Abstract

This article critically reviews the establishment and operation of the China International Commercial Court (CICC) from an insider’s perspective. It offers a detailed introduction to a few of the innovative measures of the CICC, including the International Commercial Expert Committee, the ‘one-stop’ forum for a dispute settlement mechanism integrating litigation, mediation, and arbitration, more convenient litigation procedures, and the use of advanced technology in dispute resolution. More importantly, it candidly discusses the challenges facing the CICC and makes several recommendations for its improvement towards more professionalism and internationalization.

Introduction

Over the past 15 years, international commercial courts have been established in the Middle East, Asia, and Europe. Contributing to the good business environment, international commercial courts as specialist courts within the domestic judiciary offer tailor-made procedures for business-related disputes. This article focuses on the establishment and development of the China International Commercial Court (CICC). The first part explores the background of establishing the CICC. The second part then introduces the main innovative measures adopted by the CICC. The challenges the CICC faces in improving its attractiveness and competitiveness are discussed in the third part. The fourth part considers some current issues about the court that are under debate. The discussion

closes with a few concluding remarks in the fifth part.

Background of establishing the CICC

The inherent needs of economic and trade development

The Belt and Road Initiative (BRI) put forward by Chinese President Xi Jinping, in line with the principles of extensive consultation, joint contribution, and shared benefits, has opened up new space for worldwide economic growth. By setting up a new platform for international trade and investment, the BRI offers new practices for improving global economic governance and makes new contributions to the well-being of people around the world. Results achieved by the BRI can already be seen; countries involved in the BRI have participated in the development of the One Belt One Road with high-quality and high-level cooperation, playing a leading role in supporting the multilateral trading system and promoting trade and investment liberalization and facilitation.

With the increase of transnational commercial activities, the effective settlement of international commercial disputes has become an inevitable requirement for optimizing the business environment and promoting global governance under the rule of law. Due to China being the world’s second largest economy and as a result of the BRI, cross-border commercial disputes in China such as disputes concerning international trade, international project contracting, and international logistics are on the rise. As such, the Chinese government recently emphasized that the rule of law creates the best environment for doing business. Therefore, China needs to establish a dispute resolution mechanism that matches its economic development status and its proposal of reinforcing the rule of law.

Advantages and limitations of arbitration

International commercial arbitration is regarded as the preferred mode of international commercial dispute resolution due to its advantages in speed, timing, finality, and professional arbitrators as well as its characteristics of being ad hoc, neutral, consensus-based, and private. However, as a dispute resolution mechanism, arbitration is not an authoritative and reasonable superstructure to promote the development of global business due to its high cost, lack of necessary supervision, and other related limitations.① This means that the international commercial court, which absorbs the speedy and convenient characteristics of arbitration, can work as a companion to, and not as competitor of, international arbitration② and make great progress in the coordination of commercial laws and practices.③

The rise of the international commercial court

In response to the appeal of better serving the international business environment and improving its competitiveness in the field of international commercial dispute settlement, more and more countries have reformed their traditional litigation systems and set up specialized judicial organs, such as the international commercial court. By 2019, some countries had already introduced an international commercial court, such as Britain (the London Commercial Court) and the USA (the Delaware Court of Chancery and Federal District Court for the Southern District of New York). Some other countries have reformed their existing commercial courts, such as France (the International Commercial Chamber of Paris Appellate Court) and Germany (the German Chambers for International Commercial Disputes).④ There are also countries that have set up international commercial courts modelled after the London Commercial Court but with more flexibility; examples include the Dubai International Financial Center (DIFC) courts in the United Arab Emirates, the Singapore International Commercial Court (SICC) in Singapore, and the Court of Astana International Financial Center in Kazakhstan.⑤ At present, there are more than 10 international commercial tribunals in the world, each of which has different positioning and comparative advantages. In order to improve the relevant international dispute settlement mechanisms in China, the Supreme People’s Court of the People’s Republic of China (SPC) is also active in establishing international commercial courts and strives to provide more customized judicial services and strong safeguards to the collective construction of the One Belt One Road.

The first and the second International Commercial Courts of the SPC were

inaugurated on 29 June 2018 in Shenzhen and Xi’an respectively. Ever since the acceptance of its first batch of cases at the end of last year and the commencement of the first trial on 29 May 2019, the establishment and operation of the CICC have attracted extensive attention at home and abroad. At present, the CICC has accepted 13 international commercial cases with parties from Japan, Italy, Thailand, the British Virgin Islands, Anguilla, and others. On 18 September 2019, the CICC delivered judgments in three cases, confirming that the arbitration agreements in the three cases, where the validity thereof was disputed, were valid. The first civil judgment was issued by the first China International Commercial Court on 25 October 2019. The judgment was for a product liability dispute between the plaintiff who is a Chinese herbal medicine group from Guangdong province and the defendant Bruschettini SRL, an Italian corporation. The judgment adopted the opinions of the International Commercial Expert Committee and provided further explanation on the compensation problem in the defective product recall system. The CICC also operates a bilingual website in Chinese and English to update the latest development of its work.

Innovative measures of the CICC

The CICC has adopted a series of innovative measures, each with distinctive features. These measures have provided a Chinese approach of constructing the international commercial dispute settlement mechanism. First, the CICC pioneered the system of the International Commercial Expert Committee. In order to boost the level of internationalization of the CICC under the current legal system of China, the SPC set up the system of the International Commercial Expert Committee by appointing 31 expert members from 14 countries and Hong Kong, Macao, and Taiwan regions of China. These expert members come from diverse backgrounds and are generally regarded as representative and leading figures in the areas of international trade and/or investment laws. They are internationally eminent experts and scholars either in the judiciary or international arbitration practices with a strong record of professionalism and neutrality as well as great influence in the international commercial law community. Serving as the ‘think tank’ for international commercial disputes settlement, the International Commercial Expert Committee has four responsibilities: to preside over mediations of international cases; to provide advice on specialized legal issues such as international treaties, international commercial rules, and the identification and application of extraterritorial laws; to provide opinions and suggestions for the SPC in formulating judicial interpretations and judicial policies; and to provide advice and suggestions on the development plan of the CICC. Meanwhile, to uphold the high standard of judicial services, 14 judges of the CICC were selected

from the panel of judges of the SPC. Having rich experience in trial, all of them are familiar with international treaties, international practices, international trade, and investment practices. They are also capable of using both Chinese and English as working languages fluently.

The second innovative measure is the creation of a ‘one-stop’ platform for the diversified dispute resolution mechanism integrating litigation, mediation, and arbitration for the settlement of international commercial disputes. At the end of 2018, the SPC confirmed the first batch of arbitration and mediation institutions that are accepted into the one-stop diversified international commercial dispute resolution mechanism platform. By implementing the Procedural Rules for the China International Commercial Court of the Supreme People’s Court (for Trial Implementation) and the Working Rules of International Commercial Expert Committee of the Supreme People’s Court, the CICC formally established the one-stop diversified international commercial dispute resolution platform that organically links litigation, arbitration, and mediation. The platform offers the complementary advantages of each individual dispute resolution mechanism and provides a fair, efficient, and convenient system for the resolution of international commercial disputes. The unique ‘revolving door’ design of the CICC allows the parties to choose a mediation or arbitration institution that is included in the diversified international commercial dispute resolution mechanism to conduct the respective dispute resolution first or to re-elect the CICC while giving up on mediation or arbitration. The parties may apply to the CICC for the preservation of evidence, assets or acts in accordance with the law and may also apply to the CICC to set aside or enforce an arbitral award. Because of this institutional design, in the initial stage of the CICC’s establishment, it is important to learn from the best practices of other jurisdictions and continuously improve the one-stop international commercial dispute settlement platform, so as to achieve better integration of the three dispute resolution mechanisms of mediation, arbitration, and litigation.

The third innovative measure is in introducing various litigation procedures tailored to the international commercial transactions. Last year, the SPC issued the judicial interpretation, the Provisions of the Supreme People’s Court on Several Issues Regarding the Establishment of the International Commercial Court, and established a series of working rules for the CICC. The innovative procedures introduced include:

i. in terms of determining jurisdiction, the combination of consensual jurisdiction and discretionary jurisdiction will be adopted—this not only will fully respect and guarantee the autonomy of the free will of the parties but also takes into account the established international commercial rules;

ii. in terms of evidence, notarization or certification of evidential materials are not mandatory, and evidential materials in the English language do not have to be translated into Chinese if both parties have consented;

iii. in terms of judgments, in order to further improve the transparency of the judicial process, minority opinions of the collegial panel can be published in the final judgments; and

iv. in terms of binding power, the first instance decision shall be the final decision—this can effectively save the time and cost of litigation and, accordingly, substantially reduce the burden on the parties to the legal proceeding.

The fourth innovative measure is the use of scientific and technological means to make the CICC and the international commercial dispute settlement mechanism smarter. In the Internet era, dispute resolution should be deeply integrated with modern technology. The SPC is vigorously promoting the development of the CICC’s information infrastructure, making filing, hearing, cross-examination, and other services possible to be carried out through the Internet and striving to achieve the goal of the ‘smart trial’.

Challenges ahead

The world today is going through major developments, transformations, and readjustments. A new round of scientific and technological revolution and industrial transformation is on the rise, and new drivers of growth are gathering momentum. Effective settlement of international disputes is essential for the collective building of a community with a shared future for mankind. Therefore, how to establish an international commercial court that can better facilitate business and how to create a better business environment are the key questions that China endeavours to address with unremitting efforts.⑥Having experienced the advantages and disadvantages of the existing CICC rules in handling cases and studied the characteristics of major existing international commercial courts around the world, it is apparent that there is room for further improvement for the CICC. The following aspects may become the main concerns.

First, the International Commercial Expert Committee should play a greater role in aspects not restricted by law and appropriately increase the number of its members. In order to make up for the fact that the CICC cannot appoint foreign judges due to restrictions in law, the SPC pioneered the International Commercial Expert Committee to enhance the international credibility of the CICC, which only has domestic judges. It is proposed that, besides the four aforementioned functions, the International Commercial Expert Committee members should be allowed to participate in ongoing litigations by acting as amicus curiae and submitting their opinions to the CICC judges. Another possibility that the CICC could explore is that the International Commercial Expert Committee members can act as the jury for certain cases. In addition, the International Commercial Expert Committee should be constituted by experts from as many major legal systems and major global trading powers as possible. Current coverage offered by the 31 appointed expert members still needs to be improved. In the future, the appointment of the second group of expert members for the International Commercial Expert Committee should be seriously considered.

Second, there is an urgent need to cultivate and recruit international legal talents and promote the diversification of judges. Nowadays, countries around the world are increasingly engaged in economic and trade exchanges with deeply vested interests. International dispute settlement is becoming more specialized and international legal talents are the pressing needs. In the face of the controversial extraterritorial jurisdiction in some countries, such as the long-arm jurisdiction and legislations like the Foreign Corrupt Practices Act, more relevant legal talents are needed in order to cope with these complex legal issues. It is also necessary for countries to multilaterally cooperate and promote the diversified development of the international commercial dispute settlement mechanism. In contemplating whether the CICC should appoint foreign judges, considerations need to be given to China’s current statutes and the difficulties of amending laws, given that it is not as easy to amend laws in China as in smaller jurisdictions. Other alternative options available may include recruiting and appointing judges from Hong Kong, Macao, and Taiwan to the bench of the CICC⑦ and so to improve the diversity on the bench and quality of response to parties from the common law systems.

Third, the CICC can expand the scope of cases it accepts. Currently, according to the definition of international commercial cases in Article 3 of the Provisions of the Supreme People’s Court on Several Issues Regarding the Establishment of the International Commercial Court, in order for a case to be accepted by the CICC, it needs to have practical connection with China. In the future, parties may choose to settle their international commercial disputes at the CICC by agreement, even though the disputes have no actual connection with China. For such cases, the CICC may learn from the DIFC courts and the SICC’s offshore case system.⑧ Meanwhile, as the CICC gathers the best international legal talents to one platform, it should be able to deliver good judgments on major legal issues as proposed and envisaged by China’s Chief Justice Zhou Qiang.

Fourth, the CICC should enhance the international circulation of CICC judgments. The effective operation of the international commercial dispute settlement mechanism cannot be achieved without international judicial assistance. In this regard, three main efforts have been made. The first effort is in demonstrating positive judicial attitude and response. For example, the Nanning Declaration signed by China and ASEAN countries in June 2017 adopted the approach of presumptive reciprocity. This demonstrated to the world China’s open attitude on the principle of reciprocity and its determination in vigorously promoting the transformation from de facto reciprocity to presumptive reciprocity. The second effort is in expanding the network of bilateral memoranda. One example is that, in August 2018, the chief justices of China and Singapore jointly signed the Memorandum of Guidance on the Recognition and Enforcement of Money Judgments in Commercial Cases. This is a great milestone for the mutual recognition and enforcement of money judgments in the two countries. The third effort is in extending the multilateral international treaty network. For instance, in July 2019, the Hague Conference on Private International Law concluded the Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters—the first international treaty in the world to comprehensively establish uniform rules for the international circulation of civil and commercial judgments. Chinese courts will strictly abide by its international treaty obligations and work with other countries to actively promote international judicial assistance in civil and commercial matters to facilitate the recognition and enforcement of foreign judgments.

Specific issues under debate

There are several specific issues of the CICC that are worth studying.

First, the working language must be studied. The origins of the international commercial court system are the London Commercial Court and the Federal District Court for the Southern District of New York. Since both courts are located in English-speaking countries, their working language is naturally English. For DIFC courts and the SICC, given the former is mainly modelled on the London Commercial Court and the latter is located in a former British colony, it is logical for both of them to adopt English as the working language. Due to the similar influences, nowadays English is still the most widely used language in international business transactions. The Netherlands Commercial Court and the International Commercial Court of Paris Appellate Court have adopted English as their working language in order to expand their influence in Europe after Brexit. Given the prevailing usage of English as the working language of international commercial court, the CICC should adapt to the current situation and further expand the scope of English usage it allows.

Second, legal representation should be considered. In foreign-related civil litigation, all countries require parties to be represented by lawyers from the country where the court is located. In order to increase their competitiveness, both the SICC and the DIFC courts have made changes to the traditional legal representation system and allowed parties to be represented by registered foreign lawyers in the legal proceedings.⑨ However, taking into account the restrictions in Article 263 of the current Civil Procedure Law and Article 528 of the Judicial Interpretation of the Civil Procedure Law in China,⑩ as well as the fact that other major jurisdictions such as the United Kingdom (UK) and the USA have not yet allowed legal representation by foreign lawyers, it is not appropriate for China to allow representation by foreign lawyers too at the present stage.

Third, the world’s major arbitration and mediation institutions must be introduced into a one-stop service platform. At present, the five arbitration institutions and the two mediation institutions accepted into the one-stop platform are all Chinese institutions. In order to increase the level of internationalization and global attractiveness of the CICC as well as to improve the level of specialization of dispute settlement, it would be necessary to introduce other influential international arbitration institutions like the Arbitration Institute of the Stockholm Chamber of Commerce, the Court of Arbitration of International Chamber of Commerce, the London Maritime Arbitrators Association, and the Singapore International Arbitration Center into the existing network of the one-stop platform.

Fourth, the relief of first instance must be final. According to the discretionary jurisdiction of the SPC in Article 20 of the current Civil Procedure Law in China, ⑪ and Article 3 of the judicial interpretation of the CICC rules, the CICC has jurisdiction over major international commercial disputes. The procedural rule that the SPC’s first instance decision shall be the final decision is due to the complex consideration of fairness, speed, convenience, and cost in handling such disputes. At the same time, to address the lack of route of appeal, the abovementioned judicial interpretation also provides that parties can apply to the SPC for a retrial. ⑫ Although some scholars are concerned that such a practice would abuse the retrial procedure, this is mainly aimed at major international commercial disputes and affords the CICC’s judgments endorsement from the SPC. It should, therefore, be regarded as a comparative advantage.

Fifth, it must be studied whether to adopt the DIFC courts’ arbitral award approach. It was suggested that the CICC may learn from the DIFC courts and allow conversion of its judgment into an arbitral award under certain circumstances so as to enable it to be recognized and enforced in the 159 contracting States of the New York Convention. ⑬ However, the fact that the arbitral award may be revoked by application and foreign courts may refuse to recognize and enforce it on public policy ground is troubling. In addition, the UK, the USA and other large jurisdictions have not adopted this practice. Therefore, it is not suitable for China to adopt it too.

Concluding remarks

It seems that, in the process of establishing and developing the international

commercial court, the CICC emphasizes competitiveness as one of its key development goals and believes that a dispute settlement system with global competitiveness is an important factor to increase the overall competitiveness of the country and/or the region. In terms of the CICC’s functions, the highlight is placed on the judicial services, and special attention has been directed towards the specialization of the judiciary and the protection of the rights of the parties. In implementing a healthy working relationship between the CICC and other international criminal courts, cooperation is emphasized and the idea that common development should be achieved through constant exchanges and mutual learning with other countries is stressed. ⑭

If the CICC wants to be widely recognized by the international legal community, it needs to have a team of excellent judges, and each judgment it delivers must be of high quality. Looking outside the region, foreign judges have not been appointed to international commercial courts in most of the jurisdictions except for the few courts in some smaller jurisdictions such as the DIFC courts and the SICC. ⑮ Therefore, it is not important for the CICC to introduce foreign judges to its panel for the purpose of increasing its level of internationalization. The most crucial characteristics of an international commercial court judge should be those of independence, impartiality, and freedom from any improper external interference and corruption. ⑯

With the increase in transnational economic activities and trade, international commercial disputes will increase correspondingly. Countries around the world have established international commercial courts as a platform to increase their influence in the field of international dispute settlement. As a major trading power in the world and for the purpose of the BRI, China has set up the CICC to try to offer Chinese and foreign parties a fair, efficient, convenient, and cost-effective forum to resolve their international commercial disputes. The CICC will leverage the advantages of China’s existing civil law traditions, learn from and absorb the comparative advantages of the common law, Islamic law, and other hybrid legal traditions, and adopt the best practices of litigation and arbitration to improve and promote international trade and commerce and the development of the relevant basic principles and practices. The CICC will contribute to the provision of better services, playing its part in facilitating the reinforcement of the rule of law in the international business environment.

The article was first presented at the International Conference on Dispute Settlement for the Belt and Road Initiative held at National University of Singapore Faculty of Law on 14–15 November 2019. The author would like to thank Wang Jiangyu for his invitation to attend the conference and Cao Mian and Shao Yinuo for their assistance in editing this article.

Annotation：

①    Shi Jingxia and Dong Nuan, ‘Several Core Issues of China’s International Commercial Tribunal’ (2019) 39(3) J Xi’an Jiaotong U 116.

②    International Commercial Courts are described as ‘companions’ to, not ‘competitors’ of arbitration. See Andrew Godwin, Ian Ramsay and Miranda Webster, ‘International Commercial Court: The Singapore Experience’ (2017) 18 Melbourne J Intl L 219.

③    Anselmo Reyes, ‘The Necessity and Prospect of Establishing China’s International Commercial Tribunal: A Speech on BBS under the Background of One Belt and One Road’ <http://www.sohu.com/a/270167938_159412> accessed 3 November 2019.

④    Mao Xiaofei, ‘A Unique Model of the International Commercial Court in Germany: an Analysis of the Draft of the Introduction of the International Commercial Court by the Federal Republic of Germany’ (2018) 6 Intl L Studies 97.

⑤    See Yang Linping, ‘A Study on One Belt and One Road International Commercial Dispute Settlement Mechanism: Centered on the International Commercial Court of the Supreme People’s Court’ (2019) 25 People’s Judiciary 34.

⑥    Shan Wenhua, ‘Extraterritorial Experience in the Construction of International Commercial Tribunals and China’s Contribution’ (2018) 8 China Trial23.

⑦    He Qisheng, ‘On the Construction of China’s International Commercial Court’ (2018) 3 Intl L Rev Wuhan U1.

⑧    Shi Jingxia and Dong Nuan, ‘Several Core Issues of China’s International Commercial Tribunal’ (2019) 39(3) J Xi’an Jiaotong U116.

⑨    See SICC, ‘Singapore International Commercial Court User Guides’ <http://www.sicc.gov.sg>accessed 3 November 2019.

⑩    Art 263 of the Civil Procedure Law of PR China states: ‘When foreign nationals, stateless persons or foreign enterprises or organizations need or appoint lawyers as agents ad litem to sue or respond in the people’s court, they must appoint lawyers of the People’s Republic of China.’

⑪    Article 20 of the Civil Procedure Law of PR China states: ‘The Supreme People’s Court shall have jurisdiction as courts of first instance over the following civil cases: (1) cases that have major impact on the whole country.’

⑫    Article 16 of the Provisions of the Supreme People’s Court on Several Issues Regarding the Establishment of the International Commercial Court states: ‘Parties may, in accordance with the provisions of the Civil Procedure Law, apply to the main body of the Supreme People’s Court for a retrial of a legally effective judgment, ruling or conciliation statement made by the International Commercial Court.’

⑬    Convention on the Recognition and Enforcement of Foreign Arbitral Awards 7 ILM 1046 1958; He Qisheng, ‘On the Construction of China’s International Commercial Court’ (2018) 3 Intl L Rev Wuhan U 1.

⑭    He Qisheng, ‘Judicial Philosophy of Great Powers and the Development of China’s International Civil Procedure System’ (2017) 5 Chinese Social Science 123.

⑮    He Qisheng, ‘Development of Contemporary International Commercial Court’ (2019) 2 L Rev U Intl Business & Economics 60.

⑯    See Justice John Middleton, ‘The Rise of the International Commercial Court’ [2018] Federal Judicial Scholarship 18.

*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.