China is considering the use of a specialized court to handle finance-related lawsuits in Shanghai to improve the country’s judicial capability and better prevent financial risks.
The proposed establishment of the Shanghai Financial Court was submitted to the Standing Committee of the National People’s Congress for deliberation as the top legislature began its bimonthly session on April 25.
The civil court, which would deal with financial disputes in the city, aims to bolster the international influence of China’s financial jurisprudence, forestall financial risks and steer the financial sector toward serving the real economy as well as building Shanghai into an international financial center by 2020, said Zhou Qiang, president of the Supreme People’s Court, who briefed the lawmakers.
“Financial security is an important component of national security and a key basis for healthy economic development,” he said, adding that a sound legal environment for finance is a basic element and important guarantee to help build China into a strong economy.
The special court in Shanghai, a pioneering practice that is being proposed, will help form a joint force between the judiciary and the financial supervisory departments to tighten market supervision and prevent systematic risks, Zhou said.
According to the proposal, the court would be at an intermediate level, hearing a variety of finance-related civil and administrative disputes, such as those on loans, insurance, securities and lawsuits against financial supervision authorities.
Shanghai People’s Congress, the municipal legislature, would appoint the financial court’s president, while judges for the court could be selected from senior commercial or civil judges or from lawyers and legal experts, according to the draft outlining the proposal.
Zhou said the top court opted to put the proposed pilot court in Shanghai because the city has many financial institutes and has witnessed a sharp rise in financial disputes in recent years.
Last year, courts in Shanghai handled the initial hearings on 179,163 finance-related cases. Between 2013 and 2017, the number of such lawsuits in Shanghai grew by an average 51 percent year-on-year, according to the top court.
Financial cases are also becoming increasingly complicated and require professional knowledge in court hearings, so a specialized court will help with that, Zhou said.
Due to the complexity of such cases, financial professionals may also be invited as consultants to help judges hand down fair and effective verdicts, according to the proposal.
Such a court also would lead to a better information-sharing system on preventing financial risks, a think tank on finance-related laws and a financial case database, it added.