BRI and China’s International Commercial Courts

SOME COMPARISONS CAN BE MADE BETWEEN THE OLD SILK ROAD and China’s modern Belt and Road Initiative (BRI), which has been dubbed “the New Silk Road”. Some interesting comparisons – revealing both similarities and differences – can also be made between the traditional and modern systems of dispute resolution in China. This column examines the impact of China’s new international commercial courts on disputes arising out of the BRI.

China has undertaken a number of significant reforms in recent years to improve the professionalism of its court system and, in particular, to increase the independence of the courts from local governments and local interests.

Despite these reforms and the increasing professionalisation of courts generally, the courts in China still face many challenges. For example, there is still a significant gap between the professionalism of courts in major cities such as Beijing and Shanghai and those in other parts of China, particularly in the rural areas. Another operational challenge, particularly in a country as big as China, is the varying quality of judges in terms of their experience and expertise.

Partly as a result of these challenges, the courts in China have traditionally not been the first choice for commercial dispute resolution, particularly for the purpose of resolving commercial transactions involving foreigners and foreign investors. To date, the overwhelming majority of foreign investment contracts between Chinese parties and foreign parties have chosen arbitration as the mechanism for resolving disputes.

The popularity of what we in common law jurisdictions describe as alternative dispute resolution mechanisms, such as arbitration and mediation, should come as no surprise for those who are familiar with China and its legal system. The origins of the aversion to courts and their proceedings go back a long time before the modern era and reveal some interesting historical parallels.

The above is based on a presentation delivered by the author at a seminar entitled “The New Silk Road: Perspectives from the East to the West”, held in Warsaw on 11 May 2019 and hosted by the Polish Research Centre for Law and Economy of China, the School of Law and Economy of China at the University of Warsaw and the Harvard Club of Poland.

A former partner of Linklaters Shanghai, Andrew Godwin teaches law at Melbourne Law School in Australia, where he is an associate director of its Asian Law Centre. Andrew’s new book is a compilation of China Business Law Journal’s popular Lexicon series, entitled China Lexicon: Defining and translating legal terms. The book is published by Vantage Asia and available at law.asia.