Should the retirement age for Chinese judges be raised?

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President Zhou Qiang, speaking at a national court conference

The retirement age of Chinese judges, is 55 for women and 60 for men, the age when judges in many other jurisdictions are in their prime. US Supreme Court judges have lifetime appointments, while compulsory retirement ages include:  Germany–68, Australia, 70, Hong Kong, 65 (with provisos).  The discrepancy between China and the rest of the world has not escaped NPC deputies as well some of the more senior members of the Chinese judiciary.  Many of them have been working in the courts since the early 1980’s, and are now facing retirement.

As work begins on a re-draft of the Judges Law (as highlighted in an earlier blogpost), one of the issues that has been repeatedly mentioned in the Chinese legal press is raising the retirement age and/or permitting judges to go on “senior status.” Among those speaking out include President of the Supreme People’s Court, Zhou Qiang, presidents of provincial high court of Hubei, Zhejiang among others, as well as the president of the National Judicial College. The 4th Five Year Judicial Reform Plan mentions raising the age for becoming a judge,but is silent about retirement.

The issue of retirement for judges relates to larger issues, such has separating the treatment of judges from other civil servants, raising the general retirement age for judges, and the type of qualifications that judges should have, and of course compensation.

The president of the National Judicial College published a long article in the People’s Court Newspaper (affiliated with the Supreme People’s Court) in August of this year calling for a re-think of career paths for judges. He noted (among other issues) that many judges are “three gate cadres” (三门干部) who have gone from the gates of home, school, to the courts, and lack the necessary life experience.  (The article seems to be the public version of a talk he gave to a closed door conference on judicial reform sponsored by the China Academy of Social Sciences, reported here).

It is a waste of know-how and experience, particularly for women, who are forced to retire five years before men. The Chinese courts need to try to retain the talent that they have, particularly when the courts will be faced with an increasing number of cases relating to an ageing population. With Zhou Qiang and other senior court leaders backing delayed retirement, it appears the reform will eventually be implemented, but it is likely to be too late for those now close to retirement age.

Some questions about Chinese judicial reforms answered

law professors Fu Yulin and He Haibo (©Southern Weekend)

law professors Fu Yulin and He Haibo (©Southern Weekend)

An article on the judicial reforms in the 25 September edition of  Southern Weekend (南方周末) is now making its way across Chinese social media, featuring an interview with Peking University Law professor Fu Yulin and Tsinghua University law professor He Haibo. The article  addresses some of the questions many inside and outside of China have been asking:

  • What is the status of the judicial reform pilot projects outside of Shanghai?
  • What is the status of some of the issues mentioned in the judicial reform documents?
  • Why haven’t China’s judicial reform documents been made public?

 

Some background

The two principal judicial reform documents approved by the highest political authorities are:

  •  the Fourth Five Year Plan Judicial Reform Outline, a summary of which was issued on 9 July (blogpost analysis here and here).
  • the Shanghai Judicial Reform Pilot Project Work Plan(上海市司法改革试点工作方案). A detailed description of how the Shanghai authorities will implement this (上海市司法改革试点工作方案>实施意见) has been released by both the Shanghai and national press (an English translation available here).

The published reports on the Fourth Five Year Plan Judicial Reform Outline have mentioned that pilot projects would be implemented in Guangdong, Hubei, Jilin, Qinghai and Hainan, but no outlines of those pilot projects have surfaced.

What is the status of those judicial reform plans?

According to Southern Weekend, drafts for judicial reform plans for Guangdong, Hubei, Jilin, Qinghai, and Hainan are basically finished and have been submitted to the Central Political Legal Committee. They are awaiting approval.

What is the status of some of the issues mentioned in the judicial reform outlines?

 Judicial selection committees

According to  Southern Weekend, it is unresolved under the judicial reforms, who will select judges and how they will be selected. Plans for all five pilot plans designate the the head of the provincial political legal committee as the head of judicial selection committee, with the judicial selection committee to be based at the provincial political legal committee. The reforms in Shanghai are the exception, where the judicial selection committee will be based in the Shanghai Higher People’s Court.  The two law professors interviewed suggest that the provincial people’s congress would have been more appropriate (for the other five pilot plans), but they state that the people’s congresses in these locations did not want to take on that role. (And one comment on the article was that the Party, after all, selects people’s congress members.)

The law professors stressed the need for legal professionals to be members of judicial selection committees. One noted that in China, the principle of “the Party manages cadres” (党管干部) cannot be avoided and suggested that judicial selection committee and Party organization department clearance could run parallel.

It seems that the tension between Party involvement and professionalism in judicial selection remains an issue.

Quota system for judges

The quota system for judges refers to establishing quotas on the numbers of judges in relation to other personnel within the judicial system.  As described in these articles, the plan in Shanghai is to limit judges to 33%, with administrative and support staff constituting 55% and 15% respectively. The  framework in Shanghai has been widely discussed and criticized in the Chinese legal press and on social media, particularly for its impact on younger judges, who note that they would not fit the judicial criteria and would be made “obsolete.”

Professor Fu echos criticism made by judges and others in the press that imposing a rigid quota system for the number of judges was inappropriate.  She pointed out that at the basic level, having a system with fewer than 40% judges was unworkable, given that the Chinese courts at the basic level had to deal with large number of minor offenses.  The reason was that China had not yet established separate courts to deal with minor offences [the Supreme Court Monitor notes that pilot projects for these courts are underway in some areas]. Another issue is the many responsibilities that Chinese judges have in addition to hearing cases and how a smaller number of judges will be able to hear cases as well as carry out their other responsibilities (research, compiling judicial statistics, promoting the courts).

 Why haven’t the current judicial reform documents been made public?

The professors note that they themselves have not seen the judicial reform documents either. They suggest that policies for many issues have not been worked out, but that the uncertainty about the direction and content of the reform policies has a negative effect.

The upcoming plenum

It seems likely that the upcoming fourth plenary session of the Chinese Communist Party’s 18th Central Committee, on rule of law, in October will give us more certainty about the direction and content of the judicial reform policies.  In the meantime, the issues and their implications give us all much to think about.

Seen on the China Policy Institute Blog of the University of Nottingham

supreme_court_civil_case-400x210 The Supreme People’s Court Observer published (by invitation)  Using Model Cases to Guide the Chinese Courts on the blog of the China Policy Institute of the University of Nottingham. The post discusses:

  • what model cases are;
  • which courts issue them;
  • the authority of model cases;
  • recent model cases the Court;
  • why the Court (and the lower courts) are using them; and
  •  trends in the use of model cases.

Clearing the Backlog of Civil Disputes in the Chinese Military Courts

Zhou Qiang visiting PLA Military Court, 2013

Zhou Qiang visiting PLA Military Court, 2013


A short notice on the Supreme People’s Court’s websites and Wechat on 2 March (linked here) announced the launch of an 8 month campaign in the military courts to clear out a backlog of major civil disputes.  The announcement (and related information) gives the outside world a peek behind the curtain of the almost 100 military courts.  Any lawyer involved in due diligence projects in China in the last 15 or more years will have encountered issues related to Chinese military law, particularly land issues, but the issues targeted in the campaign are much broader.

This blogpost will look at:

  • the military court system;
  • transparency of the military courts;
  • judicial reforms in the military courts;
  • civil jurisdiction of the military courts; and
  • the clearup campaign.

Military Court System

The Chinese military court system, a system to itself within the Chinese court system, apparently has attracted little attention outside of China (or at least in open sources).  The military court system is headed by the PLA Military Court, which is under the Political Department of the Central Military Commission, and under the Supreme People’s Court.  Below the PLA Military Court there are courts in the military regions as well as the military services–Navy, Air Force, Armed Police and below those courts, basic level courts within each of these regions, military services, and other units  (see this description.

Transparency

Although several articles in the Chinese press suggest that the military courts are more transparent than before, national security concerns apparently mean that the transparency measures being pushed by the Court leadership have not yet extended to the military courts.  For example, the judgment debtor database established in the fall of 2013 includes all the courts but the military ones (although some military-linked companies can be found in the database). The Court’s websites link to websites of the provincial-level local courts, but not that of the military courts. However, internet searches (as well as searches of legal databases) will turn up many reports of cases involving both the civilian and military court systems.

Judicial reforms in the military courts

The Third Plenum Decision called for improvement in military legislation, and it is understood to include judicial reforms in the military courts.  The head of the PLA Military Court stated that judicial reforms included improving the quality of military justice, including the quality of cases handled. What that involves has not been revealed in the open press, although presumably these are issues for the leadership of the PLA military court.  It is likely that increased training of military judicial personnel will be part of the solution,both within the military system and outside it.

Civil jurisdiction of the military courts

Civil, rather than criminal cases, are the focus of the clear up campaign.  The military courts have heard over 2500 civil cases, most of which have been settled.  The Chinese military courts have civil jurisdiction, most recently under a judicial interpretation in the form of regulations issued by the Supreme People’s Court in 2012, “Provisions on Several Issues Concerning the Jurisdiction of Military Courts in Civil Cases” (Civil Cases Jurisdiction Provisions, linked here) and a previous 2010 notice.  The rationale for giving military courts civil jurisdiction is to enable certain types of civil disputes to be resolved more effective, because the local court have encountered difficulties in dealing with them.  Difficulties cited range from serving military personnel or military entities, freezing military assets, obtaining evidence held by military entities, having military personnel attend hearings in the civilian courts, and enforcing judgments against military entities.

The Civil Cases Jurisdiction Provisions deserve more discussion than this quick blogpost can provide, and stipulate:

  • certain civil cases must be exclusively heard in the military courts (including cases in which both parties are military personnel or military entities):
  • parties have the choice whether or not to file a civil suit in the military courts under certain circumstances:
  1. tort cases in which military personnel or entities are tortfeasors;
  2. family disputes in which one party is in the military;
  3. tort cases that occurred within a military facility; or
  4. military real property disputes with a military individual or entity as party.
  • civil cases can be transferred to and from the military and local courts, respectively.

    Head of Lanzhou Military District Court visiting local intermediate court

    Head of Lanzhou Military District Court visiting local intermediate court

The PLA Military Court has issued regulations further specifying the jurisdiction of various levels of military courts, that have been summarized in the press but not made public.

The clear up campaign

The campaign, undertaken with the concurrence of the Political Department of the  Central Military Commission, focuses on the following types of cases:

  • construction of military installations;
  • ownership of military land;
  • defense technology (and presumably other intellectual property-related cases);
  • family law cases involving military personnel;
  • torts;
  • condemnation of property; and
  • labor.

Although reports have not given further details on specific cases, the following is generally known or presumed:

  • In many cities, PLA entities hold real estate in prime areas and the ownership disputes may involve significant sums of money;
  • it is likely that military families have not escaped greater social trends of increased rates of divorce, particularly in the major cities, and some of those divorces are likely to involve disputes over valuable real property;
  • there are likely are disputes over the intellectual property rights held by military personnel and military entities (one reported case involved infringement of copyright (by civilian publishers) of writings by military personnel);
  • military entities have contract disputes involving construction of military installation as well as military goods and services procured.

Greater engagement with the outside world?

It is unclear whether military exchanges with foreign armed forces have included the military courts, or whether the PLA Military Court (or the Central Military Commission) would welcome further engagement with the outside world.  Presumably efforts aimed at increasing the role of law within the military and strengthening the military courts would benefit all.

Why the Supreme People’s Court is lobbying National People’s Congress Delegates?

Deputy court president in Ningbo, December, 2011

Deputy Court president in Ningbo, December, 2011

Since the end of Third Plenum in November, senior Supreme People’s Court (Court) officials have been racking up airmiles, traveling all over China to meet with National People’s Congress (NPC) and  Chinese People’s Political Consultative Conference (CPPCC) representatives.  Over forty meetings have been held over the past year. Although Court officials had met with NPC and CPPCC delegates in previous years, it is apparent that these meetings are taking on special significance this year. This blogpost will explain what occurs at these meetings and the rationale for having them.  It also illustrates one of the skills that an effective court president needs in China.

In recent months, senior Court officials, primarily the Court vice presidents, have traveled to the four corners of China, from Gansu to Guangxi and from Jilin to Yunnan. Zhou Qiang has also met with Beijing based delegates.

The stated purpose of these meetings is to “listen” (听取) (and respond) to the views and suggestions of NPC and CCPCC delegates. Court officials have either released to NPC and CPCC delegates a copy of the Court draft work report or summarized the developments in the courts in 2013 and plans for 2014.  Some meetings apparently involved more substance than others.  The meeting with Shanghai delegates, which included a leading law firm partner as well as the general manager of Shanghai Electric (listed on the Hong Kong Stock Exchange) raised the issues of:

  • quality of judicial personnel;
  • increasing judicial independence;
  • resolving local protectionism;
  • having more witnesses appear in court; and
  • cross-examination.

It is apparent from the extensive reports on these meetings that Zhou Qiang is taking a tactical approach to these meetings.  As the former governor of Hunan, former Party Secretary of Hunan and director of the Standing Committee of the Hunan People’s Congress, he has extensive experience in dealing with people’s congress and consultative congress deputies.

It appears that the rationale Zhou Qiang (and colleagues) have for these meetings is two-fold.  First, it is to diffuse criticism of the Court (and the work of the lower courts) at the upcoming NPC session and incorporate frequently issues into either the final version of the Court Work Report or the 2014 Court agenda.   The large number of votes against the 2013 Court Work Report was seen as a loss of face and it is likely that Court leadership wants to avoid that.

The second reason Zhou Qiang has for closely liaising with NPC delegates is to lay the groundwork for implementing  court reforms.  If the Court is able to obtain support for overhauling the structure for the funding of courts and appointment of judges at the local level (as foreseen by the Third Plenum Decision) this reform will require that the NPC amend the basic statute for the court system, the Organizational Law of the People’s Courts (人民法院组织法) and will  require NPC delegates support the reforms in large numbers.

Zhou Qiang listening to Hunan provincial people's congress delegates, 2011

Zhou Qiang listening to Hunan provincial people’s congress delegates, 2011

General Party Secretary Xi Jinping Issues Written Instructions (批示) to the Supreme People’s Court (Updated)

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On the eve of the Chinese New Year, a banner headline was posted on the  Supreme People’s Court (Court) websites:

Study the Important Written Instructions of  General Party Secretary Xi Jinping

A revised version of that banner has remained on those websites since (the photo above), apparently unobserved by outside commentators, who may have not realized its significance.   This blogpost will look at:

  • what written instructions (批示) are;
  • the significance of Xi Jinping giving written instructions;
  • what Xi Jinping’s instructions were;
  • why the instructions were issued on eve of the New Year; and
  • why Zhou Qiang, President of the Court called on the lower courts to study diligently Xi Jinping’s instructions.

What are written instructions (批示)?

”Written instructions“ (批示) means notes or comments made by a superior on a written document submitted for approval or comment.  It is used in reference to Party/government documents as well as documents within the court system (see the regulations on handling each type of document).  The term has been used throughout the history of the PRC as well as in Chinese history.  Analysis of Chinese political documents often mentions written instructions.

According to the reports on various Court websites and in the press, Xi Jinping gave his written instructions on 28 January in response to a report submitted by the Supreme People’s Court  entitled Situation Concerning the Work of the People’s Courts in 2013 and Proposals for their Work in 2014 (关于2013年人民法院工作情况和2014年工作打算的报告).  The report has not been made public.

What were Xi Jinping’s written instructions and what is their significance?

Xi Jinping wrote what to the outside observer appears to be a collection of slogans from the Third Plenum Decision.  However appearances can be deceiving.

He wrote that the courts had diligently implemented the Center’s policies and implemented their responsibilities and achieved new results.  He expressed his hope that the courts will make persistent efforts, implement the spirit of the 18th Party Congress, Third Plenum etc, uphold the Party’s leadership, promote judicial reform, advance the building of a judicial system that is fair, efficient, and authoritative..provide powerful judicial protection for reform, and continue to promote the building of the rule of law in China.

The significance of the written instructions is not so much in its content as the fact that Xi Jinping issued it to the Supreme People’s Court.  It is unusual for a Party General Secretary to have issued them.  By doing so, Xi Jinping expresses his support, praise, demands, and hopes for Zhou Qiang and the Court leadership.

Why were the written instructions issued on eve of the New Year?

The written instructions were issued on the eve of the Chinese New Year to approve what Zhou Qiang and the other Court leaders did in 2013, as well as confirm the planned policies of the Court for 2014.  The written instructions were issued before the Chinese New Year to enable the Court leadership to be better equipped when dealing with issues at the National People’s Congress (NPC) meeting in early March. Court leaders are likely anticipating that local opposition to judicial reforms under consideration may be expressed at the NPC meeting.

Why are the lower courts requested to study diligently Xi Jinping’s instructions?

Xi Jinping’s instructions summarize in one paragraph the Central Committee’s policy towards the courts and their role in the Third Plenum reforms as well as judicial reforms.  The written instructions enable the lower courts  to understand the political background against which they work and the political goals for their work in the near and longer term.

The more sophisticated lower court judges understand that the written instructions mean that the Party leadership values the work of the Court leadership, but recognize that this will not resolve their caseload.

Concluding Remarks

To the outside observer:

  • it illustrates what is meant by Party leadership of the courts at the highest level;
  • in the political context of China, it is a major coup for Zhou Qiang (and colleagues) and their reform policies for Xi Jinping to have issued those written instructions; and
  • It means the political leadership is behind those reforms.
  • At the same time, it places a great deal of pressure on the Court leadership to deliver results (as seen from the political leadership) in the judicial reforms.
  • It would not be surprising to hear voices opposing some of the reforms at the NPC meeting.

The Supreme People’s Court: Week Ending 21 December 2013

1.  The Chinese government cracks down on medical institution crime. On 21 December, 11 government and Party bodies, including the:

  • National Health and Family Planning Commission;
  • Supreme People’s Court;
  • Ministry of Public Security;
  • Ministry of Justice; and
  • Supreme People’s Procuratorate,

initiated 1 year movement to crack down on crime relating to medical institutions. The plan, reported here and  linked here , calls for the punishment of offenses related to medical institutions.  It also announces the framework for related reforms:

  • restructuring state-owned medical institutions;
  • resolving medical disputes with mediation;
  • improving rural health; and
  • improving security in medical institutions.

Although the Supreme People’s Court co-issued this document, it is not a judicial opinion.  It is a policy document.

2.  The Court posted structural reform issues for on-line discussion, although it is unclear what the response has been.  On 18 December, the Court posted two court structural reform issues raised by the Third Plenum Decision on the “Everyone Discuss Judicial Reform” Website (linked here) and asked for comments:

  • local courts and procuratorates–promote uniform administration of  personnel, finance, and property at provincial level and below;
  •  the four levels of the courts–clarify their role and position.

Questions raised by the Court concerning the “uniform administration of the local courts”:

  • what does this mean;
  • what are its implications,
  • will it mean further bureaucratization of the courts and procuracy,
  • what flexibility should there be,
  • what will it mean for local protectionism.

Questions raised by the Court concerning “clarify the role and position of the functions of the four levels of the courts” concern the implications for:

  •  judicial interpretations,
  • appeals systems;
  • internal organization of the courts.

The “Everybody Discuss Judicial Reform” website is a joint project of the national court website, justice website (Supreme People’s Procuratorate), and the China Law Society.  It is a forum for eliciting discussion on important issues for which the institutions must already have framework plans.

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