At 2:00 pm on December 9, Suzhou International Commercial Tribunal (SICT) opened a public hearing to hear the case of a loan contract dispute between plaintiff Korea Eximbank and respondent Changshu Guangcheng Electronics Co., Ltd. The trial marked the official opening of the SICT.
This case involved a financial loan contract dispute between Korea Eximbank and a wholly foreign-owned enterprise in China, the subject matter involving a high value and complicated foreign-related litigation subjects and legal facts, and common international commercial issues such as foreign exchange control and the applicability of foreign laws. During the trial, both parties argued whether the defendant should repay the principal and interest at the rate agreed to in the amended agreement. Under mediation presided by the tribunal, the plaintiff and the respondent reached a mediation settlement in tribunal.
The plaintiff and the respondent signed a loan agreement on June 10, 2011. On June 20, 2011, the plaintiff granted the respondent a US$2 million loan from an overseas financial institution. Since then, the two parties have renewed the loan agreement several times in the form of "repaying the sold debts with new loans". On June 22, 2018, they signed a revised loan renewal agreement for the unpaid principal and interest of US$1 million and raised the interest rate at the same time. "The two parties had disagreements on the effectiveness of the final contract’s article on the interest rate and whether the interest rate should be approved by the foreign exchange administration department. Under mediation organized by the tribunal, the two parties finally reached a mediation agreement with mutual understanding, protecting the interests of all parties," said Cai Yanfang, Deputy Chief Judge of SICT and the judge handling the case.
“SICT hopes to use this case to convey to all that, while handling the case, we are committed to protecting the interests of both Chinese and foreign parties on an equal footing and contributing to a good legal environment in Suzhou.”
Cai added that during the trial of foreign-related commercial cases, applicability of law is the foremost issue to handle, that is, which country’s law will be selected as the applicable law.
"In this case, although both parties agreed to apply South Korean law in the loan agreement, since this case involves financial security issues such as foreign exchange control, Chinese law should be compulsorily applied as the applicable law," Cai stressed.
The case was filed on June 24, 2020, and the two parties reached mediation agreement in the tribunal on December 9 the same year. It took less than half a year from filing to closing.
“The collegiate panel boasts strong professionalism and rich trial experience, which enables timely and efficient communication of evidence, materials and appeals of both parties, and adopts a dual mode of online and offline work to seamlessly proceed with the case.”
Jing Yandong, attorney for the plaintiff from Shanghai Huali Law Firm, said that the trial was fast, efficient, fair and just, which reflects the professional, convenient and internationalized trial environment of the SICT.
The SICT was recently inaugurated in Suzhou Industrial Park, Jiangsu Province. This is the first international commercial tribunal approved by the Supreme People's Court to be established in a local court. It will provide a strong legal guarantee for the innovation and development of the entire region and contribute judicial wisdom to build a world-class business environment in Suzhou.
As a specialized trial institution of the Suzhou Intermediate People's Court, SICT shall mainly have jurisdiction over the trial of first instance of a civil or commercial case with the subject matter of action involving a value of less than RMB 5 billion in the districts of Suzhou; cases in which the parties disagree with the judgments and rulings of foreign-related civil and commercial cases made by the People’s Court of Suzhou Industrial Park and appeal; and other cases accepted by the Suzhou Intermediate People’s Court that have foreign-related factors or are relevant with the opening-up of the economy, including civil and commercial cases in which one party is a solely foreign-invested enterprise, cases of letter of credit, and letter of guarantee disputes, civil and commercial judicial assistance cases, and arbitration judicial review cases.
"With the SICT, we have a more convenient, more efficient, and more concentrated judicial service window," said Yu Shuijuan, Chief Judge of SICT. The tribunal will effectively leverage the platform advantages of the Suzhou Intermediate People's Court, take in the requirements of the “Belt and Road” construction, higher-level opening up and the development of the Suzhou Area of China (Jiangsu) Pilot Free Trade Zone into consideration, implement a boutique strategy for foreign-related commercial trials, and strive to provide inclusive, equal, convenient, efficient, intelligent and accurate judicial services for Chinese and foreign parties, timely and effective judicial relief for Chinese and foreign market players, and stronger judicial guarantees for the implementation of major national strategies and Suzhou's high-quality development as a pace setter.
The establishment of SICT marks another important example of Suzhou's efforts to optimize its business environment. Suzhou is a highland of China's open development. At the end of 2019, Suzhou’s actual use of foreign capital amounted to US$132 billion, ranking third among large and medium-sized cities across the country. Suzhou is home to more than 400 projects invested by more than 150 Fortune 500 corporations. The Suzhou Industrial Park has seized multiple opportunities and developed into an international highland of openness and innovation. The Suzhou Free Trade Zone, which was established a year ago, contributes 7.9% of the actual paid-in foreign capital and 11.2% of the import and export volume of free trade zones nationwide with 2.78% of the total area of free trade zones nationwide.
"The SICT integrates legal service resources and explores the establishment of a one-stop international commercial dispute settlement mechanism, which improves the sense of gains of market entities such as foreign companies, and contributes to benchmark international standards, strengthening exchanges with universities, experts and scholars, and carrying out research on the forward-looking issues of commercial disputes in the free trade zone,” said He Tianhong, a senior partner of Beijing Yingke (Suzhou) Law Firm. The SICT accurately matches the strategic construction of the Suzhou Free Trade Zone from the perspective of judicial service guarantee, He said.