For a long time, ascertainment of applicable foreign law, or proof of foreign law has been a challenging task for China courts in adjudicating foreign-related civil and commercial cases. In legislation, there is only one clause in the Law of the People’s Republic of China on the Law Applicable to Foreign-Related Civil Relationships (the “Foreign-related Civil Relationships Law”) dealing with the ascertainment of applicable foreign law, which is very general and concise[1]. It’s very difficult and time-consuming for China courts to ascertain foreign laws in their judicial practice. As one of the judges from China International Commercial Court (the “CICC”) under the Supreme People’s Court (the “SPC”) put it, ascertainment of applicable foreign laws has become one of the “bottlenecks” that has greatly decreased the efficiency of China court system in handling international commercial disputes[2].

In order to address this long-existing issue, on November 30, 2023, China SPC released the Second Judicial Interpretation on Foreign-related Civil Relationships Law (the “Second Judicial Interpretation”) which, effective as of January 1, 2024, aims to provide more detailed and easy-to-follow rules for ascertainment of foreign laws. The whole Second Judicial Interpretation contains 13 clauses, covering division of responsibility in law ascertainment between the trial court and disputing parties, methods employed to ascertain foreign laws, assessment of foreign law obtained, determination of the contents and application of foreign law obtained, and so on.

Pursuant to Article 10 of the Foreign-related Civil Relationships Law, the trial court is vested with the responsibility to ascertain the foreign law applicable to the dispute. Where the disputing parties have chosen a foreign law as the governing law, they are obligated to provide such a law. In case that the applicable foreign law cannot be ascertained or is silent about the issue to be decided upon, the law of PRC shall be applied. Article 1 of the Second Judicial Interpretation further stipulates that where the parties fail to choose a foreign law, the court shall take the responsibility to ascertain the foreign law to be applied.

It can be concluded from these clauses that in China the trial court has the responsibility to find and interpret the applicable foreign law, while provision of such applicable foreign law by disputing parties is just one of the ways for the trial court to ascertain foreign law, therefore the judge has the primary responsibility to ascertain foreign law but may be assisted by materials provided by the parties concerned according to the actual circumstances.

Foreign-related Civil Relationships Law is silent about the methods which may be used to ascertain foreign law, while the Second Judicial Interpretation gives out a broad and detailed list of methods to be employed, which are formulated on the basis of the previous practice adopted by China court system in the past decades. Specifically, the applicable foreign law can be ascertained in seven ways as follows:

1.to be provided by the parties to the dispute:

Where the parties did not choose a foreign law to govern their dispute, the China court entertaining the dispute may still request them to assist by providing the foreign law to be applied. However, under this circumstance, the parties are not obligated to do so. Where the parties fail to provide the applicable foreign law, the trial court will not squarely render a determination that the foreign law cannot be ascertained, and it shall further resort to other methods for further ascertainment.

2.to be provided by in accordance with judicial assistance treaties between China and foreign states:

Up to today, China has entered into bilateral judicial assistance treaties regarding civil and commercial proceedings with more than 30 countries and most of these treaties contain a clause with the heading of “Exchange of Information” or the like, which can be interpreted to include providing the laws or judicial practice of each side. For instance, Article 27, under the heading of “Exchange of Information”, of the treaty between PRC and France regarding civil and commercial judicial assistance, stipulates that “either party shall at the request of the other party provide information on its currently effective laws or previously effective laws, as well as information about its judicial practice with respect to civil and commercial matters”. This should have been employed by China courts as a method for ascertaining applicable foreign laws in their court proceedings. However, in practice, this method was not adequately used by China court system, perhaps due to the complexity of the process to be gone through.

3.to be provided by China embassy or consulates to the country concerned or by the embassy or consulates to China of the country concerned:

This is related to the diplomatic channels between two countries. The whole process is very complicated, time-consuming, and highly inefficient. In the past, China embassies to other countries once assisted China legislative bodies in collecting documentations about the law of other countries towards their legislature activities, but they seldom assisted China courts in finding and interpreting the law of other countries for their dispute adjudication.

4.to be provided by the participant state concerned to any foreign law ascertainment collaboration mechanism established or participated in by China SPC:

In recent years, China SPC has established many collaboration mechanisms towards its judicial practice with a lot of foreign countries, particularly with those countries who have consented to participate in the Belt and Road Initiative proposed by China. On December 3, 2021, China SPC and Singapore Supreme Court entered into a memorandum of understanding on information of foreign law, which stipulates in its Article 1 that “if it is necessary for courts in either state to apply the law of the other state in adjudicating international civil and commercial cases, a request may be made by one state to the other to provide information and opinions on its domestic law and judicial practice in civil and commercial matters, or matters relating thereto”. This can be deemed as a good start for China SPC to establish direct cooperation mechanism in foreign law ascertainment with its counterparts in other states.

5.to be provided by experts on the International Commercial Expert Committee established by China SPC:

In August 2018, China SPC issued a decision, declaring its scheme to set up an International Commercial Expert Committee (the “ICEC”), of which one function is to provide advisory opinions on specific legal issues in international commercial dispute cases for China courts. The working rules for the ICEC further states that one of its duties entrusted by the CICC is to provide advisory opinions on specialized legal issues concerning international treaties, international commercial rules, finding and applying foreign laws involved in cases heard by the CICC and China Courts at all levels. Since August 2018, the SPC has appointed three groups of experts on the ICEC. Today, there are 69 experts in total, both China nationals and foreign nationals, still included in the list of the ICEC. However, China SPC didn’t release any statistics about the ascertainment of foreign laws by these experts in the past few years since its establishment.

6.to be provided by foreign law ascertainment service entities or by China or foreign legal experts:

Since 2019, China SPC has been working together with five entities in China on the ascertainment of foreign laws, which include four foreign law ascertainment centers respectively established by four prestigious China universities and a company based in Shenzhen specializing in foreign law ascertainment service by name of Benchmark Chambers International & Benchmark International Mediation Center. These five entities have been included in the foreign law ascertainment platform under the CICC. China SPC didn’t release any statistics regarding the mandates entrusted to and ascertainment reports made by these entities. However, as per a news brief released by the foreign law ascertainment of China University of Politic Sciences and Law in its website, it has accepted six appointments by some China courts to ascertain the laws of other countries, such as Singapore, Mexico, Mongolia, France, UK and USA, and all the reports submitted by it were accepted and admitted by those appointing courts.

As for provision of foreign law by experts, China courts seldom engaged experts to do so prior to the establishment of the ICEC in 2018, but in many cases, the disputing parties did engage experts to assist themselves to provide the applicable foreign law and deliver their expert opinions.

7.to be ascertained through other suitable ways:

This is an open-ended provision. The Second Judicial Interpretation does not specify what and how other methods can be deemed as suitable, however, as per one person-in-charge from the SPC in a press release in 2023, the Second Judicial Interpretation is open and flexible about this issue, and the stand of China SPC is to encourage China judges and disputing parties to obtain foreign laws through international organizations, academic societies, legal databases and internet etc[3].

To sum up, the Second Judicial Interpretation sets out seven methods to be used for ascertaining foreign laws, and the trial court has the primary responsibilities for ascertainment. A question frequently asked is whether the trial court should exert all their efforts or employ all these methods to ascertain the applicable foreign law, particularly when the foreign law is hard to find and interpret? The answer is NO. As a judge from the SPC says, China courts just use their reasonable efforts or methods to ascertain the foreign law to be applied.

All the documents or materials obtained concerning the applicable foreign law shall be presented for questioning and assessment during courtroom sessions, and all the parties are entitled to deliver their opinions and debate concerning their understanding and application of the law at issue, and the trial court shall make its decision based upon such opinions or debates.

Where the trial court considers it necessary, it may issue a notice notifying the law ascertainment entity or legal expert who provided the foreign law at issue to appear in court for questioning. Where any disputing party believes it necessary to question such a law ascertainment entity or legal expert, it may make an application to the court requesting such an entity or expert to appear in courtroom for questioning, while the trial court has its discretion as to grant such an application or not, depending upon whether it consents the necessity to do so.

If the trial court has decided to have the law ascertainment service entity or legal expert to appear for questioning, but the circumstance indicates that it is really difficult for such an entity or expert to appear physically in the courtroom, the questioning can be conducted online, except that such an online questioning is prohibited by the laws of the jurisdiction where the law ascertainment service entity or legal expert is situated. However, such a law ascertainment service entity or legal expert is not allowed to attend any courtroom hearing except to deliver its opinions and understanding concerning the foreign law at issue.

Where all the disputing parties have no objection to the content, interpretation and application of the foreign laws at issue, the trial court may squarely determine to apply such law. In case that any disputing party raises an objection to the content, interpretation or application of the foreign law at issue, it shall present to the court its grounds for such an objection, and if the court considers it necessary, it may demand a further ascertainment or any supplemental materials from the disputing parties. If there still arises any objection from the disputing parties after such a further ascertainment or supplemental materials process, the court may make its final determination on its own. Where the content of applicable foreign law has been confirmed in an effective and binding prior court judgment, the court shall determine to apply such foreign law squarely without any questioning, except that it can be defeated by sufficient evidence produced by any disputing party.

Where the parties have agreed to apply a certain foreign law to their disputes, for instance, in a commercial contract governing law clause, if the parties, without any justification fail to provide the specified rules of texts of the foreign law within the time limit designated by the trial court, the court may determine that the foreign law chosen by the parties cannot be ascertained and then directly apply China law to the case before it.

While composing its judgment for the case, the court shall include the process which has been gone through to ascertain the applicable foreign law, the content thereof, and the reasons why it holds the foreign law cannot be ascertained if the ascertainment fails. The court shall also specify the allocation of fees and expenditures between disputing parties towards the ascertainment of the applicable foreign law.

In all, the Second Judicial Interpretation of SPC set out detailed rules concerning the ascertainment of applicable foreign law, aiming to address the long-existing bottleneck issue in applying foreign law in China judicial practice. Finally, some key takeaways as follow:

1.If the parties to a transaction have agreed to apply a certain foreign law other than China law as the governing law, while in courtroom litigation in China, the parties are obligated to provide such a foreign law, otherwise, the trial court may squarely determine that the agreed foreign law cannot be ascertained and then apply China law to the dispute before it;

2.Where a disputing party is obligated or requested by the court to provide the applicable foreign law, it should provide the specific prescriptions of the legal rules or texts of the law, together with an explanation about the channels used to obtain such rules or texts, the status or effectiveness thereof and their connection or links with the current case to be adjudicated;

3.All the documents or materials obtained concerning the applicable foreign law shall be presented for examination and questioning during courtroom sessions, and any party to the litigation is entitled to deliver its opinions and arguments concerning the understanding of the foreign law at issue;

4.Where a party to the litigation believes it necessary to examine or question the law ascertainment service entity or legal expert, it may make an application to the court requesting such an entity or expert to appear in court for questioning.