Comparative Law – European Chinese Law Research Hub

Navigating Stricter Data Privacy Rules for Cross-Border Data Transfers With China

3. October 2023

A new paper by W. Gregory Voss and Emmanuel Pernot-Leplay

Cross-border data transfers are a sensitive topic in many jurisdictions, even more so when China is concerned. The EU and the U.S. regulate those flows in very different ways, and China just issued rules showcasing its own specific approach, mixing privacy and national security together, which have become a compliance hurdle for many multinational companies. Our study observes holistically the regulation of personal data flows both into and from China.

Why and how the USA and the EU regulate data flows to China

In both the EU and the USA, China is often seen as an untrusted destination for data exports because of the risks that would exist for both individual rights protection and national security. These concerns are addressed by restricting the cross-border data transfers to China, but it’s done differently in the EU and the USA.

The USA does not have general data transfer restrictions, but it has taken specific actions for national security and user privacy reasons that limit data flows to China. Those are best exemplified by the Grindr and TikTok cases, both on national security protection grounds, for fear of access to the data by the Chinese government and potential blackmailing against nationals of the USA in a position to obtain access to sensitive materials. This is a regulatory risk for Chinese companies, which has sometimes resulted in them storing data in the USA. Because the USA currently lacks an omnibus data privacy law covering data flows, unlike the EU and China, data privacy restrictions cannot serve as the grounds for such procedures, and therefore the USA must resort to national security rules, instead. Nonetheless, this solution remains impractical and used only for high-profile cases. In the future however, proposed data privacy legislation in the USA may impose requirements on transferring personal data to China, resembling restrictions in other major regions.

On the other hand, the EU has strong data privacy rules in the GDPR, including on cross-border data transfers, but by virtue of the division of powers between the EU and its component Member States, national security issues are left to the prerogative of each of the Member State. The GDPR sets several conditions and safeguards to be applied to data transfers for them to be legal. The main ones are the adequacy decision on the one hand, and standard contractual clauses from the European Commission on the other. The latter provide a legal framework that obligates both the data exporter and the data importer (the entity outside the European Economic Area receiving the data) to protect the personal data in accordance with GDPR principles. An adequacy decision, however, means an entity can freely export data to the country that has received this adequacy decision from the European Commission, which greatly facilitates business operations for companies and economic exchanges between the two jurisdictions. But, in the case of China, such decision is currently virtually unforeseeable. This is due to the fact that the European Commission assesses issues such as the rule of law in the destination country in deciding adequacy. Because of the structural specificities of its political and legal system, China is unlikely to meet this first condition. Companies can still export data to China, but the exporting and receiving parties will need to commit to the standard contractual clauses.

China now restricts cross-border data flows to protect both personal data and national interests

Whereas the USA acts on outbound data flows using mainly national security arguments, and the EU focuses on data privacy, China combines both rationales in its own approach.

To provide contextual clarification, it is pertinent to underscore that the progression of data protection legislation in China has followed a peculiar trajectory. At first, there were only a few rules targeting specific sectors, with lightweight protections. This resembled the US-approach and favoured a free use of personal data without many safeguards and rights for the individuals. However, faced with the increase of privacy abuse threatening to cause social unrest, China gradually moved towards a more protective approach and started the legal transplantation of certain rules and concepts from the EU, offering more protection to Chinese consumers against misuse of their data by the private sector. As one may expect protection of the citizen against data collection by the government remains embryonic, due to the specificities of China’s political and legal system.

This progress culminated in the Personal Information Protection Law (PIPL) from 2021, sometimes dubbed as China’s GDPR, which also showcases China’s own approach to the regulation of personal data use, especially on cross-border data transfers through mechanisms implemented in 2023. In a syncretic manner, China has indeed combined data privacy and national security concerns into its mechanism to restrict data flows, impacting both domestic and international companies.

Under the PIPL, companies seeking to transfer data outside of China have possibilities: certification, standard contractual clauses (SCCs), and security assessments. These mechanisms aim to ensure that personal data remains protected and that its transfer aligns with the law’s requirements. The certification mechanism offers a route for intra-group data transfers (akin to Europe’s Binding Corporate Rules (BCRs)). However, its adoption may be hindered by complexities and potential costs. The PIPL’s SCCs provide a standardized framework for data transfers, mirroring similar processes under GDPR. However, unlike in the EU, an organization can use those two systems only under a threshold that may easily be crossed by bigger corporations. Above it, and for more sensitive data transfers, a state-led security assessment is required. This assessment evaluates not only data protection levels but also considers China’s national security, economic stability, and political implications. This is especially the case for organizations deemed critical information infrastructure operators, and is a Chinese specificity that does not exist in either the EU or the USA. Because of the large room for discretionary interpretations, favoured by the vague terminology used in the requirements, this assessment puts multinationals looking to take data out of China in a grey zone, with potential high impact on their business operations. However, it is a risk that China does want to mitigate.

China’s data localization rules are robust and align with global trends in privacy protection on one hand, but feature significant specificities on the other, which leads to uncertainty for companies but provides more maneuvering room to authorities looking to protect China’s interests. As the EU’s GDPR influenced several other jurisdictions’ data privacy rules, time will tell if China’s own approach on data flow screening will be mimicked by other countries, and if the intertwining of data privacy with national security will confirm a new trend.

The article “China Data Flows and Power in the Era of Chinese Big Tech” is forthcoming with the Northwestern Journal of International Law & Business, Vol. 44, Issue 2.

W. Gregory Voss is an Associate Professor at TBS Business School (formerly Toulouse Business School). His research focuses primarily on technology law and fundamental rights (e.g., privacy & data protection).

Dr. Emmanuel Pernot-Leplay is a principal data privacy specialist at Schneider Electric. He holds a PhD degree in Comparative Law from Shanghai Jiaotong University and writes on comparative law and policy, in the fields of data privacy, digital policy and their implications for national security.

What does the Proposed Amendment to the Chinese Company Law Hold?

15. July 2023

A new paper by Fang Ma

Chinese company law is going through significant reforms. The current law, first passed by the National People’s Congress in 2005 and last amended in 2018, has played an important role in establishing a modern enterprise system and promoting the development of a socialist market economy in China. As stated in the explanatory notes for the first draft amendment to the Company Law, the current law provides the fundamental and theoretical legal framework for companies; however, it lacks detailed rules, in particular, in the areas of directors’ liabilities and the protection of shareholders and creditors. This article maps the proposed amendments and draws parallels to Company Law in the United Kingdom.

To mend these shortcomings, two amendments have been proposed: The first draft amendment was published on 24 December 2021 by the Standing Committee of the 13th National People’s Congress for soliciting comments from the public. Based on the feedback and rounds of consultation, the amendment was revised and the resulting second draft amendment was issued on 27 December 2022. The probably final round of deliberation is expected in August 2023. This is the third major reform of the 2005 Chinese Company Law following the amendments in 2013 and 2018. As laid out in the explanatory notes that accompany the draft amendment, the main purposes of this Company Law reform are to “deepen state-owned enterprise reform, improve business operation environment, improve the protection of property rights and optimize fundamental systems for the capital market”.

The stated aim manifests in the following concrete changes:

The Chinese party-state is given stronger controls over its state-owned enterprises, as decisions made in previous years by the Central Committee of the CPC are woven into the Company Law.
Some clarity on the duty of diligence (勤勉义务) and the duty of loyalty (忠实义务): While the 2005 Company Law stipulates that directors, supervisors and senior managers all owe a duty of diligence and a duty of loyalty to their companies, and lists some activities they must not engage in, specific rules for the application of these requirements are lacking. The proposed amendment (draft article 180) defines the duty of diligence similarly to the duty to exercise reasonable care, skill and diligence as stipulated in the United Kingdom’s 2006 Company Act.
Detailed rules on self-dealing: The draft amendment suggests detailed notification and approval procedures for when supervisors, directors and senior managers enter into a contract or transaction with the company (draft article 183).
Expansion of the corporate opportunity doctrine: Under the current Company Law, the duty to refrain from taking advantage of one’s position to acquire a business opportunity that belongs to the company applies to directors and senior managers only. The draft amendments not only extend this duty to supervisors, but also lay out exceptions such as when the business opportunity was rejected by the board of directors or the shareholder meeting (draft article 184).
Clarification of the joint liability of directors, senior managers and controlling shareholders with the company (draft articles 190 and 191): Directors and senior managers will be jointly liable with the company if they have, either deliberately or due to gross negligence, caused losses to other people when they are performing their duties.
Giving teeth to corporate social responsibility duties: The Company Law requires businesses to not only abide by laws and regulations, but also “observe social morals and business ethics, act in integrity and good faith, accept the supervision of the government and the public, and bear social responsibility” (Article 5). Critiques have pointed out that this provision is a paper tiger as it is broad and comes without remedies. While the draft amendment does specify who the stakeholders are (employees, consumers, and the environment), concrete measures for the enforcement of this rule are not proposed (draft article 20).
Finally, the proposed amendment introduces the double derivative action (draft article 188). Derivative actions are suits brough by shareholders in the name of the company against a third party, normally a director of the company. The institution of the double derivative action, as laid down in the draft Article 188, allows a shareholder in a parent company to sue the directors, supervisors and senior managers of its wholly-owned subsidiary.

This paper explores the rationale for the current law reform and analyses the proposed changes in relation to directors’ duties and the protection of shareholders’ interests. It also assesses the relevant law in the 2006 Companies Act of the United Kingdom in order to draw comparative lessons for future company law reforms in China. The proposed amendments have not solved all of the problems in relation to the current law on directors’ duties and shareholders’ derivative actions; nevertheless, they undoubtedly reflect Chinese legislators’ effort to improve the corporate legal framework and enhance corporate governance in China. If these proposals are adopted in the final legislation, they will bring significant improvement to company law and corporate governance in China; ultimately, they will make Chinese companies more competitive and attractive to both home and foreign investors.

The paper Chinese Company Law Draft Amendments: Strengthening Directors’ Duties and Improving Shareholders’ Protection was published in the International Company and Commercial Law Review.

Dr Fang Ma is a Senior Lecturer in Law at the University of Portsmouth in the UK. Her research interests include Company law and Corporate Governance in China and in the UK. She can be contacted at fang.ma[at]port.ac.uk.

Regulation of Cryptoassets in Mainland China, Hong Kong, Macau & Taiwan

2. March 2022

A new paper by Aleksandr Alekseenko

^{This file is licensed under the Creative Commons Attribution 2.0 Generic license.}

Investors increasingly diversify their investment portfolios by investing in cryptocurrencies. Cryptocurrencies however are not a safe haven for investors. Bitcoin is extremely volatile and can bring both exceptionally high profits and terrible losses, seemingly due to market manipulations. The question of how cryptoassets should be regulated is approached differently by jurisdictions. This paper compares the current regulatory frameworks for cryptoassets of Mainland China, Hong Kong, Macau and Taiwan.

China is among the world’s leaders in e-commerce and FinTech, but despite this fact the Peoples Bank of China (PBOC) banned cryptocurrencies and initial coin offering (ICO). From 2013-2021 the PBOC issued several notices which obliged financial institutions not to provide transactions of digital financial assets. The People’s Republic of China also proclaimed that Bitcoin and ICO’s are tools for illegal fundraising, money-laundering, and scamming, and that therefore all activities using them violate national laws and regulations. The worries are not unfounded: In one case tried before the Heilongjiang High Court, the defendant had exchanged illegal gains money from RMB into 1,200 Bitcoins and transferred them to Macau, there converted the Bitcoins into Hong Kong Dollar and consequently exchanged them for RMB to transfer the money back to mainland China.

In addition, PRC authorities have pointed out that cryptocurrency production requires a lot of electricity. At the same time, energy is needed by organizations that produce goods and suffer from a shortage of electricity. Therefore, the second reason for prohibition is energy efficiency and concern for the environment. In order to discourage citizens from investing in projects based on digital tokens, Mainland Chinese courts do not protect the rights of investors, indicating that investors themselves are violators who expect to receive illegal income.

Macau’s authorities closely cooperate with mainland China to prevent money laundering through digital financial assets and therefore prohibited transactions with Bitcoin and banned ICO. It reduces opportunities for illegal activities and protects investors from investing in projects that exist as a pyramid scheme. In comparison with Mainland China and Macau, Taiwan has a more liberal approach to cryptoassets regulation and restricts only financial institutions from dealing with Bitcoin. Other companies may sell and buy goods for Bitcoins.

In Hong Kong, cryptocurrency and tokens are only strictly regulated by the Hong Kong Securities and Exchange Commission (SEC) if they have the characteristics of securities, bonds or futures. The SEC doesn’t regulate Bitcoin because it is neither a means of payment nor any other regulated asset. Hong Kong’s authorities pay most attention to digital platforms, which provide opportunities for ICO’s and cryptofundraising. In this regard, the SEC has issued some standards that clarify the licensing procedure for cryptocurrency exchanges and organizations that manage digital financial assets.

Thus, although Hong Kong does not create a liberal haven for crypto business, an entire segment of Hong Kong’s digital assets market is in a regulatory “gray” area. As a result, both Taiwan and Hong Kong de facto serve as bridges from the market of digital financial assets to the PRC. Mainland investors may use them as a “crypto-hub”. For the case of Hong Kong, this situation fully fits the principle of “one country – two systems.”

Find Dr. Aleksandr Alekseenko’s paper, published with the China and WTO Review, here. Dr. Aleksandr Alekseenko is an Associate Professor in the Faculty of Law of the Saint-Petersburg State University, with a research focus on Commercial Law, Investment Law and Legal Regulation of digital Financial Assets. He received his LL.M from the Far Eastern Federal University (Vladivostok) and a PhD in laws from the Ural State Law University (Yekaterinburg). He studied Chinese language at the Linyi Normal University and is the principal investigator and participant of scientific project of Russian Foundation for Basic Research on the topic of e-commerce legal regulation and new technologies in the sphere of investments.

After Difference: A Meta-Comparative Study of Chinese Encounters with Foreign Comparative Law

12. April 2021

A new paper by Samuli Seppänen

European and American comparative lawyers’ engagement with so-called “radically different” legal systems has generated much introspection and methodological controversy among comparative lawyers. Is it possible to truly understand “radically different” foreign law? Can one understand foreign law through translations? What right do comparatists have to write about areas of law which are outside their field of expertise, in the first place? Similar questions have long been raised in comparative law, but they have gained new momentum as American and European comparatists have begun to examine “non-Western” legal systems.

Yet, there remains a striking asymmetry in how such questions are conventionally posed. While many American and European comparatists have expressed concerns about intercultural comparisons, few studies have examined whether the experience of “radical difference” and its side effects—self-doubt, suspicion of cultural bias, and feelings of inadequacy—affect comparative lawyers in “radically different” legal cultures, such as China.

My article “After Difference: A Meta-Comparative Study of Chinese Encounters with Foreign Comparative Law” (free draft) examines perceptions of difference in Chinese comparative law. I seek to demonstrate that labelling foreign law as “different” or “similar” carries different political implications in China than in liberal democratic societies, such as Britain and the United States. China’s governing Communist Party sees the promotion of Western constitutional democracy as an “attempt to undermine the current leadership and the socialism with Chinese characteristics.” The Chinese leadership has also instructed legal scholars and other social scientists to develop original theories based on China’s practical conditions.

In this political climate, an emphasis on “similarity” in comparative legal scholarship often coincides with a willingness to adopt liberal legal and political reforms, whereas a conspicuous preference for “difference” implies resistance to such reforms. A legal institution that is described as foreign, and yet familiar, can be more easily advanced in China than a legal institution that can never be “truly” understood or one that is portrayed as being “radically” different from Chinese law.

Comparative law has also supported mainstream legal scholars who try to find a middle ground between conservative socialism and devotional liberalism. A comparative law focus on the social purposes of legal institutions, for instance, has allowed Chinese comparatists to denounce politically sensitive foreign legal institutions—such as the judicial review of legislation—which supposedly serve the idiosyncratic purposes of Western societies, while at the same time endorsing and advocating politically less controversial legal reforms.

To be sure, there are many nuances in Chinese comparative law. An emphasis on difference can be a liberal strategy, whereas arguments about similarity have been used to resist legal and political reforms. It is also true that many Chinese comparatists are sufficiently familiar with American and European law so as not to experience them as exotic. The question of (radical) difference and similarity also relates to Chinese legal scholars’ professional identity and worldview. Whereas American and European comparatists may view Chinese comparatists (and indeed, all students of Chinese law) as being on the margins of their discipline, Chinese mainstream comparatists are committed to learning and understanding foreign law. This attitude is not limited to Chinese studies of European and American law, but it can also be seen in some Chinese research on non-European legal systems, such as Hindu law.

Finally, the larger argument of my Article is that statements about difference and similarity—and attitudes towards understanding, in general—should be understood in light of the individual scholar’s ideological project. There is no ideologically innocent way to relate to foreign legal systems either in China or abroad. Scholars who encounter legal systems that at first seem difficult or even impossible to “understand” would do well to remember that difference and similarity are matters of perception—and, it would appear, not the most fruitful theoretical basis for legal research.

Find Samuli Seppänen’s free draft of “After Difference: A Meta-Comparative Study of Chinese Encounters with Foreign Comparative Law” here. He is an Associate Professor at the Chinese University of Hong Kong. His research focuses on legal and political thought in China and developmental aspects of international law. Reach out to him at sseppanen(at)cuhk.edu.hk.

American Constitutional Law in China

22. March 2021

A new paper by Han Liu

American constitutional law has influenced various countries, but what about China? For conventional account, the answer is, little, given China’s socialist constitutional system and continental legal thinking. Diving into a relatively unexplored domain, Han Liu traces the reception of American constitutional law in post-Reform China, arguing that American constitutional law has greatly influenced Chinese constitutional thinking, sometimes even generating practical reform projects (article, free draft).

One influential Chinese text book on US-American Constitutional Law

To be sure, American constitutionalism had almost no influence in proto-socialist China (1949–1979). In 1979, as China and the United States established diplomatic relations, interest in American constitutional system began to surge. Translations, studies, and introductions about American constitutional law started to grow rapidly. This academic project also influenced practice, especially by providing an example of the separation of powers and judicial review.

Han Liu points out that there has been a great change in Chinese understandings of American constitutionalism, that is, from “regime-centered” to “court-centered”. These two exerted different practical influences. In the 1980s, American constitutionalism was generally tantamount to tripartite “separation of powers” to Chinese intellectuals, legal or otherwise, and even political leaders. Deng famously said that “I always criticize the American power holders for having three governments.” Despite Deng’s critique, others tried, without success, to learn from the American example, bringing checks and balances into the Chinese system.

But at the turn of the century, especially in the early 2000s, American constitutionalism shows a different face. For many legal scholars and lawyers, it was understood as synonomous with judicial review. They came to believe that a constitution remains a dead letter if not used in courts and litigations, as in the US. The US Supreme Court, with its power to enforce the Constitution, now took the center stage in the Chinese understandings. Its Chinese counterpart, from 2001 to 2008, even introduced an American model of judicial review into the Chinese judicial system.

Why has this happened? It was not simply a “response-impact” mechanism. Rather, China’s different receptive attitudes towards American constitutional law hinge upon China’s own frame of reference in the legal reform. As the authorities began to construct “the rule of law” in the 1990s, the Constitution had to be activated in practice. Then the American model became attractive.

In the space between theory and practice, the Chinese constitutional mind becomes receptive to American influence.

This logic also explains the decline of American influence in Chinese constitutional theory and practice in the last ten years. While the authorities declare the principle of “governing according to the constitution”, they at the same time stress China’s distinction from “Western” models, especially the US. In due course, American constitutionalism in China will perhaps no longer be the single idol to adore, let alone the best model to follow.

Looking back, American constitutionalism’s impacts on Chinese constitutional development depend upon the internal logic and dynamics of Chinese reform, which determines the optics in the reception of foreign law. The fundamental change in Chinese understandings of American constitutionalism reflects the great transformation in the deep structure of Chinese ideology and jurisprudence.

Han Liu is Associate Professor at Tsinghua University Law School and Deputy Director of Tsinghua Institute for Law and AI. He researches comparative constitutional law, cyber law and policies, and legal theory. His recent paper ‘Regime-Centered and Court-Centered Understandings: The Reception of American Constitutional Law in Contemporary China’ (free draft here) appears in American Journal of Comparative Law, selected as one of the top 10 comparative law articles in the Best of 2020 Law Journals from Oxford University Press. His book Think Big and Beyond Yourself: Law as a Way of Thinking (in Chinese) won “The 10 Best Books 2020 in Law” in China. His online course “Legal Thinking” has attracted more than 70, 000 subscribers. Reach out to him at liuhan[at]tsinghua.edu.cn.

How Comprehensive is Chinese Data Protection Law?

1. February 2021

A new paper by Anja Geller

When I told people that I am writing an article about Chinese data protection law, the most common reaction was the question “does that even exist?” The surprised and doubtful undertone motivated me to find a convincing answer. On my way, I encountered some obstacles. There is a plethora of regulations with different scopes, legislation bodies and legal effects. Even for specialised Chinese lawyers, it can be difficult to figure out which norms apply in a certain case. In the end, I chose to restrict my analysis to the 13 most important Chinese regulations with a nationwide scope of application.

Lacking a unified law, these norms have to be seen in combination to determine the comprehensiveness of Chinese data protection law. As the European General Data Protection Regulation (GDPR) is one of the most comprehensive and modern data protection regimes, I used it as a framework. When viewing the Chinese norms against this backdrop, it quickly becomes clear that especially the non-binding norms and drafted provisions are the most progressive and strict ones. They show that the Chinese legislators are moving towards the European system rather than the US or a taking a third way.

However, as is common for such cases of legal orientation, “Chinese characteristics” remain. For example, strong divergences exist in the area of administrative penalties. Instead of a focus on severe monetary penalties similar to the GDPR, there are many different sanctions. Starting with warnings and orders to correct, infringers may face a suspension or closure of their business, revocation of their business licences or even a definitive ban from the profession. Furthermore, measures of “naming and shaming” such as the publication of these sanctions in the “Social Credit Register” and other public announcements may be ordered. Compared to the European medieval equivalent of the pillory, such punishments have a long and living tradition in China. Especially the emerging “Social Credit System” relies on such punishments and is presented as a crucial tool for making citizens and companies comply with the law.

Another “Chinese characteristic” is the “real-name registration” requirement, which has already existed in many other fields for quite some time. Providers of network access and other digital services have to require users to provide true identity information before allowing access. Although this may help law enforcement in digital environments, there are well-founded fears concerning its negative implications on privacy and the freedom of speech.

Nevertheless, there are also a lot of positive developments from a European data protection perspective. The Chinese legislators have been very active in recent times and many new regulations and drafts appear on an annual basis. In fact, on 21 October 2020, one month after the online publication of my article, perhaps the most significant draft was published: the “Law of the People’s Republic of China on the Protection of Personal Information (Draft)” (中华人民共和国个人信息保护法（草案）). In the article, I covered an already very promising draft of the same name, which was proposed by several delegates of the National People’s Congress (NPC) in 2017. The 2020 draft, on the other side, was published by the Standing Committee of the NPC as a whole, which gives it much more weight. Both drafts intend to become the first national “laws” that aim to protect the right to personal information as a primary goal. All other regulations that share this as a central objective are on a lower level in the hierarchy of norms.

A quick comparison of their lengths and the amount of their articles – 70 compared to 44 – suggests that the 2020 draft is even more comprehensive. Among the most striking innovations is the broad extraterritorial applicability of the 2020 draft, which is relatively similar to the GDPR. One could say that reciprocity prevails here. As the introduction of the European rules have led to much discussion and controversy, it will be interesting to see what the international response will be as this draft becomes more widely known. Since a more detailed treatment of this new draft would go beyond the scope of this blog post, I refer to the comparisons here, here and here (all in Chinese), and a comprehensive analysis here (English). When and in which form this draft will be enacted is still unclear. Nonetheless, it shows yet again that the Chinese lawmakers are actively working to create an increasingly comprehensive data protection regime.

Therefore, to the question whether or not a Chinese data protection law exists, the short answer is: yes.

The paper “How Comprehensive Is Chinese Data Protection Law? A Systematisation of Chinese Data Protection Law from a European Perspective” appeared in GRUR International 2020, 1191-1203. It is available via open access here.

Anja Geller is a PhD candidate at the Ludwig-Maximilians-Universität and a junior research fellow at the Max Planck Institute for Innovation and Competition, Munich, Germany. Contact her via Anja.Geller@ip.mpg.de or via Linkedin.

Chinese influence – New perspectives on international arbitration regimes

3. January 2021

A new paper by Ulla Liukkunen

Cross-border dispute resolution is changing as a part of the Belt and Road Initiative (BRI) development. With the BRI, Chinese interest in international commercial arbitration has gained a new dimension as BRI promotes the expansion of Chinese dispute resolution institutions and their international competitiveness. Ulla Liukkunen finds that these developments challenge the current narrative of international arbitration, underlining the connection between the legal regime of arbitration and endeavours by the state. In her recent paper (PDF), she explores private international law as a framework for discussion of noteworthy characteristics of the Chinese legal system and legal culture that are present in international commercial arbitration.

The People’s Republic of China has made initiatives to develop a joint dispute resolution circle for BRI countries so that there would be an area in the BRI sphere which offers effective and foreseeable dispute resolution based on jurisdictions close to the disputing parties. In 2016, upon an order by the State Council, Shanghai pressed forward with the creation of an international commercial arbitration system which has since then developed rapidly: The Shanghai International Arbitration Centre has witnessed an increase in the number of cases, and has launched a series of initiatives to promote the development of arbitration. In 2018, the CCP’s Central Committee and the State Council issued an Opinion calling the Supreme People’s Court to set up international commercial courts, to take the lead in setting up a committee of international commercial experts, and to support a BRI-related international commercial dispute resolution mechanism. The aim is that the BRI dispute resolution mechanism would form a convenient, speedy and low-cost “one-stop” dispute resolution centre to provide high-quality and efficient legal services for parties involved in BRI construction.

In the theory of international commercial arbitration, elaboration of a doctrine based on the claimed autonomous nature of international arbitration exists, resting on views of self-standing transnational legal standards that distance arbitration from state-bound laws as well as a state-bound setting. The growing role of China in international arbitration ‒ and the state interest embedded therein ‒ challenges this picture which has been built within international arbitration doctrine and which has resulted in loosening the scene of the role of state law in arbitration.

A rethink of comparative methodology is proposed in order to promote an understanding of Chinese law in the arbitration process. This article argues for adopting micro-macro comparison as a methodological approach in arbitration. Micro-macro comparison as a process penetrates the decision-making of arbitrators, also governing the conflict-of-law dimension.

Moreover, considerations of the Chinese private international law and arbitration regime speak for a broader comparative research perspective towards international commercial arbitration. In the international commercial arbitration frame under scrutiny, we can see the conception of party autonomy placed in a Chinese context where the state is shaping the still relatively young private international law frame for exercise of that freedom and certain institutional structures are advocated where party autonomy is placed. Chinese development underlines the connection between the legal regime of arbitration and endeavours by the state, thereby requiring assessment of party autonomy from the perspective of the regulatory framework of private international law that expresses the complex dichotomy between private and public interests.

The article “Chinese context and complexities — comparative law and private international law facing new normativities in international commercial arbitration” is among the first in the new open access publication Ius Comparatum launched by the International Academy of Comparative Law.

Professor Liukkunen examines international commercial arbitration from the perspective of Chinese developments, noting that, in global terms, the organization of cross-border dispute resolution is changing as a part of the Belt and Road Initiative (BRI) development. With the BRI, Chinese interest in international commercial arbitration has gained a new dimension as BRI promotes the expansion of Chinese dispute resolution institutions and their international competitiveness.

Tag: Comparative Law