APRAG Conferences 2020 Session 2 : Overview of China International Commercial Court and Its Impact on International Arbitration in the People’s Republic of China
(1.1) Movement of well-known alternative dispute resolution organizations or agencies in connection with disputes arising out of the Belt and Road Program
In 2018, the ICC established a Belt and Road Program Commission to resolve disputes arising out of the Belt and Road Program by arbitration or other ICC Dispute resolution proceedings. In addition, in March 2019, the ICC issued a conciliation guideline for disputes arising from the Belt and Road Program.
HKIAC: Experts were appointed to serve as the Belt and Road Committee, including legal and commercial experts in construction, finance, commerce, navy, and infrastructure. An online system called the BRI Resource Center was also created with the aim of being a source of information, news and facts, and the current progress of the Belt and Road Program.
BAC: In May 2019, a joint academic seminar with AIAC was held on the topic of arbitration to resolve disputes arising from the Belt and Road Program.
CIETAC: In November 2019, a notice of cooperation between arbitration service agencies about the Belt and Road Program in Beijing.
(1.2) Establishment of China International Commercial Court and operations
On June 29, 2018, the Supreme People’s Court established two branches of the International Commercial Courts of China (CICC) located in Shenzhen and Xi’an, respectively, with separation of the jurisdiction of the courts for considerations in Dispute resolution. In other words, the CICC Shenzhen branch arbitrates disputes arising from BRI Maritime road (concerning maritime commercial, shipping, etc.), whereas the CICC Xi’an branch arbitrates disputes arising from and related to the Overland Belt.
The CICC shall arbitrate disputes under the conditions of the following cases: 1. International trade cases with claims in excess of RMB 300 million and parties shall also agree to settle a dispute at the Supreme People’s Court; 2. International cases which have been submitted to Higher People’s Court for trial may be transferred to CICC with the approval of the Supreme People’s Court; 3. International cases which affect the country widely and significantly; 4. Application for an order of reservation of rights such as preservation of real estate or preservation of evidence in international arbitration cases or an appeal for revocation of an award or refusal of enforcement of an arbitral award in connection with international trade and; 5. Other international trade cases that the Supreme People’s Court deems appropriate for trial by the CICC.
(1.3) Definitions of international trade cases are as follows:
(1) In the event that one or both parties are foreign persons or stateless persons or foreign juristic persons or other organizations;
(2) In the event that one or both parties reside outside the territory of the People’s Republic of China;
(3) In the event that a disputed object is outside the territory of the People’s Republic of China; and
(4) Legal facts that have created changed or caused the termination of commercial legal relations occurs outside the territory of the People’s Republic of China
(1.4) Judges of the CICC
On June 28, 2018, eight judges were appointed, the first panel to serve as the judges of the CICC. Later on December 7, 2018, another panel was appointed, consisting of seven judges to serve as the judges of the CICC, totaling fifteen judges of the two-panel, all of whom were Chinese nationals and selected based on experience and expertise in international trade trials, knowledge of conflict of laws, proficiency in both Chinese and English. In a particular case, there may be a panel of three members or more.
(1.5) A CICC’s rule may indicate a contradictory opinion of an individual judge, in contrast to a general rule of the Supreme People’s Court, when parties present documentary evidence taking place outside the borders of the People’s Republic of China to the CICC. Even though the document has been notarized or officially certified, it will also be cross-examined during the CICC hearing of evidence. In the event that the document is in English, it may not be presented with Chinese translation, but the consent of the other party is also required.
(1.6) International Commercial Expert Committee
On August 24, 2018, the CICC appointed 31 experts as the first members of the International Trade Experts Committee with four years of the term of office, or until August 24, 2022. These members may be entrusted by the CICC to settle an international commercial dispute on the basis of the willingness of parties and provide suggestions to the Supreme People’s Court on legal issues, which are specific in international trade trials. The members may suggest on the amendments to the CICC regulations, development policy legal interpretations, or judicial policies to the Supreme People’s Court. These 31 experts are selected by experts from countries and regions with different legal systems, and also with a variety of professions such as judges, executives in major international organizations, legal experts.
(1.7) CICC Case Statistics
The CICC case statistical data, which was compiled in December 2019, found that there were 13 international trade cases with the grounds of action on a product defect, brokerage agreement, confirmation of property of shareholders in a company, liability for damages incurred to a company’s profits, confirmation of the validity of an arbitration agreement. Etc. Parties involved in these cases were Japanese, Italian, British Virgin, etc. and there were also juristic persons or ordinary persons from the People’s Republic of China, Hong Kong Special Administrative Region, as well as Taiwan.
(1.8) The CICC’s Link to the Arbitration Process in the People’s Republic of China
CICC is regarded as a one-stop service for the settlement of international commercial disputes, where the Supreme People’s Court has created a network of cooperation with the International Commercial Conciliation Centre, the International Commercial Arbitration Centre, as well as the CICC itself, with a platform for Dispute resolution, arbitration and court proceedings which are effectively linked. The CICC will encourage parties to settle international commercial disputes with an option that parties deem appropriate, including conciliation, arbitration, or litigation.
Parties may apply for an order of right preservation such as preservation of the property of parties or preservation of evidence prior to and during an arbitration process, and parties may also apply for revocation or refusal of an award of an international arbitral tribunal.
(2) Differences between International Commercial Courts and International Arbitration
| Issues | International Commercial courts | International Arbitration |
| Establishment | Considered a state court | Only related to parties |
| Laws used in trials | Internal state law | Internal state law or international law |
| Procedure law | State procedure law | Regulations for international arbitration proceedings |
| Costs | Relatively low | Relatively high |
| Time period | Relatively long | Relatively short |
| Confidentiality | Non-confidential and court proceedings are mainly open | Arbitration proceedings are quite confidential and restrict to a group of participants in judicial proceedings |
| Person to make an award and settle a dispute | Judge of the state
– Principle of impartiality and independence – In the case of a rather complex international trade dispute, a judge with the expertise and knowledge of international trade is required to decide a case |
Individual skilled arbitrator, no nationality requirement unless specified by parties, which shall be complied with. |
| The enforcement of an award / decision is based on a bilateral, multilateral or regional agreement.
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A relevant convention is the Convention on Recognition and Enforcement of Foreign Judgment in Civil or Commercial Matters 2019, and the only country that has signed the Convention is Uruguay. | The New York Convention, or its full name, “Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958”, with currently more than 160 signatory member countries |
| Issues | International Commercial courts | International Arbitration |
| Establishment | Considered a state court | Only related to parties |
| Laws used in trials | Internal state law | Internal state law or international law |
| Procedure law | State procedure law | Regulations for international arbitration proceedings |
| Costs | Relatively low | Relatively high |
| Time period | Relatively long | Relatively short |
| Confidentiality | Non-confidential and court proceedings are mainly open | Arbitration proceedings are quite confidential and restrict to a group of participants in judicial proceedings |
| Person to make an award and settle a dispute | Judge of the state
– Principle of impartiality and independence – In the case of a rather complex international trade dispute, a judge with the expertise and knowledge of international trade is required to decide a case |
Individual skilled arbitrator, no nationality requirement unless specified by parties, which shall be complied with. |
| The enforcement of an award / decision is based on a bilateral, multilateral or regional agreement.
|
A relevant convention is the Convention on Recognition and Enforcement of Foreign Judgment in Civil or Commercial Matters 2019, and the only country that has signed the Convention is Uruguay. | The New York Convention, or its full name, “Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958”, with currently more than 160 signatory member countries |
(3) Settlement of Disputes Between Public and Private Sectors
Settlement of disputes between public and private sectors is a mechanism under international trade and investment agreements, such as investment promotion and protection agreement and a free trade agreement, which grants investors the right to a settlement of disputes with an investee public sector in a specified manner in the event that a public sector violates its obligations under the agreement.
Dispute resolution proceedings between state and private sectors may be performed by the International Center for Settlement of Investment Disputes (ICSID) International Investment Court, which varies in detail.
In the case of ICSID, the arbitrator shall make an award for a dispute, in which parties have the authority to appoint or specify an appointment. A settlement agreement may be in the form of a treaty (between an investor and an investee public sector) and shall comply with the minimum standard of international justice and stabilization clauses. In other words, an investor shall be bound by the terms or provisions of the law during investment. In the event that the conditions, measures, or provisions of the law are subsequently changed in a way that is harmful to an investor, it shall not be bound thereby; legality of a settlement agreement shall be examined by a third-party mediator in order to protect an investor. Substantive law used in determining the contents of the case depends on an agreement of parties; a venue for the proceedings is usually at the ICSID headquarter or it may be another location; a language of the proceedings depends on an agreement of parties; the judicial process is confidential, and disclosure is the exception, which results in consequence of ruling or an award that is difficult to acknowledge due to limitations of confidentiality; in addition, an ICSID arbitral award is final and unappealable; and proceedings also depend on laws and conventions related to arbitration.
