China Opens Its First Finance Court
August 28, 2009
by Helen Tian and J. Ryan Hemingway
China recently opened its first court to deal specifically with financial disputes. The financial court was founded by Pudong Financial Service Office and Pudong People’s Court. The court is administered under the jurisdiction of the Shanghai Pudong New Area District People’s Court. The Court is named as the “Sixth Civil Court of Pudong People’s Court."
The Sixth Civil Court deals with banking, securities and insurance cases, involving not more than 50 million yuan (about USD $7.15). Other first instance financial cases involving more than 50 million yuan are handled by Shanghai Intermediate People’s Court. There are plans in the future to include more categories, but currently there is no jurisdiction over financial criminal cases or finance administrative cases.
Establishment of the financial court is another step by the authorities to develop Shanghai into an international finance center. The court will employ specially trained finance experts and judges, as well as maintain consistent communication with financial institutions, Ding Shouxing, director of Pudong People’s Court, said. The court also intends on publishing court rulings and case studies, thus making its rulings more transparent and consistent.
Pudong People’s Court accepted 127 financial cases in 2005 and over 1500 cases in 2007. Due to the lack of a special financial court in the past, many Shanghai financial institutions have sought adjudication or arbitration in Hong Kong, Singapore, and other areas with developed finance centers.
The financial court may provide an effective solution in deciding on a dispute resolution mechanism in international finance, e.g., domestic insurer/international reinsurance agreements. The court aims to provide the specialized expertise so often lacking in the regular courts, yet provide more in-depth handling of cases that some complain is lacking in arbitration. Because the decisions weigh directly on Shanghai’s finance center, it is also possible the court may provide a more neutral ground than what others have found in both arbitration and the regular courts. At this juncture, however, this is speculation.
We note that a second financial court is now set up under the Huangpu District People’s Court, following the Pudong New Area People's Court.
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