title: Legal transplant as a device of legal change in transitional economies: the case of importing common-law-style corporate fiduciary duties into contemporary China
Creators: name: Deng, Fei
Publisher: name: University of Glasgow
Year: 2022
Subjects: subject: Legal transplant, fiduciary duty, comparative corporate law, Chinese legal system.

description: The process of legal reform in transitional economies has entailed primarily legal transplantation from Europe or US legal resources. China is no exception. One typical example is the transplantation of the distinct common-law concept of fiduciary duty in its 2005 Chinese Company Law. As a core concept in Anglo-American corporate law for delineating directorial standards and duties, the fiduciary duty is deeply embedded in the equity jurisdiction and the case law tradition, both hallmarks of common-law systems. The transplantation of the fiduciary duty concept to China, as both a transitional economy and a civil-law jurisdiction, therefore, is widely considered to be challenging. This thesis examines and explains the efficacy of this transplantation case study so as to contribute to legal transplant scholarship and practice. Drawing on legal transplant theories, major factors influencing the efficacy of legal transplantation include: the transferability of a legal rule across legal systems, the local adaptation made by law reformers and enforcers in the recipient system, the social demand for the legal rule, and the knowledge of the rule by various actors in the recipient country. In the legal transplant case study, the transferability of the fiduciary duty concept from common-law systems to China is inherently low in light of the great context differentiation. Consequently, the effectiveness of the transplantation depends more on the local adaptation in China. Local adaptation plays a critical role in legal transplants even across similar legal systems and leads to substantial divergence of law. The transplantation of corporate fiduciary duties from the English legal system to a US legal system in history ultimately resulted in a very different model of law. This thesis evaluates the legal transplant case study in three dimensions: the convergence dimension, the operative dimension, and the instrumental dimension, and concludes that China’s transplantation of common-law corporate fiduciary duties has been largely effective. What explains the effectiveness of this legal transplantation is that Chinese legislative and judicial institutions, rising to the great challenges brought about by contextual differentiation, have undergone effective local adaptation in the transplantation process. Particularly, the empirical research in this thesis reveals that Chinese courts take initiative to interpret and apply fiduciary duties in the 2005 Chinese Company Law in a similar manner as common-law courts do. This case study therefore casts light on the feasibility for a common-law concept being effectively transplanted in civil law jurisdictions and/or transitional economies. Moreover, the theoretical framework formulated in this thesis for evaluating and explaining the legal transplant case study can serve as a useful tool for analysing the potential effectiveness of legal transplants on a case-by-case basis.