Security and Foreign Policy

China Aims to Build A New Legal Regime for Its Belt and Road Initiative

In 2018, China announced the creation of a commercial legal entity known as China International Commercial Courts (CICC) as a response to the legal needs of commercial participants in the BRI. Steven Osborne assesses the impact of this new legal landscape on the Belt and Road Initiative and the world at large.

BY: M. STEVEN OSBORNE

China’s Belt and Road Initiative (BRI) is a centerpiece of President Xi Jinping’s agenda. Since its initial announcement several years ago, it has expanded from a present-day recreation of the ancient Silk Road to an expression of Chinese expansion into global infrastructure development. BRI has components ranging from the Artic to Eastern Europe and from cyber space to outer space. The massive infrastructure spending associated with this project will involve many commercial actors, and the likelihood that disputes will arise is significant. These disputes will be settled through some legal process and often have several options of venue. By responding to the legal needs of commercial participants in the BRI, China will soon exercise international legal influence in addition to its economic and political influence.

Early in 2018, China announced the creation of two special commercial courts collectively known as the China International Commercial Courts (CICC), which would operate under the auspices of the Supreme People’s Court in Beijing. These courts have stated their objective to “try international commercial cases fairly and timely in accordance with the law, protect the lawful rights and interests of the Chinese and foreign parties equally, create a stable, fair, transparent, and convenient rule of law international business environment.”  These commercial courts preside in the cities of Shenzhen and Xian to respectively address legal issues arising from the maritime and land route portions of the BRI. By the end of the year, the shape of the CICC was becoming clearer. The South China Morning Post reported that there would initially be eight judges. Several of these judges have studied overseas, for at least some period of time. Three have studied in the United States, with two having spent time at Duke University and a third at George Mason University; others have studied in Canada and England.

Another issue that any international court must deal with is comparative law. Comparative law is the method by which different legal systems are harmonized. While some of the judges’ international experience is undoubtedly a part of the reason they were tapped for this role, it has been noted that the CICC, unlike their counterparts in Singapore and India, will not, at least initially, permit foreign judges to sit on the court. Other commercial courts have done so due to the comparative law issues that are raised when litigating cases involving foreign parties doing work in foreign countries. All eight of the announced judges have a Han Chinese background and are Chinese nationals. Additionally, the new court will conduct proceedings in the “written and spoken language commonly used in the People’s Republic of China,” presumably Mandarin, in accordance with Chapter XXIII, Article 262 of the Civil Procedure Law of the People’s Republic of China (CPL). The new commercial courts will also follow the Civil Procedure Rules allowing for the use of “local ethnic” variations of Chinese in accordance with Chapter I, Article 11 of the CPL. This is a contrast with international arbitration proceedings, which often utilize English language and English/American common law principles.

As a practical matter, in some instances, the CICC will compete with international arbitration forums as a location for litigants to take their disputes. The CICC offers an alternative to arbitration for cases having an actual connection to China. Though Chinese civil procedure does limit the CICC’s competitiveness with arbitration in several respects. It should also be noted that these courts have started small, but should they prove a successful forum, China can expand them at a later date. So, one should be careful to not overstate the importance of these courts in and of themselves.

Whether the new courts prove to be a permanent feature or a mere experiment, they are reflective of more profound trends in geopolitics. The courts provide China with an opportunity to assert jurisdiction and authority over international and comparative law matters arising from the BRI and the new spaces it creates. This is reflective of what Avetis Muradyan of Palladium describes as a “khorapolitical” dynamic. Khorapolitics is essentially the politics of space. He suggests the international order is increasingly rooted in “spatial” political competition. Whereas, in the past, both liberal democratic and communist actors sought to construct an international order based upon a conception of historical development, what Muradyan refers to as “chronopolitical” thought, new imperial and federal powers are focused on maximizing their advantage in specific spheres and spaces. The development of a legal regime to specifically address a reconstructed Silk Road land route and a new maritime sea route is reflective of a khorapolitical development. This is in contrast to the past chronopolitical development of international forums oriented towards liberal democratic priorities.

The CICC also represents a consolidation of legal authority. This consolidation is an attempt to draw the political order around the interests of the new regional order. With that being said, the creation of these courts represents the re-centering of international legal issues on new imperial terms. The term “imperial” draws dark connotations to many readers, particularly in the liberal West. However, here the term is used in a more academic manner. In the context of a different discussion, Daniel Weissman, also of Palladium, discusses two imperial models, an “Indirect-Universal” model and a “Formal-Consolidated” model. The traditional submission of international legal issues to international organizations and arbitration forums is reflective of an indirect but universal model. It is indirect in the sense that an arbitral award is granted by a private arbitrator and then the prevailing party must find a court to enforce his judgement purely on a contractual basis. It is universal in the sense that liberal democratic legal principles are often, though not always, the principles of choice in those forums. What China is doing is reflective of a formal and consolidated approach. Rather than having disputes involving international and comparative law issues decided within private arbitration and mediation forums, the Chinese are encouraging litigants to have disputes settled within a more formal body operating under the direct authority of the Chinese government.

This could be part of a larger trend towards Formal-Consolidated Models. Increasingly, the international political scene is becoming dominated by large federal entities such as the United States and European Union or by civilization-states such as China, as opposed to individual nations, ideologies, or an international organization of states. Like the old empires, these regional actors are often “multi-national.” As empires grow, they sometimes evolve based upon the incorporation of new peoples. It is possible the CICC will develop longstanding legal traditions that will influence nations and promote mutual development throughout Eurasia.

The CICC will also have an impact on a more practical level. For construction contractors, vendors, transportation providers, and a host of other businesses, these new courts will mean a new forum and new challenges. In addition to the obvious linguistic challenge for non-Chinese speakers, there is also an issue of jurisprudence and which laws will be applied. Both of these challenges will provide an advantage to Chinese companies operating along the Belt and Road, however the courts may be under pressure to demonstrate that foreign litigants can, in fact, get fair treatment. This pressure could mitigate the natural advantages Chinese litigants would have.

The language of these courts will be Chinese. Lawyers practicing in the CICC must be licensed in China, which should alleviate any language barrier in the proceedings themselves. At the same time, contracts drafted in the native languages of Belt and Road countries will likely need to be translated, further increasing the cost of litigation.

Because disputes in these courts will be international in nature, there will be a comparative law element to contend with. By operating under the auspices of the Supreme People’s Court, one can presume these new courts will utilize Chinese civil procedure rules. However, the substantive law will not always be so clear. Contracts can contain a choice of law provisions, which help determine the substantive law that is applied to disputes. How the CICC utilizes or fails to utilize the laws of other Belt and Road countries will be a critical test.

The fact that several of the judges sitting on the court have studied abroad is indicative of a desire to have judges competent in comparative law issues. So, at least initially, the courts seem prepared for the comparative law challenges that will arise as cases are litigated in this new forum.

Whether the new Belt and Road commercial courts will be a success remains to be seen. The manner in which the courts are run and the reaction of foreign litigants to participating in that forum will determine the ultimate success or failure. Regardless of the outcome, it is an example of the growing legal and geopolitical influence China is wielding across the stretch of these new Silk Roads.


Steven Osborne is an attorney with Adams and Fisk, PLC. He holds a Juris Doctorate from Liberty University School of Law and a Bachelor’s Degree in Politics and Policy from Liberty University. In addition to his legal practice, he is involved in foreign policy analysis and advocacy with a focus on domestic and international politics, economic opportunity, and human rights.

Please note that opinions expressed in this article are solely those of our contributors, not of Political Insights, which takes no institutional positions.

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