An introduction to the China International Commercial Court (‘CICC’)

In 2018 the Supreme People’s Court of the People’s Republic of China (‘Supreme Court’) launched the China International Commercial Court (‘CICC’). The CICC integrates litigation, arbitration and mediation into one dispute resolution mechanism to resolve international commercial disputes.

The CICC aims to advance China’s own domestic and international policy objectives and to demonstrate China’s openness to a new and changing global market.

The Supreme Court issued several judicial documents throughout 2018 to guide the operation of the CICC, including the Provisions on Several Issues regarding the Establishment of the CICC the ‘Provisions’), the Procedural Rules for the CICC, and Working Rules of the International Commercial Expert Committee.

The Provisions took effect from 1 January 2024 and set out the three requirements, which must be met in order to establish a valid arbitration agreement with the CICC as the chosen court:

1. The case must involve an international commercial dispute – one of the following circumstances must apply to be recognised under this requirement:
   1. One of both parties are foreigners, stateless persons, foreign enterprises or organisations;
   2. One of both parties have their habitual residence outside the territory of the People’s Republic of China (‘PRC’);
   3. The subject matter is located outside the territory of the PRC;
   4. The legal facts that create, change, or terminate the commercial relationship outside the territory of the PRC.
2. The choice of court agreement between the parties must be in writing, stipulating that they agree to submit the dispute to the Supreme Court.
3. The amount in controversy exceeds CNY 300 million (£31,220,100). This may seem a high bar to meet, but it is worth bearing in mind that the original purpose of the CICC was to manage disputes and encourage foreign investment into China’s Belt and Road Initiative 2013, a global infrastructure developed and adopted by the Chinese government. Lower value claims can also still be heard provided they meet one of the above requirements, as the requirements exist independently.

The CICC is similar to the circuit courts of the Supreme Court. It has specialist justices who are familiar with international treaties, the practices of international trade, and the mechanics of customs and investments. Judges are required to speak both Mandarin Chinese and English, but in practice, the proceedings are conducted in Mandarin Chinese only.

Any decision made by the CICC is treated as final and cannot be appealed. On the one hand, it provides finality and peace of mind after obtaining an award. Conversely, if a party is concerned that foreign law has not been interpreted or applied correctly then the absence of appeal leaves them without any recourse.

Only Chinese-qualified lawyers can represent clients. Foreign lawyers are able to assist CICC judges in ascertaining the content of foreign laws to help formulate judicial interpretation. This could limit the appeal of the CICC to foreign parties. In comparison, both the SIAC and DIFC include foreign judges and allow foreign lawyers to participate in proceedings.

Comparison with other international commercial courts

In its first four years after establishment, the CICC heard a relatively low number of cases. As of August 2022, the CICC had accepted 27 cases, published six rulings and one final judgment.

Whilst parties may agree to have foreign law apply to CICC cases, there remains a pattern of bias toward application of Chinese law. CICC judges can utilise submissions by parties and members of an International Commercial Expert Committee. However, it remains unclear how much weight these submissions hold when determining which law to apply. Judges often default to Chinese law, as a way to expand the application of Chinese law.

From an enforcement perspective, China is a contracting state to the New York Arbitration Convention on the Recognition and Enforcement of Foreign Arbitral Awards (‘The New York Convention’). That means that CICC arbitration awards can be enforced in the other contracting states to the treaty, of which there are more than 170 countries.

Conclusion

The development of the CICC has been welcomed as a groundbreaking innovation for China’s judiciary system, especially for cross-border disputes.

Nonetheless, there remains concerns about the procedural bias towards Chinese law.

Sources

1. https://www.whitecase.com/insight-alert/china-international-commercial-court
2. U.S. - China Economic and Security Review Commission
3. https://www.chinajusticeobserver.com/a/spcs-revised-rules-extend-reach-of-international-commercial-courts