Big data update on contested divorces in China

Recently, the Supreme People’s Court (SPC) Judicial Cases Research Center (最高人民法院司法案例研究院)(affiliated with the National Judicial College) issued a big data report on contested divorces in 2016-17, a follow up to their report of 18 months ago (the charts below are from the report). The report was done in conjunction with the SPC’s big data center. The Judicial Cases Research Center publishes big data reports occasionally, some in the form of this report.

As noted in earlier blogposts, the 4th Judicial Five Year Plan calls for reforms in judicial statistics:

Reform mechanisms for judicial statistics with the idea of “big data, big picture, and big service” as a guide; make a system of standards for judicial statistics that has scientific classifications and complete information, gradually building a model for analysis of empirical evidence that complies with the reality of judicial practice and judicial rules, and establish a national archive of court judgment opinions and a national center for big data on judicial information.

As I discuss in one of my forthcoming articles,  the language quoted above contains no commitment to release to the public any of this new and improved big data, but careful observation has revealed that some of the more detailed big data from the SPC big data center is being published in one of the SPC’s academic journals.

It shows that in 2017, first instance contested divorces exceeded 1,400,00, somewhat more than in 2016.

Screen Shot 2018-04-23 at 5.32.27 PMAlmost three quarters (73%)of the plaintiffs in first instance divorce cases were women.Screen Shot 2018-04-23 at 5.39.20 PM

Mostly couples sued for divorce on the basis that they no longer were compatible, and in about 15% of cases domestic violence was alleged.

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Domestic violence was alleged most often in Guangdong, Guizhou and Guangxi.

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Most of the domestic violence alleged was physical violence.Screen Shot 2018-04-23 at 5.44.43 PM

In the first instance divorce cases, 91% of the domestic violence was committed by men on women.

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Judicial interpretations & arbitration

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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.

 

 

 

Public-Private Partnership Disputes in the Chinese courts

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A team of researchers from the Jiangsu Higher People’s Court #1 Civil Division recently published an article on difficult legal issues relating to public-private partnerships (literally government/social capital cooperation) (PPP) in the Journal of Law Application (the Journal) (法律适用), # 17, 2017.  The Journal is one of China’s core legal journals (among the most prestigious academic law journals).  The National Judges College is affiliated with the Supreme People’s Court (SPC).  

The data on which the researchers’ analysis was based was the results of a search of the official Supreme People’s Court (SPC) database (裁判文书网),  using the keywords  “BOT” and  “PPP”.   Their search (end date April 30, 2017) found 493 BOT-related decisions and 20 PPP-related decisions.  The article relates to both BOT and PPP projects and uses the term PPP to include both.

Data on PPP/BOT disputes

  1.  BOT/PPP disputes are increasing

    1. BOT cases
2013 2014 2015 2016
Concluded cases 21 115 107 183

From 2013 to 2016, BOT disputes increased 71%.

2. PPP cases: not large number currently but increasing yearly.

2015 2016
Cases# that been concluded 4 16

Wide range of industries are involved in PPP disputes

China’s official PPP projects include a large number of industries such as energy, transportation, water conservancy construction, etc (can be found on http://tzs.ndrc.gov.cn/zttp/PPPxmk/xmk/). PPP disputes have largely focused on heating, sewage treatment, road engineering, station project, etc.

Type of PPP cases 

BOT cases:

Type of cases Civil Cases Administrative Cases Criminal Cases
85.54% 2.7% 11.76%

Civil cases mainly include contract, property, tort and financial disputes, among which contract disputes account for 78.22%.

Type of the contract cases (78.22%) Construction Project dispute Heating contract Loan Lease Sales
21.61% 13.92% 13.19% 7.69% 7.33%

PPP cases:

Type of cases Civil Case Administrative Cases Criminal Cases
# 11 5 4

Most civil cases are construction project disputes.

 parties to PPP cases

PPP disputes involve multiple legal relationships and parties, including the government, private investors, the project company (SPV), financiers, guarantee companies, insurance companies, contractors, operators, raw material purchaser, etc. Also, with the implementation of the One Belt And One Road” strategy, disputes arising from overseas PPP projects have gradually emerged.

New issues are emerging

Because PPP is a newly-developing area, many problems are gradually emerging. New problems will continue to increase, including interpretation of the PPP contract terms, the application of the “changed circumstances” doctrine [under the Contract Law], the government’s repurchasing issue,  and the evaluation of project quality. In December 2016, National Development and Reform Commission (NDRC) and China Securities Regulatory Commission (CSRC) released Notice of the Ministry of Finance, the People’s Bank of China, and the China Securities Regulatory Commission on Issues concerning Regulating the Asset Securitization of Public-Private-Partnership Projects, which however, still cannot solve some key legal issues such as asset independence and bankruptcy isolation in terms of the insufficient SPV legislation.

Difficulties in hearing PPP cases

For a long time, the government has been used to the role of “administrator”, usually solving disputes through administrative mechanisms. It has not cared much about contracts in which it is on an equal footing with private entities. Facing PPP disputes, private entities may take irrational and non-legal means to protect their rights, resulting in further aggravated conflicts and sometimes mass incidents.

There are difficulties hearing PPP cases, considering the insufficient (PPP 立法供给不足), non-specific (没有专门的PPP法律和行政法规) and incoherent legislation (没有明确的法律规则参考). Also, courts need to consider many aspects such as the legal, economic and social impacts.

Legal risks in implementing PPP projects

Although the central and local governments are promoting PPP projects, there is virtually no related legislation. Although there are relatively few PPP disputes now, that will change as government continues to promote PPP.   Because legislation governing PPP projects is insufficient the compliance risk is inevitable.  Major legislation lacks special provisions regulating PPP:

Although the State Council has enacted guidelines on promoting PPP projects (Circular of the General Office of the State Council on Guiding Opinions on Promoting the Public-Private Partnership Mode in the Public Service Fields (关于在公共服务领域推广政府和社会资本合作模式指导意见)  they are only administrative regulations and are insufficient to protect the private sector. Meanwhile, there are conflicting policies from different national ministries and departments, which in the end not only affects the standing of PPPs and fairness, also causes high administrative costs and low work efficiency.  It is unclear what PPP is and the relationship between PPP projects and others, such concessions. Therefore there are many disagreements concerning whether a project should be considered a PPP project and what the rights of the various parties should be.

The competent authority & management mechanism for PPPs are  unclear

At present, China lacks a unified institution to govern PPP projects.  Although the state has designated the NDRC to take the lead on traditional basic infrastructure PPP projects and the Ministry of Finance (MOF) to take the lead on public services PPP projects, in reality there is crossover between the two types of projects and no clear line between them.  These projects involve  NDRC, MOF, and the authorities in charge of the relevant industry and in this situation with projects involving multiple approvals, there are no clear rules on the division of authority among authorities, and between the central and local authorities, the procedure for obtaining approvals, and whether approvals can be consolidated.

Legal infrastructure for PPP projects

PPP projects involve multiple legal fields such as tax, land, finance, insurance, and construction.  Because a coherent and detailed procedure is lacking for PPP projects, it will lead to legal risks afterwards such as whether PPP projects have tax breaks, whether the land used in a PPP project needs to be put out for bidding separately.

III. How the courts deal with PPP cases

General principles in hearing PPP cases:

  1. Balance strict application of law and promoting transactions; and
  2. Uphold the equal protection of property rights–balance the interests of the government and social capital (private sector), different parties’ interests, and the interests of the public.

Nature of PPP agreements

There are two schools of thought on the nature of PPP agreements, administrative v. civil agreements.

Validity of the PPP contract?

What if the parties argue that the PPP agreement is invalid since it may violate existing laws and administrative regulations?

  • Qualification for private sector (companies) to enter into a PPP contract
    • One view is that private sector must be qualified for construction, otherwise the PPP agreement will be invalid.
    • Another view is that private sector does not need construction qualifications, and the PPP is not invalid.
    • Authors’ view: we need to distinguish. If the PPP contract contains project construction, then the private sector shall have the corresponding construction qualification. If the contract does not contain such project construction, then the private sector does not necessarily need to have the construction qualification.
  • Problems in the bidding process
    • NDRC has released guidelines for PPP project operations – Notice of the National Development and Reform Commission on Issuing the Guiding Rules for Implementing Public-Private Partnership Projects in Traditional Infrastructure Fields (国家发展改革委关于印发《传统基础设施领域实施政府和社会资本合作项目工作导则》的通知), which provides that the private sector should be selected via relevant bidding process. Then what if the PPP contract which includes the construction project did not go through the bidding process, will that lead the invalidity of such contract?
    • Authors’ view: if the contract contains construction work, and such the contract is legally required to go through the tender process, then without such process, the PPP contract will be invalid.
  • land issues

Many PPP projects are connected with land use. What if the land was not subject to a tendering process? Will that invalidate the PPP agreement?

Authors’ view: this is controversial in practice. According to the regulation enacted by Ministry of Land and Resources 国土资源部办公厅关于印发《产业用地政策实施工作指引》的通知国土资源部办公厅关于印发《产业用地政策实施工作指引》的通知, if the PPP project concerns land use, then the process of bidding and the process of authorizing land use can be combined, therefore the courts can confirm the validity of the PPP agreement.

Enforcing government undertakings

Some local governments will make undertakings to provide certain benefits or rewards to the private sector participants. What is the legal effect of that commitment?

  • One view holds that the promise is an administrative promise and should be recognized as effective.
  • Another view is that the govern commitment is ineffective since it goes beyond the government’s powers.

Authors’ view: we need to distinguish different situations. If the government’s benefits or rewards are in violation of law, administrative regulations and mandatory regulations, such as in violation of tax laws or result in the loss of state-owned assets, then the undertaking is invalid. If the commitment does not violate mandatory laws or against the public interest, such commitment should be valid based on the principle of estoppel.

Issues related to PPP contracts

  1. Relationship between the PPP agreement and the construction contract
    • In PPP projects, the government signs the PPP project agreement with the private sector entity, and the SPV and the third party (which is designated or appointed by the private sector) signs the project construction contract. What is the relationship between these two contracts? When the PPP agreement is terminated, how do we deal with financial settlement under the construction contract?
      • One view is that in the construction contract is one part of the performance under the PPP agreement, therefore, the project construction contract is linked to the PPP agreement.
      • Another view is that the construction contract and the PPP contract have an actual connection but involve different legal relationships.
      • Authors’ view: it is necessary to see whether the PPP agreement has specifically agreed upon certain terms governing the construction contract. If not, then these two contracts shall be deemed to be independent of each other.
  2.  Bid bond issues
  • Generally, the government requires the private sector entity to provide a bond for its bid. The issue is whether the bid bond is governed by the arbitration agreement (in the main agreement).
  • One view holds that the bid bond is linked to the main contract and the arbitration clause applies to the bid bond.
  • Another view is that the indemnity obligation of the guarantor is primary and therefore not related to the main agreement, therefore the arbitration agreement is inapplicable.
  • Authors’ view: the issue of tender guarantee payment, it is related to the main contract, therefore it should be subject to the arbitration clause in the contract if there is any.

Project employer issues

  • Since it is the government and the private sector signed the PPP contract, and it is the project company and the contractor have signed the construction contract, then who is the project employer under the construction contract?
    • One view holds that the government and private sector entity are the project employers.
    • Another view is that the project company is the project employer.
    • Authors’ view: the PPP contract and construction contract are independent contracts, therefore under the construction contract, the project company should be recognized as the project employer.

 pledge of the interest in the PPP

Can a concessionaire’s rights be pledged? Considering the SPC’s guiding case No.53, the usufruct (benefits from the use rights) in a concession may be pledged and can be used as accounts receivable in the pledge registration

  • Authors’ view: the pledge should be recognized as effective under SPC’s guiding case No. 53.

Dispute settlement mechanism in PPP disputes

  • What if the parties agree to dispute resolution by arbitration or civil action in the PPP agreement?
    • Authors’ view: as discussed above, if the issue is governed under administrative law, then even if the parties agreed to arbitration or civil litigation in the PPP agreement, the agreement will not be binding and the parties must rely on administrative remedies. If the dispute is a pure contract issue, then the dispute resolution agreement between the parties shall be valid.
  • What if the parties agreed on jurisdiction?

Other Suggestions

  • Promote PPP legislation and create an the overall framework of PPP system: China should speed up the process of PPP legislation, which can learn from Legislative Guide on Privately Financed Infrastructure Projects enacted by United Nations Commission on International Trade Law, PPP Reference Guide enacted by the World Bank, PPP Handbook enacted by Asian Development Bank (ADB).
  • Clarify the PPP management mechanism and clarify the responsibilities of all parties.
  • Improve the supporting mechanisms for PPP projects.

__________________________________________________

Many thanks to my Peking University School of Transnational Law research assistant Zhu Dianmeng (Grace) for her work on this.

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.

 

 

 

 

 

Why are Chinese judges so stressed?

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“Dear litigants”

The photo above was viral in legal Wechat groups in early February–a notice in the lobby of a Guangxi district court advising litigants to use mediation or arbitration because the judges in the court are overworked, overstressed, and voting with their feet to leave the courts.  The notice gives the court’s 2017 caseload (36,476 cases) and prediction for 2018 (over 40,000) and says fifteen percent of the judges have quit, retired, or transferred out of the courts and judges’ assistants are leaving as well.

How many Chinese judges are there?

SPC President Zhou Qiang reported to the National People’s Congress Standing Committee in November 2017 that there were 120,128 quota judges/judicial post judges(员额制), a reduction from 211,990.   Some of those judges have become judicial assistants, while others have been transferred to administrative roles within the courts.

It appears that the authorities decided to reduce the headcount of Chinese judges by comparing the percentage of judges in China with those in major jurisdictions. The readers of this blog know (and Chinese judicial reformers know clearly), the structure of the Chinese courts is quite different from those in other jurisdictions, whether civil or common law systems. However, once the reduction had been approved by the highest political authorities,  those questioning the wisdom of this decision  run the risk of improperly discussing (or distorting (歪曲)) judicial reform (妄议司改), a variation of “improperly discussing Central policy (妄议中央).

Chinese courts are a cross between a court and a Party/government organ, with personnel in administrative offices such as the political department (政治部), general office (办公厅), supervision bureau (监察局). Senior personnel such as the court president, vice presidents, and division chiefs, have a significant portion of their time taken up by administrative matters.  The judicial reforms now require senior personnel to hear a small number of cases per year and according to President Zhou Qiang, that number is up 32% (the base number is unknown).  Of the 120,990 judges who have the status of judge, 85% of them hear some number of cases. Statistics on the number of judges actually hearing cases are hard to pin down.

We do not know how many judges have left the Chinese courts in 2017 or 2016 by quitting or transferring to a government department.  Presumably, the head of the Supreme People’s Court’s (SPC) Political Department (in charge of personnel) does, but those statistics seem to be confidential.  Based on partial information however, judges are continuing to leave the courts, from the SPC on down.

From a survey done by a post-doctoral student at the China Institute of Applied Jurisprudence of the SPC in 2015 (further detailed below), close monitoring of Wechat articles, and my own personal observations, those who remain in the judiciary have a high degree of stress.

Stresssed Chinese judges and their job dissatisfaction

In the spring of 2015, then Beijing Higher People’s Court Judge Hu Changming and a post doctoral student at the SPC’s China Institute of Applied Jurisprudence, but now a researcher at the Chinese Academy of Social Sciences Institute of Law, conducted a job satisfaction survey among Chinese judges, published in the prestigious China Law Review and summarized in SPC media. Hu previously won awards for his writings as a judge. He later published an article on Wechat (originally published in the defunct Wechat account “Home of Judges” that (according to this report) led to his punishment for distorting (歪曲) judicial reform.

Hu received 2660 responses from judges working in all four levels of the Chinese judiciary.  Although the ongoing trope about the Chinese judiciary outside of China is that most Chinese judges are former People’s Liberation Army officers, Judge Hu’s survey found that most judges had at least an LLB or master’s degree in law, with small numbers of judges with less than an LLB or a Ph.D.

The pie chart below (from Hu’s study) is of responses concerning job satisfaction (extremely satisfied 1.28%, relatively satisfied, 11.09%, neutral, 30.53%, not very satisfied 34.89, and very dissatisfied, 22.22%).Screen Shot 2018-02-21 at 3.58.34 PM

His survey further revealed that practically all (94.47%) of judges surveyed had considered quitting the judiciary, of whom 57.37% had considered it seriously, and only 5.53% had never considered it.  His survey had more male than female respondents, and more middle-aged than late career judges, likely affecting these results.

Why are Chinese judges dissatisfied?

According to Hu’s 2015 survey, Chinese judges are dissatisfied for both work-related and benefits-related reasons. This is consistent with my earlier research.   This post will look at some of the work-related reasons.

Work-related reasons

Both the survey and other observations show that Chinese judges, particularly those in basic level courts in China’s most developed areas, have too much work.  One major reason was the decision in 2015 to change the case filing system. Six weeks into the case filing reform I predicted “greater stress for fewer judges and other judicial staff” and at the end of 2015 noted the SPC was “putting a positive spin on what is a highly stressful situation for frontline judges.”

The caseload in the busiest courts is large and on the increase yearly(see the chart below for the caseload in first half of 2017 and percentage increases). The Wechatosphere frequently reports on the heavy caseload in the country’s major courts and the stress on frontline judges. In September, 2017, I reported on the situation for frontline judges pre-19th Party Congress.

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1. Pudong/Shanghai; 2.Chaoyang/Beijing;3. Yuexiu/Guangzhou; 4. Baoan/Shenzhen; 5. Futian/Shenzhen; 6. Haidian/Beijing; 7. #1/Dongguan; 8. Jingan/Shanghai; 9. Western District/Beijing; #1/Zhongshan

For domestic cases, judges are under tight deadlines and their work computers will flash a red signal when a case isn’t closed on time. Although unreasonable performance targets were to have been abolished, Wechat articles and judges who I was able to disturb at year’s end mentioned that they were under pressure to close cases by year end so that their court could achieve a high closing rate, documenting the closing rate pressure mentioned in September, 2017.

Another source of pressure for judges is the lifetime responsibility system, which two Chinese judges writing in an academic law journal called the “sword of Damocles hanging over judges” ( 法官办案责任追究是时刻悬挂在法官们头上的“达摩克利斯之剑”), analyzing the drawbacks with the standards and their implications for judges.  Hu’s survey found that almost half of them felt that the responsibility system for mistaken cases was unfair and this is also shown in Wechat and articles in court media as well as comments by individual judges.

According to Judge Hu’s survey, judges regularly work overtime, some for over six months a year, and most mention that they have inadequate administrative support. This may change over time as some law graduates are willing to take on positions as judge’s assistants, but as the sign above indicates, some of them are leaving too, but from the Wechatosphere, they feel stressed as well. As mentioned in this earlier blogpost, interns are a welcome source of additional brainpower, although in experience of my students, at least, interns need to depend on their parents or school scholarships to cover their expenses during their internships.

Then there is the matter of what work occupies their work day.  In addition to sitting in court, reading case files,  or drafting judgments, Chinese judges have to receive petitioners, deliver litigation documents, and enforce judgments, as well as publicize law to “the masses (including soldiers).”

Additionally, meetings of various types take up their time as well.  Since the Communist Party has been focusing on raising the ideological level of the judiciary, it seems likely that for frontline judges, meetings focused on the latest Party documents take time away from cases.

As this blog has mentioned previously, the judicial reforms for the most part have retained the pyramid structure of Chinese courts, where the court president, vice presidents, and division chiefs have administrative authority over judges.  And even for those reformed courts that have a flat administrative structure, the authority of the head of the court (or tribunal and the judicial committee still remains in place, although the judicial reforms call for new committees to be put in place relating to both appointments and judicial punishment.

Will the “deepened reform of the judicial system with comprehensive integrated reforms” (深化司法体制改革综合配套改革) (discussed in December’s blogpost) deal with the stress of China’s judges and retain (and attract) the elite corps that Chinese judicial reformers envision?  We will need to wait and see.

 

 

 

 

 

Rights of the Child

Hannah Lu[1]

As of this writing, there have been eight school shootings in the United States since 2018 started[2] and there have been 290 school shootings in the United States since 2013[3]. Between the years 2013-15, 85 of these shootings have occurred at K-12 schools.[4]

In November 1989, practically every member of the United Nations signed the Convention on the Rights of the Child (CRC), a human rights treaty that sets out the civil, political, economic, social, health, and cultural rights of children. I learned about this treaty when I was in primary school in Hong Kong.  196 members of the United Nations are party to the convention. The United States is not.

CRC Article 3 states

“in all action concerning children, whether undertaken by public or private social welfare institution courts of law, administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration”.

Article 19:

“State’s parties shall take all appropriate legislative, administrative, social and educational measures to protect the child from all forms of physical or mental violence, injury or abuse, neglect or negligent treatment, maltreatment or exploitation, including sexual abuse, while in the care of parent(s), legal guardian(s), or any other person who has the care of the child.”

The United States (while it has not ratified the treaty, it remains a signatory) is in violation of these articles through its negligence to properly and adequately protect children from gun violence while they are at school. [Editor’s note: this assumes these articles are now part of customary international law, so that the United States is bound by these principles although it has not ratified the CRC.] The failure to pass any gun reform legislation on both a federal and state level is not just a failure on the part of the government to its children but a violation of their human rights. The negligence and inability to pass gun reform legislation mean that the United States has both failed to consider the best interests of its children but also that it has failed to protect them from physical and mental violence. The State Department’s website says that “the protection of fundamental human rights was a foundation stone in the establishment of the United States over 200 years ago”[5]. The question now is when will the United States address those foundational rights?

_____________________________

[1] Class of 2018, New York University, Tisch School of the Arts (and daughter of the Monitor).

[2] https://www.theguardian.com/world/2018/feb/14/school-shootings-in-america-2018-how-many-so-far

[3] https://everytownresearch.org/school-shootings/

[4] https://everytownresearch.org/reports/analysis-of-school-shootings/

[5] https://www.state.gov/j/drl/hr/

Supreme People’s Court & the new campaign to “sweep away black & eliminate evil”

Screen Shot 2018-01-31 at 11.21.40 AMLast week, China announced the latest campaign to “sweep away black and eliminate evil,” saohei chu’e (扫黑除恶),“Concerning the Carrying Out of a Special Action to Sweep Away Black and Eliminate Evil” (关于开展扫黑除恶专项行动的通知) (full text not yet released) with Xinhua news reporting that it reflects it reflects the leadership’s  outlook on security and people-centered governance thought.  The Supreme People’s Court (SPC) is an integral part of the campaign and was one of the institutions (along with the Supreme People’s Procuratorate, Ministry of Public Security, and Ministry of Justice) that issued a guiding opinion (办理黑恶势力犯罪案件的指导意见) on how the campaign is to be carried out (text found here). As previously discussed on this blog (and in a forthcoming article), there is no transparency requirement for guiding opinions and other “judicial normative documents” that are not judicial interpretations.  What has been made transparent (in a quick dive into the Wechatosphere) is that the SPC is both clarifying the criminal law issues to the legal community and signalling through releasing typical cases and other actions that lower authorities should not use the campaign to confiscate the property of private entrepreneurs. But will other imperatives trump that signal?

  1. Clarifying the legal issues

Although the commentators in this Voice of America program weren’t aware of it, there is a body of (confusing) legislation, partially described in this book chapter (somewhat outdated).  The authoritative (because it is published by the five criminal divisions of the SPC)  Reference to Criminal Trial (刑事审判参考), had published a special issue (issue #107) on organized crime law last summer. (For those of us who read more quickly in English, the editors have helpfully compiled an English translation of the table of contents. (see below)

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In his 29 January Wechat posting on his 说刑品案 (“Speak About Criminal Law, Evaluate Cases”) Wechat account, its editor, Judge Yu Tongzhi (于同志), a judge in the #2 Criminal Division and one of the editors of Reference to Criminal Trial, set out 20 Q & A’s with guidance on the legal issues (derived from last summer’s issue).

Judge Yu described the posting as to “coordinate” (配合) with this campaign, but is the author’s way of saying that the law on these issues is confusing and all involved, whether they are judges, prosecutors, public security or defense lawyers need an authoritative steer through the forest of law, judicial interpretations, and other guidance.   As is apparent from the photo above, the guidance includes a 2015 conference summary on organized crime, guiding cases (指导案例)(not to confused with those guiding cases (指导性案例 issued by the SPC itself), authoritative commentary on the 2015 conference summary, major cases, and discussions by judges of difficult legal issues. The guidance posted often illustrates answers with examples from the guiding cases and cautions that standards should not be improperly expanded, such as the definition of a “gang member.”  He does not include a summary of the law on property seizure, the subject of one of the articles in issue #107.

Some of the organized crime legal issues are analogous to those in other jurisdictions and last year one of the SPC websites published a long article analyzing this area of law (and its problems), suggesting that China look to US RICO legislation.

The first of the 20 questions is:

  1. What’s the connection between the 2015 and 2009  conference summaries on organized crime?

Don’t be surprised if you haven’t heard of either conference summary, as neither one seems to have been incorporated in any of the major translation databases.  As to what conference summaries are, Conference summaries are what the SPC entitles “judicial normative documents”  (there are a number of titles for these) and often address new issues or areas of law in which the law is not settled.   “Conference summaries” are also a form of Communist Party/government document.

The relationship is addressed in the article on the application of the 2015 conference summary by several heads of SPC criminal divisions in issue #107.  Their view is that the two conference summaries should be read together, which the later one taken as an elaboration of the first, with newer provisions superseding the older ones.

The campaign & private entrepreneurs

The second signal that the SPC is sending is that the “sweep away black and eliminate evil” campaign should not be used to abuse private entrepreneurs.  On 30 January, the SPC issued seven typical cases on protecting private property rights and the rights of entrepreneurs, one of which involves a case that occurred during the 2008 “strike black” campaign.  As summarized in China Daily,  the Liaoning Public Security Department arrested Liu Hua and Liu Jie in a 2008 criminal investigation and seized 20 million yuan (about 3.16 million U.S. dollars) in funds from their company, Beipeng Real Estate Development Co. Ltd. in Shenyang. In 2014, a local court in Benxi convicted the two and the company of illegal occupation of farmland but exempted them from criminal punishment. Liaoning Public Security refused to return the seized funds and related financial documents were not returned.  SPC Vice President Tao Kaiyuan SPC Vice President Tao Kaiyuan acted as the chief judge, and the SPC’s State Compensation Committee ruled the Liaoning Public Security Department should return the funds with  interest. Judge Hu Yunteng and the  #2 Circuit Court  were involved in this as well. Company counsel’s detailed account of this case (highly recommended!) found here. Judge Zhu Heqing, Deputy head of the #3 Criminal Division, discussed in the article mentioned above in #107 the problems with the law and practice of property seizures, such as the lack of a definition of “organized crime related property” (涉黑财物) and related seizure procedures, as well as the lack of procedures to require the return of property improperly seized.

Some thoughts

As the document on implementing this campaign has not been released, we cannot know whether it includes performance targets that will lead local authorities to “round the usual suspects up.” What is apparent from the Wechat posting and much more from issue #107, is that the law is this area is unclear, lacks procedures for protecting the property of the entities involved (not to mention the entrepreneurs), and can be easily abused by local authorities.  As we know from the case above and other cases, entrepreneurs will then spend years seeking the return of their property.  The SPC must coordinate with this latest campaign while protecting the rights of entrepreneurs, and avoid a new set of mistaken cases.