New International Commercial Courts: A Comparative Analysis – and a Tentative Look at Their Success

During the past two decades a number of jurisdictions have established so-called ‘international commercial courts’. These courts are located in various regions of the world and have attracted a lot of attention because they enrich the current landscape for the resolution of international disputes. In particular, they present themselves as alternatives to litigation before ordinary courts on the one hand and to international commercial arbitration on the other. In ‘Success and Impact of International Commercial Courts: A First Assessment’ [2022-2023] Yearbook of Private International Law 45, we provide a first (but tentative) assessment of (a) how recently established international courts do in practice; and (b) how successful they have been in achieving their professed aims. Building on a comparative study that we had the privilege to conduct under the auspices of the International Academy of Comparative Law (IACL) and that has just been published (Yip & Rühl (eds), New International Commercial Court: A Comparative Perspective (Intersentia 2024)) we find that international commercial courts have to do more to convincingly demonstrate that they are ‘game changers’ for the resolution of international disputes.

Core Settled Meaning and Conceptual Penumbra

We start our analysis with a discussion of the notion of ‘international commercial courts’—and an interesting observation: the term ‘international commercial court’ is not legally or otherwise defined. Nonetheless, there is broad agreement that the following nine courts clearly count as international commercial courts: the Dubai International Financial Centre Courts; the Qatar International Financial Courts; the Abu Dhabi Global Market Courts; the Singapore International Commercial Court , the Chinese International Commercial Courts; the Astana International Financial Centre Court; the Netherlands International Commercial Court, the French international chamber in Paris, as well as the large number of German international chambers. We submit that these courts share three essential features that together determine what we define as the settled core meaning of international commercial courts.

First, these courts are judicial bodies established by a state. They were not established by an international body or the international community, the way the International Court of Justice or the International Criminal Court had been created. Second, the international commercial courts were established to settle international disputes, although their jurisdiction may not be strictly confined to disputes with a cross-border element. Third, as a matter of their institutional and procedural framework, the modern international commercial courts exhibit innovative features that are oriented towards internationalization and set them apart from the normal domestic courts in their respective jurisdictions.

However, we also find that there is a conceptual penumbra in which it is debatable whether a court can be regarded as an ‘international commercial court’. It comprises (at least) the London-based Commercial Court of England and Wales and the New York federal and state courts. These courts are domestic commercial courts that have developed a global reputation for the settlement of international commercial disputes with recognized openness to foreign parties. However, unlike the modern international commercial courts, they were established to improve the resolution of domestic disputes. Notably, they do not exhibit specific institutional or procedural features geared towards internationalization: they are exclusively staffed with local judges, apply the ordinary rules of civil procedure, and their procedural innovations were not created with internationalization as the primary goal. This blog post as well as the abovementioned article and study, therefore, focus on modern international commercial courts that exhibit all three essential features identified above. Specifically, we offer thoughts on the driving forces and the motivation for their creation, their institutional and procedural design as well as, finally, their success and impact in practice.

Driving Forces and Motivation

Starting with the driving forces and the motivation for the creation of international commercial courts, we find that the abovementioned jurisdictions are united by the wish to make themselves an attractive dispute resolution venue for international litigants. The reasons underlying this common wish, however, differ across jurisdictions. In respect of the international commercial courts in Abu Dhabi, Dubai, Qatar and Kazakhstan, they were created in Special Economic Free Zones as a trustworthy, reliable dispute resolution mechanism with the aim of attracting international investors. In respect of other jurisdictions, such as the Netherlands and Singapore, the driving force behind the establishment of their international commercial courts was to boost the national legal services industry. France and Germany, on the other hand, are less ambitious and have created their special chambers with the view of improving the resolution of cross-border disputes for local or regional businesses. The ambition of China is more political in nature: the Chinese International Commercial Courts were for the political (and economic) agenda of protecting and fostering the Belt and Road Initiative. The reasons for the establishment of international commercial courts, thus, vary widely. And we submit that the different reasons have a decisive influence on the institutional and procedural design of the courts. In fact, we observe that the more ambitious the reasons for the establishment of the international commercial court, the more ambitious their design.

Institutional and Procedural Features

As indicated at the beginning, all courts that fall into what we perceive to be the core of international commercial courts, exhibit special institutional and procedural features that can be described as innovative on the one hand and as geared towards internationalization on the other. However, the degree of innovation and internationalization varies: while (most of) the European international commercial courts are to be found on the less ambitious side, (most of) the Asian international commercial courts and those in the Gulf region are found on the more ambitious and advanced side. We use two examples to illustrate this point

The first example relates to the appointment of judges. Some international commercial courts, namely those in Abu Dhabi, Dubai, Qatar, Kazakhstan, and Singapore, allow foreign judges to hear disputes alongside domestic judges. They, hence, obviously try to capture the benefits of an international bench which are well-known from the world of arbitration. What is equally interesting, however, is that the aforementioned courts do no invite just anybody to sit on the bench. In fact, they overwhelmingly draw on (retired) English judges and judges from other common law jurisdictions. This clearly shows that common law courts, notably the English courts (including the London Commercial Court), enjoy a special reputation in the world of international dispute resolution. And by bringing in judges from these courts, Abu Dhabi, Dubai, Qatar, Kazakhstan and Singapore attempt to enhance the branding of their newly-created courts by importing some of that reputation and expertise. The situation is markedly different for the specialist courts in China, France, Germany and the Netherlands. In these jurisdictions, only national judges sit on international commercial courts. The Chinese International Commercial Courts, however, may have a slightly more international outlook by appointing foreign jurists, in addition to Chinese experts, to their ‘International Commercial Law Expert Committee’.

The second example relates to the conduct of proceedings. All modern international commercial courts offer more flexible, arbitration-style and/or more English-style proceedings than their other domestic courts. But some offer greater flexibility than others. The courts in the Gulf region and in Kazakhstan apply a separate set of procedural rules that largely follow English procedural rule. The courts in the Netherlands, China, and Singapore, being chambers or divisions within the domestic court system, in contrast, apply the general rules of civil procedure with various rules being customized to better suit the international and commercial nature of the disputes. Finally, there are the France and Germany. They apply the ordinary (national) rules of civil procedure, which are mandatory in nature, that are applied in ordinary courts. They, however, allow flexibility in practice, for example, by engaging in active case management or allowing proceedings to be conducted in English to the extent possible.

Success and Impact

Institutional design aside, the pertinent question is this: how successful international commercial courts have been in reaching their aims to become attractive dispute resolution venues for international litigants and whether they are rightly touted as ‘game changer’? We suggest that two criteria should be used to help us analyze these courts’ success in two different ways. First, the number of cases that international commercial courts have received, in particular, by comparing the number of direct filings based on parties’ choice to the number of cases received by reason of other bases of jurisdiction and, second, the impact that international commercial courts have on the local judiciary and the domestic legal system. The first criterion measures the success of international commercial courts based on these courts’ professed goal of making an attractive dispute resolution offer to litigants. The second criterion measures their success based on their larger impact on the dispute resolution landscape. This second criterion addresses the debate between the proponents and opponents of international commercial courts. The former argues that international commercial courts would have positive spill-over effects on the local judiciary while the latter fears the bifurcation of the civil justice system resulting in good courts for the rich and bad ones for the poor.

Starting with the first criterion, the available data suggests that only the international commercial courts established in free economic zones settle a larger number of cased submitted based on parties’ choice. All other international commercial courts, notably those established in France, Germany the Netherlands, China and Singapore, have settled far lower number of cases which are directly filed with the courts based on parties’ choice. This finding coincides with recent studies which suggest that international commercial arbitration remains the most popular mechanism for the resolution of international commercial disputes. It also aligns with the finding of our study that in most jurisdictions the majority of international cases are still settled by ordinary courts, and not by international commercial courts.

As to the second criterion, whilst the spill-over effects may be hard to observe (or trace), there is anecdotal evidence that at least some international commercial courts have started to change their local civil justice environment (and arguably for the better). Take, for example, Germany: more and more Länder, ie the federal States that make up the whole of Germany, have set up international chambers over the past years. In 2010, there were only two international chambers; in 2024, there are now seven. In China, the creation of the two Chinese International Commercial Courts in 2018 has recently been followed by the establishment of no less than twelve local international commercial tribunals in various Chinese cities. Although these developments may be regarded simply as part of the trend of proliferation of international commercial courts, it can also be understood as examples for how international commercial courts (or chambers) may exercise a good and healthy influence on the local judiciary.

Conclusion

In light of the above, we conclude that international commercial courts have had some positive influence on the resolution of international commercial disputes and the dispute resolution landscape at large. Overall, it remains to be seen whether they are able to seriously compete with international commercial arbitration as a means to settle international disputes. In view that the creation of international commercial courts is still a fairly recent phenomenon, a final verdict is premature at this stage. In addition, more (empirical) studies need to be conducted to help us fully understand the impact of international commercial courts on the resolution of international disputes as well as their relative significance vis-à-vis international commercial arbitral tribunals on the one hand and ordinary courts on the other.

Man Yip is Professor of Law at the Singapore Management University.

Giesela Rüh is Chair for Civil Law, Civil Procedure, Private International Law, International Civil Procedure and Comparative Law at Humboldt University of Berlin.

The full article is available here.