In June 2018 the Chinese Supreme People’s Court adopted the dispositions regarding the establishment of an International Commercial Court (Fa Shi 2018 – No.11), through which it created an institution aimed at resolving international commercial disputes.
The foundation of the International Commercial Court of China (‘‘CICC’’) responds to the necessity of giving legal coverage ex post to the multibillionaire initiative ‘One Belt, One Road’ (‘‘OBOR’’), surely the biggest geo-economic project of the 21st century, which analysts and academics compare, mutatis mutandis, to the American Marshall Plan. We already discussed about this initiative and its consequences for the European Union in a previous article.
Background: the OBOR initiative
The OBOR initiative is a 10 trillion dollars plan, whose main goal since 2013 is to connect China with the rest of the World through investments in the energetic and infrastructure sectors, whilst promoting financial and cultural cooperation projects.
The initiative is divided into two main routes: the land corridor or Silk Road Economic Belt and the maritime or Maritime Silk Road. With regard to the first one, it aims to connect the city of Yiwu, a major industrial hub on the East of China, with the city of Madrid, through a rail network which crosses through Asia and Europe. In relation to the second, there are two main maritime routes that can be highlighted: one departing from the Fuzhou port which crosses the Indian Ocean up to Malaysia, Sri Lanka, and the Red Sea, connecting with Europe and Rotterdam; the second departing from Fuzhou too but reaching out to the Pacific Islands through China’s sea.
The OBOR project is supervised by the National Development and Reform Commission (“NDRC”, the Ministry of Foreign Affairs of the People’s Republic of China and the Ministry of Commerce of China. OBOR plays a key role in the plans of Beijing’s Government of supporting the long-term objectives for doubling the GDP, and creating new international connections; which have already been announced in march 2016 with the release of the Thirteenth Five Year Plan.
To sum up, the objectives of the OBOR initiative can be highlighted through the following aspects:
1. connecting countries, improving the communication between Governments;
2. connecting infrastructures, simplifying the transport of goods and the mobilization of people between the different countries;
3. connecting the economies to increase the volume of trade;
4. connecting capital to stimulate its flows;
5. connecting people, promoting the exchange of cultures and education systems and encouraging the sharing of technology and its uses.
In order to achieve these objectives, China will need to implement policies aimed at stabilizing the market and avoiding the devaluation of the Yuan. The ‘One Belt One Road’ Project has the potential to stimulate to stimulate even more the Chinese economy, contributing to the expansion expected by Beijing’s Government.
In light of the above, it is clear that it was necessary to establish a Judicial Body specialized in the handling of International Commerce disputes. So that it could be of help in creating a more efficient and transparent judicial protection system more appropriate and attuned to the ‘One Belt One Road’ initiative.
The Role of China's International Commercial Court in the 'One Belt One Road' Initiative
According to the regulations issued by the Supreme Court of China (Fa Shi 2018 – No. 11) the International Commercial Court that has been established is composed of two separate courts:
• the First International Commercial Court, headquartered in Shenzhen, province of Guangdong, and
• the Second International Commercial Court, headquartered in Xi’an, province of Shaanxi.
These are full-fledged Judicial Bodies competent to hear any disputes arising from or concerned with economically or technically relevant International Commercial matters involving China. Most importantly, the rulings issued by the CICC are final and binding on the parties and with immediate legal effect.
The courts are composed by Chinese judges (currently, eight), with solid international, technical and linguistic experience. They can be helped by an International Commercial Expert Committee, composed of experienced advisors (Zhuanjia Weiyuanhui), formed by Chinese and foreign lawyers (which at the moment has twenty components: eight Chinese and twelve foreigners).
Nevertheless, the international experts will not be able to act like judges (nor the foreign lawyers), as they will only have ancillary duties, from the advice regarding application of foreign law, to the role of being conciliators in the disputes.
To seize the CICC, applicants needs to agree on a submission clause or conclude a submission agreement, where the following conditions are met: i) the dispute must be related to P. R. China, and ii) the value of the litigation must be above 300 million yuan.
However, the CICC will be competent to hear all those disputes which are forwarded to by the Chinese Supreme Court, any appellate courts, the cases with high national impact, those related to the enforcement of precautionary measures within international arbitration proceedings or the recognition and enforcement of foreign arbitral awards. In contrast with the Ordinary Chinese Courts, a main feature of this new body is the fact that it provides a set of services in order to resolve conflicts (known as ‘single-window system’). So, CICC is expected to carry out important mediation efforts, boost the quest for alternative solutions, independently or in coordination with the main Chinese institutions specialized in the provision of international mediation and arbitration services (CIETAC, SHIAC, CMAC, BAC, etc.)
Other interesting aspect of the new CICC is its more flexible formal criteria of admissibility and taking of evidence, such as for instance regarding the hearing of witnesses or the use of the English language throughout the proceedings. In this regard, the Supreme People’s Court establish for any evidence submitted in the English language with the consent of the parties that no translation is needed. Likewise, appointment of the judges should be based not only on their English language general proficiency but on their specific ability to use it during the procedure.
The new International Commercial Court of China constitute a one-of-a-kind institution within the Chinese Courts System, whose effectiveness must still be tested. It will be interesting to see how many businesses taking part or concerned by the Chinese ‘One Belt One Road’ initiative will seize its exclusive jurisdiction in the near future, by including submission clauses.
In Lleytons, we work hand in hand with our Chinese partners MWE China Law Offices, to provide specialist advice and defense in proceedings initiated before Chinese domestic courts or most prominent Chinese arbitration institutions.
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