Official interference or leadership?

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Interference in cases forbidden!(©Xu Jun, Xinhua)

In late August, the Supreme People’s Court (Court) issued a pair of regulations, aimed at reducing the phenomenon of officials, within and outside a court, involving themselves in cases.

Translations of the regulations are available, thanks to Chinalawtranslate.com: (the Chinese originals are available on the Court’s website here and there):

  • Implementing Measures for People’s Courts Carrying Out the ‘Provisions on Recording, Reporting and Pursuing Responsibility of Leading Cadres Interfering with Judicial Activities or Tampering with the Handling of Specific Cases (Leading Cadres Measures); and
  • Implementing Measures On Pursuing Responsibility In Cases Of Internal Judicial Personnel Prying Into Cases (Judicial Prying Measures).

This blogpost takes a quick look at the first one.

What do the Leading Cadre Measures say?

The Leading Cadre Measures (which implement State Council/Central Committee (General Office) regulations issued in March are directed at officials outside the judiciary who seek to influence court decisions, and require judges (who are other subject to penalties for not doing so) to  record all communications relating specific cases made by entities and individuals other than those in courts, and retain the relevant materials. These Measures implement language in the 4th Plenum Decision (Establish a system for recording, reporting, and investigating the responsibility of instances wherein leading cadres interfere in judicial activities or get involved in the handling of certain cases.)  The reports are to be submitted to the local political legal committee (or next higher political legal committee, depending on the status of the offending individual) and the next highest court, generally on a quarterly basis. If the conduct is serious, and might cause unjust, false and wrongfully decided cases or other “serious consequences,” the court is directed to report immediately.

Article 7 of the Leading Cadre Measures lists some of the most frequently used techniques, many of which have a economic, rather than political motivation:

The Leading Cadre Measures place the views of certain organizations in a different category:

“Party and government organs, professional associations, social public interest organizations and public institutions with administrative functions in accordance with law retained or permitted by people’s courts to follow the working procedures to submit consultative opinions in cases of national interest or societal public interest, may be not entered into information archive on prying, but relevant materials shall stored in the case file for future reference.”

Professor He Haibo of Tsinghua University explains what this means:

the courts must accept these materials, and it gives those organizations a chance to participate and speak; placing the materials in the case file gives the other party as well as possibly the public an opportunity to understand and evaluate them. This is consistent with the requirements of due process…

Will documents issued by Political Legal Committees at various levels really be placed in case files and made accessible to lawyers?

How do officials and judges interact?

The patterns of behavior that these regulations are aimed at changing are long-standing. From Doing Business in China, a leading book for practitioners (chapter by Harry Liu, Meg Utterback, Yu Simin):

Informally, judges are occasionally given instructions by political leaders on individual cases. Intervention by Party leaders in individual cases remains acceptable…The forms of interference vary: sometimes oral instructions are given, or sometimes the instructions are incorporated into official documents, with a requirement that the judge report back on the outcome. As to the content, the instructions may (1) tell courts to emphasize a case or handle a particular case “according to law,” (2) express an opinion on certain aspects of the case, or (3), recommend certain action to the court in lieu of dictating the outcome.

Professor He Haibo of Tsinghua University School of Law, writing in the People’s Court Daily–the line between “coordination in accordance with law” and interference with judicial activities is very hard to draw (什么是“统筹协调依法处理”、什么是“干预司法活动”,界限似乎难以划得清清楚楚)。

Comments from an unscientific sampling of judges

  • How the regulations work out in practice will depend to a large extend on how the officials undue intervention recorded will affect their future career or have legal liability.  If yes, the leaders will refrain from intervening. It will also depend on whether the judges would suffer from recording the intervention, particularly if he institutions are not administratively or financially independent from the agencies the officials represent or are able to influence.  In the latter case, judges wold be reluctant to record the intervention. It is likely that court leaders will interfere less frequently and with less success.
  • It will be of some help, when the interference is from strangers. But if from old friends, direct leaders, those won’t be reported, because it would betray the relationship.

More autonomy under Party leadership

The Leading Cadre Measures are not a magic bullet that will change the way the Chinese courts operate. The intent is to reduce the involvement of local officials in court cases to achieve fairer outcomes, while maintaining central policy leadership (and recognizing current reality by having a framework for Party officials to provide their views “for consideration”).

How well will the Measures work during the transitional period that the local judiciary remains under the control of local authorities? And how should the line be drawn between interference, leadership, and coordination?

A model case?

In late August, the Jinhua Intermediate Court (Zhejiang province) used the March regulations to call the attention of the press (and higher authorities) to a local official who threatened a judge with physical harm, when local courts ruled against the official’s wife in a shareholding dispute, although the case led one Zhejiang University law professor to comment that it wasn’t typical of official interference. According to the latest reports, the Jinhua Intermediate Court has withdrawn the notice, and both the judge and official in question are being investigated by the relevant CCDI organization.  A local Jinhua lawyer was quoted as saying that the local court staff had erred in making the matter public at this point.

The Jinhua case, while perhaps not a typical interference case, is typical of the widespread lack of civility confronting Chinese judges (and doctors), that in too many cases means a threat to their physical safety, and could indicate how difficult it will be to actually implement the Leading Cadre Measures.

New docketing procedures come to the Chinese courts

local court case filing office

local court case filing office

New docketing procedures (case filing) (立案) have come to the Chinese courts.  Chinese courts have a separate case filing divisions, which up until 1 May of this year acted as gatekeepers to courts.  They exercised their approval authority over cases in a non-transparent manner, which meant for litigants in Chinese courts that their cases could be and were rejected without having the opportunity to argue why they should be accepted.  Case filing divisions also were known to put troublesome filings aside, without issuing a rejection, or repeatedly asked for supplementary documents, seeking to drive away litigants by repeated formalistic demands.

More background is given in these blog posts and law review article.  It has been an ongoing problem for many years, provoking endless complaints and articles by ordinary people, lawyers, academics, and NGOs, and has been one of the issues driving petitioners to the streets.

The Supreme People’s Court (Court) leadership identified case filing as one of the needed reforms (and as one of the many contributing factors to the low prestige of the Chinese judiciary), even before the Third Plenum. Because of that, the Communist Party’s 4th Plenum Decision and the 4th Five Year Court Reform Plan flagged this as a priority.  (Unsurprisingly), the language in the two documents is almost identical:

  • Reform systems for courts’ acceptance of cases, change the case filing review system to a case filing registration system, and in cases that should be accepted by the people’s courts, ensure parties procedural rights by requiring filing when there is a case, and requiring acceptance where there is a lawsuit.
  • Change the case filing review system into a case filing registration system, making it so that for cases that should be accepted by the people’s courts, where there is a case it must be filed, and where there is a suit it must be accepted; safeguarding the parties’ procedural rights.

Litigants in line at the #1 Circuit Tribunal

In late April, the Court issued case filing regulations which address many of the longstanding problems that litigants and their lawyers faced:

Case filing divisions

  • refusing to accept complaints;
  • refusing to issue notices rejecting complaints;
  • repeatedly asking for supplementary materials.

The new rules require case filing divisions to accept filings of civil and criminal private prosecution cases (brought by the victim of a crime if the state refuses to prosecute, generally relating to minor crimes) on the spot if possible, provide templates for frequently used types of cases, and to respond within statutory deadlines.  Case filing divisions are directed to make requests for supplementary materials once. (The new administrative litigation law judicial interpretation, described in this earlier blogpost, contains similar provisions.) Litigants who encounter noncompliant behavior can file a complaint with the relevant court or the court above it.

Cases that the courts must refuse:

  1. Matters that endanger national security;

Rights activists have likely noticed that these carveouts are broad and flexible enough to keep out some cases that they might want to bring.

The take-up on the reform: some “Big Data”

According to Court statistics, in the first month since the regulations went into effect, there was a 30% jump in the number of cases accepted,(1.13 million), with most of them accepted immediately. The Jiangsu, Zhejiang, and Shandong courts accepted over 80,000 cases, with Beijing, Hebei, and other areas accepting over 40,000.

In particular:

  • the number of civil cases was up about 28%.
  • the number of administrative cases accepted was up 221% in comparison to last year (starting from a low base), with Tianjin cases up 752.40%,Shanxi, 480.85%,and Shanghai 475.86%, reflecting both the new case registration and new Administrative Litigation Law going into force.
  • Courts in Zhejiang found that fewer litigants were mediating their cases before filing suit (down 17%), and the success rate of mediation was down by 14%.  Does this mean a better outcome for litigants?  Closer analysis is needed.

Much of the press coverage has been about litigants filing cases themselves, rather than with the assistance of a lawyer or other legal personnel, but I haven’t seen statistics that address this.

Some more detailed data from Jiangsu province:

download 1

Case filings in Jiangsu Province, by city

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Civil 60791, enforcement 25438, administrative 1980, private prosecution 256, state compensation 56

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May, 2015 cases accepted, by location

An evaluation after six weeks

Some thoughts about the case filing reform

  • It will mean more cases in the courts and greater stress for fewer judges and other judicial staff, to assist the many pro se litigants.
  • It should reduce the dissatisfaction level of some proportion of litigants with the court system, such as the anonymous staff from a Guangzhou car finance company quoted in a press report.
  • Violence against court personnel (like medical personnel), is another factor driving qualified and experienced people away, as described in these recent articles.  Will the reforms reduce the level of frustration of ordinary people with the court system, and reduce physical and verbal attacks on judicial personnel?  It is early days to say.
  • It does not resolve underlying issues such as local courts not wanting to offend local government or locally state-owned enterprises.  The 4th 5 Year Court Reform Plan identifies cross-jurisdictional courts as a solution, and pilot projects have started on this in various locations, including Beijing, but a comprehensive framework is not yet in place.
  • For the numerically small number of foreign litigants in the system, it does not change all the documentary requirements needed, such as notarization and legalization of documents and powers of attorney. It should make it easier for foreign invested companies to litigate.
  • As a Court spokesman suggested,  the rejection of many cases could come later, leading to greater pressure on the courts later on, from appeals, more requests for cases to be re-tried, and not ultimately reduce the number of petitioners.
  • It will inevitably lead to abuse of process and frivolous cases, such as the over-publicized case of a Shanghai man suing because of the stare of a TV star caused him spiritual damage. The Court is working on rules to address this.

The Supreme People’s Court Issues its Newest Five Year Reform Plan for the Courts

On 9 July, the Supreme People’s Court issued its fourth five year reform plan for the courts, approved by the Party leadership, which sets out 4 broad areas of reform, relating to 8 general areas. An overview has been released on Wechat and other Chinese social media and can be expected to be published very soon in more traditional media. An clear info graphic was published on the Court website and other official media, translated here.

The Court described it as taking first steps towards establishing a judicial system with Chinese characteristics and is intended to roll out reforms announced in the 3rd Plenum decision and the judicial reform decision announced earlier this spring and some of its themes were highlighted in press releases published just after Chinese new year.  Many of these issues are ones that have been discussed within the Chinese legal community for many years and draw on international expertise as well. The summary below highlights five of the eight broad areas.

  • Personnel reforms
  • Separate administrative and judicial jurisdiction
  • Improve the operation of the judicial function
  • Improve the protection of human rights
  • Increase judicial transparency
  • Clarify the roles of the four levels of the courts
  • Improve judicial administration
  • Promote reforms relating to petitioning

Personnel reforms

The intention of the personnel reforms are to split the treatment of judges from other civil servants, to step away from the traditional model of judges as cadres. This will involve pushing forward the initial reforms being tested to change the personnel management of local courts, and transfer that to the provincial level. This will include:

  • the establishment of provincial level selection committees, will involve clearance by Party disciplinary and other functions, and retain appointment by the people’s congress.
  • Personnel reforms will also involve splitting the management of judges from other judicial personnel, such as judicial police and clerks.
  • Additionally, reforms are intended to the use of judicial headcount, to focus that by increasing the number of judges.
  • Two other reforms involve establishing new systems for judicial promotions and establishing differing criteria for the recruitment of different types of judges.

Separate administrative and judicial jurisdiction

Reforms in this area include:

  • taking steps to take certain cases, such as some environmental and commercial cases out the local administrative jurisdictions, so that they can be heard fairly.
  • Reform some of the lesser known courts, such as the forestry courts, to bring them into the ordinary court system.
  • Establish a system for circuit tribunals at provincial level to hear difficult cases, and focus on environmental cases.
  • In areas where  there are more intellectual property cases, promote the establishment of intellectual property courts.

Improve the operation of the judicial function

The summary concerning this section admits that having the person who heard the case decide it remains difficult to implement within the Chinese jidicial system, and that despite initial attempts, internal multi-level approvals for deciding cases remains the norm.  The intended reforms in this area include:

  • improving the system of responsibility of the primarily responsible judge and the panel that heard the case.
  • Changing the system of signing judicial decisions.
  • Improving the monitoring of judicial performance.
  • Improving judicial disciplinary procedures.

Importantly, reforms look to change the current relationship between the judge responsible, the tribunal, and others in a position of leadership within the courts, such as the head of the division and court president. There has been a great deal of academic writing about this, in both English and Chinese, as well as articles written by judges serving at various levels.  A great deal of thought has gone into this section and implementing these reforms will involve changing long-term patterns of interaction.

Improve the protection of human rights

Reforms in this area are intended to improve the protection of human and property rights, particularly by improving judicial review of the investigation and prosecution stages:

  1. Eliminate the use of illegally obtained evidence.
  2. Improve the role of the defense lawyer and the statement by the advocate for the defendant.
  3. Improve systems for pursuing judicial negligence.
  4. Improve the protection of assets relating to [criminal cases].
  5. Improve reforms in the area of minor crimes, so that those cases are heard more quickly (pilot projects are underway in some areas).

These reforms represent the result of years of discussions within the judiciary, with lawyers, academics, and interactions with members of foreign courts, research into foreign legal systems, and others.

Increase judicial transparency

Reforms in this area build on the initial steps taken late last year and include:

  1. Make the hearing stage more open, by improving the system of announcements and permitting spectators to attend court hearings, increase real time broadcasts of hearings.
  2. Improve the handling of judicial information, so that litigants can determine the status of their case on-line.
  3. Improve the judicial decision database, Judicial Decisions of China.

All of these reforms are good practical proposals. Foreign observers of the Chinese courts would welcome easier access to Chinese court hearings.

A quick comment

Drafting this reform plan has been a tremendous undertaking and its implementation promises to be even more challenging.  Some of the reforms discussed above are the subject of pilot projects in various parts of the country, ranging from Guangdong and Shanghai, where the courts have heavy caseloads and face cutting edge cases, to less prosperous inland provinces. Reforms are likely to start with what is most easily implemented and where results can most easily be achieved.  What this means for some of the specialized courts, such as the military and maritime courts, will be clarified in time. The extent to which these reforms can change patterns of interaction within the judiciary and between the judiciary and government/Communist Party of many decades standing remains to be seen.  It is hoped that the pressure of greater professionalism within the judiciary, and other social and economic forces will eventually result in a judiciary that better serves the needs of all.

 

Dispute Resolution Reforms in the Shanghai FTZ Underway– Updated

Current plans for the new Shanghai Free Trade Zone (Shanghai FTZ) include  reforms to China’s dispute resolution systems, both the courts and commercial arbitration. Court reform developments, in particular, are moving rapidly.

On 5 November, the establishment of a tribunal (自贸区法庭) in the Shanghai FTZ was announced, with Judge Luo Dongchuan, the head of the #4 civil division of the Supreme People’s Court (Court) in attendance, among others.

It follows the announcement by the Court designating the Shanghai courts to be among the first in the country to implement certain judicial reforms.  These reforms are linked to the Supreme People’s Court  2013 Judicial Reform Opinion (discussed in this blogpost).

Professor Ding, Chairman of Legal Affairs Commission, Shanghai Municipal People’s Congress Standing Committee, identified some of the reforms contemplated as well as some of the obstacles to legal reform in the Shanghai FTZ.  in a thoughtful speech given at the opening of the China (Shanghai) Pilot Free Trade Zone Court of Arbitration (affiliated with the Shanghai International Arbitration Center).

This post, which updates my earlier blogposts on the subject, looks at two important developments affecting dispute resolution in the Shanghai FTZ:

  • the Court designating the Shanghai courts to take the lead in judicial reforms;
  • Professor Ding highlighting to the Shanghai political and legal leadership that the Shanghai FTZ provides an unprecedented opportunity for Shanghai to build itself into an international arbitration center.

A.             The Courts

The presence of Judge Luo of the Court is a signal that the Shanghai FTZ tribunal is an initiative that the Court backs.   According to a statement of the vice president of the Shanghai Higher People’s Court, the jurisdiction of the tribunal will include civil and commercial cases related to the Shanghai FTZ:

  • investment;
  • trade;
  • finance;
  • intellectual property; and
  • real estate.

According this statement by the President of the Pudong New Area People’s Court, the Shanghai FTZ tribunal will implement the following reforms:

  • case acceptance;
  •  pre-litigation mediation;
  • greater transparency;
  •  use of model cases, and
  • moving more litigation procedure on-line. 201311061401215050.

The decisions of the tribunal will be considered decisions of the Pudong New Area People’s Court and appeals will be made to the #1 Municipal Intermediate People’s Court.

The new reforms for all of Shanghai announced by the Court on 25 October, which build on previous work by  the Shanghai court leadership, include:

  • increasing judicial transparency, including judicial procedure, judicial decisions, and information concerning enforcement;
  • reforming the internal operating rules of the judiciary, so that it operates according to judicial rather than administrative principles;
  • motivating and providing protection to judges to enable them to decide cases fairly;
  •  improving the operating structures of the courts;
  • amending the operating rules for judicial committees;
  • providing a structure for the discussion of cases.

The Shanghai courts have started to take the first steps by issuing regulations to address one of the many issues facing litigants in the Chinese courts, the refusal to take cases (http://www.chinacourt.org/article/detail/2013/11/id/1116965.shtml).  We can expect many more regulations to come.

The reforms highlighted by the Court will be difficult to implement, particularly the reform of internal operating rules of the judiciary, because the PRC judiciary has operated according to those principles throughout its history (as many others inside and out of the Chinese judiciary and mainland China have pointed out (including this author)). Many of these reforms relate, indirectly, to the relationship of the courts and other government institutions, as well as the nature of Communist Party leadership of the courts.

The Court announced that it has established standards and metrics to evaluate the effectiveness of the announced reforms. On the basis of those reforms, The Court will gradually roll out those reforms throughout the entire country.

The announcement designating the Shanghai courts as one of the court designated to lead the way in judicial reforms indicates  the importance of Shanghai and the Shanghai FTZ.  The Court has put aside the scandal involving a group of senior judges of the Shanghai Higher People’s Court visiting prostitutes (that led the Supreme People’s Court to issue a statement that the judges had tarred the image of the nation’s judges and scarred judicial credibility (http://english.peopledaily.com.cn/90882/8356970.html)).

Designating the Shanghai courts to take the lead in court reform presents a challenge to the Shanghai Higher People’s Court—can they establish a court that will earn the credibility of both domestic and foreign litigants through having competent judges who are able to put into practice ethical standards?  The announcements related to the Shanghai FTZ tribunal indicate that the Shanghai court authorities are selecting well educated judges for the task.

B.             Arbitration

Among the challenges Professor Ding identified in building the Shanghai FTZ into an international arbitration center is challenges to the arbitral institution.  One of those challenges is internationalization.

Challenges to the arbitration institution—possible internationalization?

 In the September interview mentioned above, Lu Hongbing advocated that cooperation between foreign arbitration institutions and Shanghai based ones should be encouraged in the Shanghai FTZ.

Real cooperation involves the following questions (among others!), and a web of legal issues:

  • Should cooperation between foreign and Shanghai based arbitration mean allowing international arbitration institutions to establish offices in the Shanghai FTZ?
  • If that is permitted, should foreign arbitration institutions be permitted to hold arbitrations (seated) in China?
  • Would an arbitral award under those circumstances still be considered to be “international” and enforceable in China under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) or Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region (Arrangement with Hong Kong)

Enabling real cooperation between foreign arbitration institutions and Shanghai based ones will require profound analysis of and well-considered solutions to the complex of issues related to the Arbitration Law and Civil Procedure Law raised by the above questions.

An additional outstanding issue that the Court will need to resolve  is the issue of the validity and enforceability of arbitration clauses of the Shanghai Court of International Arbitration (and its predecessor, the CIETAC/Shanghai).  A draft of a judicial opinion resolving the matter is said to be under consideration by the Supreme People’s Court.  That also needs to be resolved if dispute resolution in the Shanghai FTZ (and all of Shanghai) is to serve the needs of disputing parties.

The Court, Professor Ding Wei (and other Shanghai government legal specialists) and the legal advisers for the People’s Government of Pudong District (lead outside counsel is understood to be the Zhong Lun Law Firm) need to work on designing solutions to untangle  the web of interconnected legal issues affecting the internationalization of arbitration.  Given that multiple central government institutions will need to be involved with any solution, it is likely progress on real cooperation with foreign arbitration institutions can only occur over the long term.

C.             Conclusion

The Shanghai FTZ provides the Chinese government an opportunity to experiment with Chinese dispute resolution reforms, both in the courts and arbitration.  The Court is taking steps in Shanghai to address the difficult legal and political issues that must be considered and resolved to make real progress.  Many are “watching this space”, particularly after the establishment of the Shanghai FTZ tribunal.


 

[ii] http://www.chinacourt.org/article/detail/2013/09/id/1080615.shtml

Dispute Resolution Reforms in the Shanghai FTZ Underway

Few are aware that current plans for the new Shanghai Free Trade Zone (Shanghai FTZ) include  reforms to China’s dispute resolution systems, both the courts and commercial arbitration. Court reform developments, in particular, are moving rapidly, because the Supreme People’s Court (the Court) has designated the Shanghai courts to be among the first in the country to implement certain judicial reforms (http://rmfyb.chinacourt.org/paper/html/2013-10/26/content_72024.htm?div=-1#).  These reforms are linked to the Supreme People’s Court  2013 Judicial Reform Opinion (discussed in my 30 October blogpost) and  announced on 29 October.

Reforms in dispute resolution were highlighted by Professor Ding Wei, Chairman of Legal Affairs Commission, Shanghai Municipal People’s Congress Standing Committee (http://www.cietac-sh.org/English/ResourcesDetail.aspx?tid=39&aid=571&zt=3) , in a thoughtful speech given at the opening of the China (Shanghai) Pilot Free Trade Zone Court of Arbitration (affiliated with the Shanghai International Arbitration Center) on 22 October.  Professor Ding identified some of the reforms contemplated as well as some of the obstacles to legal reform in the Shanghai FTZ.

This post, which updates my blogpost of 28 October, looks at two important developments affecting dispute resolution in the Shanghai FTZ:

  • the Court designating the Shanghai courts to take the lead in judicial reforms;
  • Professor Ding highlighting to the Shanghai political and legal leadership that the Shanghai FTZ provides an unprecedented opportunity for Shanghai to build itself into an international arbitration center.

A.             The Courts

Professor Ding’s made a statement in his speech that “judicial arrangements (for the FTZ) relate to the organization and authority of matters stipulated by the Organizational Law of the People’s Courts, and local government cannot make changes” makes it clear that substantial court reform in the FTZ is not in the hands of the Shanghai government, but rather the central government.  From its press announcement on 25 October (http://www.chinacourt.org/article/detail/2013/10/id/1113813.shtml), it is clear that the Court sees the opportunity presented by the dynamism of economic developments in Shanghai, including the Shanghai FTZ (although not mentioned).

Although currently there is no Shanghai FTZ court ( Lu Hongbing, vice president of the All China Lawyers Association and founding partner of the Shanghai-based Grandall Law Group,  mentioned in a September article the possibility  that one will be established (http://stock.sohu.com/20130924/n387092295.shtml)), the Court is calling on the Shanghai courts to make reforms that will benefit litigants in the Shanghai FTZ  (as well as the entire Shanghai court system.

The new reforms announced by the Court on 25 October, which build on previous work by  the Shanghai court leadership, include:

  • increasing judicial transparency, including judicial procedure, judicial decisions, and information concerning enforcement;
  • reforming the internal operating rules of the judiciary, so that it operates according to judicial rather than administrative principles;
  • motivating and providing protection to judges to enable them to decide cases fairly;
  •  improving the operating structures of the courts;
  • amending the operating rules for judicial committees;
  • providing a structure for the discussion of cases.

The Shanghai courts have started to take the first steps by issuing regulations to address one of the many issues facing litigants in the Chinese courts, the refusal to take cases (http://www.hshfy.sh.cn/shfy/gweb/xxnr.jsp?pa=aaWQ9MjkyMzQ0JnhoPTEPdcssz)(http://www.chinacourt.org/article/detail/2013/11/id/1116965.shtml).  We can expect many more regulations to come.

The reforms highlighted by the Court will be difficult to implement, particularly the reform of internal operating rules of the judiciary, because the PRC judiciary has operated according to those principles throughout its history (as many others inside and out of the Chinese judiciary and mainland China have pointed out (including this author)). Many of these reforms relate, indirectly, to the relationship of the courts and other government institutions, as well as the nature of Communist Party leadership of the courts.

The Court announced that it has established standards and metrics to evaluate the effectiveness of the announced reforms. On the basis of those reforms, The Court will gradually roll out those reforms throughout the entire country.

The announcement designating the Shanghai courts as one of the court designated to lead the way in judicial reforms indicates  the importance of Shanghai and the Shanghai FTZ.  The Court has put aside the scandal involving a group of senior judges of the Shanghai Higher People’s Court visiting prostitutes (that led the Supreme People’s Court to issue a statement that the judges had tarred the image of the nation’s judges and scarred judicial credibility (http://english.peopledaily.com.cn/90882/8356970.html)).

Designating the Shanghai courts to take the lead in court reform presents a challenge to the Shanghai Higher People’s Court—can they establish a court that will earn the credibility of both domestic and foreign litigants through having competent judges who are able to put into practice ethical standards?

B.             Arbitration

Among the challenges Professor Ding identified in building the Shanghai FTZ into an international arbitration center is challenges to the arbitral institution.  One of those challenges is internationalization.

Challenges to the arbitration institution—possible internationalization?

 In the September interview mentioned above, Lu Hongbing advocated that cooperation between foreign arbitration institutions and Shanghai based ones should be encouraged in the Shanghai FTZ.

Real cooperation involves the following questions (among others!), and a web of legal issues:

  • Should cooperation between foreign and Shanghai based arbitration mean allowing international arbitration institutions to establish offices in the Shanghai FTZ?
  • If that is permitted, should foreign arbitration institutions be permitted to hold arbitrations (seated) in China?
  • Would an arbitral award under those circumstances still be considered to be “international” and enforceable in China under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) or Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region (Arrangement with Hong Kong)

Enabling real cooperation between foreign arbitration institutions and Shanghai based ones will require profound analysis of and well-considered solutions to the complex of issues related to the Arbitration Law and Civil Procedure Law raised by the above questions.

An additional outstanding issue that the Court will need to resolve  is the issue of the validity and enforceability of arbitration clauses of the Shanghai Court of International Arbitration (and its predecessor, the CIETAC/Shanghai).  A draft of a judicial opinion resolving the matter is said to be under consideration by the Supreme People’s Court.  That also needs to be resolved if dispute resolution in the Shanghai FTZ (and all of Shanghai) is to serve the needs of disputing parties.

The Court, Professor Ding Wei (and other Shanghai government legal specialists) and the legal advisers for the People’s Government of Pudong District (lead outside counsel is understood to be the Zhong Lun Law Firm) need to work on designing solutions to untangle  the web of interconnected legal issues affecting the internationalization of arbitration.  Given that multiple central government institutions will need to be involved with any solution, it is likely progress on real cooperation with foreign arbitration institutions can only occur over the long term.

C.             Conclusion

The Shanghai FTZ provides the Chinese government an opportunity to experiment with Chinese dispute resolution reforms, both in the courts and arbitration.  The Court is taking steps in Shanghai to address the difficult legal and political issues that must be considered and resolved to make real progress.  Many are “watching this space”!


[i] My translation: The translation on the website states: the justice arrangement concerning duty allocation among people’s court is an important power under the “PRC People’s Organization Law.” No local organizations are permitted to change it.

[ii] http://www.chinacourt.org/article/detail/2013/09/id/1080615.shtml