Walter Hutchens’ Blog

Last week I was in Shenzhen to help judge China’s national rounds of the Jessup International Moot Court Competition. Twenty six teams from all over China participated in the competition, held at Shenzhen University.

The Jessup competition is in English. Each year teams stand before panels of make-believe judges (though some of the judges are, in fact, real-life judges) to argue a hypothetical public international law dispute, advocating on behalf of one or another sides of the dispute.

This year’s case concerned the admission of a particular nation-state to an inter-governmental organization (IGO) very much like the European Union. The nation-state was denied membership in the organization despite having fulfilled onerous terms set out as pre-conditions to its accession in an agreement between the nation-state and the IGO.

After the denial of accession, the nation-state arrested a diplomat from the IGO, entered its legation to seize records and passed a law that forbade profits from entities that had been privatized as part of the accession effort from flowing back to the IGO member states.

The nation-state then brought claims before the International Court of Justice, suing the IGO member states for breach of the accession agreement.

The IGO member states counter-sued for breach of international law for the failure to provide immunity to the IGO’s diplomat and legation premises.

The IGO member states also claimed the law banning repatriation of profits was an illegal expropriation.

Around these substantive claims were problematic issues of standing because the International Court of Justice is by the terms of its organic statute only empowered to hear claims brought by nation-states.

The competition was organized by Prof. Zhu Wenqi from People’s University in Beijing. He did a great job, running a smooth and fair competition and giving both the students and judges an enjoyable experience. I made lots of new friends and thoroughly enjoyed the experience.

The law firms Lovells, Fangda and White and Case were sponsors of the national competition, along with the Wang Family Foundation whose executive director Prof. Francis Wang also participated as a judge.

Justice Carlos Moreno from the California Supreme Court presided over the final rounds (I was honored to serve on the final panel, in which a team from People’s University competed against a team from Xiamen Univ. before a crowd of a few hundred).

Because I have spent many years studying Chinese, I could genuinely appreciate how awesome a feat it is for these students to argue in English about complex factual and legal matters, with frequent interruptions from judges whose questions probed the core issues (and sometimes raised offbeat, unexpected matters). The three finalist teams—and many individual advocates from teams that didn’t advance—were excellent. They had mastered the facts and the law and were generally unflappable under fire, providing legal backup for their points (not merely asserting conclusionary statements as so many students to do) and were able to nimbly distinguish difficult precedents and rules.

Sometimes I am discouraged by developments in China, but listening to these outstanding students renewed my optimism about China’s prospects for further developing legal education and even stoked my hopes that over the longer term a stronger version of the rule of law will develop in China.

This is the Jessup’s 48th year and the fifth year Professor Zhu has organized a national tournament in China, so it was denoted in Chinese as something like the Fifth National Moot Court Tournament on International Law or 国际法模拟法庭中国第五届全国选拔赛 (Guojifa moni fating Zhongguo di wu jie quan guo xuanbasai). More information about the Jessup competiton is here.

My second appearance on Dialogue, a show on China’s national English language television channel (CCTV-9), came off pretty much as expected.

The other discussant was Prof. Wang Changyun, a finance professor from People’s University.

The show’s host Tian Wei did her best to provoke Prof. Wang and I into a lively discussion about the current turbulence in China’s stock markets. Prof. Wang and I, however, are more academic analysts than pundits, so I’m not sure she got what she wanted.

I think I managed not to say anything too stupid (always my first fear) and made a few points I wanted to make. My expertise, such as it is, concerns market regulation more than trading, so I really wasn’t the perfect guest to talk about “stock market fever.”

My main impression about television is that the discussion is always over before it’s really started. The first time I was on Dialogue it was pre-recorded and edited down, but this time it was broadcast live so the available time was even more truncated.

Later I’ll get a DVD with the segment on it and may upload it here (and the station may put the show on the Internet as they did last time), but here are a few low res screen captures my wife made when the show was rebroadcast later on the same night after it first aired.

Interesting article in the Washington Post today about two new members of Congress who are making their daily schedules available online.

I’ve been invited to be a guest on the news talk show Dialogue tonight to discuss recent events in China’s stock markets. It’s supposed to be a live broadcast, airing about 7:30 pm Beijing time (GST +8).

The mainland exchanges in Shanghai and Shenzhen had fabulous years in 2006.

The Shanghai composite index grew about 130%, exceeding 2,600 by year end, a dramatic recovery from the 1,000-ish level the index reached in 2005.

The (notional) total market cap of China’s mainland exchanges reached about a trillion US dollars, making them the world’s tenth largest stock markets, according to some accounts.

Daily trading volumes also ballooned as lots of new investors and capital entered the markets.

IPOs began again after a long moratorium.

The massive IPOs of Bank of China (USD 9.7 billion) and ICBC (USD 22 billion) both had large mainland A-share tranches to augment their “overseas” listings in Hong Kong (unlike say the earlier IPOs of China Life and China Mobile which were inaccessible to mainland investors).

Reform of the share classification system is essentially complete, eliminating (at least on a de jure basis) the difference between tradeable shares and illiquid shares (state owned or legal person shares, fei liutong gu, that formerly comprised most of the share capital of listed firms). This was accomplished by basically paying off the holders of listed shares, giving them about 3 shares for every 10 held to assuage any pain from price drops when more shares become tradeable (a practical solution, though dubious in terms of its fairness to the “whole people” for whose benefit those shares were ostensibly held, since “their” assets were transferred to investors whose consideration was simply their consent to the share reform process, when those investors had no explicit guarantees they wouldn’t be diluted).

The role of institutional investors also surged ahead, with 40% of the listed shares now held by institutions, according to PRC reports.

Lots of investors are obviously very happy about the market’s 2006 upturn.

Many had shares that had been under water throughout the 4.5 year bear market. Many have finally recovered the lost value and made positive returns. Indeed, anybody who got in at the trough and is now holding blue chips must be ecstatic.

Predictably, more folks are clamoring to get in. Recently there are reports of loans for apartments and cars being diverted into stock market accounts, and NPC vice chairman Cheng Siwei and others have warned of a bubble, triggering big adjustments this week.

The TV folks want to talk about all this, though they are probably more interested in it from the perspective of an investor rather than a policy and legal analyst. I don’t know who the other guest will be (they usually have two, one “foreign” and one Chinese).

Unlike the last time I was on, this time is supposed to be a live broadcast. I’ll have to hope I don’t sneeze.

Incidentally, some people avoid Chinese TV appearances because they don’t want to collude with or be seen as assenting to the Chinese government’s control of media. I can see the reasoning for such a stance (I certainly wish there was more press freedom in China), but I’m very comfortable being on Dialogue to talk about stock markets. Nothing I can imagine saying, no matter how radical compared to current practices, hasn’t already been forcefully argued in the Chinese financial and academic press already. Also, nothing I said last time was edited in any way that bothered me or seemed to dilute what I was saying (though I admit to being more “diplomatic” than was necessary—during a break the host actually encouraged me and the other guest to cross swords more, which might just happen tonight).