No.64 [2020]of Shanghai Financial Court
The establishment of the Lin-gang Special Area of the China (Shanghai) Pilot Free Trade Zone (the “Lin-gang Special Area”) marks a strategic step to expand openness taken by the CPC Central Committee with Comrade Xi Jinping as the core through overall deployment and scientific decision-making, and is a significant move in the new era to demonstrate China’s resolution to pursue all-round openness and its initiative in leading the healthy development of the global economy.
To implement the central government’s decision on establishing the Lin-gang Special Area, bring into full play the judicial functions of Shanghai Financial Court (the “Court”), serve and guarantee the financial openness and innovative development of the Lin-gang Special Area at a deeper level, in a wider scope, and with greater efforts, and provide a more just, efficient, convenient and predictable judicial safeguard for finance business and a world-class rule-based business environment for the Lin-gang Special Area, these Measures are hereby formulated in accordance with the Overall Plan for the Lin-gang Special Area of the China (Shanghai) Pilot Free Trade Zone issued by the State Council, Opinions of the Supreme People’s Court on Provision of Judicial Services and Guarantee by the People’s Courts for the Construction of China (Shanghai) Pilot Free Trade Zone Lin-Gang Special Area, Implementation Opinions of Shanghai High People’s Court on Providing Judicial Services and Safeguards for the Construction of the Lin-gang Special Area of China (Shanghai) Pilot Free Trade Zone by Shanghai Courts, and other relevant regulations, and in light of the practices of the Court.
1. Adhere to the adjudication principlesof financial cases; serve and guarantee the financial openness and institutional innovation of the Lin-gang Special Area according to law. The leadership of the CPC, the principle of serving the overall interests, and the guiding role of the rule of law shall be adhered to, and actions shall be taken to equally protect the legitimate rights and interests of Chinese and foreign parties in accordance with law, respect the parties’ autonomy of will, guarantee and spur innovation in the financial sector, and create a stable, fair and transparent legal environment for the financial sector. The Court shall, by benchmarking itself with best practices of international financial trials, build a trial system/mechanism for financial cases that is in line with international rules; apply Chinese and foreign laws, international treaties and international financial transaction practices with accuracy; and hear financial disputes involving foreign nationals or firms fairly and efficiently. For foeign-related financial disputes, the resolution procedures should be optimized to reduce litigation costs and improve process convenience. Attention should be focused on the Lin-gang Special Area’s pioneering role in piloting the opening-up of the financial sector. More efforts should be put in the detection,prevention, and resolution of financial risks so as to maintain the nation’s financial security.
2. Improve the financial trial mechanism and forge a court of first choice for resolving international financial disputes. The institutional and resource advantages of the Court, as a specialized court, in terms of collected subject matter jurisdiction, and expertness in financial disputes, and professional team should be leveraged to form as early as possible a specialized trial mechanism for financial cases, so as to facilitate the financial openness and innovative development of the Lin-gang Special Area, and enhance the expertise of trial of foreign-related financial cases. Efforts are required to establish new tribunal for trial of financial cases in the Lin-gang Special Area. For the trial of significant, complex, and new types of financial cases with foreign elements, the practice of hiring compatriots from Hong Kong, Macao, and Taiwan as people’s jurors should be explored. The litigation mechanism for financial disputes with foreign elements should be reformed at a deeper level, and for simple second-instance financial cases, the sole-judge trial system should be further promoted on a pilot basis. With the consent of all parties, foreign parties should be allowed to use English to participate in litigation activities, and intelligent real-time translation and simultaneous Internet live broadcast should be offered as an option.
3. Respect the parties’ choice of the court and lawfully exercise judicial jurisdictionover financial disputes with foreign elements. The Court shall observe the choice of court by the parties, properly determine the basis for jurisdiction, and recognize according to law the parties’ selection of Shanghai Financial Court by agreement for the trial of cases related to the Lin-gang Special Area, such as cases over cross-border financial transactions and offshore financial transactions. Where the parties’ selection of a foreign court as the competent court violates compulsory provisions on China’s exclusive jurisdiction, the Court shall exercise its jurisdiction according to law. For disputes arising from overseas financial transactions that disrupt the order of the domestic financial market and damage the legitimate rights and interests of domestic financial consumers and investors, the Court shall hear such cases according to law.
4. Refine the diversified dispute resolution mechanism and build a one-stop platform for resolving financial disputes with foreign elements. The Court shall adapt to the characteristics and respond to the needs of financial disputes with foreign elements in the Lin-gang Special Area and contribute efforts to form a one-stop diversified dispute resolution mechanism that integrates litigation, arbitration, and mediation. Exploration should be made to submit financial civil and commercial disputes between financial institutions, or between financial institutions and companies registered in the Lin-gang Special Area for arbitration by designated personnel at designated locations in accordance with designated arbitration rules. Efforts are also required in deepening cooperation with mediation agencies in the Lin-gang Special Area, inviting Chinese and foreign experts to serve as mediators, so as to deliver more professional mediation service for financial cases. The economic lever of litigation cost should be taken advantage of to guide the parties to resolve disputes through mediation. For collective financial disputes, the one-stop diversified dispute resolution mechanism of “model judgment＋professional mediation＋judicial confirmation” should be applied to provide professional, convenient and efficient dispute resolution solutions for Chinese and foreign parties.
5. Optimize the procedural rules for financial cases with foreign elements to provide a more convenient access to the Court. For financial cases with foreign elements, guidelines for case trial should be formulated, trial procedures should be standardized, and mechanisms of exterritorial service of documents, remote certification of evidence, court hearing, and proof of foreign laws should be perfected to enhance convenience of dispute resolution; well-established rules on electronic litigation should be put in place to serve the online trial of disputes; the scope of application of electronic service of documents should be broadened and the service process assisted by lawyers and social intermediaries should be explored in order to raise the effectiveness of service; if the extraterritorial evidence materials has been verified to be authentic, the notarization or certification procedures could be simplified; for the sake of more accurate application of foreign laws, a professional, convenient and efficient foreign law proving mechanism addressing both online and offline needs should be established through more in-depth cooperation with professional colleges and third-party expert agencies at home and abroad.
6. Appropriately try banking-related disputes in the Lin-gang Special Area according to law, with an aim to strengthen the role of cross-border investment and financing in serving the real economy. The Court shall try, in conformity with legal provisions, disputes concerning financial loan contracts, guarantee contracts, independent guarantees and letters of credit arising from cross-border financing, cross-border guarantee, cross-border payment and settlement business, as well as cross-border transfer of trade financing assets, so as to support the development of cross-border financial trade business in the Lin-gang Special Area. It shall hear according to law disputes involving entrusted wealth management contracts signed by companies in the Lin-gang Special Area such as wealth management companies controlled by foreign financial institutions, wealth management subsidiaries or specialized wealth management subsidiaries of commercial banks jointly established and invested by foreign financial institutions, and confirm the legal effect of innovative financial wealth management products that do not violate the prohibitive norms of laws and administrative regulations in a bid to protect the legitimate rights and interests of financial investors. Additionally, to serve the real economy, the Court shall hear, as required by law, financing guarantee disputes arising in such key industries areas as integrated circuits, artificial intelligence, biopharmaceuticals, aerospace, in the Lin-gang Special Area.
7. Properly handle securities-related disputes in Lin-gang Special Area according to law and guarantee market access and development of cross-border securities and futures business. The Court shall carefully and skillfully handle disputes arising from securities and futures transactions involving securities companies and futures companies that are controlled or wholly-owned by foreign investors, and shall try according to law disputes arising from overseas securities issuance and trading activities that disrupt the order of China’s domestic market and damage the legitimate rights and interests of domestic investors. The boundary of rights and responsibilities of securities transaction entities should be reasonably defined according to the special systems and arrangements applicable to cross-border securities transactions in disclosure, securities issuance, trading, registration, custody and settlement and in light of international judicial practice, so as to mitigate the legal risk of such entities and nurture an open, fair and just cross-border investment environment.
8. Appropriately resolve insurance-related disputes in the Lin-gang Special Area according to law and orderly facilitate the innovative development of cross-border insurance business. More efforts are required to ascertain the dispute-settlement needs presented by new and cross-border insurance products such as cross-border health-care insurance, export credit insurance, and cross-border guarantee insurance. Insurers in the Lin-gang Special Area should be encouraged to work together with foreign institutions to develop cross-border insurance products and innovative insurance products. The Court shall try disputes resulted from companies’ purchase of employer’s liability insurance, directors and officers liability insurance, and other types of insurance according to law, strengthen information-sharing and cooperation with insurance regulators, properly resolve various disputes involving life insurance and property insurance, clarify transaction rules, promote integrity in the insurance sector, improve relevant systems, and offer judicial support for the orderly development of the insurance sector in the Lin-gang Special Area.
9. Foster a sound legal environment for financial information and boost the cross-border data flow of financial transactions. The boundary of protection available to the right holders of financial information should be reasonably defined, the protection of digital financial information under the Internet environment should be strengthened, and the fair use of cross-border financial transaction data should be facilitated in accordance with the law. The Court shall hear in accordance with law infringement cases and financial administrative cases triggered by the illegal use of customer identity information, financial account information, and financial transaction information by financial institutions and other market entities, punish all kinds of market entities that use financial information for profit in violation of laws and regulations, and enhance cooperation and exchanges with financial, information and other regulatory authorities to establish a tiered system of civil, administrative, and penalresponsibilities and form a joint force for financial information protection.
10. Support fintech-based regulatory innovation and protect the legitimate rights and interests of financial consumers. The application of fintech for regulatory purposes by financial regulators should be encouraged, and the innovation in regulatory mechanisms in line with financial innovation and aimed at protecting the legal rights of financial consumers and preventing financial risks should be advanced. The Court shall observe the principles of legality review and endorse regulators’ establishing the entry and exit criteria of the “fintech-based regulatory innovation pilot mechanism” and improving the implementing process thereof. The financial consumers’ right to know and right to choose in terms of their participation in pilot test projects should be legally protected, and where the financial consumers suffer losses due to unreasonable risks inherent in the test projects or the failure of the test project implementer to fulfill the obligation of suitability or the obligation of notification and explanation, the test project implementer shall compensate the financial consumers for the actual losses. To properly resolve mass disputes triggered by the “fintech-based regulatory innovation pilot mechanism”, the model judgment mechanism and the representative action system shall be applied.
11. Step up judicial assistance and raise the effectiveness of preservation and enforcement of ADR decisions. A mechanism of online judicial cooperation with securities depository and clearing institutions should be established to achieve the online query and freezing of property and thereby boost the efficiency of enforcement. For financialarbitrations conducted by well-known foreign arbitral institutions established in the Lin-gang Special Area, the application for and enforcement of interim measures such as property preservation, evidence preservation, and behavior preservation submitted by Chinese and foreign parties prior to and during arbitration should be supported and ensured according to law. With regard to applications for preservation forwarded by arbitral institutions established in the Lin-gang Special Area or applications for enforcement of non-litigation financial dispute cases based on effective legal documents issued by arbitral institutions or notary institutions, the process should be optimized and the feedback and communication mechanism should be refined to upgrade the handling efficiency of alternative financial dispute settlement in the Lin-gang Special Area.
12. Further the extensive application of judicial technology to resolve cross-border financial disputes efficiently and conveniently. Through the deep integration of modern technology such as artificial intelligence, blockchain and big data, and the application of the Court’s latest achievements in judicial technology such as the case filing system, the smart litigation risk reminder platform, and the securities investor protection chamber, and the artificial intelligence-based simultaneous translation system, the system integration of paperless litigation services and electronic litigation enforcement should be improved so that one-stop online litigation services covering case filing, mediation, trial, and enforcement will be available. Efforts are also required in building a more convenient, smart, and efficient “digital financial court” and providing judicial technical support for the entire process of online case handling.
13. Leverage the guiding function of cases to enhance judicial predictability. The “test case” mechanism should be explored, and market entities in the Lin-gang Special Area should be guided to initiate test litigation on disputes that have a market significance, so as to clarify the boundaries of rights and obligations and regulate financial market behaviors in a timely manner. The Court shall jointly set up a practical research platform with the Shanghai Head Office of the People’s Bank of China and top universities and regularly publish typical cases in Chinese and English on the platform to effectively respond to the needs of the financial market. A guide for the judgement of similar cases shall be developed to summarize trial rules, unify judgment standards, and accordingly form a database of judicial cases that meets the development needs of the financial market and will stabilize expectations for cross-border financial dispute resolution. Cooperation with international legal information platform should be enhanced to proactively introduce typical financial cases to the international community, and explorations should be made to produce reference English translations of judgment documents and publish them on the Internet to enhance the international influence of China’s trial of financial cases.
14. Establish an expert committee to reinforce expert support for trial of financial cases with foreign elements. Experts from well-known universities and in the field of financial law should be invited to serve as members of the Expert Committee of Shanghai Financial Court. Such members are going to: give professional advice on significant, difficult, sophisticated, and new types of cases; provide advisory opinions on specific legal issues such as the identification and application of international treaties, international financial rules, and foreign laws involved in cross-border financial cases; be appointed as per the principle of parties autonomy to preside over or participate in the mediation of cross-border financial cases involving the Lin-gang Special Area; and conduct independent research on the trial practice of financial cases through the scientific use of judicial big data to serve the formulation, implementation and adjustment of policies for the Lin-gang Special Area.
15. Train talents specialized in international finance law to improve competency of cross-border financial dispute resolution. For this purpose, efforts are required to establish a mechanism of exchange, learning and personnel training in line with international standards and earnestly press ahead the “Financial Law Elite Project” and other training programs jointly held with well-known institutions; give full play to the role of “SFC Society of Financial Law”, the translation research team, and use the best practices of international financial trial as a reference for the trial practice of cross-border financial cases in the Lin-gang Special Area; encourage and support judges to participate in international judicial academic exchanges to build a team of well-rounded high-level financial trial talents who possess profound theoretical foundation and a good knowledge of international financial laws and regulations and are proficient in finance-related legal affairs, and to provide solid talent support for the construction of the Lin-gang Special Area.
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