The CICC and the rule of law

Fair, transparent and convenient? What you need to know about China’s new International Commercial Court


On 8 June 2019, The Economist reported that the president of the Supreme People’s Court (SPC) ‘called for strict implementation of rules requiring judges to seek Communist leaders’ instructions when “major matters” arise’. The new China International Commercial Court (CICC) includes members of the SPC. This is one reason that it was argued that: ‘In the law courts of Communist China, power and political control count for more than fairness.’

About a week earlier, the First International Commercial Court of the SPC held its inaugural public hearing in Guangdong Bencao Medicine Group Co Ltd v Bruschettini SRL. There are 15 judges appointed by the SPC to sit in the CICC, including four women. Here is what else you need to know…

Objective

The CICC comprises the First and the Second International Commercial Court of the SPC. The objective of the CICC ‘is to try international commercial cases fairly and timely in accordance with the law, protect the lawful rights and interests of the Chinese and foreign parties equally, and create a stable, fair, transparent, and convenient rule of law international business environment’. Accordingly, this is the yard-stick to which the international commercial community will measure the success (or otherwise) of the CICC.

‘Safeguard the smooth progress of socialist construction and development’

At the First Seminar of the International Commercial Experts Committee (‘the First Seminar’), the third Secretary for Justice of Hong Kong correctly identified that the CICC is ‘a court within the judicial hierarchy of China’. Bencao v Bruschettini was accepted by the CICC in accordance with the ‘Civil Procedure Law of the People’s Republic of China’ (‘the Law’). Part One of the Law – titled ‘Purpose, Scope of Application and Basic Principles’ – prescribes that the purpose of the Law includes maintaining ‘the social and economic order and safeguard the smooth progress of socialist construction and development’.

‘Proficiency of using both Chinese and English as working language’

Speaking on ‘China’s Practice and Innovation’, Justice Zhang Yongjian, member of the Adjudication Committee of the SPC, rightly opined that there are ‘strict criteria for the selection of judges, which include rich experience, familiarity of international treaties, conventions, and practice experience in international trades and investments, and also proficiency of using both Chinese and English as working language’.

Dissenting opinions are allowed

Cases tried by the CICC are heard by a collegial panel, consisting of at least three judges. The inaugural public hearing of Bencao v Bruschettini was heard by five judges (the pre-trial conference was heard by two). Panels follow the rule of the majority, however, minority opinions can be issued. Three of the five judges hearing Bencao v Bruschettini have studied in the United Kingdom. Another studied at the University of Hong Kong. This substantial experience of the common law tradition adds importance (in principle) to the ability to hand down reasoned, dissenting judgments.

Lawyers must be from China

Article 263 of the Law prescribes that: ‘An alien, stateless person or foreign enterprise or organization that needs to be represented by a lawyer as his or its agent ad litem in instituting and responding to an action in a people’s court shall appoint a lawyer of the People’s Republic of China’. The word ‘shall’ can be interpreted to mean that lawyers appearing in the CICC must be from China. The defendant in Bencao v Bruschettini, for example, is domiciled in Genoa, Italy. It is represented by JunHe LLP in Beijing.

International Commercial Expert Committee

The International Commercial Expert Committee (‘the Expert Committee’) is another unique feature of the CICC. At the First Seminar, the President of the Expert Committee fairly reported that the duties of members include ‘mediation under the appointment by the International Commercial Court, to provide advisory opinions on interpretation of international commercial transaction rules and ascertainment and application of foreign laws, and to offer advice and suggestions in respect of amendment of rules and development plans of the International Commercial Court… and enactment of judicial interpretations and policies’.

‘One-stop international commercial dispute resolution mechanism’

At the First Seminar, Sir William Blair – a former judge of London’s Commercial Court – remarked that the CICC ‘recognises the mutually supportive roles of the courts, arbitration, and mediation’. This is made out by the provisions on the establishment of the CICC, which provide that, together with the Expert Committee, the SPC will set up ‘a dispute resolution platform on which mediation, arbitration, and litigation are efficiently linked, thereby creating a “one-stop” international commercial dispute resolution mechanism’.

Conciliation statements have the same legal effect as judgments

The CICC may issue a ‘conciliation statement’ after parties have reached a mediated settlement. After it is signed by the parties, this has the same legal effect as a judgment. Parties may apply to the CICC for enforcement of a conciliation statement, in the same way that they can apply to enforce a legally effective judgment or ruling.

Belt and Road Initiative dispute resolution

A senior judge from the SPC is reported to have told China Daily (25 February 2019) that: ‘We must improve the quality of hearing cases involving countries taking part in the initiative, as it has been a major part of a growing foreign-related disputes [sic] heard by Chinese courts in the last few years.’ Statistics released by the SPC were reported to have showed that Chinese courts concluded 200,000 foreign-related disputes between 2013-17. Cases in relation to the Belt and Road Initiative were apparently ‘a main component’. It is therefore likely that such disputes will form an important part of the CICC’s caseload.

Electronic litigation service platform

The CICC has an ‘Electronic Litigation Service Platform’. It supports online case registration, payment of fees, review of files, exchange of evidence, and hearings. This appears to be in-step with the Business and Property Courts of England and Wales, where effective e-filing is now standard, and coding has been embraced, so that litigants can carry out the disclosure process accurately, speedily, and at much less cost.

Fair, transparent and convenient rule of law?

Bencao v Bruschettini has justifiably received extensive public attention. At the pre-trial conference, the parties expressed their opinions on the selection of mediators to facilitate settlement in their case, time limit for mediation, and scope of the expert members to act as mediators. Sensibly, two judges and the parties also broadly determined the date that the case would be heard, should mediation fail.

This appears to demonstrate that the parties have flexibility in how their dispute is resolved, judges appropriately, but firmly, case manage and that the CICC is indeed a ‘one-stop international commercial dispute resolution mechanism’. Judgment should be eagerly awaited. It is the first, small step, before an informed judgement can be formed on whether the CICC is achieving its objective to ‘create a stable, fair, transparent, and convenient rule of law international business environment’. 

Dominic Bright is a barrister at Lamb Chambers. His forthcoming book, A Practical Guide to the Small Claims Track is set for publication with Law Brief Publishing in November 2019.

Find out more about the new court here: http://cicc.court.gov.cn

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Dominic Bright

Dominic Bright is a barrister at Lamb Chambers.