Editor's Note: The Third Seminar of the International Commercial Expert Committee of the Supreme People's Court and Reappointment Ceremony of the First Group of Expert Members was held successfully on Augest 25, 2022. Over 40 experts from more than 20 countries and regions focused on the theme of the Development, Challenges and Countermeasures of Cross-Border Commercial Disputes during the seminar. Extensive and in-depth discussions were held within the framework of four specific issues. The texts of speeches delivered by the participants would be posted on the CICC's website. 

INTERNATIONAL COMMERCIAL COURTS IN CHINA: PRACTICE, INNOVATION, AND FUTURE

Zhou Hanmin

The Standing Committee Member of Chinese People's Political Consultative Conference, 

Vice Chairman of China National Democratic Construction Association

I. The Necessity of Establishing International Commercial Courts

As the world's economic center of gravity moves from the West to the East, cross-border economic transactions across Asia have become more frequent, while the number of related international commercial disputes has also increased. Statistics show that leading arbitral institutions in Asia, including Singapore International Arbitration Centre (SIAC), Hong Kong International Arbitration Centre (HKIAC), Asian International Arbitration Centre (AIAC) in Kuala Lumpur, Korean Commercial Arbitration Board (KCAB), China International Economic and Trade Arbitration Commission (CIETAC), and Shanghai International Arbitration Center (SHIAC), have witnessed a steady increase in both the number of international commercial arbitration cases and the amount in dispute in the past decade.

Against this background and under a system that predominantly resolves diversified disputes by litigation, the judicial organs in relevant Asian jurisdictions have gradually awakened to the current situation in handling international commercial disputes:

On the one hand, whichever conflict law is applied, an international commercial case will exclusively come under the jurisdiction of one certain court at a certain level in a certain area, which means that the trial of international commercial cases will have to use and adapt to the existing (sometimes even rigid) rules of that certain court.

On the other hand, international commercial cases, the operative word being international, imply that the application of rules in trials varies from case to case, and the court rules of any specific region will not be as flexible as commercial arbitration rules. However, the practical demand for rules exerts a substantive impact as soon as the parties concerned decide on the plan for jurisdiction.

Therefore, the international commercial dispute resolution mechanism in Asia reveals the following development pattern in the past decade: For one thing, the diversified dispute resolution mechanism characterized by the international commercial arbitration system has achieved rapid development in Asia; for another, the development of the international commercial arbitration system has objectively prompted the judicial organs in the relevant Asian jurisdictions to set up international commercial courts dedicated to the adjudication of international commercial cases.

When it comes to the practice of establishing international commercial courts in Asia from 2015 to 2019, major jurisdictions have successively established Dubai International Financial Centre Courts (DIFC Courts), Abu Dhabi Global Market Courts (ADGM Courts), Civil and Commercial Court of the Qatar Financial Centre (QFC Court), Singapore International Commercial Court (SICC), China International Commercial Court (CICC), etc. Among them, the Supreme People's Court of China (SPC) has established the First International Commercial Court in Shenzhen, Guangdong Province, and the Second International Commercial Court in Xi'an, Shaanxi Province according to the Provisions of the Supreme People's Court on Several Issues Regarding the Establishment of the International Commercial Court, and has formulated the Procedural Rules for the China International Commercial Court of the Supreme People's Court (for Trial Implementation).

II. Progress Made in the Practices of International Commercial Courts

The world today is undergoing profound changes unseen within the last century. Reforms have taken place in the overall development of the world economy. Taking this as an underlying driving force, the establishment and operation of the CICC must meet the objective challenges of adjudicating international commercial cases. According to statistics, the CICC has made judgments or rulings on international commercial cases concerning parties from countries and regions such as Italy, Thailand, and the British Virgin Islands. The judgments and rulings made by the CICC concern international and professional commercial legal issues, such as the establishment and validity of international commercial arbitration agreements, the identification of competent authorities in disputes over international civil aircraft maintenance agreements, the recognition and enforcement of arbitral awards in international commercial arbitration, and the performance of duties of cross-border exclusive distribution agreements. The CICC has a team of judges with international and professional adjudicating capability. Using this professional advantage, the CICC adopts court rules and practices in line with international standards to ensure that the adjudication procedures and results in international commercial disputes are in accordance with relevant international rules. This demonstrates that the advanced concepts and practices have been adopted in CICC's trial of international commercial cases.

In view of the status of the CICC within Chinese judicial organizations, the advanced concepts adopted by the CICC will be approved and followed by the lower courts, which will help unify and improve the standards of adjudication in similar international commercial cases adjudicated by Chinese courts. This will also help improve cross-border commercial entities' ability to understand and apply China's judicial adjudication rules. At the same time, the practices and development of the CICC have played a very important role in optimizing the business environment under the rule of law in China, as well as protecting the legitimate rights and interests of Chinese enterprises abroad.

III. Innovations Made by International Commercial Courts

Two major patterns can be identified in the procedural rules that have already been established by international commercial courts:

1. The procedural and substantive rules of some international commercial courts are deeply influenced by the practice of the common law system. Here are some examples: Abu Dhabi established the Law on the Application of English Law in 2015, allowing the ADGM Courts to apply the substantive rules of English commercial laws; Dubai has comprehensively introduced the procedural rules of the common law system through legislation, abolishing traditional law practices in Sharia and the civil law system; Abu Dhabi, Dubai, and Singapore all allow foreign judges to serve in local international commercial courts. 

2. A large part of innovations made in the rules of the international commercial courts are based on the practices of international commercial arbitration rules, for example, allowing parties concerned to decide languages and substantive legal rules applicable to the case, enriching procedures that are conducive to the speedy trial of cases, and providing diverse judicial resources for the parties concerned. These innovations have become the necessary framework for international commercial courts, and now also are the focus of competition among various international commercial courts, which is vividly described as "forum selling" in the industry. 

For example, the rules of the CICC allow foreign experts of the International Commercial Expert Committee to act as mediators in international commercial cases, expediting the settlement of cases through professional mediation. In fact, in the arbitration rules formulated by commercial arbitration institutions in China and represented by the China (Shanghai) Pilot Free Trade Zone Arbitration Rules of the SHIAC (the mediation system heralded as the “Oriental Experience”) have been included in commercial arbitral proceedings, through which commercial mediation is brought into full play. The application of mediation in arbitration improves the quality and efficiency of the adjudication of commercial arbitration cases. Obviously, the understanding and recognition of the value of the mediation system provided by the rules of the CICC are consistent with the concept of leading arbitration institutions in Asia represented by the SHIAC.

Therefore, in the future, the rules of the CICC can draw on the useful practices of domestic leading arbitral institutions in the innovation of rules so as to improve the flexibility of the rules of the CICC and its adaptability to the needs of the adjudication of international commercial cases.

IV. The Future of International Commercial Courts

The future development of the CICC must follow the overall plan and requirements of China's economic development. It should be borne in mind that the fundamental engine of the idea of international commercial courts taking root in Asia is the changing pattern of the world's economic center of gravity, which is shifting from the West to the East. The future development of the CICC is bound up with frequent international commercial transactions, urgent needs of commercial entities for internationalized and professional adjudication capabilities, and policy support from governments on the development of foreign-related rule of law. 

The SPC has established the First International Commercial Court and the Second International Commercial Court in Shenzhen and Xi'an respectively. It is known that Shenzhen and Xi'an are places of high levels of economic development in southern China and northwestern China respectively. Shanghai, Pudong New Area in particular, is the symbol of the economic development of China's southeastern coastal areas and even the whole country. In 2021, the CPC Central Committee approved the plan of Pudong New Area to build itself into a leading example of socialist modernization. In the face of profound changes unseen in a century, the leading example of socialist modernization must adopt a global vision and be future-oriented, and should be benchmarked against the highest standard and level. Obviously, it is imperative to establish an international commercial adjudication system aligned with Shanghai's status in international economic and trade exchanges and the need for international dispute resolution in Shanghai.

Here, I sincerely recommend that consideration of the SPC be given to planning and establishing the Third International Commercial Court of the SPC in Shanghai to handle international disputes from a broader international perspective. In this way, it can contribute back to the construction of the international economic and trade order with more effective international adjudication experience, further enhance Shanghai's capacity and level in international economic and trade exchanges, and build a system of international commercial legal rules, with “China's Rules” as an important driving force. Over time, it will help promote the great rejuvenation of the Chinese nation and make contributions to building a community with a shared future for mankind.

(Zhou Hanmin: Member of the Standing Committee of the CPPCC National Committee, Vice Chairman of the CPPCC Shanghai Committee, and Member of the International Commercial Expert Committee of the Supreme People's Court of China)

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*The original text is Chinese and has been translated into English for reference only. If there is any inconsistency or ambiguity between the Chinese version and the English version, the Chinese version shall prevail.