Chongqing- The China (Chongqing) Pilot Free Trade Zone (CFTZ) has celebrated its 5th anniversary on April 1st. The mission of the CFTZ is to fertilize innovative policy all way around. The international commercial dispute resolution mechanism has been significantly developed in the past five years. The mechanism for one-stop international commercial dispute resolution innovated by the Liangjiang New Area (Pilot Free Trade Zone) Court has been recognized as one of the best practice cases in China.

The mechanism

The honor of this mechanism comes from its advantages of diversity, efficiency, and convenience.

"There are three main ways to resolve international commercial disputes: litigation, arbitration, and mediation. In the past, these three ways were independent. However, under the international commercial dispute resolution mechanism, related parties only need to visit the Chongqing One-stop Diversified International Commercial Dispute Resolution Center to get through the three ways simultaneously. It's easier to find the right agency in high efficiency and cost-saving," said Jia Ke, vice president of the Liangjiang New Area (Chongqing FTZ) Court.

The Liangjiang New Area (Chongqing FTZ) Court opened in 2018, and the year after, It launched the mechanism of one-stop diversified international commercial dispute resolution.

Chongqing has successfully mediated 184 international commercial cases, accomplishing the first docking case of international commercial litigation in China.

The first docking case of international commercial litigation in China

Company E is a limited liability company located in Moscow, Russia, undertaking international tourism business. Since 2017, company E has been entrusted by Chinese company K as its Russian ground pick-up travel agency, responsible for receiving the ground pick-up service for travel to Russia.

After the ground pick-up service fee is paid in advance by company E, company K should pay company E according to the travel service period. Disputes arose between the two parties because company K owed the ground service fee to E company.

Then, company E sued company K in court, requiring company K to pay the ground service fee and the loss of overdue payment.

The one-stop solution

After reviewing the dossier materials, the court judge believed that this case was a dispute over property rights and interests between equal parties, which was arbitrable.

The judge informed both parties that they could use the "one-stop" dispute resolution mechanism to choose the most suitable method. To resolve disputes efficiently and conveniently by choosing from the three dispute resolution methods of litigation, arbitration, and mediation.

Both parties unanimously agreed that this case would be arbitrated by the Southwest Branch of the China International Economic and Trade Arbitration Commission, or the CIETAC Southwest Branch.

Subsequently, the plaintiff filed an arbitration application with CIETAC Southwest Branch and applied for withdrawal of the lawsuit with the People's Court of Chongqing Pilot Free Trade Zone.

The court made a ruling approving the case withdrawal and handed over the case materials to CIETAC Southwest Branch.

After the CIETAC Southwest Branch accepted the application, it deducted the litigation fee already collected by the court when collecting the arbitration fee. The case was finally resolved by arbitration and mediation.

Legal environment crucial to the CFTZ

Jia told iChongqing that this mechanism has prevailed in international commercial dispute resolution, but it is the first practice in China. This exploration depends on Chongqing's unique location advantages in the New International Land-Sea Trade Corridor, ASEAN countries, and the Belt and Road.

As one of the six pilot cities to innovate the national business environment in China, Chongqing provides diversified choices and legal protection for the CFTZ through the mechanism.

Jia introduced this mechanism has become a competitive component to improve the legal environment in Chongqing, which will promote foreign investment in Chongqing and facilitate more Chinese enterprises to go global.

In 2021, the State Council launched six pilot cities for business environment innovation in China. Beijing, Shanghai, Chongqing, Hangzhou, Guangzhou, and Shenzhen are the six cities. The pilot measures include improving cross-border trade facilitation, optimizing foreign investment and international talent service management, etc.