatization has made great strides, so should be useful to the international commercial court.  However, Judge Gao and her colleagues could usefully look at the type of information accessible to both the parties and general public (and the level of detail in judgments) in other international commercial courts.
  • enforcement; Judge Gao raises the issue of recognition and enforcement of judgments, discussed above.

Where does the SPC go from here?

The article by the post-doctoral student Liao Yuxi suggested that the SPC may want to request the NPC Standing Committee authorize it to suspend some of the problematic provisions of the Civil Procedure Law that Judge Gao flagged above, such as the use of language, and the qualification of judges.  However many of the other issues cannot be resolved so easily, such as international enforcement and the requirement of notarization and legalization of evidence.

As for when we can expect to see some rules relating to the international commercial court, and whether drafts will be circulated for public (or even soft consultation), those are all unclear.  What is clear is that many complicated legal issues face Judge Gao and her colleagues.

 

 

 

 

 

arbitration, Commercial law, One belt one road

December update on judicial review of arbitration

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photo of Beijing traffic, December 2017

The latest buzz within the Chinese international commercial legal community on Belt & Road related legal developments appears not to have surmounted the Great Wall of the Chinese language. The buzz is that a comprehensive judicial interpretation relating to arbitration is on route to promulgation.

On 4 December the Supreme People’s Court (SPC) issued a news release that its judicial committee had approved a judicial interpretation on judicial review of arbitration in principle, entitled Provisions on Some Issues Related to the Trial of the Judicial Review of Arbitration (Judicial Review of Arbitration Interpretation) (最高人民法院关于审理仲裁司法审查案件若干问题的规定).  “Approval in principle”  (原则通过) is not mentioned by the SPC’s 2007 regulations on judicial interpretations but is one of the SPC’s long-established practices.  It means that the judicial committee has approved it, subject to some “minor” amendments. Minor amendments are more than typographical errors and relate to specific substantive matters.  However, the news release did not specify what those “minor” issues were or set a deadline for issuing the interpretation. In December of last year (2016), the SPC’s judicial committee also approved in principle the #4 Company Law interpretation, but that interpretation was not formally issued until August of this year. This observer surmises (without any basis in facts or rumors) that the interpretation will be promulgated before Chinese new year so it can be one of the 2017 accomplishments of the SPC’s #4 Civil Division (but then again, that may be overly optimistic.

The new interpretation will focus on the issues that courts frequently encounter when arbitration-related cases come before them, dealing with gaps in current judicial interpretations (and likely the outdated Arbitration Law, (The Arbitration Law is also the subject of discussions among practitioners, academics, and others.)  The interpretation will incorporate new provisions on the types of cases, case acceptance, jurisdiction, procedure, the application of law and other questions.  It appears that it will incorporate the provisions described in the Notice concerning some questions regarding the centralized handling of judicial review of arbitration cases (the subject of the last blogpost).  It is hoped that the new interpretation will provide for a hearing procedure when cases involving the SPC’s prior approval procedure.

For those not familiar with the intricacies of China’s judicial review of arbitration issues, a 1995 SPC circular sets out a prior approval procedure, requiring local  court rulings to refuse to enforce foreign-related/”greater China”/foreign arbitration awards to be submitted for eventual review by the SPC.  It is currently an internal administrative type procedure, with no explicit option of a hearing.

The SPC announcement described the drafting of the Judicial Review of Arbitration Interpretation as having begun in 2016.  This blog reported in late 2014 that Judge Luo Dongchuan, then head of the SPC’s #4 Civil Division, mentioned that a new judicial interpretation on the judicial review of arbitration-related issues will go into the Court’s judicial interpretation drafting plan in 2015 and that the SPC intends to reform jurisdiction in judicial review of arbitration issues, to consolidate them in specialized courts.

A follow up post will describe the latest buzz on the Belt & Road international commercial tribunal.

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alternative dispute resolution, Commercial law, foreign-related cases, One belt one road

SPC reveals new Belt & Road-related initiatives

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

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

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

Enforcing foreign civil judgments

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

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

Belt & Road Commercial Court

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

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

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

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

 

arbitration, Communist Party and the Courts, Court Reform, foreign courts, One belt one road

Supreme People’s Court gears up for 19th Party Congress

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As the days count down to the 19th Party Congress, all Party/government institutions are preparing for it, including the Supreme People’s Court (SPC). On 19 September, the SPC issued an emergency notice (pictured above), calling on the lower courts to strengthening law enforcement work to provide a good judicial environment for the holding of the 19th Party Congress.  The SPC, as other Party/government institutions, issue emergency notices from time to time (here’s one from the Ministry of Education), generally linked to a politically significant event. The full text for the SPC notice hasn’t been released (or if it has, it has escaped me). It is meant to send signals to the SPC staff and to the lower courts.

Some of the signals:

  • improve performance indicator systems (indicating too many courts still have dysfunctional performance indicators);
  • handle more cases, handle them well, handle them quickly (多办案、办好案、快办案, language better suited to the factory floor);
  • ensure that the goal of having  difficulties in enforcement basically resolved in three years is achieved (again….);
  • clear up those unresolved cases (要抓好长期未结案件清理,确保依法妥善清理案件)–this is being taken seriously by court leaders, again judges (and their clerks, assistants and interns). The PhDs (and Master’s degree holders) praised by the SPC may feel they are somewhere between a model production worker and a real judge (or clerk.). (Of the SPC quota judges, about 1/3 have PhDs, with over half holding a master’s degree), and PhDs are not unusual in the lower courts, at least in major cities.)  An unscientific survey shows judges and their support staff doing more overtime during the pre-19th Party Congress and pre-Golden Week holiday to meet this target;
  • reminds the lower courts about the case registration reform and reminds judges that cases should be accepted, even towards year end, when courts are concerned about their case closing numbers, especially the number of cases that will be carried over to the next year, and warns them against reporting false closing statistics  (坚决杜绝人为抬高立案门槛、拖延立案、年底前提前关门不收案等突出问题), （切实防止虚假报结、强迫撤诉);
  • reminds courts about another important but controversial judicial reform, implementing the judicial responsibility system (insightful analysis and research from within the courts on this is coming out, see this recent article in the National Judicial College’s journal);
  • it reminds judges of ways to deal with the increase and cases and reduction in headcount–use diversified dispute resolution, separate simple from complicated cases, and try similar cases together.

The SPC released some year to date (end August) statistics (I’m drilling down on the state of transparency in this area)–close to 16 million newly accepted cases (15.89 million), no breakdown on how cases are categorized, closed cases up to 12.67 million (up 15.7%). This indicates continued high pressure on first instance judges and their assistants. I’m awaiting data on what the vortex of reforms means for retaining high quality judges.

 

 

Commercial law, foreign-related cases, Maritime courts, One belt one road

English language websites of Chinese courts

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

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

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

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

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

SPC English website

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

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

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

National Maritime Court site

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

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

National Foreign-Related Commercial Cases Website

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

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

Local court websites

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

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

Local Maritime court websites

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

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Comment

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

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

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

big data, Commercial law, Communist Party and the Courts, One belt one road

Signals in Zhou Qiang’s 2017 NPC Report (Part 1)

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Most people who have commented (outside of China) on Supreme People’s Court (SPC) President Zhou Qiang’s March, 2017 report (on 2016 work) to the National People’s Congress (NPC) didn’t have the patience to read (or listen) much beyond the initial section, which mentions the conviction of Zhou Shifeng as indicating that the courts are doing their part to crack down on state subversion.  It appears to be another in a series of colorless government reports.  But for those with the ability (or at least the patience) to decode this report, it provides insights into the Chinese courts, economy, and society.

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The report, which went through 34 drafts, is intended to send multiple signals to multiple institutions, particularly the political leadership, in the months before the 19th Party Congress.

According to a report on how the report was drafted, the drafting group (which communicated through a Wechat group to avoid time-consuming bureaucratic procedures) faced the issue of how to summarize the work of the People’s Court in 2016 correctly.  The guidance from President Zhou on the report–it must:

  1. fully embody the upholding of Party leadership, that court functions (审判职) must serve the Party and country’s overall situation;
  2. embody the new spirit of reform, showing the (positive)impact of judicial reform on the courts and show the ordinary people what they have gained;
  3. not avoid the mention of problems, but indicate that they can be resolved through reform.

Underneath these political principles, the operation of a court system with Chinese characteristics is visible.

A partial decoding of the report reveals the points listed below (to be continued in Part 2).

1. Caseload on the rise

The caseload in the Chinese courts continues to rise significantly, at the same time that headcount in the courts is being reduced.  Diversified dispute resolution (the jargon outside of China is alternative dispute resolution) is being stressed.

  • SPC itself is dealing with a massive increase in its cases, 42.6% higher than 2016, and that number was significantly higher than 2015.
    Screen Shot 2017-03-16 at 4.07.25 PM.png
    2016, SPC cases accepted 22,742, up 42.3%, concluded 20151, 42.6%, Circuit Cts #1 & 2 accepted 4721 cases in last 2 yrs, resolved 4573 cases

     

The statistics on the SPC’s caseload are not broken down further, but are understood to be mostly civil, commercial, and administrative.  It appears from a search of one of the case databases that not all of the SPC judgments or rulings have been published (a search of one of the judgment databases showed 6600+, and only some of the death penalty approvals). It seems also that the database does not include SPC cases such as the judicial review of certain foreign and foreign-related arbitration awards.

Although the report does not focus on the reasons for the massive increase in SPC cases, careful observation reveals the following reasons:

  • establishment of the circuit courts, hearing more cases and ruling on applications for retrials;
  • increase in the number of civil and commercial cases with large amounts in dispute;
  • SPC itself has implemented the case registration system; and
  • changes in law giving litigants rights where none previously existed.

The report also mentioned that 29 judicial interpretations were issued (some analyzed on this blog) and that 21 guiding cases were issued.  Model cases and judicial policy documents were not separately set out, although some were listed in the appendix to the SPC report distributed to delegates.

Lower courts

23,030,000 cases accepted by lower courts, up 18%, cases resolved, 19,773,000; amounts in dispute up 23%

The pie chart below sets out the statistical distribution of cases heard by the Chinese courts:

 

Screen Shot 2017-03-16 at 9.59.06 PMThe pie chart of cases heard, enforced and closed in 2016 shows:

  • about 60% of those cases were civil, commercial, or intellectual property cases;
  • 6.41% criminal cases,
  • 3.40% parole, sentence reduction cases;
  • almost 26% enforcement cases,
  • .03% state compensation cases,
  • petition or application for retrial, .91%;
  • and 1.66% administrative cases.

Although the stress in Zhou Qiang’s report is placed on law and order, in fact many more cases in the Chinese courts are civil and commercial rather than criminal.

2. Social stability, public order, law & order are major concerns

Criminal cases have a prominent place in the report, although the data reveals a slight increase in the number of cases  (1.5%), involving the conviction of 1,220,000 people, down 1%. (Note that many minor offenses are punished by the police, with no court procedures).

Although the report mentioned the Zhou Shifeng case (state security) and criminal punishment of terrorist and cult crimes, it did not release statistics on the number of cases of any of these crimes heard.  Corruption cases totaled 45,000 cases, involving 63,000 persons.  Violent crimes (murder, robbery, theft) cases 226,000. Drug cases: 118,000, a significant decrease from 2015. 2016 cases of human trafficking and  sexual assault on women and children totaled 5335, while telecommunications fraud cases in 2016 totaled 1726.  Only 213 cases involving schoolyard bullying were heard and the SPC revealed that the drafting of a judicial interpretation on the subject is underway. The report highlighted some of the well-known criminal cases, including the insider trading case against Xu Xiang and the Kuai Bo obscenity cases to illustrate and criminal law-related judicial interpretations to signal that the courts are serving policy needs in punishing crime.

The same section described what has been done in 2016 to correct mistaken cases, highlighting the Nie Shubin case (reheard by Judge Hu Yuteng and colleagues) as an example.  The report revealed that the local courts retried only 1376 criminal petition cases, likely a tiny fraction of the criminal petitions submitted.

3. Maintain economic development

As President Zhou Qiang indicated, the way that the Chinese courts operate is Party/government policy-driven (they must serve the greater situation). Serving the greater situation meant, in 2016, that the Chinese courts heard 4,026,000 first instance commercial cases, a 20.3% increase year on year.  He also mentioned the 3373 bankruptcy cases analyzed in an earlier blogpost. Of those 4 million commercial cases, 1,248,000 involved securities, futures, insurance, and commercial paper and 255,000 real estate cases and 318,000 rural land disputes. Other implications are discussed below.

This section of the report devoted a paragraph to a topic discussed last year on this blog: the courts serving major government strategies, including One Belt One Road, the Yangtze River Belt, and Beijing-Tianjin-Hebei coordinated development.

Green development , intellectual property (IPR), property rights (of private entrepreneurs), serving maritime and major country strategy, socialist core values, judicial solutions to new problems and cross-border assistance also merited mention in this section.

  1. The courts heard 133,000 environmental and natural resources cases, with Fujian, Jiangxi and Guizhou courts designated as experimental environmental courts.  While public interest environmental and procuratorate brought (environmental) cases were mentioned, statistics were not set out.
  2. First instance IPR cases totaled 147,000, with several cities (Nanjing, Suzhou, Wuhan, and Chengdu) establishing IPR divisions to take cases across administrative boundaries. This section mentioned the Jordan trademark case and the IPR courts.
  3. On protection of property rights, the report mentioned some of the documents intended to protect private entrepreneurs discussed on this blog, as well as 10 model cases.
  4. On maritime and cross-border cases, the report mentions the judicial interpretations on maritime jurisdiction (discussed in this blogpost), intended to support the government’s maritime policy, including in the South China Sea.  The Chinese courts heard only 6899 commercial cases involving foreign parties (this means that of the 2016 19,200 civil and commercial cases mentioned by Judge Zhang Yongjian, most must have been civil) and 16,000 maritime cases. The report again mentions making China a maritime judicial center, further explained in my 2016 article.
  5. On the relevance of socialist core values to the courts, that is meant to incorporate socialist core values into law (although they should be understood to have always to be there) and to give the Langya Heroes special protection under China’s evolving defamation law.
  6. Judicial solutions to new issues included internet related issues, including e-commerce cases, internet finance cases, and theft of mobile data; the first surrogacy case, and judicial recommendations to Party and government organizations.
  7. In the section on international cooperation, President Zhou Qiang revealed that fewer than 3000 cases involving mutual judicial assistance were handled. The bureaucratic and lengthy procedures for judicial assistance in commercial cases has long been an issue for lawyers and other legal professional outside of China.  This is likely to change (in the long run, as Chinese courts increasingly seek to obtain evidence from abroad).  US-China dialogue on bankruptcy issues and cooperation with One Belt One Road countries (cases involving these countries are increasing significantly), were also mentioned here.

TO BE CONTINUED

 

foreign investment law, foreign-related cases, One belt one road, Uncategorized

Supreme People’s Court & foreign-related disputes

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

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

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

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

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

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

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

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

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

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

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

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

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