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Communist Party and the Courts, Court Operations, Greater Bay Area, international commercial court, Maritime courts, NPC

Supreme People’s Court’s Specialized Report on Foreign-Related Adjudication Work

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By Susan Finder with initial research assistance by Zhu Xinyue

President Zhou Qiang delivering the report

The Supreme People’s Court’s (SPC) October 2022 specialized report on foreign-related adjudication work (最高人民法院关于人民法院涉外审判工作情况的报告)  provides an overview of the SPC’s and the lower courts’ work related to foreign-related matters over the past 10 years. This blogpost uses the term “adjudication work” to encompass the multiple functions of the SPC (see my U.S.-Asia Law Institute article for a refresher) as well as the lower courts. (My previous blogpost gives a detailed explanation of the significance of specialized reports of the SPC and other institutions to the NPC Standing Committee). The report is intended to showcase the SPC’s work in supporting Xi Jinping era fundamental changes in foreign policy, or as the concluding section words it,  “vigorously serving the greater situation of the Party and State’s external policy work” (积极服务党和国家对外工作大局).  An analysis of the content of this specialized report provides insights into the role of the SPC and its relationships with other Central institutions as well as the current and evolving concept of “foreign-related rule of law” (涉外法治). Concerning the link between “foreign-related rule of law” and the foreign-related adjudication work of the people’s courts,  as President Zhou Qiang said: “the foreign-related adjudication work of the people’s courts is an important part of foreign-related rule of law work (人民法院涉外审判工作是涉外法治工作的重要组成部分).”  

I surmise that the NPC Standing Committee requested the SPC submit a specialized report on the SPC’s foreign-related work because the political leadership is prioritizing developing China’s foreign-related body of law and takes the view that SPC expertise is needed to that end.  As in any legal system, issues that come before the Chinese courts highlight the gaps in current legislation (broadly defined).  

1. Overview of the Report

The report covers all areas of SPC work–criminal, civil and commercial, maritime, intellectual property, administrative, and other areas, as well as the recognition and enforcement of foreign judgments, recognition and enforcement of foreign arbitral awards, and other forms of international judicial assistance.  Because cases involving Hong Kong, Macau, and Taiwan are considered by reference to the principles for foreign-related cases, the report provides highlights of those developments as well. 

Following some background material, this blogpost follows the structure of the report and therefore the blogpost is much longer than usual.  A more comprehensive analysis of many aspects is found in my “never-ending article,” currently on its meandering way to publication.

2. Drafting of the Specialized Report

Because most of the cases involving foreign-related matters tend to be in the commercial area generally (incorporating maritime,  recognition and enforcement of foreign judgments and arbitral awards), it is likely that the #4 Civil Division took the lead in drafting the report, worked closely with the International Cooperation Bureau,  and involved other divisions and offices of the SPC as needed, including those working on criminal law issues.  Although this report appears to be just another anodyne official report, what underlies it is likely to be hundreds of hours of drafting, soliciting data and comments from related offices, including the Research Office (with a department in charge of Hong Kong and Macau issues), comments from the vice president in charge of the #4 Division (it now appears to be Justice Tao Kaiyuan),  President Zhou Qiang’s office, and the NPC Standing Committee itself. It is unclear whether the Ministry of Foreign Affairs and the Ministry of Comments also provided input.  It incorporated the SPC’s response to a research report on foreign-related adjudication work prepared by the NPC Standing Committee’s Supervisory and Judicial Affairs Committee (mentioned in the previous blogpost).

3. Summary of the Report

The report highlights the SPC’s work in foreign-related cases in support of related policies. The structure of the report is the usual one for such reports–a long list of accomplishments,  followed by a summary of outstanding challenges and suggestions to the NPC Standing Committee for future work.  It reveals some previously unknown developments and clearly sets out the official conceptual structure underpinning the SPC’s foreign-related adjudication work and therefore China’s “foreign-related rule of law.”   The report takes an inclusive view of accomplishments: judicial interpretations, policy documents, typical and guiding cases, as well as correctly deciding important cases.  This blogpost decodes the details in the report, with brief comments and links to some of my earlier blogposts.

a.  Selected Statistics

 The report provides selected statistics. As I have said when I have spoken on the Belt & Road and the SPC, the number of foreign-related cases heard in the Chinese courts has increased substantially over the past ten years, but even now they constitute a tiny percentage of cases heard in the Chinese courts.  The report reveals some of the challenges, as seen officially.

From 2013 to June 2022, Chinese courts heard a total of 384,000 foreign-related (including Hong Kong, Macau, and Taiwan-related) cases. These numbers are tiny compared to the large number of cases accepted by the Chinese courts annually. For example, in 2021, that number reached over 33 million cases. The number of first-instance foreign-related civil and commercial cases nationwide increased from 14,800 in 2013 to 27,300 in 2021.  The SPC has not released more detailed statistics about the types of civil and commercial cases or foreign-related cases in other areas of law, such as criminal cases.  

b.  Protecting China’s National Security and Sovereignty


As is usual with SPC official reports and documents, matters relating to national security and sovereignty take a prominent place.  The SPC reiterates that its foreign-related adjudication work serves the domestic and external greater situations.  This section highlights two areas of service in protection of national security and sovereignty:

  • striking at crime: and

The crimes mentioned are harmonized with the priorities seen in other official reports and documents, so that national security, particularly political security is listed first.  The crimes are similar to those listed in the 2020 Guiding Opinions on Services and Safeguards of the People’s Courts on Further Expanding Opening-Up to the World (Open Policy Guiding Opinion 最高人民法院关于人民法院服务保障进一步扩大对外开放的指导意见).  Accomplishments listed include the 2017 Provisions on Several Questions Concerning the Application of the Procedure of Confiscating Illegal Gains in Cases Where the Criminal Suspects or Defendants Absconded or Died and the 2021 comprehensive judicial interpretation of the Criminal Procedure Law (my book chapter concerns its drafting), which contains basic principles relating to foreign-related cases.  

  • protecting China’s investments abroad. Cases so classified include infrastructure-related cases, trade cases, and shipping cases. The principal accomplishment is issuing a judicial interpretation on the hearing of independent letter of guarantee (demand guarantee) disputes and unifying the rules governing such disputes. These developments, which have come through several SPC cases (discussed here) and the end 2021 Conference Summary, have been flagged on this blog. A long-pending China International Commercial Court (CICC) case may provide additional guidance. 

c. Creating a Legalized International Business Environment

This section is relatively long and highlights much of the SPC’s foreign-related adjudication work in the past 10 years. The focus is on international commercial dispute resolution rather than intellectual property disputes. 
i. Foreign investment: The courts have supported the revised Foreign Investment Law and Implementing Regulations with two interpretations (including one on the application of the Foreign Investment Law, mentioned here), as well as a policy of centralizing the hearing of such cases, seeking to ensure greater competency.
ii. Pilot free trade zones and ports: The courts have supported these policies through several services and safeguards opinions (one general one, discussed in my book chapter, as well as ones on Lingang, Hainan, and new zones in Beijing). The SPC also issued related typical cases and encouraged local courts to establish additional measures to support national free trade zone policy.
iii. The courts have supported national policies supporting a competitive market order, and to that end have issued regulations on bankruptcy, normative documents on improving the business environment (including services and safeguards opinions and a conference summary), and established financial courts (see Mark Jia’s related article).
iv. Supported national policy concerning economic development and COVID-19 pandemic control (I have a related article that will be published in Italian).  The SPC promulgated four guiding opinions (policy documents) on the trial of civil cases related to the Covid-19 pandemic, one of which focused on foreign-related commercial and maritime cases.  This document was included in UNCITRAL’s CLOUT database.

v.  Respecting international conventions and international practices (customs or usage, by which is meant trade/commercial practices or usages).  As mentioned here, the SPC is drafting a judicial interpretation on the application of international conventions and treaties and international practices and has issued related typical cases.
vi. Application of (foreign (non-mainland) governing law.  Since 2013, the courts have applied foreign law in 542 cases. My draft article discusses related issues briefly.
vii. Cross-border recognition and enforcement of judgments: Since 2013, the courts nationwide have considered 7,313 cases of applications for recognition and enforcement of civil and commercial judgments from foreign courts.  My draft article discusses the evolution of this policy. The report mentions the enforcement of Chinese judgments abroad.

d. Serving national maritime policy


The report underlines that the SPC’s maritime adjudication work directly serves foreign trade shipping and marine development to maintain national [judicial] sovereignty and related national interests. The report mentions that the SPC issued judicial interpretations on maritime litigation jurisdiction, and issued judicial interpretations for hearing cases of compensation for damage to marine natural resources and ecological environment. The SPC and the Supreme People’s Procuratorate issued regulations on handling public interest litigation cases on marine natural resources and ecological environment, and released related typical cases.
The report mentions China’s work on becoming an international maritime justice center  (See my article in the Diplomat).   Related accomplishments include the SPC expanding the network of maritime courts and their dispatched tribunals and the report highlights that more parties without a jurisdictional link with China have chosen the jurisdiction of the Chinese maritime courts (for a different view from the official one, see Professor Vivienne Bath’s research on parallel litigation involving the Chinese maritime courts). 

e. Improving international commercial dispute resolution mechanisms to serve high-quality development of the BRI


According to the report, the SPC is implementing the deployment of the political leadership in this area.  Those include:

the CICC and related developments, including: the CICC’s bilingual website, the  CICC’s expert committee; two BRI Services and Safeguards Opinions, and typical BRI cases, as well as establishing local international commercial courts. (This blog has discussed these developments in some detail, with more contained in my draft article).

f. Establishing diversified dispute resolution of international commercial disputes 

i. The SPC reports that it established a “one-stop” diversified international commercial dispute resolution mechanism, which integrates litigation, arbitration, and mediation.  The report mentions the accomplishments of several local courts and the incorporation of arbitration and mediation institutions into the SPC’s (CICC’s (Chinese version)) one-stop platform.  
ii. Arbitration: The SPC issued judicial interpretations on judicial review of arbitration cases and enforcement of arbitral awards, and introduced a mechanism and reporting system for judicial review of arbitration cases; since 2013, Chinese courts have heard over 110,000 judicial review cases (presumably the vast majority domestic). 
iii. Mediation: The report describes local developments and accomplishments related to the mediation platform of the people’s courts (see the related white paper). 

g. Serving national Hong Kong, Macao and Taiwan policy

On the details of SPC and Greater Bay Area policy, please see my earlier blogpost and presentation at a November, 2022 conference held at the Law Faculty of the University of Hong Kong.

This blogpost summarized earlier developments related to Taiwan. The  SPC issued judicial interpretations on the recognition and enforcement of Taiwan civil judgments and arbitration awards.
The SPC mentioned that the courts have supported national policy on integrating Hong Kong and Macao into Greater Bay Area policy by supporting [Ministry of Justice led policy] to permit lawyers from Hong Kong and Macao to practice in the Greater Bay Area (note, such lawyers must be Chinese citizens). The courts are also supporting the initiatives related to integrating Hong Kong, Macau, and Taiwan legal professionals (again, foreign professionals registered in these jurisdictions are not included).

f. Improving the quality and credibility of  China’s foreign-related adjudication


i. Jurisdiction: the report mentions a notice on jurisdiction on foreign-related cases (flagged in this blogpost) and centralized jurisdiction.
ii. Service of process: The SPC amended the judicial interpretation of the Civil Procedure Law to enable more flexible service of process abroad and established a platform with the Ministry of Justice (discussed in this blogpost) to enable more efficient handling of service of process requests from abroad. (There is no mention of greater flexibility in foreign service of process into mainland China.)
iii. Determination of foreign law: the SPC established a unified platform for the determination of foreign law (accessible through the CICC website, see the links above), which links to SPC-authorized institutions providing such services.  My draft article provides additional details. 

iv. Improving cross-border litigation services.  This integrates with the SPC’s smart courts policy.  One of the major accomplishments mentioned in the SPC’s judicial interpretation on cross-border online litigation.  
iv. Training foreign-related adjudication talents (涉外审判人才.  See my earlier blogpost.

g.  Promoting the development of the domestic and foreign-related legal systems

Matters so classified include: vigorously supporting the development of foreign-related legislation (mentioned in this blogpost); application of foreign-related law; and undertaking related research.  The foreign-related legislation that the report mentions (Civil Procedure Law and several maritime-related laws), is actually only one small part of what the SPC has done.  The application of foreign-related legislation gives the SPC an opportunity to reiterate its accomplishments in issuing judicial interpretations; policy documents;  conference summaries; and typical cases.  The SPC also mentions its BRI research center and establishing research centers at 15 universities and research institutions.

h. International judicial exchanges to promote the establishment of a community with a shared future of mankind

The SPC includes in this category the following: judicial exchanges in the form of memoranda of understanding and large-scale conferences; international judicial assistance in both civil and criminal matters; participation in the formulation of international rules (negotiating international conventions and bilateral treaties, as mentioned here, as well as providing support to China’s initiatives in various matters, including railway bills of lading (see my student Zhang Huiyu’s article); and “telling China’s rule of law story well.”  The latter category includes certain conferences and meetings with foreign judiciaries.   I have either been a participant or an observer in some of those “telling China’s rule of law story well” events, such as the CICC international conferences and the 2019 third meeting of the UK-China Joint Judicial Expert Working Group on Commercial Dispute Resolution.  

4. Challenges in foreign-related work

The report listed the following challenges:
a. Limited ability of some courts to engage in foreign-related adjudication work, as evidenced by the lack of experience of some courts in foreign-related work.  When I spoke at a Hong Kong International Arbitration Centre event in October, 2022, my co-panelist Arthur Dong illustrated that with his accounts of how several local courts handled applications for interim measures.
b. Ongoing difficult issues: difficulties in service of process, extraterritorial investigation and evidence collection; determining foreign (non-mainland Chinese) law;  shortening the trial period for hearing foreign-related cases (also note that at least one CICC case has been outstanding for over two years).
c. The “one-stop” diversified international commercial dispute resolution mechanism needs improving and China needs to accelerate the drafting of a commercial mediation law.  The need for a commercial mediation law has been discussed within central institutions since at least 2019 (as I have observed). So it seems that the SPC is in line with the view of the Ministry of Commerce that such a law is needed to promote more professional mediation.
d. A significant shortage in the number of judicial personnel with foreign-related expertise (discussed here).

5. Future developments

The report emphasized adhering to the leadership of the Party to ensure foreign-related adjudication is politically correct and in line with the deployment of the political leadership.
The practical measures (directed towards the NPC Standing Committee) included:

  •  Accelerating the process of amending the foreign-related part of the Civil Procedure Law (this has been accomplished). Incorporating the amendment of the Special Maritime Procedure Law into the [NPC’s] legislative plan;  amend the NPC Standing Committee decision establishing the maritime courts, to give maritime courts in coastal cities jurisdiction over certain criminal cases (an issue under discussion since at least 2014);
  • improving certain matters related to the CICC to resolve certain “bottleneck” issues (unspecified). 
  • At an appropriate time, drafting a commercial mediation law to provide a sufficient legal basis for China’s competitive position in international commercial dispute resolution;
  • Delegating authority to Guangdong and other courts that hear a large number of cases involving Hong Kong and Macau cases to simplify civil litigation procedures, such as proof concerning the identity of the party and authorization of its representative. (These issues are linked to the fact that China has not yet signed the Hague “Apostille Convention” (see my earlier blogpost) and has not yet created an analogous procedure for Hong Kong and Macau);
  • Improving training of foreign-related legal personnel through implementing an exchange policy with international institutions. As I have observed, much of the discussion of training foreign-related legal personnel has involved training in China, with minimal foreign involvement.  

Concluding comment

As this report has illustrated, the SPC (and the court system) are taking an active part in the evolving project of creating a foreign-related legal system that better reflects both the demands of the political leadership and the practical needs of the users of the Chinese legal system.  It should be clear from this analysis that China’s foreign-related rule of law is a work in progress involving a multitude of issues, and that the SPC has a multifaceted and crucial role in its creation.

arbitration, conference summary, Expert Committee, international commercial court

Supreme People’s Court Issues New Guidance on Cross-Border Commercial & Procedural Legal Issues

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In January 2022, the Supreme People’s Court (SPC) issued a Conference Summary [also translated as “Meeting Minutes”] of the National Symposium on Foreign-Related Commercial and Maritime Trial Work (Foreign-Related Commercial  & Maritime Law Conference Summary (bilingual version here) (全国涉外商事海事审判工作座谈会会议纪要).  From unauthorized versions released, it can be seen that it was another SPC year-end accomplishment.  Although this document is not a judicial interpretation and cannot be cited in Chinese court judgments, it is crucially important for legal professionals outside of China dealing with cross-border commercial issues involving China and for Chinese legal professionals focusing on cross-border commercial issues involving the rest of the world.

The conference summary has  111 provisions.  The focus is on legal issues because the target audience of domestic judges understands the political framing.  The conference summary applies to foreign-related cases and to Hong Kong, Macau, and Taiwan-related cases by reference (see Article 111,  set out at the end of this post).  They are in the following categories:

  • foreign-related commercial (涉外商事部分), the longest:
  • Maritime (海事部分); 
  • Judicial review of arbitration (仲裁司法审查部分).

This blogpost will explain why the conference summary was issued, its legal and policy basis, and why it addressed those particular issues and will leave the majority of the content of the conference summary for the experts in practice and academia.

Why this conference summary?

The conference summary (meeting minutes) is based on a national conference on foreign-related commercial and maritime trial work held in Nanjing in June of last year and the issues that the SPC would have heard raised by lower court judges.

When asked the question of why this conference summary was issued, an SPC judge is likely to say “to resolve difficult issues in practice and unify judgment standards.” But a fuller answer to this question for a larger audience requires further details. 

As to why a conference summary and not rely on “case law” with Chinese characteristics, including China International Commercial Court cases, SPC cases, and various types of typical or SPC selected cases as “soft precedents,” the answer is that the SPC is issuing this conference summary to guide lower court judges (and possibly judges in other divisions of the SPC) practically and efficiently and for some additional reasons.  The simple answer is that “case law” is not effective enough to practically guide lower court judges.  If it were, the SPC would not have issued this document. I have seen a number of academic articles (in English) that illustrate a misunderstanding of what the SPC is doing.   

Additionally, I surmise that at the Nanjing conference, behind closed doors, SPC judges heard about inconsistent approaches or requirements from lower court judges.  I surmise they also heard from lower court judges uncertainty in the approach that they should take concerning issues where the law is unclear.   The judicial evaluation system values deciding cases correctly. Moreover, the most recent SPC policy focuses on unifying the application of law. Its leadership has established a leading small group to that end.  So for all these reasons, lower court judges would look to the SPC for clarification.   What is contained in the conference summary is the SPC’s current consensus on major cross-border commercial, maritime, and arbitration review-related issues, based on their further research and consideration.

In the busiest courts where many of these cases arise, judges are under enormous pressure to decide cases timely and accurately, especially after the recent changes to the jurisdiction of lower courts under the reorientation of the four levels of the people’s courts and the issuance of other documents changing the jurisdiction of the lower courts in commercial cases.  “Codifying” the principles from cases and issues considered by the SPC in the form of a conference summary is the most useful and efficient form of guidance for lower court judges. As mentioned here, although conference summaries are not judicial interpretations and cannot be cited in a court judgment document as the basis of a judgment, they provide important guidance to the work of the courts concerning issues about which existing law and judicial interpretations are unclear.  Judges will rely on its provisions to decide cases.

The legal basis for the conference summary derives from the SPC’s authority under Article 10 of the Organic Law of the People’s Courts to supervise the lower courts. 

As for an answer to the question of why not issue a judicial interpretation–time, fluidity, and attenuated basis for some of the conference summary’s provisions do not permit a judicial interpretation to be issued.  One example of the attenuated basis and fluidity is Article 100,  which”codifies” the Guangzhou Intermediate People’s Court decision in the Brentwood case (discussed here).   It establishes welcome certainty to the enforceability of arbitral awards made by overseas arbitration institutions arbitrations seated in Mainland China.  It provides that such awards are regarded as foreign-related arbitral awards (rather than foreign awards) in Mainland China.  It is likely to be helpful to the overseas arbitration institutions that are considering establishing case management offices in China, as is now possible under Shanghai and Beijing regulations.   As mentioned before, the Arbitration Law being revised, the current draft addresses the issue, and the SPC is likely to issue a comprehensive judicial interpretation thereafter.  

Moreover, for some of the procedural provisions, such as those relating to the recognition and enforcement of foreign judgments, it gives the SPC a chance to pilot its guidance, before formalizing it in the form of a judicial interpretation.   A recent Wechat article (with further details) flags that in 2021, three foreign judgments and nine Hong Kong, Macau, and Taiwan judgments were recognized and enforced.  Likely more applications were made but not decided.

Other provisions consolidate existing guidance in a form that is easier for the lower courts to grasp quickly.  Article 22, on obtaining an opinion on foreign or international law from a China International Commercial Court (CICC) expert committee expert, for example, repeats what is to be found in CICC guidance.  The same can be said about Article 11, on the topic of electronic service of process, promoted in several Belt & Road-related SPC Opinions.  It should be noted that China maintains its traditional approach to service of process from foreign jurisdictions.

It appears that some clauses reflect a change in the negotiating position of Chinese financial institutions, in contrast to “back in the day. ” Article 2, on the topic of asymmetric jurisdiction clauses, states that Chinese courts will uphold them unless they violate Chinese rules on exclusive jurisdiction or relate to the interests of consumers or workers.   (For those with no background on these clauses, according to Herbert Smith Freehills: “asymmetric jurisdiction clauses are common in the financial sector, and typically require one party to bring proceedings in one jurisdiction only, while the other (usually the financial institution) may choose to bring proceedings in other jurisdictions.”  From this position, I surmise that Chinese banks use asymmetric jurisdiction clauses as well.

Articles 18-20 address a few of the ongoing issues related to the application of international conventions and treaties in the Chinese courts. Article 18 answers the question of what a court should do if the relevant treaty or convention is silent or China has made a reservation on that issue.  The answer is to use the Law on the Laws Applicable to Foreign-Related Civil Relations to determine the applicable law.  Article 20 focuses on what a Chinese court should do if it is applying Chinese law if Chinese law has conflicting positions and China has acceded to a relevant treaty or convention.  A report on a recent workshop involving the SPC, the Beijing #4 Intermediate People’s Court, and academics from the China Academy of Social Sciences and other institutions flags some of the many other unresolved issues.

Article 30 addresses an important question for Chinese and foreign banks, suppliers to Chinese EPC contractors, and project owners, particularly in Belt & Road jurisdictions–how easily can a Chinese court stop payment on a demand (independent) guarantee?  The answer is, strictly according to the provisions of the relevant judicial interpretation. Article 30 provides that when a court hears an application to stop payment on the basis of fraud (which can be filed as a preliminary matter or during the course of litigation or arbitration),  it must examine the independent letter of guarantee stop payment application submitted by the parties in according to Article 14 of the (updated) Provisions on Several Issues Concerning the Hearing of Independent Letter of Guarantee Dispute Cases, and conduct a preliminary substantive examination on whether there are fraudulent grounds for stop payment in accordance with the provisions of Article 12 and set out its finding of facts and reasoning as required by  Article 16.

The Bigger Picture

This conference summary is another form of SPC soft law. It harmonizes the decisions of the Chinese courts to be consistent with SPC policy (or said another way, strengthens the firm guiding hand of the SPC). 

This document reflects the awareness of its drafters, the judges of the #4 Civil Division of the SPC, that the issues that come before the Chinese courts far outpace the infrastructure of Chinese foreign-related commercial law. Given the larger trends I described in my brief article last fall, we can expect the SPC to continue to play an important role in developing China’s body of law related to cross-border commercial matters.

_____________________________________

111.【涉港澳台案件参照适用本纪要】涉及香港特别行政区、澳门特别行政区和台湾地区的商事海事纠纷案件，相关司法解释未作规定的，参照本纪要关于涉外商事海事纠纷案件的规定处理)。111. [The application by reference of this conference summary to cases involving Hong Kong, Macao and Taiwan]. As for commercial and maritime cases involving the Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan, which are not otherwise stipulated in relevant judicial interpretations, shall be handled with reference to the provisions of this conference summary on foreign-related commercial and maritime cases.

alternative dispute resolution, arbitration, BRI, CICC, diversified dispute resolution, foreign investment law, foreign-related cases

Supreme People’s Court’s new policy document on opening to the outside world

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SPC Press conference announcing the policy document

On the afternoon of 25 September, the Supreme People’s Court (SPC) issued yet another guiding opinion providing services and guarantees, this one on providing services and guarantees in support of expanding opening to the outside world  (Services & Guarantees to the Open Policy Guiding Opinions (Guiding Opinions)) (最高人民法院关于人民法院服务保障进一步扩大对外开放的指导意见). It was approved by the SPC’s Party Group, as was BRI Opinion #2.

Senior legal officials from the Ministry of Commerce (MOFCOM) and the Ministry of Foreign Affairs (MFA) spoke at the SPC press conference, in what this observer views as a cross-institutional show of support for China’s policies of opening to the outside world. At a time that government officials are focused on “dual circulation,”  it is a reminder that the opening to the outside world policy remains in place and that one of the SPC’s many responsibilities is to handle those issues properly.  The photo is also one illustration of the place of the SPC within China’s system (体制). 

SPC Vice President Yang Wanming (杨万明) spoke first at the press conference, with the officials from MOFCOM and MFA adding comments. This signalled to the careful observer that he has assumed the responsibility for overseeing the #4 Civil Division (responsible for foreign-related commercial and maritime matters) from Luo Dongchuan (who has been transferred to Fujian Province to serve as Political Legal Commission Party Secretary).

This brief (17 articles) guiding opinion providing judicial services and guarantees (not a judicial interpretation, see this explanation of what it is) is the latest judicial policy on foreign-related (this blogpost will use the term “cross-border”, to incorporate some Hong Kong-related) legal issues (inbound and outbound) relevant to the Chinese courts, drawing on BRI Opinion #2 (issued end 2019 and BRI Opinion #1) and the June, 2020 guidance on Covid-19 and cross-border commercial issues. 

As readers of this blog could anticipate, this opinion is harmonized with the latest international and domestic developments and the latest guidance from Xi Jinping.  According to the official commentary, it is intended to be guidance for judges engaging in cross-border cases for the foreseeable future, and appears to further develop the principles related to cross-border issues in the Opinions of the Supreme People’s Court on Thoroughly Implementing the Spirit of the Fourth Plenum of the 19th Party Congress to Advance the Modernization of the Judicial System and Judicial Capacity.  

As to what those judicial services and guarantees are, Justice Yang said the following:

Wherever the national strategy is deployed, the judicial services and guarantees of the people’s courts will be there (国家战略部署到哪里，人民法院司法服务和保障就到哪里.)

How does this document relate to other Chinese legislation?

To clarify the relationship between this opinion on the one hand and legislation, judicial interpretations and other types of judicial documents (such as the two BRI Opinions), Justice Yang gave a quick summary in SPC jargon:

While maintaining consistency with existing laws and regulations, judicial interpretations, and judicial policy documents, the Guiding Opinions also strengthen the macro-guidance of the people’s courts’ services and guarantees opening to the outside world from a higher level,  and are organically linked to other SPC judicial policy documents for major opening-up decisions, major strategies, and major initiatives, to further improve the system of judicial services and guarantees of the work relating to opening to the outside world与现有法律法规和司法解释、司法政策文件保持一致的同时，从更高层面加强人民法院服务保障对外开放工作的宏观指导，与最高人民法院出台的其他司法服务保障国家对外开放重大决策、重大战略和重大举措的司法政策文件有机衔接，进一步完善了司法服务保障对外开放工作体系。

What is means is:

  1. The Guiding Opinions are intended to be consistent with current law and regulations, SPC judicial interpretations, and SPC judicial policy documents.
  2. The Guiding Opinions links with previous SPC policy documents (such as BRI Opinions #1 & #2, the FTZ Opinions, the Lingang Opinions, Diversified Dispute Resolution Opinions, etc.)（see more below);
  3. It is intended to provide comprehensive guidance and better support government policies on opening to the outside world.

The Guiding Opinions. like many of the documents analyzed on this blog, are written in SPC jargon. Decoding this language poses challenges to those are concerned or who should be concerned about the impact of how the Chinese courts interact with the rest of the world. 

Decoding the language, however, enables the careful reader to understand outstanding issues and contemplated reforms or other measures, including possible judicial interpretations.

Summary and comments

This blogpost will summarize and make some brief comments on some of the issues mentioned in each of the six sections of the documents and make a few concluding comments.  There are many more issues in this document that should be explored, but I’ve been delayed by a hand injury.

1. Political stance

The first section calls for judges to raise their political stance.  This is standard language in the New Era. The first article frames the documents in current political language, including that frequently used in Chinese foreign policy documents and to relevant political documents. Therefore the first article (and elsewhere) refers to multilateralism, equally situated parties, and creating a legalized, internationalized convenient business environment.

The second article calls for the courts to provide services and guarantees for ten crucial national strategies and policies: promoting the BRI; pilot free trade zone construction [enhancement]; Hainan Free Trade Port construction; construction of the Greater Bay area; Beijing-Tianjin-Hebei area development; Yangtze River basin development; Shenzhen model city for socialist development; China-Shanghai Cooperation Organization local economic cooperation demonstration zone; Great Maritime Power construction. 自由贸易试验区建设、海南自由贸易港建设、粤港澳大湾区建设、京津冀协同发展、长江三角洲区域一体化发展、长江经济带发展、深圳中国特色社会主义先行示范区建设、中国-上海合作组织地方经贸合作示范区建设、海洋强国建设。This second article also calls for new mechanisms for hearing cases, and improving the application of law, to create a transparent stable predictable legalized business environment. The list of ten national strategies and policies is a signal to the leadership and to the lower courts, but for those of us far outside the System,  it signals to us that these are the most important current policies related to foreign-related judicial policy. It also appears that the national strategies linked to the opening policy evolves over time.

2.  Basic principles of foreign-related litigation

The second section focuses on basic principles of foreign-related litigation–of which it sets out three: protecting the equal rights of parties; respecting the intent of the parties; and implementing (judicial) jurisdiction according to law. 

The second principle, described in Article 4, includes the right of parties to choose governing law, a court with jurisdiction and arbitration, litigation, or mediation to resolve their disputes. However, as mentioned previously, Chinese law treats choice of arbitration and litigation differently, requiring litigants choosing a (foreign court) to have an actual connection to the foreign court (see Professor Vivienne Bath’s previous scholarship on this), although there isn’t a counterpart position for arbitration. As mentioned previously, the  application of foreign law by Chinese courts is a work in process.  The SPC has given a great deal of publicity to its platform for the ascertainment of foreign law. which includes determinations of foreign law on a certain issue by certain authorized organizations and opinions given by members of the international expert committee of the China International Commerce Court (CICC). As I wrote close to two years ago, the China International Commercial Court (CICC) rules do not clarify a number of practical questions. Could a court request an advisory opinion from an expert and from a designated ascertainment center, and if so, what relative weight will be attached to each? Presumably, a court would give it greater weight than an opinion from an expert provided by a party. 

The third principle, described more fully in Article 5, is linked to protecting China’s judicial sovereignty and repeats the statement that conflicts in jurisdiction and parallel proceedings will be resolved properly (妥善解决). This has appeared in BRI Opinions #1 and #2, but specific measures to resolve parallel proceedings have not yet been noted. Parallel and conflicting proceedings are an ongoing issue (not only between the Chinese courts and other courts outside mainland China) and will be further mentioned below.  As Professor Bath discussed, several scenarios are common. One involves situations in which parties had agreed to the exclusive jurisdiction of the courts of one country, but a party brings proceedings in the courts another country (China), which accepts the case and may issue a judgment before the original court. Another set of cases involves an alleged arbitration agreement which provides for arbitration overseas, but a party brings a case in a Chinese court nonetheless.  A variation has recently been noticed by two leading practicing lawyers in China.  In that case, an issue that had been pleaded in arbitration proceedings in Hong Kong and reviewed by the relevant Hong Kong court was not given res judicata effect in China.  The ruling by the Shijiazhuang court has been reviewed by the SPC under its Prior Review proceedings.

Although parallel proceedings in courts outside of China and in China have previously been noted primarily in maritime law (and anti-suit and anti-anti-suit orders),the parallel/conflicting proceedings issues seem to be moving to the area of Intellectual property (IP) law, likely related to the multi-jurisdiction litigation between Huawei and Conversant concerning standard essential patents, including in the UK Supreme Court and the German courts. What has been noted is one of the SPC’s research topics includes protecting China’s judicial sovereignty (national interests) through anti-suit or anti-anti-suit injunctions. The SPC Intellectual Property Court has issued an anti-suit injunction order against Conversant and the Wuhan Intermediate Court issued an anti-suit injunction order against Intel Digital (the linked article has a summary of the facts in the Wuhan case, but reserve judgment on the author’s comments on the authority of Chinese courts to issue these order).

3. Modernizing China’s foreign-related and maritime litigation systems

This third section contains four articles: application of law; fully develop the advantages of service and guarantees to cross-border trade and investment; promote the integration with the internet of foreign-related litigation; and develop diversified dispute resolution related to international commercial dispute resolution. Many of the provisions in this section repeat provisions in the BRI Opinions #1 and #2.  What appears to be new is a statement that the SPC will seek to integrate prestigious foreign arbitration and mediation organizations to be part of its one stop mediation/arbitration/litigation mechanism.

4. Increase judicial protections

Article 10 mentions foreign-related administrative litigation issues. They were mentioned briefly in BRI Opinion #2 and once in BRI Opinion #1, here seeing greater stress.  Section 11 focuses on cross-border intellectual property issues.  It has some important new content.  It mentions improving (完善涉外知识产权诉讼制度) foreign-related IP litigation procedures, putting into judicial policy previous statements by former Vice President Luo Dongchuan about the need for special IP litigation rules. It again mentions researching and responding to parallel international litigation relating to intellectual property rights and becoming a preferred place for settling IP disputes. From comments made by several leading experts in a recent webinar the Chinese courts are an important jurisdiction in IP litigation. It is unclear whether the use of anti-suit (or anti-anti-suit )injunctions by the Chinese courts will be the way that litigants are encouraged to turn to the Chinese courts to settle their global IP disputes. According to comments by several persons with expertise in Chinese IP law and related commercial issues, a number of factors are leading to the Chinese IP courts becoming an important forum for the resolution of IP disputes.  Related to this, see the analysis by Doug Clark, partner in the IP law firm Rouse in this article, in which he says that the Chinese courts are looking to take on the role of setting global FRAND rates. Also see related blogposts on Mark Cohen’s blog, Chinaipr.com.  These issues are complex and important.

5.  Prevent and resolve major risks

This section has only two articles.  Article 13 focuses on perfecting risk control mechanisms for major cases and firmly establishing an overall national security concept.  These phrases are not unique to the SPC, but reflect language in Party documents, with the “overall national security concept” attributed to Xi Jinping.  This article also calls on courts to coordinate the overall international and domestic situations, adhere to bottom-line thinking and risk awareness, understand the domestic and international situation and risks and challenges facing China’s opening up.  The final phrase in this article calls on courts to resolutely defend our (China’s) judicial sovereignty and national security.  So it seems that the concept of “judicial sovereignty” (used several times in this document) is being used to protect China’s national sovereignty.

The second one (Article 14), on guaranteeing state security and economic and social order gives a different priority to possible cross-border criminal law issues from either BRI Opinion.  Neither BRI Opinion mentioned  infiltration (渗透), espionage (间谍), sabotage, subversion  (渗透颠覆破坏). Infiltration and espionage are mentioned immediately after the article heading. (the sentence is: “thoroughly participate in the struggle against infiltration, espionage, separatism, terrorism, and cults, by strictly combatting crimes of infiltration, subversion, and sabotage, and crimes of espionage, violent terrorism, ethnic separatism, religious extremism, and other crimes that endanger national security” 深入参与反渗透反间谍反分裂反恐怖反邪教斗争，严厉打击各种渗透颠覆破坏、间谍、暴力恐怖、民族分裂、宗教极端等危害国家安全的犯罪. (Many thanks to Chinalawtranslate.com for this translation). Other concerns, such as violent terrorism, ethnic separatism, religious extremism have been seen previously in the other two BRI documents. and article 14 again stresses criminal justice cooperation between China and the rest of the world. The reason for the change in priorities is unclear. What signal does this send to the international commercial and judicial world (international community) that infiltration, espionage, sabotage and subversion are being mentioned?

6. Increasing judicial cooperation, increase the international influence of the Chinese judiciary

These three articles address judicial cooperation, judicial exchanges, and training of judges who can handle foreign-related cases.  

Article 15 concerns judicial assistance treaties, encouraging Chinese judges to participate in the negotiation of bilateral and multilateral judicial assistance treaties.

Article 16, on judicial exchanges, including highlighting exchanges with the principal international legal organizations, also summarizes ongoing SPC practices in developing exchanges with BRI judiciaries, although it is not so specified.  

Article 17 calls for the better training, recruitment and promotion of persons who can deal with specialized legal issues such as cross-border finance, environmental protection, maritime law, intellectual property. Measures include joint programs with universities, exchanges with international organizations and international commercial courts, with the objective of having judges who are able to participate in the drafting or amendment of relevant international rules [a glimpse into a judiciary certain special functions] and the creation of a group of Chinese judges with an international perspective. This appears to be directed to law schools and senior personnel in the lower courts and likely involved concurrence by the SPC’s International Cooperation Bureau.  As has been mentioned in earlier blogposts, the career progression for legal professionals to become judges has slowed because of the personnel reforms in the previous round of judicial reforms, under which young professionals work as judges assistants for a number of years before applying (and passing relevant examinations)to become a judge.  From my observations, fixed quotas on the number of judges in a court can mean a talented, educated judges assistant in one court may wait significantly longer than a similarly qualified person in another court to become a judge.

A few concluding comments

Perhaps it is not realized that multiple documents conveying many of the same messages, with references that need decoding, may not convey the intended message to the international business community that the Chinese courts welcome and will treat fairly foreign commercial litigants, and that Chinese law is stable, transparent and predictable. 

The Guiding Opinions call for increasing publicity about and the international influence of Chinese justice, and international confidence in Chinese law, through translating guiding and typical (exemplary/model) cases into foreign languages.  This echoes language in BRI Opinion #2.  The international community outside of China may or may not consider those sources to be primary ones in forming a view about the Chinese courts.  In my view, it is more likely that the international community will look to decisions and rulings of the Chinese courts in several categories of cases: enforcement or other proceedings involving foreign (and Hong Kong) arbitral awards;  parallel or competing proceedings, whether with other courts or with international arbitration;  difficult commercial ones, particularly involving Chinese state-owned enterprises, or other Chinese national champions and issues related to intellectual property, particularly as it relates to “cutting-edge” technology.  This observer surmises that the international judicial community will also look for a spirit of mutual respect for foreign courts and their jurisdiction.

The Guiding Opinions repeats language about Chinese courts participating in the formulation of international rules, an ongoing theme since the 2014 4th Plenum of the 18th Party Congress decision. One example is the constructive role of the SPC negotiator as a member of the Chinese delegation that participated in the drafting of the Hague Judgments Convention. But what the international community will also look for is China’s capacity to harmonize its legislation to be able to ratify the international conventions whose drafting it participates in.

The introduction to Guiding Opinions notes that comments were sought from many sources. It is unclear whether the views of international users of the Chinese court system were solicited. Other developments in which the international community may display an interest are the creation of additional institutions within the Chinese judiciary to enable the Chinese judiciary to better understand the needs of（domestic and international) users.

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Many thanks to several highly knowledgeable readers who commented on earlier drafts of this blogpost.

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.

Communist Party and the Courts, Expert Committee, foreign investment law, foreign-related cases, international commercial court

Supreme People’s Court updates its Belt & Road policies

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Screen Shot 2019-12-29 at 9.15.50 PMAt a press conference on 27 December (2019) the Supreme People’s Court’s (SPC) #4 Civil Division (the division focusing on cross-border commercial issues) announced it had issued three documents: a judicial interpretation and two judicial policy documents. The documents are connected directly or indirectly to the Belt & Road Initiative (BRI) and improving China’s foreign investment environment.

  1. Interpretation on Several Issues Regarding the Application of the “People’s Republic of China Foreign Investment Law” (FIL Interpretation) (最高人民法院关于适用〈中华人民共和国外商投资法〉若干问题的解释);
  2. Opinion on providing services and guarantees for the Belt & Road (BRI Opinion #2) (关于人民法院进一步为“一带一路”建设提供司法服务和保障的意见); and
  3. Opinion on providing services and guarantees for Construction of the Lingang area of the Shanghai Pilot Free Trade Zone (Lingang FTZ Opinion) (关于人民法院为中国（上海）自由贸易试验区临港新片区建设提供司法服务和保障的意见).

The two Opinions update two of the SPC’s two major policy documents on cross-border issues: the 2015 Opinion on Providing Services and Guarantees for the Belt & Road (BRI Opinion, and Opinion on Providing Guarantees for the Building of Pilot Free Trade Zones (FTZ Opinion). Policy documents do not have the force of law. They are examples of how the SPC supports the Party and government by issuing documents to support important strategies or initiatives (serving the greater situation (服务大局). In the New Era, the SPC has issued over dozen policy documents that provide “judicial services and guarantees” for major government strategies or initiatives, many more than before.  These Opinions are intended to harmonize the two earlier policy documents with post 19th Party Congress developments and priorities, including those mentioned in the Fourth Plenum Decision. I had previously reviewed the two earlier documents in detail.  My analysis of the Pilot FTZ Opinion can be found here and I have previously written and spoken about the BRI Opinion.  This blogpost draws on correspondence I had recently with Professor Vivienne Bathof the University of Sydney, but I am solely responsible for the views expressed here.  This blogpost discusses BRI Opinion #2.

2.  Belt & Road Opinion #2

This document is longer than the other two put together and has much more substantive and political content. Comments on the first section will focus on the political issues, while comments on the rest of the document will discuss the other content in the document:

  • political signaling on discrete issues;
  • judicial policy changes;
  • signaling to various audiences;
  • instructions and guidance to the lower courts;
  • highlighting future possible changes to SPC positions on legal issues;
  • promoting or supporting certain government initiatives within the courts;
  • reiterating basic policies.

New requirements and tasks (Section 1)

In keeping with post 19th Party Congress trends and the spirit of the 2019 Political-Legal  Work conference, BRI Opinion #2 has more politically oriented content and references than the 2015 BRI Opinion. As it must be harmonized with the latest Party and government policy, it includes the latest judicial policy jargon, such as “improving the business environment” and “creating an international, law-based and convenient business environment with stability, fairness, transparency, and predictability.”

The first section includes a long paragraph on working principles. For the casual reader, the principles are an odd hotpot of political, substantive, procedural, and administrative matters but in keeping with its role in the document. It is all about political signaling. To the person unfamiliar with these documents, it gives the reader the impression that if she put her chopsticks in one place in the hotpot, she would pull up support for international arbitration and if in another, support for constructing litigation service centers.

Policy changes and signaling (section 2)

This section contains seven apparently unconnected provisions. They are linked by their political and practical importance: judicial cooperation in criminal law; protecting the right of domestic and cross-border parties; supporting multilateralism; supporting the development of international logistics; supporting opening up in the financial sector; supporting the development of information technology, intellectual property, and green development. This section is a combination of signaling to the political authorities and the lower courts.

One notable provision is on judicial cooperation in the area of criminal law. Article 4 mentions the Beijing Initiative for the Clean Silk Road, and zero tolerance for corruption.  Doing something about cross-border corruption offenses is not a matter primarily of the SPC, as this analysis notes and has greater implications for state-owned enterprises (SOEs). This provision calls for the people’s courts to work with the judicial organs of other countries and regions along the “Belt and Road” to build jointly a judicial anti-terrorism mechanism, and curb the spreading of terrorism.  The link to the SPC is that we can anticipate that some staff from the SPC would be involved in negotiating regional or bilateral arrangements relevant to anti-terrorism (along with the Ministry of Foreign Affairs and Public Security Ministry). In an indirect way, it illustrates how the SPC works with other Party and government departments on legal issues, one of the distinctive functions of the SPC that rarely receives much attention.

On signaling to the lower courts, in addition to the section on financial cases, discussed in the previous blogpost, Article 6 is a reminder to the lower courts to apply the relevant rules of determining contract validity and liabilities in civil and commercial cases involving free trade agreements or cooperation documents signed between China and other countries. In any case, it is their obligation in applying relevant law.  Perhaps the SPC has issued the reminder because lower courts have failed to do too often.

Although Article 11 (on environmental protection) has received attention from a prominent environmental lawyer who saw the inclusion of cross-border environmental public interest litigation in the Opinion as ground-breaking, knowledgeable persons suggested it is a merely a reminder to local courts that they can take such cases provided current legal requirements are met, such as jurisdiction over the defendant, location of the pollution, and the social organization meeting specified requirements.

Specific policy (Section 3)

Section 3 contains signals on changes to specific judicial policies, reminders to the lower courts and also political signals, including highlighting SPC accomplishments. Article 13 signals to the lower courts some new policy on contract interpretation. It addresses situations that commonly arise when one party alleges fraud or collusion to avoid contract liability. The SPC reminds lower courts that evidence should be reviewed carefully, and the evidentiary standard should be beyond a reasonable doubt（根据排除合理怀疑的证据规则严格认定欺诈、恶意串通).  Article 13 directs courts to apply foreign law if the choice of foreign law would uphold contract validity.

This section has quite a few reminders to the lower courts to do what they should already be doing, such as: actively applying international conventions applicable to China; respecting international practices and international commercial rules; fully respecting parties’ governing law choice and explaining how they determined it; taking a restrictive approach towards declaring contracts invalid. Governing law is a sore spot in certain maritime matters, where the Chinese courts in a number of cases have set aside parties’ choice of law for a failure to have an actual connection.

Extending the influence of Chinese law abroad is a policy that received new impetus in the November, 2019 Decision of the 4th Plenum of the 19th Party Central Committee, and therefore it is found in Article 20 and again in Article 21 (in the following section).  Linked to this is language on increasing the prestige of the Chinese courts and the China International Commercial Court in particular. The language echoes and extends the 4th Plenum of the 18th Party Central Committee and BRI #1 Opinion, by calling on the people’s courts to extend the influence of Chinese law, publish typical cases tried by Chinese courts in multiple languages, lay a solid foundation for courts and arbitration institutions to correctly understand and apply Chinese laws, and strengthen the understanding and trust of international businesses of Chinese law. From the fact that the SPC envisions Chinese courts as having a role in assisting foreign courts and arbitration institutions to “correctly understand and apply Chinese law” shows that the SPC has a distinctive understanding of the role of a court.

On related accomplishments, one relates to typical cases in foreign languages and the other to the creation of the foreign law ascertainment platform. In 2019, the SPC published typical cases on cross-border issues in English, by publishing a pair of books on China Foreign-Related Commercial Cases and Maritime Cases (in China). It has also published a book of Chinese cases translated into English through Springer. On foreign law ascertainment, the accomplishment is the SPC having established a bilingual foreign law ascertainment platform, that assembles in one platform the available resources for ascertaining foreign law and a number of cases that involve ascertaining foreign law. There has been discussion in China as to whether courts should take such an active role in ascertaining foreign law, but the SPC has made a policy decision that it should.

International Commercial Court and One-Stop Dispute Resolution (Sections 4 and 5)

The BRI Opinion #2 contains several provisions related to the China International Commercial Court (CICC), with some mention of its expert committee.  Article 23 mentions working with international commercial courts outside of China to establish various types of exchanges and cooperation, including training judges. It is unclear whether this a reference to increasing cooperation under the Standing International Forum of Commercial Courts or other future initiatives.

These two sections also signals to the lower courts policy changes and policies to be stressed. One policy to be noted is implementing the policy of mediating first (贯彻调解优先原则), which is already incorporated into the CICC rules.  Some of the difficulties in mediating cross-border disputes involving state-owned enterprises were discussed in this earlier blogpost and at the workshop on implementing the Singapore Mediation Convention that I attended in December (2019).

Some new developments underway are mentioned in this section, linking to the central government’s policy of supporting Hong Kong’s role as an international dispute resolution center. Article 34 calls for support for increased cooperation with the Hong Kong International Arbitration Centre and other Hong Kong-based arbitration institutions, and appropriately involving Hong Kong-based institutions in CICC’s one-stop model. Article 35 mentions supporting offshore arbitration institutions being able to hear cases in China. (a development underway in recent months).

An important practical issue is raised in Article 31, which mentions improving the mechanism of coordinating cross-border bankruptcy (insolvency), and exploring (探索) applying the systems of the principal bankruptcy procedures and the center of the debtor’s main interests. This is likely linked to domestic development of bankruptcy law and the recognition that with BRI and thousands of Chinese companies investing abroad, some number will (or have) gone into bankruptcy (insolvency) proceedings. “Improving” and “exploring” mean that they are on the agenda of the SPC. It appears that the first related development occurred in Hong Kong in January 2020, when Judge Jonathan Harris granted recognition and assistance to mainland liquidators of CEFC (description of the case and link to judgment found here).  He concluded his judgment by stating” the extent to which greater assistance should be provided to Mainland administrators in the future will have to be decided on a case by case basis and the development of recognition is likely to be influenced by the extent to which the court is satisfied that the Mainland, like Hong Kong, promotes a unitary approach to transnational insolvencies.”

As I discussed in a recent blogpost and earlier, the SPC is seeking to use the CICC and its decisions (judgments/rulings) to guide the lower courts and to pilot reforms that are replicable (a Chinese judicial reform concept), as stated in Article 22 and 25: “the role of cases in determining rules and guiding behavior…and the role of the CICC in providing models and guidance shall be developed.  (发挥国际商事法庭示范引领作用…发挥好案例的规则确定 和行为指引作用).

Article 24 concerns presumptive reciprocity and mentions gradually promote reciprocity between commercial courts. This may signal that the judicial interpretation on enforcement of foreign court judgments is further delayed and that the SPC is taking a gradual approach by working towards mutual recognition and enforcement of international commercial court judgments, which would involve a smaller group of foreign judgments.

Themes that are not new in this section include supporting parties’ right to choose an appropriate dispute resolution forum.  It can be imagined that the #4 Civil Division judges considered that this basic principle needed repeating. Another ongoing theme, with more political coloration, is encouraging BRI dispute resolution, including investor-state dispute resolution to be heard in China. This is mentioned explicitly in Article 28, which lists measures “so that more international commercial disputes can be efficiently resolved in China.”  This is not new, but is part of a push that this blog noted as early as 2016, 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.

Article 32 mentions investment dispute resolution, and supporting “relevant departments in improving international investment dispute resolution mechanisms and organizations, respecting the dispute resolution clauses in bilateral and multilateral investment agreements, and resolving international investment disputes in a fair and efficient manner.”  This appears to be an acknowledgment that the SPC is in discussions with the Ministry of Foreign Affairs and other institutions on dealing with difficult issues related to enforcing international investment dispute arbitration awards in China (discussed here).

Personnel & Institutional Matters

The concluding section includes a notice in Article 37 to the lower courts that they shall “strengthen and improve the mechanism of coordination and guidance, and step up communication and cooperation with the relevant entities and departments.” This is a theme seen in many of the opinions issued by the SPC and reflects one of the many functions of the Chinese courts.

As discussed in the preceding blogpost, references in Article 38 and 39 to exchanges and training send signals within the SPC and its institutions, as well as lower courts about the types of programs that may be promoted, permitted or explored. It is likely that the National Judges College, its provincial branches, and its partners will continue to train foreign judges, as has expanded greatly in recent years. It appears that there could be greater possibilities for Chinese judges to go on exchange with other countries than has been possible in recent years. From my own contacts and experience with It may also provide the basis for a local court or division of the SPC to apply for funding to hold a legal roundtable or host an international exchange.

Concluding remarks

This Opinion is typical of New Era SPC policy documents providing guarantees and support for specific Party and government strategies and initiatives.  For a reader from outside the Chinese government system (体制), it takes knowledge of a constellation of related policies and practices to decode. This blogpost has been able to identify some of them.

BRI Opinion #2 has a great deal of content, not all discussed in this blogpost. Some have practical importance for practitioners in China and elsewhere.  But a larger question to consider, that likely was not in minds of the drafters, is whether this type of policy-oriented document is useful in reassuring foreign governments, foreign state-owned companies, and commercial entities that their dispute is best heard in China?  From my discussions with practitioners in various parts of the world, they may not be aware that BRI Opinion #2 even exists.