January 29, 2019

Progress in Chinese Courts’ abilities to adjudicate international disputes

China's Belt & Road Initiative (BRI) to increase trade and improve regional connectivity promises both excitement and uncertainty to all involved regions. An inevitable consequence of stimulated trading between parties is the prospect of disputes. In response to this, on 29 June 2018 the Supreme People's Court of China (SPC) established two international commercial courts (CICCs) to specifically handle international disputes arising from the BRI and to provide a 'one-stop dispute resolution mechanism' for parties. In this article we set out the jurisdiction of the CICCs, explain the role of the CICC Expert Committee and look at the key provisions under the CICC Rules of Procedure (trial implementation) (the CICC rules).

Jurisdiction of the CICC

On 1 July 2018 The Provisions of the Supreme People's Court on Several Issues Regarding the Establishment of the International Commercial Court (the Provision) came into effect setting out the jurisdiction of the CICC. The CICC can adjudicate the following cases:

  1. First instance international commercial cases in which the parties have chosen the jurisdiction of the SPC and the amount in dispute exceeds RMB 300 million;
  2. First instance international commercial cases which are subject to the jurisdiction of the higher people's courts who nevertheless consider that the cases should be tried by the SPC for which permission has been obtained;
  3. First instance international commercial cases that have a nationwide significant impact;
  4. Applications for preservation measures in arbitration cases for setting aside or enforcement of international commercial arbitration awards; or
  5. Any other international commercial cases that the SPC considers appropriate to be tried by the CICC.

An international commercial case is broadly defined and includes the situation when:

  1. One or both parties are foreigners, stateless persons, foreign enterprises or other organisations;
  2. One or both parties have habitual residence outside the PRC territory;
  3. The object of dispute is outside the PRC territory; or
  4. The legal facts that create, change, or terminate the commercial relationship have taken place outside the PRC territory.

CICC Expert Committee

An important feature of the Provision is the creation of the CICC Expert Committee. Together with selected mediation and arbitration institutions, the CICC Expert Committee was formed to provide a 'one-stop dispute resolution mechanism' for BRI disputes. The effect is that parties will be able to choose from mediation, arbitration, or litigation to resolve their disputes. The first committee was appointed on 26 August 2018 and consisted of 32 Chinese and foreign experts. The committee is responsible for mediating CICC cases, providing advisory opinion, and giving advice and suggestions on judicial interpretation and opinion formulated by the SPC.

CICC Rules

On 5 December 2018 the SPC introduced the CICC Rules focusing on promoting the efficiency of CICC proceedings and providing convenience for parties.

Online Platform

Under the CICC Rules, parties are permitted to submit documents to the CICC through its official website. Should any technical difficulties arise, parties can use email or any other method that is approved by the CICC to submit documents. To provide convenience to the parties, the CICC supports the use of the internet for case registration, payment, service, submission, mediation, file review, exchange of evidence, pre-trial conferencing, as well as the opening of the hearing.    

Case Management

To ensure the efficient processing of disputes, a case management conference must be held within seven days after the last party to the dispute has been served.

Mediation

If the parties agree to mediation, a time limit must also be specified for the mediation to take place which should not usually exceed 20 working days. If the parties have chosen CICC Expert Committee members to act as mediators and can agree on their identities, up to three members can be chosen, failing which the CICC will appoint one to three members to be mediators to the dispute. Otherwise, parties can choose mediators from CICC-registered mediation institutions. Mediation documents and judgments confirming the mediation agreement can also be issued to aid the enforcement of concluded settlement agreements between the parties.

Service of Documents

A document is deemed to be served on a party if the party to be served does any of the following which results in the failure of service:

  • refuses to provide a service address;
  • provides an incorrect service address; or
  • fails to notify the CICC of any alteration of service address.

A step in the right direction

The establishment of two international commercial courts, formation of the CICC Expert Committee and implementation of the CICC Rules demonstrate recognition of the likelihood of increased disputes pursuant to the BRI. The provision provides flexibility to the CICCs as its jurisdiction extends to cases with a nationwide significant impact as well as any case that the SPC considers appropriate for the CICC. Despite the traditional reluctance of international parties to select China as a dispute resolution forum, the enactment of the CICC Rules is a welcome addition that provides transparency, convenience and efficient case management to international parties.