Opinion | How I learned to stop worrying and love Chinese courts
We may all have to take Chinese courts more seriously. Companies along the Belt and Road certainly will
The traditional view of Chinese civil and commercial courts is that they are beholden to vested interests and often hand out unfair judgments. This view is quite right, but only for local-level courts. The higher the level of court, the more difficult it is for a local state enterprise to exert pressure on its operations. As a basic rule of thumb, the entity exerting the pressure needs to be one rung above the institution it wants to influence.
Why English law could rule on China’s belt and road disputes
There are many exceptions to this rule, because in reality pressure is exerted on individuals, not institutions. Nevertheless, a city level company would have a very hard time influencing a judgment issued by a provincial level court.
If normal patterns of cross-border project dispute resolutions are to followed, one would assume it would be either by submission to international arbitration, or by English courts, as these are commonly used when both parties to a contract want to find a relatively independent resolution mechanism.
To date, the most common resolution method is arbitration, because recognition and enforcement of foreign arbitral awards is easier than that of foreign court judgments. Without an enforcement mechanism there is little point in a plaintiff winning a court case.
What could be worse than Belt and Road? A copy of Belt and Road
Such is the normal rule for cross-border contracts. But the normal rule might not apply: China is pushing hard for its courts to take the leading role. The Chinese Communist Party passed a policy document on January 23 called Opinions on Establishing Dispute Resolution Mechanism and Institution for the Belt and Road Initiative. The document remains secret, but was summarised for the media: the Supreme People’s Court established international commercial tribunals in Beijing, Xian and Shenzhen to establish a new Belt and Road dispute resolution mechanism for the Land Silk Road and Maritime Silk Road, which effectively means central and southern Asia.
