The China International Commercial Court & the development of case law with Chinese characteristics

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Article in 30 December edition of People’s Court Daily

On 30 December 2019, I was quoted in an article that appeared in Supreme People’s Court (SPC) media (see the screenshot above).

“中国国际商事法庭的运作时间不长,但从迄今为止的运作中可以清楚看到,其受理案件非常慎重,会选择对中国相关法律发展产生影响的案件。”最高人民法院国际商事专家委员、北京大学国际法学院常驻知名学者Susan Finder表示,从首批案件的裁判文书可以明显看出,中国国际商事法庭的判决和裁定对于下级法院的法官和法律界人士来说,可能是重要的“软先例”,即权威性的裁判。

The CICC has been in operation a short time…What is clear from its operations so far is that it is carefully choosing its cases, only selecting cases that will have an impact on the development of relevant Chinese law. What seems evident from the initial rulings, at least, is that the judgments and rulings of the CICC are likely to be significant for lower court judges and members of the legal community as “soft precedents,” authoritative decisions….

It is an excerpt from a brief article that I am setting out below as I wrote it in English (I have added (Chinalawtranslate.com’s) translation of excerpts from certain documents) and Chinese translation (many thanks to a knowledgeable person who took a break from year-end case closing to do this elegant translation).

I am honored to have this opportunity to comment on some of the first rulings and judgments of the China International Commercial Court (CICC). This brief commentary will address the significance of CICC judgments and rulings and the CICC arbitration-related rulings.

The CICC has been in operation a short time and it is early days to provide a more detailed analysis of its operations. What is clear from its operations so far is that it is carefully choosing its cases, only selecting cases that will have an impact on the development of relevant Chinese law. What seems evident from the initial rulings, at least, is that the judgments and rulings of the CICC are likely to be significant for lower court judges and members of the legal community as “soft precedents,”  authoritative decisions that are highly persuasive although not binding on the lower courts. Authoritative commentators in China and abroad have noted that the arbitration rulings fill a gap in Chinese arbitration law. The rulings are also consistent with the position taken by courts in some major jurisdictions that also find that the parties expressed their intent to arbitrate any dispute although their contract was never finalized. In the view of this commentator, they are part of China developing its own case guidance system, highlighted in item #26 of the 5th Judicial Reform Outline, in particular the phrase “Improve working mechanisms for mandatory searches and reporting of analogous cases and new types of cases” “完善类案和新类型案件强制检索报告工作机制” . It was previously mentioned in Opinions on Putting a Judicial Responsibility System in Place and Improving Mechanisms for Trial Oversight and Management (Provisional) –“on the foundation of improving working mechanisms such as consulting similar cases and judgment guidance a mechanism is to be established requiring the search of similar cases and relevant cases, to ensure a uniform judgment standard for similar cases, and the uniform application of law “最高人民法院关于落实司法责任制完善审判监督管理机制的意见(试行), (六) 在完善类案参考、裁判指引等工作机制基础上,建立类案及关联案件强制检索机制,确保类案裁判标准统一、法律适用统一 .

Moreover, thus far, five judges formed the members of the collegial panel, all of whom are the Chinese court’s most outstanding specialists on cross-border issues, including the judicial review of arbitration. This indicates the importance to which the Supreme People’s Court attaches to CICC cases.

In this commentator’s view, addition to CICC cases, other cases decided by or selected by the Supreme People’s Court would be classified as such. For example, cases decided by the Supreme People’s Court Intellectual Property Rights Court 最高人民法院知识产权法庭 would also be allocated to the category that I call “Supreme People’s Court soft precedents.” Other Supreme People’s Court soft precedents would include cases in the Supreme People’s Court Gazette 最高人民法院公报案件,  cases in the trial guides published by the various operational divisions 各个业务庭发表的审判业务指导丛书选的案件,and cases of the specialized judges committees of the SPC operational divisions 和各个业务庭专业法官会议案件。

In my view, cases decided by the collegial panels of the Supreme People’s Court are also persuasive, but not as persuasive as Supreme People’s Court cases in the categories described above. Supreme People’s Court circuit court cases are very persuasive to the courts within their jurisdiction. This case law is needed to supplement law and judicial interpretations and guide the lower courts correctly, as many new issues come before the courts before the legislative organs have time to amend legislation. I see China evolving its own case law, looking to traditional law and foreign jurisdictions for reference, but settling upon rules that fit China’s special situation, that may include some of the points I mention above. CICC decisions, whether rulings or judgments, will send important signals to the market, and are likely to be significant worldwide, as there is a documented increase in international arbitration cases where either the contract in dispute is governed by Chinese law or Chinese law is relevant in various ways.

The Chinese version:

中国国际商事法庭与有中国特色判例法的发展

我很荣幸有这个机会就中国国际商事法院(CICC)的首批裁定和判决发表意见。本短评将侧重中国国际商事法庭的判决和裁定以及仲裁司法审查裁定的重要性。

中国国际商事法庭的运作时间不长,对其运作进行更详细的分析还为时过早。 但从其迄今为止的运作中可以清楚看到的是,中国国际商事法庭选择其受理的案件非常慎重,只选择会对中国相关法律发展产生影响的案件。 至少从首批裁定可以明显看出,中国国际商事法庭的判决和裁定对于下级法院的法官和法律界人士来说,可能是重要的“软先例”,即权威性的裁判,虽然对下级法院没有约束力,但具有很强的说服力。 国内外权威专家均指出,这批裁定填补了中国仲裁法的一项空白。 这些裁定也与一些主要法域法院的立场保持了一致,也即尽管双方当事人的合同并未最后敲定,但双方都表示有意将争议提交仲裁。 在本文作者看来,这些裁判构成中国发展自己的案例指导制度的一部分,正如第五个司法改革纲要第26项所强调的,特别是“完善类案和新类型案件强制检索报告工作机制” 。 此前,最高人民法院关于落实司法责任制完善审判监督管理机制的意见(试行)曾提及“(六) 在完善类案参考、裁判指引等工作机制基础上,建立类案及关联案件强制检索机制,确保类案裁判标准统一、法律适用统一 。”

此外,到目前为止,合议庭均由五名法官组成,全部都是中国法院在跨境问题(包括仲裁司法审查)方面最杰出的专家。 由此可见最高人民法院对国际商事法庭案件的重视程度。

本文作者认为,除国际商事法庭案件外,最高人民法院审理或选取的其他案件也将被归入此类案例。例如,最高人民法院知识产权法庭判决的案件,也可归为所说的“最高人民法院软判例”,最高人民法院其他软判例还包括最高人民法院公报案例、各个业务庭发表的审判业务指导丛书选的案例和各个业务庭专业法官会议案例。我认为,最高人民法院合议庭判决的案件也具有说服力,但是没有上述几类案例的说服力强。 最高人民法院巡回法庭案例对其辖区内的法院具有很强的说服力。 由于立法机关往往来不及修改立法,许多新问题就摆在了法院面前,因此需要以判例来补充法律和司法解释以正确指导下级法院。 我看到中国正在发展自己的判例法,参考传统法律和外国司法管辖区的做法,但最终确定适合中国特殊国情的规则,这可能包括上文提到的一些要点。 国际商事法庭的裁判,无论是裁定还是判决,都将向市场发出重要信号,而且很可能在全球范围内产生重大影响,因为已有相关文件显示,争议合同适用中国法,或者中国法在不同方面予以适用的国际仲裁案件不断在增加。

Happy New Year!

Supreme People’s Court Monitor at the Supreme People’s Court (III)

I am prefacing this blogpost with a statement that nothing in it (or future blogposts, for that matter) represents the Supreme People’s Court (SPC), the China International Commercial Court (CICC), or the  International Commercial Expert Committee (Expert Committee).

On the afternoon of 21 August, Professor Liu Jingdong of the International Law Institute of the Chinese Academy of Sciences (pictured below) and I spoke at the SPC, invited by the #4 Civil Division.  Ms. Long Fei, Deputy Director (Person in Charge) of the CICC Coordination and Guidance Office. chaired the proceedings and Judge Wang Shumei, head of the #4 Civil Division, gave concluding remarks.  Professor Liu had previously been a guazhi scholar (seconded/temporarily assigned) in the #4 Civil Division (appointed as a deputy division chief, as is the practice). He felt the event was a reunion with his former colleagues.  This was the first event to involve lectures by CICC Expert Committee members to judges and other staff at the SPC, including several members of the CICC.  I trust that other Expert Committee members will have the same opportunity in the future.  I am grateful to all those involved in making all the arrangements needed for the event to take place and to all of those who took time away from dealing with difficult cases and other work to listen to and interact with Professor Liu and me.

 

The audience of about 40 people (pictured below) included Hu Shihao, head of the Judicial Reform Office, Li Xiao, deputy director of the Research Office, Judge Guo Zaiyu (of the CICC), and many others, including a group of students interning in the #4 Civil Division (seated in the back row).  After the formal part of the lecture (and a question and answer session), I was very happy to be able to take a few minutes to share with the students some of my thoughts about takeaways from their internships.

I spoke about the impact of the Belt and Road on the Chinese courts (about which I have previously spoken), market reaction outside of China to the CICC, and some modest suggestions relating to the Expert Committee.  I gave my presentation in Chinese, as I knew some in the audience would have difficulty understanding English, although my “foreigner’s Chinese” (洋式中文) may have been a challenge to understand. Professor Liu spoke on the “legalization” of the Belt & Road”  (the subject of his 2017 article in 政法论坛). One of my suggestions was that this not be a one-off event. The official report on the event (in People’s Court Daily), is also on the Chinese version of the CICC website.

 

 

China International Commercial Court starts operating

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The author in front of CICC #1,  December 2018

In the last few months of 2018,  the Supreme People’s Court (SPC) and China International Commercial Court (CICC) took measures to enable the CICC to start operating, although the CICC was established earlier in 2018.  As SPC President Zhou Qiang reported to the National People’s Congress (NPC)  in March 2018 that the CICC would be established, I expect that he will report to the NPC in March of this year that the SPC established the CICC and it has successfully begun operating. (It is likely that the National Appellate IP Court will merit a place in Zhou Qiang’s report as one of the SPC’s 2018 accomplishments, but see fellow blogger Mark Cohen (and co-authors)’s post on that development). This blogpost will summarize (and provide some commentary on) some of the recent CICC developments.

Those developments included:

  • issuing rules on the international commercial expert committee;
  • personnel measures–designating the heads of the of the #1 and #2 CICCs and the heads of the case management offices in the two offices and appointing seven additional judges;
  • designating several (mainland) Chinese arbitration and mediation institutions to be part of its integrated one-stop dispute resolution;
  • accepting several cases;
  • issuing rules on CICC operations (to be discussed in a following blogpost).

Rules on the international expert committee

On December 5 the SPC General Office issued the working rules of the international commercial expert committee (expert committee) (approved by the SPC judicial committee in late October) (最高人民法院国际商事专家委员会工作规则). The date of the notice of the General Office is 21 November.  It answers some frequently asked questions about the expert committee. My comments are in italics.

What do members of the expert committee do?

1) preside over mediations (Article 3 (1): This was clear from the CICC Provisions.  It remains to be seen how many expert committee members will feel comfortable mediating disputes. It could be that some of the Chinese members will feel more comfortable mediating disputes than the foreign or Hong Kong-based members, as some of those members have long experience as arbitrators in China, where combining mediation and arbitration (med-arb) is usual. A significant number of expert committee members are from jurisdictions where being a mediator and mediating us regarded as separate profession and skill from arbitration and adjudicating.  Articles 9-13 describe the mechanics for doing so.

(2) provide an advisory opinion on specialized legal issues such as those relating to international treaties, international commercial rules, finding and applying foreign law [foreign and greater China jurisdictions] relating cases heard by the CICC and the People’s Courts at all levels (Article 3 (2): This contains a surprising expansion of the role of the experts on the committee by authorizing Chinese courts at various levels to request an expert committee member to provide an advisory opinion on international legal, international commercial and foreign law issues. A note on terminology–the English version on the CICC website uses “foreign law” while the Chinese original uses the term  “域外 ” (extraterritorial), intended to include the jurisdictions of Hong Kong, Macau, and Taiwan as well as the law of foreign jurisdictions.  This blogpost will use the term “foreign law” as meaning “域外 ” extraterritorial law.

The fact that expert committee members have been so authorized indicates that ascertaining (determining) foreign law is a significant practical problem for Chinese judges.  I previously mentioned in this 2017 blogpost that Judge Zhang Yongjian listed ascertaining foreign law(he uses the term 外国法·) as one of many problems confronting Chinese judges hearing cross-border issues. Several articles on the Chinese version of the CICC website (plus one on the English version (by CICC Judge Gao Xiaoli) discuss this problem.  Judge Gao gently pokes fun at some Chinese scholars who fail to understand relevant judicial interpretations on ascertaining foreign law. The CICC website lists the methods available to a Chinese court in ascertaining foreign law. Among the alternatives include designating one of four authorized centers to provide an expert opinion on foreign law.  Articles 14-15 describe some of the mechanics by which one or more expert committee experts can provide an advisory opinion.

Under Article 15, a litigant may request through the CICC’s Expert Office that the expert appear in court to explain his or her opinion.  It is up to the expert to decide whether to appear. Presumably, expenses involved, including travel and translation, would be the responsibility of the requesting party.

The rules do not clarify a number of practical questions related to this. Could a court request an advisory opinion from an expert and from a designated discernment 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.  It is unclear whether experts can charge for these services. Another concern for experts could be liability, and the standard for an opinion found to be negligently made.  Additionally, for the many foreign experts on the committee who do not know Chinese, it is unclear who will be responsible for translation.  Presumably, the court that requested the opinion or the International Expert Committee office (see 6 (2), which states that the office provides services to experts. Perhaps the forthcoming Code of Ethics of the Expert Members will address these questions.

(3) provide advice and suggestions on the development of the International Commercial Court; (4) provide advice and suggestions on the formulation of judicial interpretations and judicial policies of the Supreme People’s Court; (5) Other matters entrusted by the International Commercial Court; The first two provisions set out a formal structure for foreigners to provide advice, suggestions, and comments on judicial interpretations, judicial policy and other developments to the SPC, a first. Article 18 anticipates that the Expert Office will direct requests for comments or advice on specific draft judicial interpretations, policies, etc. to one or more experts, as the CICC considers useful rather than expert committee members being informed about ongoing developments.  However, it does enable expert committee members to make suggestions or proposals on their own initiative.  

Personnel developments

The last few months have seen a number of CICC personnel developments, including the appointment of seven additional judges. In early November, Judge Zhang Yongjian, deputy head of the #1 Circuit Court and head of the #4 Civil Division, was appointed as head of the #1 CICC and Judge Zhang Ming, deputy head of the #6 Circuit Court, was appointed head of the #2 CICC.

Judges Xi Xiangyang and Ding Guangyu, presiding judges on the #1 and #6 Circuit Courts respectively, and CICC judges, were at the same time appointed heads of the case management offices of the two courts.

Judge Song Jianli has been appointed the head of the CICC Expert Office.

The additional seven judges are:

  1. Wang Shumei (deputy head of the SPC’s #4 Civil Division, specializing in maritime law);
  2. Wei Wenchao, who has had a number of roles at the SPC, most recently as deputy head of the #5 Circuit Court. He had previously served as deputy head of the Environmental and Natural Resources Division;
  3. Song Jianli, head of the Experts Office, who studied at Southampton Institute (now Solent University) (in addition to his studies in China), and was a visiting scholar at Cambridge, the University of Pennsylvania, and the Max Planck Institute of Comparative and International Law, and has primarily worked in the SPC’s #4 Civil Division;
  4. Zhang Xuemei, of the SPC #2 Civil Division (domestic commercial issues);
  5. Yu Xiaohan, also of the #4 Civil Division, and like Wang Shumei, a maritime law specialist;
  6. Ding Guangyu, who studied at the University of Manchester and has had a number of roles at the SPC, including at the China Institute of Applied Jurisprudence, and in the #4 Civil Division;
  7. Guo Zaiyu, who spent many years at the Hubei Higher People’s Court before transferring to the SPC’s #4 Civil Division.

It is clear from these announcements that at this time, the CICC is a part-time responsibility for the judges involved, who have their ongoing responsibilities at the SPC, either at one of the Circuit Courts, the new Intellectual Property Court, or SPC headquarters.  And some senior people, such as Judge Zhang Yongjian, have triple administrative roles.

One-stop diversified dispute resolution mechanism

As an earlier blogpost flagged, the institutions clearly intended to be part of the one-stop diversified dispute resolution mechanism were the leading Chinese arbitration and mediation institutions handling foreign-related matters.  Most of these institutions sent senior representatives to attend the first meeting of the experts committee, so I was not surprised to see the following institutions listed:

  1. China International Economic and Trade Arbitration Commission (CIETAC);
  2. Shanghai International Economic and Trade Arbitration Commission;
  3. the Shenzhen Court of International Arbitration (SCIA);
  4. Beijing Arbitration Commission;
  5. China Maritime Arbitration Commission;
  6. the Mediation Center of China Council for the Promotion of International Trade (CCPIT); and
  7. Shanghai Commercial Mediation Center.

SCIA has an arrangement with the Hong Kong Mediation Centre since 2014 by which Mediation Centre settlements may be enforced in mainland China through a consent award issued by SCIA.

First cases

At the end of December 2018, the CICC accepted several cases, all of which can be categorized as general international commercial disputes, with none specifically related to Belt & Road projects.  The disputes include: an unjust enrichment dispute involving Fujifilm and several Chinese companies, a product liability dispute involving Italian pharmaceutical company called Bruschettini (which sells its products through Sinco Pharmaceuticals Ltd., a Hong Kong-listed company), several disputes related to Thailand’s Red Bull (from this report, I surmise that the case was referred by the Beijing Higher People’s Court), and several disputes involving the validity of arbitration clauses, including one involving China Travel Service (Hong Kong) and one of its hotels.   ____________________________

The author is a member of the international commercial expert committee but her views do not represent the committee, the CICC, or the SPC.

 

China International Commercial Court & the Supreme People’s Court Monitor

IMG_3582I am prefacing this blogpost with a statement that nothing in it (or future blogposts, for that matter) represents the Supreme People’s Court (SPC), the China International Commercial Court (CICC), or its newly established International Commercial Expert Committee (Expert Committee).

As can be seen from the above photo taken in the SPC, with President Zhou Qiang, Vice President Luo Dongchuan and others, I was among the first group of experts appointed to the CICC’s International Commercial Expert Committee. Former World Trade Organization Appellate Judge Zhang Yuejiao and I were the only two women who attended the initial meeting on 26 August.  I’ll set out some comments on the Expert Committee and the initial meeting.

The Expert Committee is the first official SPC committee that includes foreigners and others from outside of mainland China, and it may be the first of its nature within the Chinese justice (司法) system.  The Expert Committee was established as a way to involve foreigners in the CICC.  As I wrote earlier this year, unlike Singapore or Dubai, because of the restrictions of Chinese law, the CICC could not invite foreign judges to serve on the court.  Among the 32 experts appointed to the Expert Committee include many leading specialists in international arbitration and dispute resolution, including judges, arbitrators, scholars and practitioners from inside and outside China.  The detailed rules on how the CICC and the Expert Committee will operate (and interact) are still being drafted.  The provisions on the establishment of the CICC anticipate that the experts on the Expert Committee will be able to mediate disputes and provide opinions on foreign law, among other functions.

The initial meeting was held on a Sunday morning, likely to accommodate President Zhou Qiang’s schedule or that of the other senior officials who attended the meeting.  SPC  newly appointed Vice President Luo Dongchuan chaired the proceedings.  Future events will reveal his relationship, if any with the CICC.  He had previously headed the SPC’s #4 Civil Division and was most recently the head of Xinjiang’s Supervision Commission. The senior officials who attended from outside the SPC included Mr. Xu Hong, head of the Department of Treaties and Law of the Ministry of Foreign Affairs (MFA), several officials from the Department of Treaties and Law of the Ministry of Commerce (MOFCOM), as well as representatives from China’s major arbitration institutions.  A large group of officials from the SPC also attended, seated in the row behind the experts.  The CICC judges sat separately.  President Zhou Qiang presented all the experts present with their letters of appointment, followed by speeches by officials from MFA and MOFCOM, and several of the most prominent experts on the Expert Committee, including Huang Jin, President of the China University of Political Science and Law, Sir William Blair, former High Court judge and judge in charge of the Commercial  Court in London, and Rimsky Yuen, former Hong Kong Secretary for Justice.

The remaining two hours of the meeting consisted of brief presentations by some of the SPC judges involved and several experts, while other experts provided comments.  Both Judge Zhang Yuejiao and I spoke.  My brief presentation was on “the CICC: An Important Step in the Internationalization of the Chinese Courts.”  I raised a few of the legal issues that I had raised in earlier blogposts.  I concluded by reminding the attendees that the CICC could be a great opportunity to train a new generation of Chinese international judicial personnel, and that I was looking forward to the CICC giving a chance to some of my students at the Peking University School of Transnational Law to intern there!