I recently published a short article on the Perspectives blog of the New York University School of Law U.S. -Asia Law Institute, with the same name as this post, linked here. I am posting a “homemade” PDF version temporarily and will replace it when an official one is available. I am close to finishing a longer version of the same article. The research on which this article is based draws on discussions with many persons who cannot be thanked by name and others who will be whenever the longer version is published.
The SPC Unified Market Opinion reveals a great deal about what is on the agenda of the SPC as well as deeper trends in the development of the Chinese courts in the New Era. A summary of what the SPC’s Unified Market Opinion covers and reveals follows, with some comments on what it says about larger trends.
I. What Does the SPC’s Unified Market Opinion Cover?
The SPC Unified Market Opinion covers many aspects of the work of the courts. only some of which are discussed in this overly long blogpost. Therefore the SPC’s Research Office took the lead in drafting it, along with the #2 Civil Division, focusing on domestic commercial matters and the #3 Civil Division, focusing on intellectual property matters. For that reason, representatives from those offices spoke at the press conference, along with Justice Yang Wanming, who must have been the SPC leader responsible. However, it is clear from the document that many other entities within the SPC contributed to the drafting, particularly the #4 Civil Division, which focuses on cross-border commercial matters, including arbitration, maritime, trade and investment issues. The International Cooperation Bureau, which has substantive responsibilities in addition to its duties under China’s foreign affairs system clearly contributed to it as well.
It is consistent with other judicial services and safeguards opinions for the document to serve as a “package” for judicial measures, broadly understood. Many of the measures are not new to the regular reader of SPC documents, indicating that the problem is important and the related issue has not gone away.
In the SPC’s bureaucratic language contained in the SPC’s press release, the document “coordinates the precise efforts in all areas of the judiciary” (统筹司法各领域精准发力” ). In plain language, it means that measures across all relevant areas of law for which the SPC is involved are incorporated. It also means that different types of measures are included in the package, including relevant administrative matters.
The function of coordinating with Party and state institutions, about which I wrote last year is described in the press release as “coordinating all forces to implement comprehensive policies 统筹各方力量综合施策.” Oddly enough, at least one well-known Chinese scholar who has written about the Chinese courts doubted that this is a judicial function. From these points, it can be seen that this document is a multifunctional tool.
II. What is On the SPC’s Agenda?
For those of us seeking to monitor what is on the SPC’s judicial interpretation agenda since the SPC stopped publishing its annual agenda, the SPC Unified Market Opinion has a great deal of useful information. The document also flags forthcoming judicial policies and related administrative matters that the SPC leadership has approved and a great deal of guidance for the lower courts. For cross-border matters, because I am more familiar with the SPC’s judicial policies, I will go into greater detail. In several other areas, I will flag forthcoming judicial interpretations and other important matters.
A. Cross-border commercial matters
As relates to cross-border commercial matters, Articles 5 and 16 of the SPC Unified Market Opinions signal many matters to the careful reader.
Judicial interpretations on the ascertainment of laws and application of international treaties and international practice and possibly others are on the agenda. I surmise that they are at an early stage because it says “research shall be conducted.” It would not be surprising if one or more of the SPC’s Belt & Road Research Bases would be tasked with providing research. If that is so, given the usual gap between academic research and the requirements of the Chinese courts, it will be some time before drafts of these judicial interpretations are circulating within the court system and among selected experts.
Another topic on the judicial interpretation agenda, seemingly again at an early stage, is one on jurisdiction over foreign-related civil and commercial cases tried by the courts of first instance. I surmise that this is linked to last year’s reforms to the four levels of the Chinese courts and is likely to involve centralized jurisdiction over cross-border cases (foreign and Hong Kong, Macau and Taiwan), as has been the trend thus far.
One sentence flags developments related to service of process and possibly collection of evidence, although the latter is not specifically mentioned. It calls for judicial assistance to be strengthened [improved], foreign-related service mechanisms to be improved, and work to commence on a unified electronic platform for the service of process abroad. As mentioned earlier, Greater Bay Area policy documents have included this. Chinese Civil Procedure Law permits electronic service of process from China, although no mention is made of being more flexible in the service of process from abroad to China. The latter matter would involve the Ministry of Justice, which is designated as the Central Authority under the relevant Hague Conventions.
Another early stage project is “promoting the construction of a system for the extraterritorial application of Chinese laws to legally protect the lawful rights and interests of enterprises and citizens that go global.” So I believe that we will eventually see more Chinese legislation providing for extraterritorial jurisdiction (or what is called in Chinese discourse, “longarm jurisdiction”), and likely eventually judicial interpretations. This language suggests that the SPC takes the view that its expertise is needed in the drafting of such legislation because its judges would be able to thoroughly consider what type of system will not cause further decoupling of interactions between China and the outside world.
There is language about improving the operation of the China International Commercial Court, the expert committee, and the affiliated one-stop platform. It appears from the language that some procedural rules are needed.
Article 5 has a long reminder to lower court judges on “correctly applying” foreign investment law, foreign (non-mainland Chinese) law, international treaties and practice, as well as equally treating domestic and foreign-funded companies. So it appears that additional training is needed for lower court judges if the Chinese courts are to become a preferred jurisdiction for international commercial dispute resolution, as the political leadership would like the Chinese courts to be.
Article 16 focuses on improving the connection between domestic laws and international rules., highlighting improving domestic rules as well as foreign-related ones (as addressed in at least one blogpost last year). Much of Chinese legislation is domestically focused and is inconsistent with international practice. The Construction Law’s prohibition on subcontracting is one example, that often arises in dispute resolution in BRI projects. As this article explains, Chinese general contractors often subcontract part of their projects to other Chinese companies in Chinese law-governed contracts (regardless of the requirements of local law), in violation of Chinese law. It also mentions modernizing China’s foreign-related adjudication system and capacity, which I understand to be a signal that the SPC would like to see changes to the foreign-related section of the Civil Procedure Law as well as resources allocated to the training of judges hearing foreign-related cases (see last year’s blogpost for further details).
Two of the model cases concern foreign-related matters–one on foreign investment law, the other on maritime law, the latter signaling the accomplishments of the Chinese courts in resolving disputes at source and mediating to conclusion a dispute with a foreign arbitration clause.
B. Other Areas of Law
When read together, the other provisions of the SPC Unified Market Opinion can be seen as an assessment of the state of legality and the economy after ten years of documents issued by the political leadership as well as SPC (and other institutions). The impact of multiple campaigns, regulatory and otherwise, and the grip of government on the economy is visible. Many new and forthcoming developments are visible as well, such as the implementation of Chinese government undertakings concerning climate change and the challenge of new forms of employment.
Abuse of Administrative and Prosecutorial Power
Articles 3 and 4, entitled “helping the implementation of unified market entry” and “enhancing equal protection of property rights” provide guidance to lower courts on trying cases related to abuses of administrative power that harm business, the misuse of administrative power to exclude or restrict competition. property, and the abuse of prosecutorial power that transforms a business dispute into a criminal case. The language “it is imperative to improve the mechanism for petition and retrial, etc. of enterprise-related property right cases and refine the mechanism for effective prevention and correction of wrongful convictions” signals that the many documents issued to protect the interests of private entrepreneurs have not been effective and that the campaign (now normalized) to sweep out organized crime and get rid of evil (saohei 扫黑除恶） has likely resulted in another group of persons wrongfully convicted. That section and one of the model cases also signal that the protection of private property rights in criminal cases continues to be a problem.
Article 6 focuses on bankruptcy (insolvency) law. In addition to a long list of guidance, it mentions the SPC facilitating (推动) amendments to the Bankruptcy Law and legislation on individual bankruptcy. SPC President Zhou Qiang has received delegations from the NPC working on the drafting of the Bankruptcy Law several times, and it is likely that staff-level interactions occur much more often.
Another matter to note in that article is the establishment of the normalized “government-court interaction” coordination mechanism (常态化“府院联动”协调机制). SPC judges who have spoken about this mention that the coordination mechanism faces many barriers, but it is a fact that in the Chinese context, bankruptcy cannot proceed without the assistance of local governments.
Article 7 is on enforcement, and mentions that the SPC will cooperate (presumably with the NPC Standing Committee and its Legislative Affairs Commission) on efforts relating to the Civil Compulsory Enforcement Law and amend or otherwise issue a judicial interpretation to enforce it.
Article 8 is on unifying the urban and rural land markets. In addition to a great deal of guidance, it mentions that to adapt to the adjustments of land supply policies, the standards for the hearing cases involving disputes over the assignment and transfer of the right to use state-owned land shall be unified. It does not specify the form that the unification will take.
Article 9 relates to the securities and financial markets. In addition to a great deal of guidance, it mentions that the SPC will improve rules (审 理规则) for hearing new types of cases: private equity investment, entrusted wealth management, asset securitization, and cross-border financial asset transactions, among others. It flags that the SPC will research legal issues concerning digital currency and mobile payment (I surmise possibly looking to the academic sector for initial research),
Article 10 focuses on the unification of the data and technical market, flagging that judicial safeguards will be provided for the data element market driven by data and the SPC will focus on improving judicial protection of data property rights.
Article 11 relates to energy and the environment. Those focusing on these issues would be able to write an entire article on this article–I would only mention that the SPC plans to research judicial policy support for achieving the target of carbon peaking and carbon neutrality.
Article 12 focuses on the judiciary and business environment, mentioning work on establishing an indicator system consistent with China’s national conditions and international standards; issuing judicial interpretations and judicial policies providing services and safeguards for the business environment, and cooperating with relevant functional departments (unspecified有关职能部门), in promulgating an implementation plan for building a business environment under the rule of law.
Article 13 is devoted to creating a good faith transaction environment. At least three points to be noted: the issuance of the judicial interpretation of the Contract Part of the Civil Code, work on deep integration of socialist core values with the work of the courts; and exploring paths for better integrating the social credit system with the work of the courts.
Article 14 focuses on regional market integration and Article 15 on improving the linkage of rules between the mainland, Hong Kong, Macau, (and mentioned less, Taiwan). The last blogpost explored Greater Bay Area judicial policy in depth.
Article 18 focuses on labor issues, reminding judges that employment discrimination cases should be tried properly but not mentioning the drafting of a judicial interpretation. It flags that the SPC will do research related to a judicial interpretation concerning labor disputes of employees in new business forms.
Article 20 focuses on providing better protection for the consumer. It mentions improving e rules for hearing cases involving online consumption, mechanisms for trying consumer disputes, work on establishing a collective litigation system for consumer cases plus a related public interest litigation system and cooperation mechanism with consumer protection authorities.
Article 21 is a long paragraph on anti-monopoly law, so much in this area can be anticipated. It mentions “strengthening” judicial regulation over monopoly by platform enterprises, improving rules for making judgments in competition cases and eventually issuing a judicial interpretation on anti-monopoly civil litigation. The article on intellectual property law, Article 19, appears to be a summary of current policies.
Article 22, on supervising and supporting market regulators also deserves standalone analysis. It mentions amending and improving the judicial interpretations relating to public disclosure of government information and cooperating with the procuratorate to push market regulatory departments to improve their regulatory system through administrative public interest litigation cases and judicial recommendations. The courts will communicate and cooperate more with the market regulators to unify administrative and judicial rules.
Article 23 focuses on criminal and other violations of market order. On the agenda in this area is a future judicial interpretation on hearing tax-related criminal cases. It also mentions intensifying the punishment of tax evasion by making use of dual contracts and by high-net-worth individuals in culture and entertainment fields. As could be anticipated the judiciary will collaborate with the taxation and public security authorities on tax matters.
Article 24 summarizes SPC policy in support of epidemic prevention and the economy. I have a forthcoming short article on this topic.
Implications for the Courts
The concluding section (Articles 25-29) of the SPC Unified Market Opinion focuses on the courts themselves. The message from the SPC is that this document is important and that lower court leaders should regard it as an important political task. This section summarizes recent litigation-related reforms, SPC efforts to unify the application of law, smart courts, and diversified dispute resolution.
III. What Does It Signify About Larger Trends?
I surmise that the SPC issued this document in July so that it could be included in its forthcoming mid-term report to the NPC Standing Committee about the piloting of the reforms to the four levels of the courts. That reform means a shift in focus of the work of the SPC, especially SPC headquarters, to judicial policy, judicial interpretations, and guidance of the lower courts as well as reducing the number of cases the SPC considers. It is meant to illustrate to the members of the NPC Standing Committee the many contributions the SPC makes when focused on judicial policy, interpretations, and guidance of the lower courts. For that reason, it also appears designed “to welcome” the upcoming 20th Party Congress by showing the relevance of the SPC and the court system to promoting the development of the economy and socialist rule of law (with Chinese characteristics).
Assuming that the mid-term report is approved and the reform of the four levels of the Chinese courts continues to be implemented, we will see more of such relatively comprehensive judicial services and safeguards opinions promoting the multiple functions of the Chinese courts. These will strengthen the centralizing role of the SPC, or as I have mentioned often in this blog, strengthen the firm guiding hand of the SPC.