A Dispute Resolution Trojan Horse? Does the China International Commercial Court (CICC) pose a normative challenge to the framework of international arbitration? A Summary

Image Source: China International Commercial Court

During my undergraduate law degree, I learned extensively about the Chinese legal system and the influence the state exerts over adjudication in the People’s Courts. When studying alternative dispute resolution (ADR) processes, I became particularly interested in whether private dispute resolution mechanisms in China also follow this trend. The most intriguing case study was that of international dispute resolution. As an ADR mechanism that is both private and institutionalised, international arbitration presents an intriguing balance between private and public law elements. Parties to an agreement decide where and how their dispute will be arbitrated—such as which institution will hear the case and the rules that will govern it. The decisions made by arbitration tribunals, known as awards, are final. They are recognisable and enforceable in national courts but can be set aside under certain circumstances. Thus, despite international arbitration being grounded in the autonomy of contractual parties, national courts still have the power to challenge these decisions.

This is why international arbitration in China is particularly fascinating. The government’s influence over the judiciary raises important questions about whether arbitration, especially cases with international elements, is subject to this influence.

Three key issues heighten the stakes in this context. First, there is the notion that China is establishing alternative 'norms' and standards for international practices. This 'normative challenge' discourse is particularly prevalent in international investments (such as the Belt & Road Initiative), but it could also apply to dispute resolution. Second, China has become a popular destination for resolving international arbitrations, with a recent report estimating over 600,000 arbitration cases being heard in institutions across the country. Third, China recently established the China International Commercial Courts (CICC), designed as a centralised 'one-stop' dispute resolution mechanism. This development has sparked controversy, with some arguing that the CICC is a tool for China to exert influence over commercial dispute resolution. This is why I focused on the CICC for my postgraduate thesis.

I began my research by analysing the discourse around China's 'normative challenge,' where scholars debate whether China is attempting to challenge the norms established by Western dominance. I then examined the framework of international arbitration in China. Institutionally, the landscape of Chinese international arbitration can be summarised through the following diagram:

Legislatively, China is a member of the United Nations Commission on International Trade Law (UNCITRAL) New York Convention, which obligates it to recognise and enforce foreign arbitral awards in its national courts. National courts can still set aside awards under specific circumstances, such as flawed proceedings or public policy grounds. However, China has not adopted the UNCITRAL Model Law, a discretionary model law that states are encouraged, but not obligated, to adopt to regulate international arbitration. In my research, I compared China’s key legislation on international arbitration (specifically the Arbitration Law of the People’s Republic of China and the Civil Procedure Law of the People’s Republic of China) with the UNCITRAL Model Law, and found the differences to be minimal. The grounds for setting aside arbitral awards in China closely mirror those of the Model Law. The main difference lies in the wording of “public policy,” which is referred to as “social and public interest of the country” in Chinese legislation.

After establishing this framework, I examined the CICC in practice. I analysed its procedural rules, typical cases, and published heard cases to determine whether the CICC represents a departure from or a challenge to the existing framework. The CICC's procedural rules clearly define its jurisdictional limits and outline its role as a 'one-stop' dispute resolution mechanism. Contrary to popular belief, the goal of this 'rebranding' was not to centralise international commercial disputes within the CICC, but to establish a mechanism through which disputes can be more efficiently referred to the appropriate institution. In fact, the CICC directs parties to a series of dispute resolution institutions within the Greater China Region, allowing them to apply to have their cases heard or reviewed. This challenges the idea that the CICC was created to replace other international commercial courts or favour Chinese parties in disputes. Both typical and heard cases respected the court’s jurisdictional limits, and underscored a reluctance to overstep its authority to challenge arbitral awards and arbitration agreements' validity. Moreover, the courts were willing to condemn Chinese parties that attempted to 'maliciously' manipulate Chinese law to have cases adjudicated rather than arbitrated, despite the existence of a valid arbitration agreements. The cases also upheld the principle of party autonomy, which is fundamental in arbitration. However, it is worth noting that the available case judgments were only published in Mandarin, raising concerns about accessibility and transparency in the CICC. Considering the CICC’s role as an international court, this is an issue that requires attention.

Ultimately, this brief summary of my paper highlights the complexity of the institutional and legislative framework in which the CICC operates, and evaluates the significance of its first six years. It appears that the CICC does not pose a significant threat to the established norms of international commercial arbitration. Instead, it coexists and even collaborates with other institutions in China and the Greater China Region. This is essential in understanding the legal and dispute-resolution framework of doing business with China.

I would be happy to discuss my findings in more detail with anyone interested and provide a full copy of my paper.