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Tag: Law and Development

Archipelagos of Chinese Law

25. June 2021
A new paper by Matthew Erie
Dahlak Archipelago (Wikimedia Commons)

On May 20, 2021, the Sri Lankan government passed the controversial Colombo Port City Economic Zone Bill (Port City Bill), creating the country’s first special economic zone (SEZ) for services-oriented industries. Parliament’s passing of the bill occurred days after the Supreme Court ruled that several provisions of the Port City Bill were unconstitutional, requiring amendments. The heart of the controversy was the creation of a commission of unelected members who would have broad powers over the SEZ, an innovation that contravened the authority of regulators and, as it has been argued, violated Sri Lankan sovereignty as enshrined in its constitution. More specifically, the SEZ is funded and developed by a subsidiary of China Communications Construction Company, which invested $1.4 billion to construct the SEZ in exchange for a 99-year lease from the Sri Lankan government. As a result of this controversy, the Port City Bill was amended such that five of the seven commission members have to be Sri Lankan.

Unaddressed by the Supreme Court, however, was a seemingly more innocuous but nonetheless potentially far-reaching problem: the bill’s dispute resolution provisions. The Port City Bill proposed to establish an International Commercial Dispute Resolution Centre (ICDRC) that uses arbitration to settle disputes within the SEZ, effectively ousting the jurisdiction of Sri Lankan courts. This ouster is contentious given that the courts have, in the past, held that legislation cannot oust its jurisdiction. Still, the ICDRC survived judicial scrutiny and was passed into law.

The Port City Bill and the ICDRC, in particular, exemplify a particular logic of outbound Chinese capital, one that, in my recent article based on three years of fieldwork and nearly 150 interviews, I summarize as “Chinese law and development” (CLD). Whereas previous capital-exporting countries, and in particular, the U.S., have sought to reform the legal system of host states, often in line with their own experience of law, Chinese parties are mostly not interested in engaging in the legal reform of host states. Rather, they have shown a greater interest in creating institutions of transnational law, including international arbitration centers—both within the People’s Republic of China and outside its territory—that can avoid Chinese companies from having to litigate in host state courts.  

Opening Ceremony Colombo Port City Project (Public Ownership)

Taking a step back, “law and development” most generically refers to the relationship between law and economic development in what used to be called the “Third World,” and is particularly understood as technical legal development assistance as provided by donor states to host ones. The career of David Trubek at the University of Wisconsin Law School is most commonly associated with the U.S. experience of law and development, one that has undergone a series of waves. Chinese law and development (CLD) is different from Trubek’s view of the notion. For the most part, the Chinese government does not send out legal technicians to advise foreign states on how to design legal institutions or draft legislation, efforts under-girded by assumptions about the capacity of law to stimulate economic growth.

Instead of popular accounts that envision China as hegemonic, and roughly analogous to previous economic superpowers, China is emerging into the world economy during a period of widespread anxiety about Chinese influence, anxiety that takes the form of investment screening, trade tariffs, and immigration blockades. Further, China’s own experience with legal reform shows how law offered one set of norms, among others (e.g., administrative directives, dictates of the Chinese Communist Party, political campaigns, etc.) that facilitated (and sometimes impeded) economic experimentation. CLD thus addresses how the Chinese government and Chinese enterprises protect their assets, investments, and personnel in challenging legal and regulatory environments. To do so, CLD unzips the toolkit of such Chinese parties to demonstrate the plurality of means by which they secure their commercial and also geo-economic interests.

The co-creation of what elsewhere I have called “exceptional zones” such as SEZs with their own dispute resolution mechanisms that feature rules different from those of the host jurisdiction is one such method. In addition to Sri Lanka, there are other extraterritorial examples, such as that of the China-Africa Joint Arbitration Centre. These jurisdictional archipelagos foster transnational law by allowing parties to opt out of the national law of host states and choose alternative law, which theoretically could be Chinese law. Hence, issues of governing law in contracts that are the basis of disputes, as well as language of arbitration, nationality of arbitrators, and related procedural issues, loom large as these new legal hubs start to accept cases. While these archipelagos are not unique to Chinese outbound capital, Chinese parties seem to be particularly focused on their promotion. More broadly, CLD raises important questions concerning how exceptional zones impact legal development and access to justice in emerging economies.

Matthew Erie’s paper ‘Chinese Law and Development’ was published in the Harvard International Law Journal earlier this year and is available for free here.

Matthew S. Erie is an Associate Professor, Member of the Law Faculty, and Associate Research Fellow at the Centre for Socio-Legal Studies at the University of Oxford. He is also the Principal Investigator of the “China, Law and Development” project (grant agreement No 803763), based at the University of Oxford. You can follow him on Twitter @MatthewErie or reach out to him at matthew.erie(at)law.ox.ac.uk.

General Arbitration Centre, Colombo Port City Bill, International Commercial Dispute Resolution, Law and Development, One Belt One Road, Special Economic Zone, Sri Lanka, Transnational law

China’s Law and Development: The Case of the China International Commercial Court

6. June 2021
A new paper by Weixia Gu
Appointment of the First Batch of CICC International Commercial Experts Committee

In June 2018, the China International Commercial Court (CICC) was established within China’s Supreme People’s Court. It is a top-down capacity-building effort in establishing dispute resolution infrastructure and represents the ambition to create a lex mercatoria in the context of the Belt and Road Initiative (BRI). This blogpost highlights some salient features of the CICC and sheds light on its significance in China’s Law and Development.

First, CICC installed an International Commercial Experts Committee (ICEC) to make up for the lack of non-Mainland Chinese judges among its personnel. It draws on experts from both civil law and common law jurisdictions with diverse backgrounds (Eastern, Western and African legal culture). Members of the ICEC will provide foreign legal expertise to engage in the CICC mediation work, the outcome of which could be turned into a CICC judgement equivalent to “semi adjudication.” The ICEC has two main functions: first, presiding over mediation proceedings of international commercial cases which can be converted into a CICC judgement; second, providing advisory opinions on proof of foreign law and on international treaties, international commercial rules. The ICEC is argued as emblematic of the “paradigm shift” of the Beijing Consensus which traditionally emphasises soft law in international legal ordering such as what has happened in the Belt and Road context. Scholars have argued about a rising new Chinese economic legal order that is characterized by China’s decentralized mode of trade governance through a pragmatic, incremental development policy grounded in soft law and norm-based networks (Shaffer & Gao 2020). This is shown in China’s approach toward the BRI (yidaiyilu 一带一路) as China largely relies on memoranda of understanding and soft law agreements. There is no stringent cross-border legal framework or rigid regulatory structure in China’s approach toward the BRI. The advent of the ICEC however points to a new focus on institution-building which is somewhat a departure of the previous soft-law approach. Apart from that, the ICEC also showcases a breakthrough in the Chinese legal system in light of the existing statutory impediments found in, for example, China’s Judges Law, which allows only Mainland Chinese nationals to sit on the Chinese judicial benches. It reflects a more proactive, experimental, and innovative mentality adopted by the Chinese government and judiciary in seeking to incorporate overseas judicial expertise so as to compete in the global dispute resolution market.

The CICC signifies China’s major step towards a dual-track model which places equal emphasis on both soft-law instruments and hard-law capacity-building of legal infrastructure. Second, the CICC brands itself as a “one-stop shop” for diversified dispute resolution, incorporating alternative dispute resolutions (ADRs) into conventional litigation. Under this vision, international commercial litigation, arbitration and mediation are blended and integrated to facilitate the resolution of international commercial disputes brought before the CICC. The CICC also links with China’s five most market-driven arbitration institutions – China International Economic and Trade Arbitration (CIETAC), Beijing Arbitration Commission (BAC), Shenzhen Court of International Arbitration (SCIA), Shanghai International Arbitration Centre (SHIAC), China Maritime Arbitration Commission (CMAC), and two leading commercial mediation institutions – China Council for the Promotion of International Trade (CCPIT) Mediation Center and Shanghai Commercial Mediation Centre (SCMC). If disputing parties have reached a mediation settlement agreement before the CCPIT Mediation Center or SCMC, the CICC may also make a CICC judgment based on the mediation agreement if it is requested by the parties. This conversion of the institutional mediation settlement agreement into a CICC judgment is an unprecedented arrangement, evidencing the experimental and law-positive nature of China’s approach to the BRI and the new Beijing Consensus.

From the Law and Development perspective, the establishment of the CICC exemplifies a turning point in the Beijing Consensus to move away from the heavy reliance on norm-based instruments in international legal ordering.

Third, the CICC has a guaranteed caseload. Structurally, the CICC is within the hierarchy of the Chinese domestic judiciary. It forms part of China’s Supreme People’s Court of which both the first CICC in Shenzhen and the second CICC in Xi’an are permanent branches. Flowing from this structure, it is ensured that the CICC continuously has a high caseload as the Supreme People’s Court in Beijing directly refers cases to them. In fact, the case flow under the CICC Provisions includes “other international commercial cases that the Supreme People’s Court considers appropriate to be tried by the CICC.” (Provisions of the Supreme People’s Court on Several Issues Regarding the Establishment of the International Commercial Court, Article 2(5), English here). Comparative studies show that the feature of “rooting” the international commercial courts within the domestic judicial system is similarly found in other jurisdictions, such as the Singapore International Commercial Court and the Chamber for International Commercial Disputes of the Frankfurt Regional Court in Germany.

The establishment of the CICC arguably represents a paradigm shift of the “Beijing Consensus”, which traditionally placed emphasis on informal alternatives to law (i.e. a soft-law and norm-based approach). The CICC signifies China’s major step towards a dual-track model which places equal emphasis on both soft-law instruments and hard-law capacity-building of legal infrastructure. From the Law and Development perspective, the establishment of the CICC exemplifies a turning point in the Beijing Consensus to move away from the heavy reliance on norm-based instruments in international legal ordering (such as Memorandum of Understandings, Memorandum of Agreements, Joint Statements etc. involved in the BRI) to hard-law institutional infrastructure capacity-building.

Finally, the CICC benefits from China’s accession to the Hague Convention of 30 June 2005 on Choice of Court Agreements (Choice of Court Convention) (the Hague Convention) which was signed in September 2017. Recognition and enforcement of the judgments rendered by the CICC can be facilitated via the Hague Convention.

For details, please find Weixia Gu’s forthcoming article regarding the CICC and Law and Development Study at Harvard International Law Journal here. Please also find her recent monograph, Dispute Resolution in China: Litigation, Arbitration, Mediation and Their Interactions published by Routledge in 2021 here.

Weixia Gu is Associate Professor at the Faculty of Law, University of Hong Kong and immediate past Co-Chair of the American Society of International Law (ASIL) Asia-Pacific Interest Group. Her research focuses on arbitration, dispute resolution, private international law and cross-border legal issues. Her scholarship is published by leading comparative and international law journals and cited by leading judiciaries in the world. She is the recipient of University of Hong Kong’s Outstanding Young Researcher Award and three times the awardee of China Society of Private International Law Best Research Output Prize. Her recent books include The Developing World of Arbitration (Hart, 2018); Dispute Resolution in China (Routledge, 2021); Multi-tiered Approaches to the Resolution of International Disputes (CUP, 2021). Contact her at guweixia@hku.hk.

General Arbitration, Beijing Consensus, China International Commercial Court, Chinese courts, Law and Development, One Belt One Road

Economic Development through Migration: Facilitating Skilled Migration to China through the Belt and Road Initiative

5. November 2020
A new paper by Eva Lena Richter

Contributing to the “China, Law and Development” research project, Eva Lena Richter‘s latest research observes Chinese and multilateral efforts to facilitate skilled migration from Belt and Road Initiative countries to China. Since the launch of the Initiative, strengthening people-to-people ties is part of its cooperation priorities. This cooperation is established in different ways, including student and academic exchanges, research cooperation, joint vocational training, and tourism. The Chinese government is the major guiding force of the Initiative and hence also shapes how these exchanges, or rather forms of migration, develop between China and Belt and Road Initiative-countries. 

This paper (a free draft version here) looks at student, academic, and personnel mobility from Belt and Road Initiative countries to China and forms of migration and national Chinese legislation as well as efforts in bilateral and multilateral cooperation to facilitate them. Is the promise of mutually beneficial development tangible in these efforts? What role does China occupy in shaping the way migration develops along the Belt and Road Initiative? What role does Chinese skilled immigration legislation play? These are some of the questions this paper addresses. 

The findings suggest that new skilled Chinese migration legislation, geared towards foreigners with tertiary education, paired with Belt and Road Initiative cooperation efforts and visa facilitation, is opening comparatively more opportunities for skilled nationals of BRI countries. BRI nationals are more often exempt from visas and have access to targeted talent attraction and retention programs. Nevertheless, up to now, these efforts have been mainly undertaken by the Chinese government, and skilled Belt and Road Initiative nationals are not being encouraged to migrate to China under bilateral employment agreements. For now, the bulk of China’s skilled immigrants does not come from Belt and Road Initiative countries. 

Eva Lena Richter is a PhD Candidate at Cologne University’s Chair for Chinese Legal Culture and a Research Associate with the “China, Law and Development”-project, University of Oxford. She focusses on China’s legal system for skilled labour migration and efforts to attract and retain skilled foreigners in China. Get in touch with her on Linkedin.

General Law and Development, Migration, One Belt One Road

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