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Wang Shumei: Fair and Efficient Resolution of Complex International Commercial Disputes

From:          Updated: 2022-09-21   

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. 


Wang Shumei

Member of the Adjudication Committee, Chief Judge of the Fourth Civil Division,

 Judge of the CICC of the Supreme People's Court of China

Your Excellencies Experts, 

Distinguished guests, ladies and gentlemen,

Good afternoon and welcome! It is my great pleasure to discuss the topic entitled "Resolving Complex Commercial Disputes." The fair and efficient handling and resolution of complex international commercial disputes are current issues of the times faced by judges worldwide. I would like to take this opportunity to share with you some practices of Chinese court cases and offer a few suggestions.

I. Issues of foreign law ascertainment in complex cases and Chinese judicial practice

Foreign law is often not easily ascertained in complex commercial disputes. The challenges lie in their time-consuming processes, the high cost of professional fees paid to expert witnesses for their appearance at hearing, and the incompleteness of either foreign statutory laws or case laws provided by the involved parties. In recent years, to better find foreign laws, China International Commercial Court has launched a unified platform for foreign law ascertainment. The SPC signed a memorandum of understanding with the Supreme Court of Singapore on cooperation on information on foreign law. To solve the difficulty of foreign law-finding, we have also broadened the channels of finding foreign law information, for instance, provided by law-finding institutions, expert members of the International Commercial Expert Committee, and other reasonably accessible methods. In a case filed in Tianjin Court regarding the recognition and enforcement of an arbitral award rendered by the American Independent Film & Television Alliance Arbitration, one of the defenses brought forward by the respondent was the arbitration clause was invalid due to the applicant's lack of authority to sign the contract,. The court found that the contract in this case was signed in Cannes, France, therefore French law, which is the law at the locality of the agency act, shall govern the validity of the agency. Based on the provisions of the French Civil Code on Apparent Agency provided by the parties, the judge determined the contents of French law by a further research of the French legal database, Légifrance. Considering the fact that both parties involved in the case have no historical transaction records and the applicant only checked the signatory's identity through business cards, the court concluded that the applicant's intention in signing the contract could not satisfy the reasonable reliance element, which is required by actual and apparent authority under the French Civil Code. Consequently, the disputed arbitration clause was held invalid. Another example is the case of Walter vs. China Shougang International Trade Engineering Co., Ltd on equity transfer dispute in Beijing court, which involved the application of Finnish law to determine the validity of the Letter of Intent and other documents. The court held that these documents were valid by considering the expert's statement, the text of the Finnish contract law, and the contract legal principles as both parties expressed their genuine intentions in the Preliminary Agreement and the Letter of Intent and these documents did not violate the Finnish contract law. Currently, we are working on the judicial interpretation of foreign law ascertainment, which will further formalize the ways and procedures for more efficient and accurate ascertainment.

II. Issues of the application of international treaties and applicable laws in complex cases and Chinese judicial practice

The interpretation and application of international treaties and the relation between treaties and the applicable law are equally challenging issues in the complex international commercial litigation. In the Gabriel case, a shipwreck salvage dispute heard by the SPC, the controversy about the scope of the application of the International Convention on Salvage 1989 was dealt with by the Court. The Greek oil tanker Gabriel ran aground near the middle channel of Qiongzhou Strait, and the savior accepted the shipowner's entrustment to successfully rescue the ship. The parties agreed that the remuneration should be paid regardless of whether the salvage was successful or not. Afterwards, a dispute over the payment arose between the two parties. The SPC held that the salvage contract in question was not a salvage contract with "no cure, no pay", as stipulated in the salvage convention and Chinese maritime law, but an employment salvage contract. In the situation where the parties are allowed to make a separate agreement on the determination of the salvage remuneration under the salvage convention and China's maritime law while there are no specific provisions in the employment salvage contract and, Chinese contract law shall be applied to determine the rights and obligations of the parties. This case clarifies the specific application of the provisions of the cited convention and relevant domestic laws and plays an essential guiding role in advocating and encouraging salvage at sea. 

In the case of Sinochem International (Overseas)Pte., Ltd v. ThyssenKrupp Metallurgical Products GmbH, a dispute over contract for the international sale of goods appealed to the SPC, the Court clarified that if all parties' places of business are in the signatory countries of the United Nations Convention on Contracts for the International Sale of Goods (the CISG), the CISG should be automatically applied, unless explicitly excluded by the parties. The court further clarified the general principle of the application, that is,  in case of a conflict between the CISG and the applicable law, the CISG preempts the applicable law. But for the issues that the CISG keeps silent on, the applicable law of the contract shall apply, which is the New York Law in this case. The two cited cases have been listed as guiding cases. This year, the Supreme People's Court will further unify the application of international treaties and international practices by issuing the relevant judicial interpretation.

III. Technical issues in complex cases and Chinese judicial practice

There are often many professional and technical problems in the fact-finding for complex cases. Taking a maritime case as an example, judges often encounter professional and technical problems, such as navigation technology, ship design and construction specifications, general average adjustment, causes of the loss of transported goods and determination of the loss amount, etc. Judges need to make accurate judgments on these issues through the parties' cross of appraisal conclusions or professional opinions. For example, in a dispute over international maritime cargo contract case heard in Shandong Court, a dispute arose between the carrier and the consignee over the liability for the cargo damage occurred in the sea transport of soybean. Based on the evidences, including the cargo damage inspection report issued by the a professional institution, the appraisal certificate, opinions issued by experts in agricultural products, navigation technology, and other related fields, and statements of expert witnesses, submitted by both parties, combined with the relevant facts, the court found that the cargo damage in question was jointly caused by the improper cargo management of the carrier and the delayed delivery of the goods by the consignee. Therefore, the liability should be proportionately allocated to the parties according to the degree of influence of each cause. This case provides a reference for identifying the cause of cargo damage and determining compensation liability in the event of cargo damage in bulk cargo transportation.

Finally, I would like to discuss some experience learned in resolving complex disputes fairly and efficiently:

First, to enhance the judicial capability of judges. International commercial   trials, including maritime, are highly professional, and it takes years of cultivating and building sophisticated skills to become an excellent judge. Chinese courts pay significant attention to honing foreign-related judicial talents, constantly making progress on the selection, training, employment, and management mechanisms, educating judges about the foreign-related rule of law theory and judicial practice. In doing so, the courts accelerate the cultivation and reservation of a group of well-rounded judge talents who are well-versed in international legal regimes, familiar with the laws and regulations of relevant countries, and experienced in handling foreign-related affairs.

Second, to deepen international judicial cooperation and exchanges. The increase in cross-border disputes highlights the importance of international judicial exchanges and cooperation. To enhance case exchanges and sharing, strengthen discussions of law application, build up the cooperation mechanism in foreign law ascertainment among judiciaries of different countries, would not only promote mutual understandings of each other's legal systems, but also provide institutional guarantees for the fair and efficient resolution of complex international commercial disputes.

Third, to promote harmonizing various countries' commercial legal rules. The complexities of disputes arise out of the diverse legal environments, various substantive commercial laws, and different procedural rules regarding cross-border litigations. Promoting the coordination and harmonization of commercial legal rules will help stabilize business expectations, reduce transaction costs, and facilitate the resolution of complex disputes.

Ladies and gentlemen, Chinese courts will continually embrace the principles of consultation, contribution, and shared benefits, actively promote the fair and efficient resolution of complex international commercial disputes, and provide more robust services and protections for international economic and trade cooperation!

Thank you!

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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.