Chinese Law Prof Blog

Editor: Donald C. Clarke
George Washington University Law School

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Monday, June 30, 2014

Hong Kong's Big Four weigh in on Occupy Central

The Chinese government and its allies in Hong Kong’s business elite seem to be in full panic mode over the Occupy Central movement (which, let us recall, has not yet occupied so much as a garden shed). First came the PRC government’s stern warning earlier this month in the form of a White Paper reminding Hong Kong who was boss. Presumably emboldened by this, the accountants decided that their input would be valued by the public. Yes, the accountants: the Big 4 in Hong Kong (Ernst & Young, KPMG, Deloitte, and PricewaterhouseCoopers) published a joint statement last Friday in three Chinese-language newspapers [Chinese | English (scroll down)] announcing their opposition to the Occupy Central movement.

Overall, I don’t have much to add to Paul Gillis’s blog post:

The arrogance of the firms is stunning. Did they really think their voice would alter the debate? Do they really think people respect their opinions that much? Did they not see that all they were doing is setting themselves up for ridicule while diminishing their brand worldwide?

Paul also adds some thoughts about whether, if they did this at the behest of certain big clients, they have therefore compromised their independence under IAS (International Accounting Standards).

I wonder a bit if the statement was drafted by someone with PRC connections. To be fair, it doesn’t read exactly like PRC Chinese; there are many places where it uses words and expressions not common in PRC officialese. (For example, it says 各式各样 instead of the more common 各种各样, and 进行著 instead of 进行着.) But in the signature line it names Deloitte Hong Kong as德勤.關黃陳方會計師事務所 instead of using Deloitte Hong Kong’s official name, 德勤.關黃陳方會計師行. For those who don’t read Chinese, it used the common mainland term for “accounting firm” (kuaijishi shiwusuo) instead of a different term that Deloitte Hong Kong actually uses (kuaijishi hang). If you check out this page, you can see that Deloitte uses “kuaijishi hang” for its Hong Kong entity and “kuaijishi shiwusuo” for its mainland PRC entity. (Thanks to sharp-eyed commenter “percysmith” on Paul Gillis’s blog, who spotted the misnaming.)

Not surprisingly, “[w]hen the Financial Times approached the big four’s global headquarters for comment, it emerged that they had only learned of the advertisement through press reports.” The various local entities sporting the names of the Big 4 are typically not properly characterized as “branches”; they are more like franchises that bear a common name and may have some level of cooperation, but they don’t have common ownership. The Big 4 in Hong Kong could have issued this statement without the knowledge or approval of any other Big 4 offices anywhere in the world.

June 30, 2014 in Commentary, Other | Permalink | Comments (3)

Wednesday, June 25, 2014

Process, schmocess

There has been quite a bit of attention in the Chinese press recently to proposed and perhaps in-process reforms to the Chinese judicial system. These reforms were authorized in broad strokes by the 3rd Plenum of the 18th Central Committee last fall, and at least some are now on the road to implementation. An important reform is that of partially centralizing (i.e., up to the provincial level) the power of appointments and funding for local courts (see para. 32 of the Third Plenum Decision).

Recently, the Central Leading Group for Comprehensively Deepening Reform, a Party body headed by Xi Jinping, issued three documents relevant to judicial reform: (1) Opinion on Deepening Reform in the Judicial System and Social System and Plan for Division of Labor in Implementation (关于深化司法体制和社会体制改革的意见及贯彻实施分工方案); Framework Opinion on Several Issues Relating to Experimental Points in Judicial Reform (关于司法体制改革试点若干问题的框架意见); and (3) Work Plan for the Shanghai Experimental Point in Judicial Reform (上海市司法改革试点工作方案). Unfortunately, none of these documents have been made public, but their content has been sketched in the official press. Here are two articles from the Chinese press [first | second] and very helpful English-language summary courtesy of Chinese Law Translate.

These documents (at least as explicated by a government spokesman) contain a number of worthy and important reforms. Financing of all local courts is to be handled at the provincial level, as are appointments. Apparently this reform is already in process in Shanghai. (Shanghai has the administrative status of a province.) What this means is that district (区) governments and People's Congresses will no longer have power over finances and personnel respectively in Basic-Level People's Courts in their district.

This is all very well, but what seems to have been overlooked in the zeal to reform the court system is the fact that you can't do it just by making some decisions within the Party. The system whereby local authorities (i.e., Party, government, and People's Congress) control courts at the same level (at least as to personnel appointments) is enshrined both in the Court Organization Law (Art. 34) and the Constitution (Art. 101). To be sure, as reported it is not crystal clear that the reforms formally take the power of appointment away from local authorities. But it is crystal clear that local authorities will not be making the decisions. The decision as to who will be a judge in a local court will be made at the provincial level, and then "the local People's Congresses will appoint or dismiss in accordance with legal procedures" (人大依照法律程序任免).

In other words, a project designed to improve the legal system is treating legal rules as at best meaningless formalities and at worst non-existent. It seems that the problem of weak legal institutions is being dealt with the same way Simon Leys (quoting Alexandre Vialatte) describes the fate of cannibals in a certain republic: "There are no more cannibals in that country since the local authorities ate the last ones."

June 25, 2014 in Commentary, News - Chinese Law | Permalink | Comments (0)

Domestic abuse victim's death sentence overturned; case sent back for re-trial

The death sentence imposed on Li Yan, who killed her abusive husband, was recently overturned on review (not technically an appeal) by the Supreme People's Court. The case will go back to the Higher-Level People's Court (i.e., the provincial-level court) of Sichuan Province for re-trial.

Here are the key elements of the case as reported that I want to discuss:

1. "China's Supreme People's Court has ordered a higher court in the southwestern province of Sichuan to retry the case because of insufficient evidence and lack of clarity on some facts"

2. "Li, 43, was sentenced to death in 2012 for killing her husband Tan Yong. Tan had physically, sexually and verbally abused Li for more than three years, burning her with cigarettes and cutting off one of her fingers"

3. "Li beat her husband to death with an air gun after he threatened to shoot her."

4. "Supporters say Li should not have been sentenced to death because the police and the first two courts did not take into consideration the abuse she had suffered."

Point 2 is a claim that certain facts existed.

Point 4 is a claim that those facts are legally relevant to the case, and that the first two courts committed an error of law by not taking them into account.

Point 1 appears to represent an acknowledgement by the SPC of the validity of Point 4.

Finally, Point 3 suggests that regardless of whether other facts exist and are relevant, the homicide was not premeditated.

The point of all this is to note the disparity in the sentence meted out to Li Yan on the basis of apparently undisputed facts and the sentence meted out to Gu Kailai, the wife of Bo Xilai who was convicted of the murder of Neil Heywood. (Gu got a death sentence with a two-year suspension; such sentences are virtually always commuted to life imprisonment at the end of the two-year period.) In that case, there was no dispute that the homicide was premeditated. There is also generally no dispute that premeditated homicide is worse than non-premeditated homicide. Thus, even if the first two courts in Li Yan's case were right, and the evidence of prior abuse was either insufficient or irrelevant, we still find someone convicted of unpremeditated murder getting a harsher sentence than someone convicted of premeditated murder.

It's not that Li's sentence is unusual; it's that Gu's sentence is unusual.

June 25, 2014 in Commentary | Permalink | Comments (0)

Friday, June 6, 2014

Dumb arguments about human rights in China

China's Global Times, a newspaper known for its highly nationalist bent, commemorated June 4th by publishing an op-ed by a man named John Ross, currently a senior fellow at People's University's Chongyang Institute of Finance and a former advisor to former London mayor Ken Livingstone. I'm not going to reproduce the whole thing here - just click on the link to read it. I want to address some of the arguments Ross makes because I see them over and over, and they don't get better with repetition.

1. “China” has lifted X million people out of poverty. Since “China” here is way too vague to be a meaningful concept, what can this statement possibly mean? I take it it must mean something like “wise Party policies”. By all means let us give appropriate credit to those who revoked policies that imposed poverty on the people of China. But let’s also give credit to the people of China who built their own wealth. I didn’t see Deng Xiaoping or Xi Jinping down there at the construction site. Furthermore, by this logic we should also give full credit of course to Great Britain for bringing us the Industrial Revolution, and to the much-maligned US two-party system for sponsoring the postwar economic and political order that lifted large sections of the world out of poverty as well. Finally, this formulation completely avoids the question of whether things like political repression were a necessary part of those poverty-eradicating policies. 

2. By pointing out bad things about the US, or the hypocrisy of its foreign policy, one can successfully refute criticisms of China. The silliness of this position is obvious on its face. I don’t know why anyone with academic pretensions would use it. Why does everything have to revolve around the United States? It’s just one country. Can I revalidate the criticisms of China by showing that the countercriticisms of the US don’t apply to, say, Canada or Australia or Botswana? It’s all so silly.

3. Critics of China unreasonably demand that it adopt every trapping of Western democratic systems. “Consequently the attempt to reduce 'human rights' to a Western style political structure, as though having a 'parliamentary' system were the most important question facing human beings, is ridiculous.” What’s even more ridiculous is the straw man that this is what people who care about human rights are demanding. It’s much simpler, really: for example, give people accused of crimes a fair hearing, which means, among other things, not kidnapping witnesses and lawyers; don’t beat up people like Ni Yulan until they are crippled, and then imprison them without crutches so they have to drag themselves around in the shit on their cell floor; etc.

4. Each country has the right to choose its own form of government. Again, abstract words like “country” are just obfuscations here. The whole point is, who gets to speak and decide for “the country”? Does Ross mean “the citizens of each country”? If so, he must therefore be rejecting systems where citizens don’t get a choice. But then he seems to think absolute monarchy is OK if “the country” wants it, so apparently “the country” is something different from the people who live in it. I have never heard anyone say, “We must respect the choices this country has made” where it didn’t mean, “We must respect the choices the current configuration of political power has come up with”. The vapid language of respect for choice obscures critical distinctions about how that choice was made and whether it’s worth respecting – questions not susceptible to a single right answer, to be sure, but certainly questions that need to be asked.

June 6, 2014 in Commentary | Permalink | Comments (3)

Thursday, May 29, 2014

Jerome Cohen: Lawfare or warfare in the South China Sea?

Here's a piece just published by Jerry Cohen entitled, "Lawfare or Warfare? Let Impartial Tribunals Cool Asia’s Maritime Disputes."

May 29, 2014 in Commentary | Permalink | Comments (0)

Sunday, May 25, 2014

China's ban on US management consultants and Windows 8: WTO compliant?

According to the Financial Times, "China has ordered state-owned enterprises to cut ties with US consulting companies such as McKinsey and Boston Consulting Group because of fears they are spying on behalf of the US government." This comes on the heels of a report just a few days earlier that "Beijing has banned central government departments from installing Windows 8." (I will assume for the sake of this discussion that "installing" includes "purchasing.")

Questions have been raised as to whether these moves are WTO-compliant. Fortunately, the Windows 8 case is easy, and we don't even have to figure out whether software is a good covered by the GATT or a service covered by the GATS. This is because the ban applies to "central government departments," and so is clearly a case of government procurement. As China has not yet joined the Government Procurement Agreement (GPA), it can do what it likes in that area.

The management consulting case is harder. The first thing to do is to check China's schedule of commitments under the GATS to see if it made any commitments in the area of management consulting. Yup, there it is:

Capture

The next step is to figure out if there's any reason why that commitment should not apply in this case. How about government procurement? After all, the government didn't order everyone to stop using US consulting services; only state-owned enterprises (SOEs).

But making this argument puts China in an awkward position. At this very moment it is negotiating the terms of its accession to the GPA and resisting demands from other members that SOEs be included as subject to GPA commitments, presumably by arguing that SOEs are just regular market-oriented folks who seek the best product at the cheapest price and don’t take orders from government. This is in fact what it stated in the WTO accession negotiations in response to Working Party concerns. Here are the relevant parts of the Working Party Report:

6. State-Owned and State-Invested Enterprises

43. The representative of China stated that the state-owned enterprises of China basically operated in accordance with rules of market economy. The government would no longer directly administer the human, finance and material resources, and operational activities such as production, supply and marketing. The prices of commodities produced by state-owned enterprises were decided by the market and resources in operational areas were fundamentally allocated by the market. The state-owned banks had been commercialized and lending to state-owned enterprises took place exclusively under market conditions. China was furthering its reform of state-owned enterprises and establishing a modern enterprise system.

44. In light of the role that state-owned and state-invested enterprises played in China's economy, some members of the Working Party expressed concerns about the continuing governmental influence and guidance of the decisions and activities of such enterprises relating to the purchase and sale of goods and services. Such purchases and sales should be based solely on commercial considerations, without any governmental influence or application of discriminatory measures. In addition, those members indicated the need for China to clarify its understanding of the types of activities that would not come within the scope of Article III:8(a) of GATT 1994. For example, any measure relating to state-owned and state-invested enterprises importing materials and machinery used in the assembly of goods, which were then exported or otherwise made available for commercial sale or use or for non-governmental purposes, would not be considered to be a measure relating to government procurement.

45. The representative of China emphasized the evolving nature of China's economy and the significant role of FIEs and the private sector in the economy. Given the increasing need and desirability of competing with private enterprises in the market, decisions by state-owned and state-invested enterprises had to be based on commercial considerations as provided in the WTO Agreement.

46. The representative of China further confirmed that China would ensure that all state-owned and state-invested enterprises would make purchases and sales based solely on commercial considerations, e.g., price, quality, marketability and availability, and that the enterprises of other WTO Members would have an adequate opportunity to compete for sales to and purchases from these enterprises on non-discriminatory terms and conditions. In addition, the Government of China would not influence, directly or indirectly, commercial decisions on the part of state-owned or state-invested enterprises, including on the quantity, value or country of origin of any goods purchased or sold, except in a manner consistent with the WTO Agreement. The Working Party took note of these commitments.

47. The representative of China confirmed that, without prejudice to China's rights in future negotiations in the Government Procurement Agreement, all laws, regulations and measures relating to the procurement by state-owned and state-invested enterprises of goods and services for commercial sale, production of goods or supply of services for commercial sale, or for non-governmental purposes would not be considered to be laws, regulations and measures relating to government procurement. Thus, such purchases or sales would be subject to the provisions of Articles II [regarding most favored nation treatment], XVI [regarding market access] and XVII [regarding national treatment] of the GATS and Article III [regarding national treatment] of the GATT 1994. The Working Party took note of this commitment.

The commitments mentioned in Paras. 46 and 47 are more than just idle promises; they are incorporated by reference into China’s WTO Protocol of Accession and therefore form part of its WTO obligations. Thus, it seems that were China to call this a case of government procurement, it would not only be undermining its current position in the GPA negotiations, but would also be violating its specific commitments in its WTO Protocol of Accession.

Well, wait a minute, you might say. Isn't there some kind of broad national security exception countries can always invoke? It turns out that the national security exception, at least as written, is pretty narrow. Here's what the GATS says about it in Article XIV bis:

1. Nothing in this Agreement shall be construed:

(a) to require any Member to furnish any information, the disclosure of which it considers contrary to its essential security interests; or

(b) to prevent any Member from taking any action which it considers necessary for the protection of its essential security interests:

(i) relating to the supply of services as carried out directly or indirectly for the purpose of provisioning a military establishment;

(ii) relating to fissionable and fusionable materials or the materials from which they are derived;

(iii) taken in time of war or other emergency in international relations; or

(c) to prevent any Member from taking any action in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.

That's it. Surprisingly enough, it doesn't look like "fear of state secrets leaking into the hands of a foreign power," no matter how legitimate that fear might be, counts. Needless to say, there is absolutely zero chance that any government would put WTO rules above its own conception of its security needs.

My conclusion, then, is that the anti-Windows 8 measure passes muster but the anti-management consulting measure does not. Let me add that I'm not a WTO expert and don't even play one on television, so there may be some aspect of the issue that I've overlooked. Check this space for a red-faced update.

May 25, 2014 in Commentary | Permalink | Comments (2)

Sunday, April 27, 2014

Lest we forget

As the 25th anniversary of the June 4th Beijing massacre approaches, let's remember what things looked like in Tiananmen Square on this date (April 27) in 1989:

Tiananmem

April 27, 2014 in Commentary, Current Affairs | Permalink | Comments (0)

Wednesday, April 9, 2014

More on the debate over Confucius Institutes

On February 14th I posted what was definitely not a valentine to Confucius Institutes written by University of Chicago anthropologist Marshall Sahlins, as well as a response written by my colleague Ed McCord. Sahlins has now written a rejoinder, and McCord in turn a surrejoinder (I think that's what it's called - if the debate goes on any longer I will run out of vocabulary).

This is an important debate to have. I think Sahlins is right to be concerned, even seriously concerned. If Confucius Institutes did not exist, would anyone not in the Chinese government have proposed them as a model for promoting China studies around the world? At the same time, I know Ed McCord to be a scholar of integrity and sound judgment, who has not hesitated to offend the PRC government in the past when his principles called for it. Both perspectives need to be heard.

April 9, 2014 in Commentary | Permalink | Comments (3)

Saturday, April 5, 2014

Chinese law news, Qing Ming Festival edition

Today is Qing Ming Festival, or Tomb-Sweeping Day in China, when one pays respect to the dead. And what better way to introduce today's topic, which is minor property rights in grave sites?

"Minor property rights" (小产权) is the term used to describe the rights you get (or think you get) when you "buy" rural, collectively-owned land. I use quotation marks because you can't actually buy collectively-owned land. You can't even buy a long-term use right to it, the way you can buy a 70-year use right to land for residential use in urban China. But villages purport to sell these rights and urbanites purport to buy them, because they're cheaper than the fully lawful and relatively robust rights you get when you buy urban land. And the developments on minor property rights land can be pretty substantial (see the photo below); we're not talking about tarpaper shacks here.

081100 Picture of Minor Property Right Development in Zhengzhou

Now the media is reporting that minor property rights land is being occupied not just by the living, but by the dead - and for the same reasons. It's getting too expensive to die in China, so people have to find cheaper options. Here are some reports:

April 5, 2014 in Commentary, News - Chinese Law | Permalink | Comments (0)

Friday, February 14, 2014

"A Constitution Without Constitutionalism?" Talk by Prof. Zhang Qianfan of Peking Univ. Law Faculty

As announced earlier, Prof. Zhang delivered this talk at GWU Law School last Wednesday; here's the URL to a very nicely produced recording. Many thanks to our AV department!

February 14, 2014 in Commentary, People and Institutions | Permalink | Comments (0)

Confucius Institutes in US universities: two views

Confucius Institutes, which are part of the Chinese government's soft power efforts, have been in the news recently (at least in the academic community) following this blast last fall by the noted University of Chicago anthropologist Marshall Sahlins. I recommend it.

At the same time, I also recommend this recent and very cogent response by my GWU colleague Ed McCord, which he has kindly consented to have me post here. It's must reading for anyone who wants to have a fully informed view.

[Feb. 16: Replaced earlier version of McCord piece with a later, slightly modified version.]

February 14, 2014 in Commentary, People and Institutions | Permalink | Comments (3)

Tuesday, February 11, 2014

Jeffrey Bader on the Nine-Dash Line

Here's a good piece by Jeff Bader of Brookings on the Obama administration's recent explicit rejection of China's "nine-dash line" as the basis for maritime claims.

If you want to dig deeper, here’s a good relevant resource put together by OUP: http://opil.ouplaw.com/page/222/debate-map-disputes-in-the-south-and-east-china-seas. They call it a "debate map" for the East China Sea and the South China Sea controversies. It breaks down the issues and provides links to various official sources and commentary relevant to each.

February 11, 2014 in Commentary | Permalink | Comments (0)

Zhang Qianfan talk at GWU Law School: live webcast

I posted yesterday about Prof. Zhang's upcoming talk at GWU Law School (Feb. 12th, 6 p.m. EST); here's the URL to the live webcastThe talk will also be recorded and made available on line; URL to be announced.

[Post slightly edited and URL changed after initial posting.]

February 11, 2014 in Commentary, People and Institutions | Permalink | Comments (0)

Recording of Teng Biao talk at GWU Law School

Last week Teng Biao gave a talk at George Washington University Law School; here's a link to a recording of the talk.

February 11, 2014 in Commentary, People and Institutions | Permalink | Comments (0)

Wednesday, February 5, 2014

Stanley Lubman on China's crackdown on activists

Availabe here.

February 5, 2014 in Commentary | Permalink | Comments (0)

Thursday, January 30, 2014

China's GDP: services are largest sector for the first time in the modern era

This doesn't have much to do with Chinese law, but I think it's a pretty interesting development. From my friend Dan Rosen at the Rhodium Group (copied here with permission):

Full year 2013 China GDP was released on January 29. The total was just over $9 trillion USD for the first time, at CNY 56.9 trillion (2013 average CNY/USD rate: 6.313). That’s up 7.67% over 2012 (and is the level the United States was at in 1992, in 2009 dollars; versus just about $16 trillion today). Here is a significant fact: as of the end of 2013, China’s services sector is officially the largest segment of its economy for the first time in the modern era, at 46%, versus 44% for industry and manufacturing and 10% for primary activity such as farming. That updraft in the share of services started in about 2006, and should keep going for, oh, I’d say about another 20 years before flattening out. That’s a pretty important change in the structure of growth, and one that Xi Jinping’s Plenum reforms both recognize and react to, on the one hand, and aim to bolster and sustain on the other. Remember: investment in services sector capital stock doesn’t just mean ice rinks, movie theaters, hospitals and schools, but also the injection of value-adding services activity into manufacturing giants like China Aluminum, which to date have been all about smelting and little about sales and marketing, R&D, environmental engineering, new applications development and other white collar multipliers of profit.

January 30, 2014 in Commentary, News - Miscellaneous | Permalink | Comments (0)

Wednesday, January 29, 2014

Jerome Cohen on the Xu Zhiyong case

Here's Jerry Cohen's comment on Xu Zhiyong's trial, published in the South China Morning Post.

January 29, 2014 in Commentary, People and Institutions | Permalink | Comments (0)

Sunday, January 26, 2014

What a short notice on arbitration tells us about the Chinese legal system

I recently came across a very short notice from the Supreme People’s Court instructing lower courts how to handle certain arbitration disputes. I think it’s worth writing about because in a few short sentences, it encapsulates a key feature of the Chinese legal system—that is, its essentially bureaucratic nature—that I think make it fundamentally different from systems that are essentially adjudicatory. One can have a view as to whether that difference is a virtue or a vice in general or in particular cases, but it’s not my purpose here to take a stand on that issue; I just want to argue that the system is indeed different.

First, some background. China has rules about the recognition and enforcement of arbitration awards by courts; there are two relevant ones here.

               (1) A valid arbitration agreement must clearly stipulate the forum. This is a general rule of contract law and not unique to China—if we can’t find a meeting of the minds on where to arbitrate, there’s no agreement to enforce—although Chinese courts have tended to be overly demanding about what constitutes “clearly”.

               (2) Domestic arbitration can be carried out only by state-approved arbitration bodies; ad hoc arbitration (i.e., arbitration by persons or institutions not recognized by the state even if agreed upon by the parties) is not recognized by courts.

One of China’s major officially recognized arbitration bodies is the China International Economic and Trade Arbitration Commission (CIETAC). In 2012, when the problem I am about to describe arose, CIETAC had offices (sub-commissions) in Beijing and other Chinese cities, including Shanghai (Shanghai CIETAC) and Shenzhen (South China CIETAC). Thus, if the agreement said, “Arbitration at Shanghai CIETAC” or “Arbitration at CIETAC in Shenzhen”, it would have met the requirements of both of the above rules and been valid; everyone knows which arbitration forum is meant and it’s an officially recognized one.

In 2012, CIETAC issued new arbitration rules that came into effect in May of that year. Shanghai CIETAC and South China CIETAC didn’t like the rules and essentially declared independence. South China CIETAC changed its name to “South China International Economic and Trade Arbitration Commission” or “Shenzhen Court of International Arbitration”, and both the Shenzhen municipal government and the Guangdong provincial government have recognized it as a qualified arbitration organization. In April 2013, Shanghai CIETAC changed its name to Shanghai International Arbitration Center, and I believe has also been officially recognized by the Shanghai government.

In response, CIETAC issued an announcement on Dec. 31, 2012 stating that it was terminating the authorization of Shanghai CIETAC and South China CIETAC to accept and administer arbitration cases and forbidding them to conduct any further arbitration in the name of Shanghai CIETAC and South China CIETAC. CIETAC has also opened a new sub-commission in Shanghai (I’m not sure about Shenzhen) and sent its arbitrators there. In its Dec. 2012 announcement, CIETAC stated that when parties had designated Shanghai CIETAC or South China CIETAC in their arbitration agreements, they should submit their requests for arbitration to CIETAC (in Beijing), which would then take care of it. (For a good backgrounder on the dispute, see this memo from Winston & Strawn.)

Obviously, we have here a recipe for great confusion. Try to apply Rule 1: when an arbitration agreement says, “CIETAC Shanghai,” for example, which arbitration body does it mean? And what about Rule 2: do the new local arbitration bodies count as officially recognized? Who has the authority to recognize them? The Arbitration Law doesn’t say. Until this confusion is cleared up, parties have no way of knowing whether their arbitration agreement will be upheld. Courts in Ningbo and Suzhou refused to uphold arbitration awards of the newly independent Shanghai CIETAC, but were overturned on appeal.

Clearly it’s time for somebody—anybody—to step in and make a definitive ruling on these issues. The Supreme People’s Court is the obvious candidate. In September 2013, it did so. Here’s the full text of a Notice (tongzhi 通知) it issued to lower courts at that time:

Supreme People’s Court Notice on Problems Related to the Correct Adjudication of Cases Involving Judicial Review of Arbitration

To the Higher-Level People’s Court of each province, autonomous region, and separately administered city; the military courts of the People’s Liberation Army; and the Production and Construction Corps branch courts of the Higher-Level People’s Court of the Xinjiang Uighur Autonomous Region:

               Recently, the China International Economic and Trade Arbitration Commission’s (“CIETAC”) May 1, 2012 implementation of its revised rules of arbitration, together with the name changes and implementation of new arbitration rules on the part of the CIETAC Shanghai Subcommission (“Shanghai CIETAC”) and the CIETAC South China Subcommission (“South China CIETAC”), have led to disputes among parties related to issues such as the application of rules of arbitration and the jurisdiction of the above-mentioned arbitration organizations. The people’s courts of all areas have accepted case after case of arbitration review resulting from such disputes. In order to unify the standard for judgments and ensure that people’s courts correctly adjudicate cases, we now notify you as follows regarding relevant issues:

               With respect to cases in which the above-mentioned disputes result in parties applying for a confirmation of the validity of the arbitration agreement, as well as cases in which the above-mentioned disputes result in parties applying for a cancellation or ruling of non-implentation of awards rendered by CIETAC, Shanghai CIETAC, or South China CIETAC, the people’s court must, before making a ruling, submit the matter for discussion by its Adjudication Committee and then report up level by level to the Supreme People’s Court. Only after the Supreme People’s Court has made its reply may the ruling be made.

Supreme People’s Court

Sept. 4, 2013

 There are two things worth noting about this document. First, it was not publicly issued. It’s an internal instruction to courts immediately below it, and they are to pass it on to courts below them. Second, and most importantly, it does not solve the problem. It does not purport to state any rule or even vague principle that courts should use in addressing problematic cases; it does not state how the SPC intends to handle them. Yet the SPC certainly does intend to handle them, and it will produce a result. If the result is the same in cases where the relevant facts are identical, then that’s a rule of law that it would be helpful to let parties know about; if the result is not the same, then apparently there are more relevant facts than we thought.

The key point here is that the SPC is not acting as adjudicator-in-chief in a system that applies laws. It’s acting as decider-in-chief in a system that maximizes administrative discretion to the point where even here, where it would be simple to come up with a rule to resolve any ambiguity, it is unwilling to do so and reserves the right to reach different results in cases that, as far as statutorily relevant facts are concerned, are identical.

 

 

January 26, 2014 in Commentary, News - Chinese Law | Permalink | Comments (0)

Saturday, January 25, 2014

Xu Zhiyong gets four years

Here's the report (in Chinese) from the court's Weibo feed, and here's some pre-sentence commentary from the Global Times. The spin is that Xu Zhiyong is being punished not for the content of what he was seeking, but for the way in which he sought it. Of course, the article contains the usual tendentious claims that people like Xu demand legal immunity for whatever actions they might take in pursuit of their goals - claims that are not backed by any evidence and are too silly to bother refuting.

[Some text and links changed from original post.]

January 25, 2014 in Commentary, News - Chinese Law, People and Institutions | Permalink | Comments (2)

Friday, January 24, 2014

More on the Xu Zhiyong case

Here's an informative and well-documented backgrounder, with links to original sources, on the Xu Zhiyong case from the Congressional-Executive China Commission.

January 24, 2014 in Commentary, News - Chinese Law, People and Institutions | Permalink | Comments (0)