Provisions of the Supreme People’s Court on Issues in the Establishment of the International Commercial Court (Mainland China)

2018.6.27
Teresa Huang

Recently, the Supreme People’s Court issued the Provisions of the Supreme People’s Court on Issues in the Establishment of the International Commercial Court (hereinafter, the “Provisions”), in which it announced the establishment of the International Commercial Court in the Supreme People’s Court.  The Provisions came into effect on July 1, 2018.  Pursuant to the Provisions, the International Commercial Court will be a permanent trial institution of the Supreme People’s Court, and its main purpose is to try international commercial cases in a fair and timely manner, protect the legitimate rights and interests of Chinese and foreign parties equally, and create a stable, fair, transparent and convenient business environment under the rule of law to secure the development of the “One Belt One Road” initiative.  The Provisions also stipulate the scope of cases to be heard by the International Commercial Court, the trial procedure, the evidentiary rules and the effect of its decisions.  The specific details are as follows:

1. Scope of cases heard

Pursuant to the Provisions, the International Commercial Court will mainly hear the following types of cases: (1) first instance international commercial cases where the parties have chosen the Supreme People’s Court as the court of jurisdiction pursuant to forum choice in contractual property disputes provisions under the Civil Procedure Law with the value in controversy of greater than RMB300 million; (2) first instance international commercial cases under the jurisdiction of the High People’s Courts which those courts believe should be heard by the Supreme People’s Court (and accepted by the Supreme People’s Court); (3) first instance international commercial cases that have significant influence throughout the country; (4) in case of arbitration by an international commercial arbitration institution on the dispute resolution platform of the Supreme People’s Court, application for preservation measures in arbitration, or for reversal or enforcement of an international commercial arbitration award; (5) other international commercial cases that the Supreme People’s Court believes should be tried by the International Commercial Court.

Based on the foregoing, cases heard by the International Commercial Court can be first instance cases selected by the parties, or cases referred by the High People’s Courts, or cases that the Supreme People’s Court has original jurisdiction and cases involving international commercial arbitration.

Pursuant to the Provisions, “international commercial cases” shall satisfy any of the following conditions: (1) one or both parties are foreign nationals, stateless persons, foreign enterprises or organizations; (2) the habitual residence of one or both parties is outside the territories of the People’s Republic of China; (3) the subject of dispute is outside the territories of the People’s Republic of China; or (4) the legal facts that give rise to, change or eliminate the commercial relations between the parties occur outside the territories of the People’s Republic of China.  To wit, only cases with foreign elements may be heard in the International Commercial Court.

2. Trial procedure

Pursuant to the Provisions, a panel of three or more judges will hear cases before the International Commercial Court, the majority rule applies, and dissenting opinions may be stated in the opinion.  Meanwhile, the Provisions stipulate that the judges of the International Commercial Court will be selected by the Supreme People’s Court among senior judges who have had extensive trial experience, are familiar with international treaties, customs and international trade investment practices, as well as being proficient in both Chinese and English as working languages.

In addition to the decisions, the Provisions also state that the Supreme People’s Court will set up an International Commercial Expert Committee and select qualified international commercial mediation agencies and international commercial arbitration institutions to establish, in conjunction with the International Commercial Court, a dispute resolution platform where mediation, arbitration and litigation are organically connected to form a “one-stop” international commercial dispute resolution mechanism.  On this platform, the parties may choose the method they believe to be appropriate to resolve international commercial disputes.  If the parties choose to mediate, the International Commercial Court may issue a mediation agreement; and if the parties request a decision, a decision may be rendered pursuant to the provisions of the agreement for delivery to the parties.  If the parties choose arbitration on the platform, they may apply to the International Commercial Court for evidence, property or conduct preservation before applying for arbitration or after the commencement of the arbitration proceedings.

3. Evidentiary rules

As far as the application of the law is concerned, the Provisions provide that the applicable substantive laws for disputes in cases before the International Commercial Court will be determined in accordance with the Law of the People’s Republic of China on Choice of Law for Foreign-related Civil Relationships.  If the parties properly chose the laws to apply, their choice of law shall be respected.

For evidence, the Provisions state that if the evidentiary materials submitted by the parties to the International Commercial Court are formed outside the territories of the People’s Republic of China, they may be questioned in court regardless of whether they have been notarized, authenticated or passed other substantiation formalities.  If the evidentiary materials submitted by the parties are in English, it is permissible to not submit Chinese translations if the other party agrees.

4. Effect of decisions

Pursuant to the Provisions, the decisions and awards made by the International Commercial Court are legally effective decisions and awards.  A mediation agreement rendered by the International Commercial Court and signed by both parties will have the same legal effect as a decision.  For decisions, awards and mediation agreements rendered by the International Commercial Court that have since taken legal effect, a party may apply for retrial with the Supreme People’s Court in accordance with the Civil Procedure law.  If the Supreme People’s Court accepts the retrial application, a panel of judges will be separately set up for the proceedings.  To wit, the cases tried in the International Commercial Court is considered to be a single instance trial only, and on that basis, an opportunity to apply for retrial is provided as a remedy.

As far as enforcement is concerned, the parties may apply to the International Commercial Court to enforce decisions, awards and mediation agreements which have been rendered by the International Commercial Court that have become legally effective.

In addition to the above details, the Provisions also point out that the International Commercial Court will adopt information technologies to provide faster and more convenient services to the parties.  For cross-border disputes, the launch of the International Commercial Court of the Supreme People’s Court and the relevant one-stop dispute resolution platform should be of great benefit to all parties.  First, it is expected to be easier to enforce decisions.  Second, the various dispute resolution mechanisms are all connected with each other.  Finally, the single instance trial system allows litigation to be almost as efficient as arbitration.  Therefore, companies or individuals involved in cross-border transactions may consider the International Commercial Court as an option in choosing dispute resolution mechanisms in the future.