Source: Global Times    Published: 2018-6-28

China plans to establish two international courts to resolve business and investment disputes involving the Belt and Road initiative, with experts saying the courts will be international judicial institutions designed in accordance with international rules and laws and will invite notable and authoritative legal experts and professionals from outside China to participate.

The Supreme People`s Court will set up the first international commercial court in Shenzhen in South China`s Guangdong Province, which will deal with disputes in the 21st Century Maritime Silk Road. The second court in Xi`an, capital of Northwest China`s Shaanxi Province will deal with issues on the Silk Road Economic Belt, the Xinhua News Agency reported on Wednesday, citing a notice issued by the State Council, China`s cabinet.

The two courts will be authorized to settle and arbitrate cross-border commercial disputes in the China-proposed Belt and Road initiative.

The plan to establish a mechanism to legally resolve trade and investment disputes arising from issues related to the Belt and Road initiative was approved during the second meeting of the Leading Group for Deepening Overall Reform of the 19th Central Committee of the Communist Party of China in January, Xinhua reported.

Questions and concerns

The plan to establish the two courts has raised questions, concerns and some skepticism from Western experts and business professionals.

"The judiciary is subservient to the Communist Party of China and its interests, which will raise legitimate concerns around impartiality," Hugo Brennan, an analyst at the risk consultancy Verisk Maplecroft, said in an interview with CNBC.

"We can understand these concerns from the West. Before the Asian Infrastructure Investment Bank (AIIB) was established, there were many questions and concerns from the outside world, but now AIIB is running pretty well. China needs to patiently explain and publicize its policies and ideas regarding the courts, and respond to these questions," Liu Zhiqin, a senior fellow at Renmin University of China`s Chongyang Institute for Financial Studies, told the Global Times.

The international commercial courts are akin to an international judicial institution and won`t be subordinate to the People`s Supreme Court, which consists solely of Chinese personnel, Liu said.

"Like the AIIB, the courts will include notable and authoritative legal experts and professionals to assure its legitimacy, transparency and impartiality," Liu said.

Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, said "an international arbitration institution needs to win respect and acknowledgement from the international community, otherwise it would be useless. The courts that China plans to establish are not Chinese institutions, but China-proposed international organizations. They will be independent."

The international commercial courts will follow some key principles, including jointly developing and sharing of the mechanism and handling disputes in a fair, efficient and convenient manner, Xinhua reported.

Better legal support

Some Chinese companies that have invested or done business in some regions such as Central Asia and Africa have run into conflicts but found the legal system in those countries not very modern, and this is why international commercial courts are needed, Xiang Junyong, a Beijing-based expert on the Belt and Road initiative, told the Global Times.

The international courts based in China will be designed to improve transparency and provide more professional legal support for economic activities involving the initiative, Xiang said.

Liu Zhiqin is a senior fellow of the Chongyang Institute for Financial Studies at Renmin University of China.