Introduction
Overview
Accepting cases
Innovations
Suzhou City International Commercial Tribunal


Introduction

From 2015 to 2020 the basic structure of the Chinese court system remained as four levels:

  • the Supreme People's Court;
  • the higher people's courts, which sit in each province and four municipalities (ie, Beijing, Shanghai, Tianjin and Chongqing) and are directly under the central government;
  • the intermediate people's courts; and
  • the basic people's courts.

To improve trial quality and efficiency, specialised courts have been established since 2015. The Chinese court system has also been developing diversified methods of dispute resolution, such as mediation, and novel forms of virtual trial, such as online hearings.

This article provides an overview of the China International Commercial Court, which was implemented in 2018.(1)

Overview

In 2018 a new mechanism for international commercial disputes resolution was introduced: the China International Commercial Court, which officially started operating on 29 June 2018. The China International Commercial Court is part of the Supreme People's Court in Beijing and has tribunals in Shenzhen City of Guangdong Province and Xi'an City of Shaanxi Province, named as the first and second international commercial tribunals, respectively.

The Supreme People's Court explained its reasoning for having the courts located in Shenzhen City and Xi'an City as follows.

Shenzhen City
Shenzhen City is the pioneer in China's reform and globalisation. In addition, it is geographically close to Hong Kong and Macau, the two special administrative regions and standalone jurisdictions off mainland China. Other than that, based on statistics, the courts in Shenzhen City hear more cases with foreign elements than any of the other courts in China's Greater Bay Area. Setting up the first China International Commercial Court tribunal in Shenzhen City has helped with the adjudication of some complicated commercial cases.

Xi'an City
Considering that Xi'an City is the starting point of the ancient Silk Road, and that its economic activities with Central and Eastern Europe have been increasing quickly, the second China International Commercial Court tribunal has been well positioned to adjudicate the incoming cross-border commercial disputes from those areas.

Accepting cases

As part of the Supreme People's Court, the China International Commercial Court falls under the current Chinese court system and exercises its jurisdiction pursuant to Chinese civil procedure law and Article 2 of the Provisions of the Supreme People's Court on Several Issues Concerning the Establishment of International Commercial Courts (the provisions).(2)

The China International Commercial Court hears the following cases:

  • first-instance international commercial cases where:
    • the parties concerned agree to be subject to the Supreme People's Court's jurisdiction under Article 34 of the Civil Procedure Law; and
    • the subject amount is more than Rmb300 million (approximately $46 million).
  • first-instance international commercial cases within the high people's courts' jurisdiction at a provincial level (nevertheless, the higher people's courts believe it necessary to submit such cases up to the Supreme People's Court, with such submission approved by the Special People's Court);
  • first-instance international commercial cases with a significant nationwide social impact from the Supreme People's Court's perspective;
  • cases where a petition for interim measures to be carried out in mainland China has been made from an ongoing international commercial arbitration or where a petition for setting aside or enforcing an arbitration award rendered by an international commercial arbitration tribunal has been made;(3) and
  • other international commercial cases that the Supreme People's Court believes should be directly heard by the China International Commercial Court.(4)

The cases heard by the China International Commercial Court require a connection with mainland China. In the absence of such a connection, the court will not hear the case, even if the parties agree to file the litigation at the China International Commercial Court, pursuant to Article 34 of the Civil Procedure Law. This differs this court from its peers, such as the Dubai International Commercial Courts and the Singapore International Commercial Court. This means that the China International Commercial Court can hear only cases legally connected to China, such as if China is:

  • the defendant's domicile;
  • the place of performance of the contract;
  • the place of execution of the contract; or
  • the location of the subject matter.(5)

Conversely, the Dubai International Commercial Courts and the Singapore International Commercial Court may not impose such a prerequisition if both parties have mutually submitted their dispute to said courts' jurisdiction.

As an internal specialised tribunal in international commercial disputes, instead of an independent court (eg, a higher people's court, an IP court or a basic people's court), the China International Commercial Court's jurisdiction lies within that of the Supreme People's Court. In other words, the Supreme People's Court's jurisdiction is the prerequisite for the China International Commercial Court hearing a case. Therefore, in the event of a jurisdiction agreement, the "parties concerned [should] agree to be subject to the jurisdiction of the SPC"(6) rather than solely to the China International Commercial Court's jurisdiction.

The provisions outline the case allocation system within China's court system. In China, if a lower court believes it necessary to have the case heard by a higher court, the lower court can seek the higher court's permission to directly hear that particular case. Once permitted by the higher court, that case will be reassigned to the higher court.(7)

The provisions give the China International Commercial Court certain flexibility to hear cases. The court can hear cases when a "significant impact nationwide"(8) is foreseen. Although such a criterion is hard to define in advance, this vague expression gives the Supreme People's Court discretion to decide which cases the China International Commercial Court accepts on a case-by-case basis.

Article 2(4) of the provisions partly outlines the China International Commercial Court's effort to build a "one-stop international commercial dispute resolution platform", consisting of litigation, arbitration and mediation. For instance, parties can apply for interim measures before the China International Commercial Court prior to or during arbitration before the China International Economic and Trade Arbitration Commission, Shanghai International Arbitration Centre and other international commissions in China.

Other than arbitration, the China International Commercial Court also offers mediation by entrusting its International Commercial Expert Committee or International Commercial Mediation Organisation to mediate international commercial disputes. When parties reach a mediation agreement, the court can issue the mediation documents and fix a court stamp thereon. If parties seek an official court judgment or order (in case stamped mediation documents cannot be enforced in some jurisdictions outside China), the China International Commercial Court will render a judgment or order accordingly.

Given that the China International Commercial Court is part of the Supreme People's Court, judgments and orders in a China International Commercial Court first-instance trial are final and cannot be appealed,(9) unless in the rare event that the chief justice of the Supreme People's Court orders a retrial or the Supreme People's Court permits a party's petition for a retrial.(10) However, considering that international commercial courts are usually deemed akin to international arbitration where the award is final and cannot be appealed, this might not be a concern.

Innovations

The China International Commercial Court has introduced the following innovations.

Establishment of International Commercial Expert Committee
This expert committee's responsibilities include ascertaining the laws in other jurisdictions, advising the bench of national judges and carrying out mediation. Experts are invited and elected from foreign jurisdictions and are well-respected professionals.

Notarising evidence is not compulsory
Before the China International Commercial Court's establishment, as a general rule for evidence, the Chinese courts would request that parties notarise evidence produced from outside China.(11) The notarisation procedure can be time consuming and expensive. As such, the China International Commercial Court expressly allows non-notarised foreign evidence to be admitted. The parties and their counsel may assist the China International Commercial Court in authenticating the evidence, rather than notarising it. This is a positive sign.

Translating English evidence into Chinese is not compulsory
With the consent of the parties concerned, evidence in English can be directly used in a trial before the China International Commercial Court without being translated into Chinese.(12) Although they are all Chinese nationals, the China International Commercial Court judges usually have a good command of English or another foreign language. Conventionally, for a trial in a Chinese court, evidence and other documentation in English must be translated into Chinese by a qualified translation service, which may be time consuming and expensive.

Dissenting opinions of judges may be stated in judgments
The dissenting opinions of judges can now be stated in judgments.(13) A case may be heard by three or more judges in a China International Commercial Court trial.(14) Where a case is controversial and judges have different opinions, conventionally they will discuss internally, convince each other and render a unified judgment. However, in China International Commercial Court cases, dissenting or minority justices have the right, but are not obliged, to anonymously write their dissenting or minority opinion in the judgment.

Suzhou City International Commercial Tribunal

The Suzhou International Commercial Tribunal, located in the Suzhou Industrial Park of Jiangsu Province, started operating as of November 2020 as approved by the Supreme People's Court. Unlike the China International Commercial Court tribunals in Shenzhen City and Xi'an City, which are essentially internal tribunals of the Supreme People's Court, the Suzhou City International Commercial Tribunal is only a tribunal within the Intermediate People's Court of Suzhou City, meaning that it is basically a lower level tribunal compared with those of the China International Commercial Court. The Suzhou City International Commercial Tribunal was the first local-level specialised international commercial tribunal in China.

Pursuant to the jurisdiction rules in Jiangsu Province, the Suzhou City International Commercial Tribunal can hear the first-instance trials of foreign-related civil and commercial matters arising from or in connection with Suzhou City with a maximum dispute amount of Rmb5 billion (approximately $766 million). As a tribunal of the Intermediate People's Court of Suzhou City, the Suzhou City International Commercial Tribunal can also hear appeals from the Basic People's Court of Suzhou Industrial Park. The judgments and orders rendered by the Suzhou City International Commercial Tribunal are deemed decisions of the Intermediate People's Court of Suzhou City. Therefore, the appealable judgments and orders rendered by Suzhou City International Commercial Tribunal can be appealed to the Higher People's Court of Jiangsu Province.

The first case heard by the Suzhou City International Commercial Tribunal was settled by both parties on 9 December 2019. The dispute concerned a $2 million loan contract dispute between a South Korean bank and an electronics company in Changshu City of Jiangsu Province. After the Suzhou City International Commercial Tribunal's mediation, the parties reached a settlement agreement.

For further information on this topic please contact Tim Yimin Liu or Iris Tingting Yang at Global Law Office by telephone (+86 21 2310 8288) or email ([email protected] or [email protected]). The Global Law Office website can be accessed at www.glo.com.cn.

Endnotes

(1) This is the second article in a series about the Chinese judiciary system. For the first article, please see "Chinese court system: circuit courts".

(2) Fa Shi [2018] 11, 最高人民法院关于设立国际商事法庭若干问题的规定(法释[2018]第11号), effective from 1 July 2018.

(3) Id at Article 14.

(4) Id at Article 2.

(5) Article 34 of the Civil Procedure Law of China (Amendment 2017) (中华人民共和国民事诉讼法2017年修正), effective from 1 July 2017.

(6) Article 2(1) of the provisions.

(7) Article 38 of the Civil Procedure Law of China (Amendment 2017).

(8) Id at Article 2(3).

(9) Articles 155 and 198 of the Civil Procedure Law (Amendment 2017).

(10) Article 3 of the Provisions on Re-trial Cases Acceptance (最高人民法院关于规范人民法院再审立案的若干意见(试行)法发〔2002〕13号), effective from 1 November 2002.

(11) Article 11 of the Several Provisions of the Supreme People's Court on Evidence for Civil Cases 2001 (最高人民法院关于民事诉讼证据的若干规定 法释[2001] 33号), effective from 1 April 2002, amended on 1 May 2020. According to Article 16 of the amended provisions, compulsory notarisation is limited and applies only to official documentary evidence and evidence of identity formed outside China.

(12) Article 9(2) of the provisions.

(13) Id at 5(2).

(14) Id at 5(1).

Luke Zhibo Li, intern, assisted in the preparation of this article.