Commentary of the development of Chinese private international law

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Commentary of the development of Chinese private international law

TABLE OF CONTENT

1. INTRODUCTION

2. DEVELOPMENT OF CHINESE INTERNATIONAL PRIVATE LAW

2.1 General Provisions of Private International Law

2.2 Foreign-related Contract and Tort

2.2.1 The application of the law for contract debts

2.2.2 The application of the law of the torts

2.3 Property Rights with Foreign Elements

2.4 Marriage and Family

2.5 Foreign Inheritance

2.6 Foreign-related Aspects in Civil Procedure

2.6.1 Litigation

2.6.2 Judicial assistance

2.6.3 Recognition and enforcement of foreign judgments

3. CONCLUSION

1. INTRODUCTION

Without an open policy and a social environment in which there is communication between nationals and foreigners, private international law cannot exist, because private international law deals mainly with civil relationships, which contain foreign elements. The law cannot emerge or develop outside the context of its social environment. From 1949 to 1978 China was closed to the outside world, and private international law could not be developed in such a restrict environment. During the same period, there was also very poor academic research on the laws. However, opening-up reform greatly enhanced the development of China's private international law because of increased communication with the rest of the world. Until new reform China initially drew most of the laws from USSR type. From 1978, however, with respect to the theory of private international law, it began adopting western theories, and in 1997 private international law was officially incorporated as a part of China's laws. Moreover, academic research has made great strides. Textbooks have been written and major works have been translated. Nowadays, experts are drawing on practice and experience to develop a theoretical system with Chinese characteristics.

In terms of the practice of private international law, more and more lawsuits with foreign-related elements are coming before China's courts. As the number of cases is growing, the foreign elements involved in the cases are becoming increasingly complicated. During the trials of cases, foreign laws, international treaties and international customs are being applied.

This paper intends to describe development of Chinese international private law with its major components.

chinese contract offence judicial norm

2. DEVELOPMENT OF CHINESE INTERNATIONAL PRIVATE LAW

In 1979, the first law regulating foreign investment came into force. The Law of the People's Republic of China on Joint Venture Using Chinese and Foreign Investment (adopted by the Second Session of the Fifth National People's Congress on 1 July 1979 and promulgated on and effective as of 8 July 1979). This not only represented a changing attitude towards foreign capital, but it also marked a turning point in terms of reform and opening-up to foreign investment.

This law was the first to laid down the requirements for forming joint ventures between Chinese and foreign parties, and, significantly, it ensured security for foreign investors.

This law states that the Chinese government cannot nationalize or expropriate the assets of a joint venture, except in accordance with the needs of social public interest or in other special circumstances.

The Chinese government must offer appropriate compensation to the foreign party if nationalization or expropriation does occur. In deciding the portion of foreign investment, against the trend that stipulates the upper limit of foreign investment, Chinese law provides for a lower limit.

All of these factors provide a clear legal basis for foreign investment in China. In order to meet the demands of reform and opening-up, private international law has been legislated and practiced systemically.

The result is a somewhat complicated system, consisting of the following components:

1. General Provisions of Private International Law;

2. Foreign-related Contract and Tort;

3. Property Rights with Foreign Elements;

4. Marriage and Family;

5. Foreign Inheritance;

6. Foreign-related Aspects in Civil Procedure;

2.1 General Provisions of Private International Law

General provisions of private international law deal with matters such as general principles, essential provisions and common problems, and the most significance in that has the fundamental stipulations such are: characterization, incidental or preliminary questions, renvoi, evasion of law, reservation of public order and ascertainment (proof) of foreign law.

In terms of the law evasion regulation, China's rule is that the law of other legal boundaries should not be applied if the parties intentionally evade the compulsory laws of China. That kind of stipulation is common to many private international law systems around the world. Foreign laws, international conventions, and foreign judgments should not violate the public order of China. This provision also accords with international theory and common practice.

As far as the ascertainment of foreign law is concerned, China treats it neither as a question purely of law nor as a question purely of fact. Applicable foreign law can be determined either by the interested parties (the persons concerned), or by China's embassies, or by experts. Many of China's treaties of legal assistance with other countries set out the methods for determining the stipulations of relevant foreign law. Chinese law is applied if the applicable foreign law cannot be ascertained in the ways listed above.

On renvoi (remission and transmission), under the judicial interpretation of the Supreme People's Court, in “every case with [a] foreign element, the court should apply the 8^th chapter of the Civil Code to decide the applicable law of the case”. This can be interpreted as meaning that China does not accept renvoi, but there are different views on this point. Chapter IX of the draft Civil Code has moved from rejecting renvoi completely, to accepting it in some respects (e.g., a natural person's legal status and identity relationships).

It is a pity that China's private international law does not yet include any stipulations on characterization or incidental questions, although in Chapter IX of the draft Civil Code, such matters have to some extent been taken into account. The characterization of civil relations should be on the basis of the law of the court, or on the law applicable to the civil relations. Incidental questions should be decided according to the applicable law under the conflict provisions of the relevant country's courts. Few countries in the world have regulations on these issues.

2.2 Foreign-related Contract and Tort

2.2.1 The application of the law for contract debts

It is necessary to determine the applicable law for contract debts in order to resolve matters relating to contract form, establishment, potency, explanation, completion, etc. There are several theories about the application of this law. These are as follows.

· Theory of autonomy of will: a French scholar, Charles du Moulin, put this old theory forward. It permits both sides to choose the law, which will apply to their contracts.

· The theory of `objective symbols': This theory is based on the applicable law being that which is objectively the most appropriate. All contracts relate to a certain place, and the `objective place' factor is used to decide the proper law of the contract.

· The most significant connection theory: According to this principle, if the contracting parties have not chosen the law or the chosen law is invalid, the applicable law should be that of the place which has the most significant connection with the contract.

The regulation of the Supreme People's Court on the application of law in foreign- related civil and commercial contractual disputes was promulgated in July 2007. Rules of the Supreme People's Court on Related Issues Concerning the Application of Law in Hearing Foreign-Related Contractual Dispute Cases Related to Civil and Commercial Matters (promulgated on 23 July 2007 and came into effect as of 8 August 2007). It makes the theory of autonomy of will much clearer; it also contains definite and systematic rules about the method by which the law is to be chosen and the time when this must be done. It also caters for the parties' rights on implied choice under certain conditions. In other words, even if the interested parties have not formally chosen the law to apply to the contractual dispute, as long as in practice they agree on the law of a certain jurisdiction, this will be taken to be the applicable law governing their contract. Should the dispute reach the court, the parties may agree to change the applicable law at any stage before closing arguments are made.

In deciding the place, which has the most significant connection with the contract, the Supreme People's Court also adopts the `doctrine of characteristic performance'. The regulations of the Court contain 17 kinds of contracts that make clear the place, which has the most significant relationship with the contract. Ibid., art. 5. The regulations are groundbreaking in this respect. They also apply to disputes involving the Chinese mainland's contracts with Hong Kong or Macao.

2.2.2 The application of the law of the torts

The lex loci delicti is the fundamental principle in the determination of the proper law of torts. In terms of delicti, some countries consider that the applicable law should be that of the place where the tort occurs, and other countries stipulate that the applicable law should be that of the place where the damage occurs. And Chinese legal system allows both options. Chapter IX of the draft Civil Code continues to apply the rule that when there are inconsistencies between the two, the proper law can be chosen by the aggrieved party.

Although lex loci delicti is the traditional means for ascertaining the proper law of torts, it can prove too rigid for the determination of complex cases. Therefore, new methods have been developed, such as the most significant relationship test, the law in favor of the plaintiff, the parties' common personal law, etc. Some countries have even adopted the theory of autonomy of will. This allows the parties to choose the applicable law together. China has kept up with the trend by legislating for the various rules to be adopted.

China has also adopted the `principle of double actionability', the characteristic of which is that torts have a connection with the public order of the country from which the applicable law is taken.

2.3 Property Rights with Foreign Elements

According to the traditional theory of private international law, the law of the place where the property is located should be applied. The theoretical basis for this stems from the `statute theory' of the 14^th century. This takes account of economic development, and has therefore gradually been adopted by many countries.

With respect to property rights with foreign elements, it is provided in the civil law of China that the law of the place of immovable property should be applied. This definitely implies that the principle of the place where the relevant property is located (lex situs) is acknowledged in a case involving immovable property in China. In the case of movable property, however, existing civil law provides neither general principles nor exceptions.

In the case of intellectual property rights which are characterized as regional, the only applicable law is that of the country where the court is located as opposed to the court of another country. Since increasing importance is attached to science and technology in the development of the economy, the protection of intellectual property rights has extended to cover many countries. There are currently no rules in China covering the issue of conflict of laws with respect to intellectual torts. China has, however, signed almost every important treaty for the protection of intellectual property, thus giving sufficient protection to the owners of intellectual property.

According to relevant Chinese law on intellectual property protection, where there is inconsistency between national and international law, priority should be given to relevant international treaties. With respect to patents, intellectual property protection treaties between the relevant country and China are used to determine the proper law when foreign individuals, enterprises and other subjects apply for a patent in China. This may also apply in some reciprocal situations when there is no treaty available. With respect to commercial trade mark protection, the relevant laws of China are also determined by relevant treaties. And with respect to copyright protection, China has adopted the criterion of double- nationality treatment, which means that the protection standards are determined by the nationality of the author, which greatly enhances the level of copyright protection.

2.4 Marriage and Family

The `foreign family relationship' that is regulated by private international law refers to family relationships containing foreign elements. Since the period of reform and opening-up, the number of marriages and family relationships involving such features is ever increasing. The relationships covered in this category include marriage, conjugal relationships, divorce and separation agreements, parent-children relationships, adoption relationships, guardianship and maintenance relationships, etc.

With respect to foreign marriages, according to common international theory, the applicable laws are divided into two categories - substantive conditions of marriage and formal conditions of marriage. For the substantive conditions of marriage, the applicable laws relate to the law of the place where the marriage takes place or the personal law of the parties (or both). For the formal conditions of marriage, the general rule in many countries is that the applicable law is the law of the place where the marriage takes place. Pursuant to the General Principles of the Civil Law of China, Adopted at the Fourth Session of the Sixth National People's Congress, and promulgated by Order No. 37 of the president of the People's Republic of China on 12 April 1986, and effective as of 1 January 1987. the applicable law for a marriage between a Chinese citizen and a foreigner is also the law of the place where the marriage takes place. Thus, if a Chinese citizen and a foreigner are married within China, Chinese law is applicable; if a Chinese citizen and a foreigner are married outside China, the applicable law is the law of the place where the marriage takes place. And since the above regulation does not distinguish substantive conditions and formal conditions of marriage, we can conclude that it can be applied to both. However, this regulation has been questioned in academic circles, because applying the law of the place where the marriage is held to substantive conditions of marriage without exception may increase the risk of the parties evading the law. It is therefore argued that the personal law of the parties and the law of the place where the marriage is held should both be applied to the substantive conditions of a marriage.

With respect to divorce cases, pursuant to the General Principles of the Civil Law of China, the law of the place where the case is heard governs the divorce of a Chinese citizen from a foreigner. Thus, if a Chinese court accepts a divorce case, Chinese law is applicable. In addition, Chinese law governs where the Chinese courts, the divorce and the property division hear a divorce case with a foreign element.

There are no special conflict rules with respect to adoptions by foreigners, and in this respect the system needs to be improved, although Chapter IX of the Chinese Civil Code contains regulations about the establishment, validity and termination of foreign adoption, which reflect the principle of protecting the weak in private international law.

2.5 Foreign Inheritance

Since the period of reform and opening-up, cases of foreign inheritance have accounted for a considerable proportion of private international law cases. Foreign inheritance can be divided into foreign statutory succession and foreign testamentary succession. Another division - between the unitary system and the scission system, according to the classification of movable and immovable property - is also made in order to determine the applicable law.

With respect to statutory succession, Chinese law adopts the scission system, which not only favors the recognition and enforcement of judgments, but also embodies the notion that the character of succession is related to both personal law and property law.

It is a pity that there is no conflict rule with respect to testamentary inheritance in China; although fortunately Chapter IX of the draft Civil Code has improved the regulations in this area, and many provisions in it sufficiently reflect current international legislation. A good example is the acceptance of the flexible selective conflict rules on the validity of testamentary forms, derived from the Convention on the Conflicts of Laws Relating to the Form of Testamentary Dispositions at the Hague Conference in 1961. Concluded 5 October 1961 (entered into force 5 January 1964).

2.6 Foreign-related Aspects in Civil Procedure

2.6.1 Litigation

With respect to the issue of jurisdiction over litigation, aside from the clear delineation of international treaties, this is essentially determined on a geographical basis. It is roughly the same as the domestic civil jurisdiction determination. China's Civil Procedure Law Civil Procedure Law of the People's Republic of China (adopted at the 22nd Meeting of the Standing Committee of the Fifth National People's Congress and promulgated by Order No. 8 of the Standing Committee of the National People's Congress on 8 March 1982, and implemented on a trial basis as of 1 October 1982). provides for the exclusive jurisdiction of the courts in China in cases relating to real estate disputes, port operations disputes, inheritance disputes and the contractual disputes arising as a result of Sino-foreign joint ventures, cooperative enterprises, cooperative exploration and development of natural resources.

2.6.2 Judicial assistance

In decision how to administer judicial assistance and to apply the law with respect to international judicial assistance China follows the Judicial Assistance Treaty concluded with foreign countries. If there is no Judicial Assistance Treaty matters are dealt in accordance with domestic law and reciprocity. Also China has joined in the Hague Conventions.

2.6.3 Recognition and enforcement of foreign judgments

Foreign judgments are recognized and enforced in China on the basis of:

· Jurisdiction;

· Being of effective judgment;

· Fair and lawful proceedings;

· Being no competing litigation;

· The matter not being contrary to the public order of China;

· Being reciprocal relations, etc.

3. CONCLUSION

Since the initiation of the process of reform and the `opening- up' in 1978, the fate of China has changed. During the last 30 years, the country has achieved development on an unprecedented scale. The economy is soaring, and the legal system is constantly being improved. We can conclude that it is the policy of reform and opening-up which has brought the outside world to China, and that this policy has also allowed China to become acquainted with the rest of the world.

The last 30 years have also seen the development of China's legal academy, as a result of which far greater research and a large number of improved practices have been promoted, including the development of private international law. China's private international law system has become more complete and effective, particularly in light of the enactment of Chapter IX of the draft Civil Code. Chapter IX of the draft Civil Code of the People's Republic of China. It is possible to forecast with some confidence that within the next 30 years the private international law of China will be one of the most prominent private international law systems in the world, both in terms of its structure and its content.

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