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CHALLENGES AND OPPORTUNITIES FOR THE CHINA INTERNATIONAL COMMERCIAL COURT

Published online by Cambridge University Press:  16 October 2019

Wei Cai Open the ORCID record for Wei Cai [Opens in a new window]  and
Andrew Godwin
Wei Cai
Affiliation:
Associate Professor, Law School, Sun Yat-sen University and Southern Marine Science and Engineering Guangdong Laboratory (Zhuhai), [email protected]
Andrew Godwin
Affiliation:
Associate Professor, Asian Law Centre, Melbourne Law School, [email protected].
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Abstract

China has confirmed its ambition to join the global competition for international business dispute resolution services by establishing the China International Commercial Court (CICC). The CICC has now begun operation following a judicial interpretation issued by the Supreme People's Court. By examining the trial process of the CICC as set out by the Supreme People's Court and comparing the rules with other international commercial courts, this article provides a detailed overview and critical analysis of the issues surrounding cases brought to the CICC. Overall, compared with the approaches adopted by other international commercial courts, the approach adopted by the CICC is conservative. Without bold innovations to China's existing judicial system, the competitiveness of the CICC is likely to be limited. This article argues that it is desirable for the Court to be more actively reformed. Such reforms might also promote judicial reform in China generally and increase China's institutional competitiveness in the global business world. This article also aims to outline the challenges that parties (in particular those from overseas) may face in litigation before the CICC and provide the international community with a critical analysis of the operation and framework of the CICC.

Keywords

private international lawInternational Commercial CourtChinajudgesjurisdictionBelt and Road Initiativeinternational business dispute resolution services
Type
Articles
Information
International & Comparative Law Quarterly , Volume 68 , Issue 4 , October 2019 , pp. 869 - 902
Copyright
Copyright © The Authors (2019). Published by Cambridge University Press for the British Institute of International and Comparative Law 

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24 中共中央关于全面推进依法治国若干重大问题的决定.

25 See the Pilot Programme for the Reform of the Specialized Career Path of Judges and Prosecutors (法官、检察官单独职务序列改革试点方案), and the Pilot Programme for the Reform of the Wages System of Judges and Prosecutors (法官、检察官工资制度改革试点方案) adopted by the Central Deepening Reform Group of the CPC on 15 September 2015.

26 The Supreme People's Court's Opinions on Improving the Judicial Responsibility System of the People's Court (最高人民法院关于完善人民法院司法责任制的若干意见) enacted on 21 September 2015. See also Provisions on the People's Courts’ Publication of Judgments on the Internet (关于人民法院在互联网公开裁判文书的规定) promulgated by the SPC on 29 August 2016 and came into force on 1 October 2016.

27 Lin (n 23).

28 World Justice Project Rule of Law Index 2017–2018, at 30 <https://worldjusticeproject.org/sites/default/files/documents/WJP-ROLI-2018-June-Online-Edition_0.pdf>.

29 See the Global Competitiveness Index 2017–2018 <http://reports.weforum.org/pdf/gci-2017-2018/WEF_GCI_2017_2018_Profile_CHN.pdf>; for 2016–2017 <https://www.weforum.org/reports/the-global-competitiveness-report-2016-2017-1>; for 2015–2016 <http://www3.weforum.org/docs/gcr/2015-2016/CHN.pdf>.

30 Art 1 of the Regulations.

31 A list of names and profiles can be found at <http://cicc.court.gov.cn/html/1//218/19/151/index.html#>.

32 Arts 8(4) and 13 of the Regulations.

33 SPC, news release <http://www.court.gov.cn/fabu-xiangqing-113961.html>.

34 Art 5 of the Regulations.

35 Art 11 of the Several Provisions of the Supreme People's Court on Evidence in Civil Litigation (最高人民法院关于民事诉讼证据的若干规定), effective as of 1 April 2002.

36 Art 10 of the Regulations.

37 Art 12 of Several Provisions of the Supreme People's Court on Evidence in Civil Litigation, effective as of 1 April 2002.

38 Section 2 of art 9 of the Regulations.

39 Art 9 of the Regulations.

40 Freshfields Bruckhaus Deringer, ‘China Establishes International Commercial Courts to Handle Belt and Road Initiative Disputes’ (Freshfields briefing) <https://communications.freshfields.com/SnapshotFiles/30d385d8-07d3-494d-acea-95a37747720b/Subscriber.snapshot>.

41 See arts 281 and 282 of the CPL.

42 An arrangement with the Hong Kong Special Administrative Region is in place under the Hong Kong Mainland Judgments (Reciprocal Enforcement) Ordinance (Cap 597).

43 Art 18 of the Regulations.

44 M Warren and C Croft, ‘An International Commercial Court for Australia – Looking beyond the New York Convention’, remarks at the Commercial CPD Seminar Series, Melbourne, at 3 <http://assets.justice.vic.gov.au/supreme/resources/2a7ead53-9ae9-4e26-9bad-56ef25d7d34c/aninternationalcommercialcourtforaustralialookingbeyondthenewyorkconvention.pdf>.

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46 Warren and Croft (n 44) 23.

47 For Australia, see Warren and Croft (n 44) 45.

48 Southwell, R, ‘A Specialist Commercial Court in Singapore’ (1990) 2 Singapore Academy Law Journal 275Google Scholar.

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50 Menon (n 5) 13–14.

51 DIFC Courts, ‘DIFC Courts Strategic Plan 2016–2021’, at 8, <https://www.difccourts.ae/2016/04/04/difc-courts-strategic-plan-2016-2021/>.

52 See its official introduction <https://www.adgm.com/doing-business/adgm-courts/adgm-legal-framework/adgm-courts-legal-framework/>.

53 About the AIFC Court <http://aifc-court.kz/>.

54 J Thomas, ‘Commercial Justice in the Global Village: the Role of Commercial Courts’ (Paper delivered for the DIFC Academy of Law Lecture, Dubai, 1 February 2016) at 15 <https://www.judiciary.uk/wp-content/uploads/2016/02/LCJ-commerical-justice-in-the-global-village-DIFC-Academy-of-Law-Lecture-February-2016.pdf>.

55 Art 13 of the Regulations.

56 He, Q et al. , ‘The Establishment of Chinese International Commercial Court (论中国国际商事法庭的构建)’ (2018) 13 Wuhan University International Law Review (武大国际法评论) 16Google Scholar; Shen, W, ‘The Trends, Logic and Functions of the International Commercial Court: A Perspective of Arbitration, Finance and Justice (国际商事法庭的趋势、逻辑和功能——以仲裁、金融和司法为研究维度)’ (2018) 5 Chinese Review of International Law (国际法研究) 126Google Scholar.

57 Art 2(1) of the Regulations.

58 Art 3 of the Regulations.

59 Art 1 of United Nations Convention on Contracts for the International Sale of Goods (1980) provides that: ‘This Convention applies to contracts of sale of goods between parties whose places of business are in different States: (a) when the States are Contracting States; or (b) when the rules of private international law lead to the application of the law of a Contracting State.’ Art 1 of Convention of 22 December 1986 on the Law Applicable to Contracts for the International Sale of Goods provides that: ‘This Convention determines the law applicable to contracts of sale of goods – a) between parties having their places of business in different States; b) in all other cases involving a choice between the laws of different States, unless such a choice arises solely from a stipulation by the parties as to the applicable law, even if accompanied by a choice of court or arbitration.’

60 See art 2 of the two conventions listed ibid.

61 It is consistent with art 522 of the 2015 Judicial Interpretation of the CPL.

62 In one arbitration, one party was a Chinese registered enterprise controlled by a foreign investor and the other was Chinese. The Beijing Second Intermediate Court considered that it was a purely domestic case and refused to recognise the arbitration award made by an overseas arbitration institution, given that Chinese law does not allow purely domestic disputes to be arbitrated by foreign arbitration institutions. See Beijing Second Intermediate People's Court (2013) Civil Verdict No. 10670 [北京市第二中级人民法院 2014 年 1 月 20 日 (2013) 二中民特字第 10670 号民事裁定书]. In another case, both parties were China registered enterprises controlled by foreign investors. The Shanghai First Intermediate Court considered that it was a case with foreign element and thus the arbitration made by an overseas institution could be recognised. See Shanghai First People's Court (2013) No. 2 Civil Verdict on Recognition of Arbitration Award Made by Foreign Arbitration Institution [上海市第一人民法院 2015 年11 月 27 日 (2013) 沪一中民认(外仲)字第 2 号民事裁决书].

63 Huo and Yip (n 12) at Section III.A.2.

64 For example, the Rules of Procedure for the International Commercial Chambers of the Amsterdam District Court (Netherlands Commercial Court) and the Amsterdam Court of Appeal (Netherlands Commercial Court of Appeal) (The NCC Rules) provide that ‘1.2.4. The NCC will determine whether it has jurisdiction and is the proper venue in the action and whether the requirements set out in art 1.2.1(a) through (d) have been satisfied. The court must test the satisfaction of art 1.2.1(b) and (c) of its own initiative.’ The Singapore International Commercial Court also has discretion in deciding whether a case has substantial connection to Singapore and subject to its jurisdiction or not. See A Godwin et al., ‘International Commercial Courts: The Singapore Experience’ (n 45) 252–3.

65 Lith, H, International Jurisdiction and Commercial Litigation Uniform Rules for Contract Disputes (TMC Asser Press 2009) 22CrossRefGoogle Scholar. Michaels, R, ‘Globalization and Law: Law Beyond the State’ in Banakar, R and Travers, M (eds), Law and Social Theory (Hart Publishing 2013) 9Google Scholar.

66 Lith ibid, 22.

67 Grusic argued that the connecting factor of the engaging place of business should be abolished in European private international law, see Grusic, U, ‘Should the Connecting Factor of the Engaging Place of Business Be Abolished in European Private International Law’ (2013) 62 ICLQ 173CrossRefGoogle Scholar. In the context of Canada, see Monestier, T, ‘A Real and Substantial Mess: The Law of Jurisdiction in Canada’ (2007) 33 Queen'sLJ 179Google Scholar.

68 Tang, Z, ‘Effectiveness of Exclusive Jurisdiction Clauses in the Chinese Courts—A Pragmatic Study’ (2012) 61 ICLQ 460CrossRefGoogle Scholar.

69 Vita Food Products Inc v Unus Shipping Co Ltd [1939] UKPC 7.

70 See art 5 of Switzerland's Federal Code on Private International Law (CPIL) 1 of 18 December 1987 <https://www.umbricht.ch/fileadmin/downloads/Swiss_Federal_Code_on_Private_International_Law_CPIL_2017.pdf>. See also art 4 of Reform of the Italian System of Private International Law (Law of 31 May 1995, No 218) <https:/files/UTENTI/u830/Italy%20_%20Encyclopedia%20of%20Private%20International%20Law.pdf>.

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72 Order 110, Rule 8(2).

73 Section 16(2)(e) of the ADGM Courts Regulations stipulates that ‘Subject to the provisions of these Regulations, there shall be exercisable by the Court of First Instance all such jurisdiction as is conferred on it by – … or (e) any request, in writing, by the parties to have the Court of First Instance determine the claim or dispute.’ <http://adgm.complinet.com/net_file_store/new_rulebooks/a/d/ADGM_Courts_Regulations_2015_Amended_19_April_2017.pdf>.

74 Its official website stated that ‘The Court has the jurisdiction (the legal authority) to hear civil and commercial disputes where there is connection, pursuant to art 8(3)(c) of QFC Law No 7 of 2005 (as amended), with the Qatar Financial Centre.’<https://www.qicdrc.com.qa/faq-main>.

75 According to an email exchange by the author with the QFC.

76 Art 265 provides as follows: ‘Where an action is instituted against a defendant without a domicile within the territory of the People's Republic of China concerning a dispute over a contract or rights and interests in property, if the contract was executed or performed within the territory of the People's Republic of China, or the subject matter of the action is located within the territory of the People's Republic of China, or the defendant has distrainable property within the territory of the People's Republic of China, or the defendant maintains a representative office within the territory of the People's Republic of China, the action may come under the jurisdiction of the people's court of the place where the contract was executed, the place where the contract was performed, the place where the object of action is located, the place where the distrainable property is located, the place where the tort was committed or the place where the representative office is domiciled.’

77 最高人民法院关于适用《中华人民共和国民事诉讼法》的解释, effective as of 4 February 2015.

78 Art 8 of Special Maritime Procedure Law of the People's Republic of China (中华人民共和国海事诉讼特别程序法, effective as of 1 July 2000) provided that: ‘Where the parties to a maritime dispute are foreign nationals, stateless persons, foreign enterprises or organisations and the parties, through written agreement, choose the maritime court of the People's Republic of China to exercise jurisdiction, even if the place(s) which have actual connections with the dispute is not within the territory of the People's Republic of China, the maritime court of the People's Republic of China shall also have jurisdiction over the dispute.’

79 See also art 244 of the 1991 CPL, art 531(1) of the 2015 Judicial Interpretation of the CPL.

80 Tu, G, ‘Forum Non Conveniens in the People's Republic of China’ (2012) 11 ChineseJIL 343–4Google Scholar.

81 He, Q, ‘The Difference and Consideration of the Rules of China Joining the Hague Convention on Choice of Court Agreements (中国加入海牙《选择法院协议公约》的规则差异与考量)’, (2016) 4 Wuhan University Journal: Philosophy and Social Science (武汉大学学报:哲学社会科学版) 83Google Scholar.

82 It is not an uncommon concern that Chinese enterprises lack a strong sense of the rule of law, international-style of business thinking, and familiarity with the laws of the host country. See Jiang, B, ‘Strengthening Theoretical Research and Enhancing the International Credibility of China's Foreign-related Commercial Trials – Speech at the Third Meeting of the Foreign-related Professional Committee of the China Trial Research Society (加强理论研究, 提升我国涉外商事审判的国际公信力——在中国审判研究会涉外专业委员会第三次会议上的讲话)’ (26 September 2013) in Zheng, E (ed), Research on China Foreign Related Business Trial (中国涉外商事审判研究), Series 3, (Law Press [法律出版社] 2014) 1Google Scholar.

83 He, J, ‘Belt and Road Construction and Legal Protection – Interview with Liu Chao, Vice Minister of Legal Affairs, China Council for the Promotion of International Trade (“一带一路” 建设与法治保障——专访中国国际贸易促进委员会法律部副部长刘超)’ (2018) 2 People and Rule of Law (人民法治) 41Google Scholar.

84 Wang, J, ‘The Dilemma of “Practical Connection Principles”: Abolishment or Retention (“实际联系原则” 的困境:废抑或留)’ (2011) 3 Journal of Henan Provincial College of Political and Legal Science (河南省政法管理干部学院学报) 82–7Google Scholar.

85 Liu, R, ‘China's Approval of the Hague Convention on Choice of Court Agreements: Issues and Countermeasures (我国批准《选择法院协议公约》的问题与对策)’ (2018) 5 Chinese Journal of Law (法学研究) 195Google Scholar.

86 Li, H, Introduction to International Civil Procedural Law (国际民事程序法概论) (Law Press [法律出版社] 1996) 64Google Scholar.

87 He (n 81) 79; Liu (n 85) 196.

88 It is noteworthy that the choice of a foreign law alone cannot be considered to be a connection factor between the case and that foreign State. See Jiang, B et al. , The Supreme People's Court Guiding Case Judging Rules and Application · Civil Litigation Volume (最高人民法院指导性案例裁判规则理解与适用·民事诉讼卷) (China Legal Publishing House [中国法制出版社] 2014) 153Google Scholar.

89 Liu (n 85) 195.

90 See para 1, art 531 of the 2015 Judicial Interpretation of the CPL. There is an exception for two specific categories of disputes. First, disputes arising from disputes regarding real estate (within the territory of China), operation of harbours, or inheritance are subject to the exclusive jurisdiction of the exclusive jurisdiction of specific people's courts, see art 33 of 2017 CPL. Second, disputes (arbitration excluded) arising from three types of contracts performed within the territory of China, namely Sino-foreign joint venture contracts, Sino-foreign cooperative enterprise contracts, and Sino-foreign cooperative exploration and development natural resource contracts, must be governed by Chinese law and are subject to the jurisdiction of a people's court in China, see art 126 of the Chinese Contract Law (1999) and art 266 of 2017 CPL. However, arbitration of disputes arising from the above-mentioned two categories of disputes in a foreign related civil and commercial case to a foreign arbitral institution is allowed, see para 2 of art 531 of the 2015 Judicial Interpretation of the CPL.

91 Yip (n 7) 443. Yeo, T, ‘The Contractual Basis of the Enforcement of Exclusive and Non-Exclusive Choice of Court Agreements’ (2005) 17 Singapore Academy of Law Journal 306Google Scholar.

92 Section 2 of art 30 of the 2015 Judicial Interpretation of the CPL clearly provides that ‘if the choice of court agreement chooses two or more People's Courts that have actual connection with the dispute, the plaintiff may bring the case to one of them’.

93 ibid, para 2 of art 531.

94 See art 3 of the Law of the PRC on Application of Laws to Foreign-Related Civil Relations and art 7 of the Regulations. However, the choice of foreign law by itself only does not constitute a ‘connecting factor’ for the purpose of choice of forum.

95 See a detailed analysis at Tu (n 80) 346–52.

96 Tang, Z, ‘Declining Jurisdiction in Chinese Courts by Forum Non Conveniens’ (2015) 45 Hong Kong Law Journal 351Google Scholar.

97 Art 7 of the Regulations.

98 However, some types of contracts must be exclusively governed by Chinese law, see fn 90 above. There are also some other restrictions on the applicable laws, see Law of the PRC on Application of Laws to Foreign-Related Civil Relations (中华人民共和国涉外民事关系法律适用法) effective as of 1 April 2011.

99 For a detailed discussion of the principles in common law jurisdictions, see McComish, J, ‘Pleading and Proving Foreign Law in Australia’ (2007) 31(2) MULR 400Google Scholar.

100 For a discussion of civil law jurisdictions, see Hartley, T, ‘Pleading and Proof of Foreign Law: The Major European Systems Compared’ (1996) 45(2) ICLQ 271Google Scholar.

101 Rules of Court (Singapore, cap 322, 2014 rev ed) O 110 rr 26(4), 29(1).

102 SPC, news release regarding the CICC <http://www.xinhuanet.com/politics/2018-06/28/c_1123046444.htm>.

103 Art 11 of the Regulations.

104 Art 12 of the Regulations.

105 Para 2, art 15 of the Regulations.

106 Art 13 of the Regulations.

107 Art 94 and 95 of 2017 CPL. See also art 3 of the Supreme People's Court's Provisions on Several Issues Concerning the Civil Mediation of the People's Court (最高人民法院关于人民法院民事调解工作若干问题的规定), effective as of 1 November 2004.

108 最高人民法院印发《关于进一步贯彻 “调解优先、调判结合” 工作原则的若干意见》的通知, effective as of 7 June 2010. See also the Provisions of the Supreme People's Court on Several Issues Concerning the Implementation of Reconciliation (最高人民法院关于执行和解若干问题的规定), effective as of 1 March 2018.

109 最高人民法院关于民事诉讼证据的若干规定, effective as 1 April 2002.

110 For a general discussion of these issues in China, see Fei, L, ‘The Role of the Law in Chinese Judicial Mediation: A Case Study’ (2015) 26(4) International Journal of Conflict Management 386Google Scholar; see also Gu, W, ‘The Delicate Art of Med-Arb and its Future Institutionalisation in China’ (2014) 31(2) Pacific Basin Law Journal 97Google Scholar.

111 For a discussion of this issue, see The Honourable M Warren, Chief Justice of Victoria, ‘Should Judges Be Mediators’ (paper presented at the Supreme & Federal Court Judges’ Conference, Canberra (27 January 2010) <http://www.austlii.edu.au/au/journals/VicJSchol/2010/1.pdf>.

112 Menon (n 5) 9.

113 Art 155 of the 2017 CPL.

114 Art 20 of the 2017 CPL.

115 T Du and S Ye, ‘International Commercial Court: A New Type of International Commercial Dispute Resolution Institution (国际商事法庭:一个新型的国际商事纠纷解决机构)’ <http://cicc.court.gov.cn/html/1/218/149/156/828.html>.

116 Para 2, art 15 of the Regulations.

117 Art 90 of the 1991 CPL stipulates that for some cases (those related to marriage and adoption, those that can be performed immediately and others that by their nature do not need a mediation statement), the people's court may not produce a mediation statement after the mediation agreement was reached; and the mediation agreement should be recorded in the court transcript, and become binding and effective after being signed or sealed by the parties, the judges and the clerk. This article is still valid but is placed in art 98 of the 2017 CPL. In 2004, the SPC later issued some guidelines to further develop the application of this clause. Art 13 of the Provisions of the Supreme People's Court on Several Issues Concerning the Civil Mediation of the People's Courts (最高人民法院关于人民法院民事调解工作若干问题的规定) enacted on 18 August 2004 stipulates that: ‘According to the provisions of Item (4) of art 90 of the Civil Procedure Law (2002), the parties agree to sign or seal after the mediation agreement, and after being examined and confirmed by the people's court, they … shall be legally binding upon signature or seal by the party, the judge or the clerk. Where the party/parties requests to make a mediation statement, the people's court shall produce a mediation statement and deliver it to the party/parties. If the party refuses to accept the mediation statement, it will not affect the validity of the mediation agreement. If one party fails to perform the mediation agreement, the other party may apply to the people's court for enforcement.’

118 Art 201 of the 2017 CPL provides that for a final mediation document, if a party who provides evidence that the mediation has violated the principle of free will of the parties or the content of the mediation agreement has violated law may apply for retrial. Upon examination and verification, if the people's court find it true, it should initiate a retrial.

119 They include the following: (1) There is sufficient new evidence to overturn the original judgment or ruling. (2) The fundamental facts found in the original judgment or ruling are not evidenced. (3) The key evidence admitted in the original judgment or ruling to support facts in the judgment is forged. (4) The primary evidence admitted in the original judgment or ruling to support facts in the judgment has not been cross-examined. (5) For objective reasons, a party is unable to obtain key evidence necessary for the trial of a case and applies in writing for the people's court to investigate and obtain the evidence, but the people's court has not investigated or obtain the evidence. (6) The application of law in the original judgment or ruling was incorrect. (7) The composition of the trial organisation is unlawfully formed or any judge who should withdraw has not done so. (8) The legal representative of a person without competency to participate in the trial fails to participate in the trial on behalf of the person or a party which shall participate in the action fails to participate in the action, because of the causes not attributable to the fault of the party or the litigation representative thereof. (9) A party's right to debate is illegally denied. (10) A default judgment is made against a party which has not been summonsed. (11) The original judgment or ruling has omitted any claims or exceeded the claims of the parties. (12) The legal document on which the original judgment or ruling is based has been revoked or modified. And (13) When adjudicating the case, a judge commits embezzlement, accepts bribes, practices favoritism for personal gains, or adjudicates by distorting the law. See a detailed analysis of the issues regarding finality of civil and commercial judgments in China at Liu, N, ‘A Vulnerable Justice: Finality of Civil Judgments in China’ (1999) 13 ColumJAsianL 35Google Scholar.

120 See art 15 of Administration Regulations regarding Representative Offices of Foreign Law Firms in China (外国律师事务所驻华代表机构管理条例) promulgated by the State Council on 22 December 2001 and effective as of 1 January 2002.

121 The NPC and its SCNPC have the power of legislation, see arts 57 and 58 of the Constitution of China (last revised in 2018).

122 Cai, W, ‘International Commercial Court: Institutional Comparison, Conflict of Rules and Construction Path (国际商事法庭: 制度比较、规则冲突与构建路径)’ (2018) 5 Global Law Review (环球法律评论) 191Google Scholar.

123 See Section 7 of Part 7, Decision of the CPC Central Committee on Major Issues Pertaining to Comprehensively Promoting the Rule of Law; also see the Supreme People's Court's Several Opinions on Providing Judicial Service and Guarantee for the Construction of the ‘Belt and Road’ Initiative by People's Court (最高人民法院关于人民法院为 “一带一路” 建设提供司法服务和保障的若干意见) issued on 16 June 2015.

124 Tiba, F, ‘The Emergence of Hybrid International Commercial Courts and the Future of Cross Border Commercial Dispute Resolution in Asia’ (2016) 14 Loyola University of Chicago International Law Review 31Google Scholar.

125 Warren and Croft (n 44) 19.