Corporate Law in the Shanghai People's Courts, 1992-2008: Judicial Autonomy in a Contemporary Authoritarian State

In late 2005 China adopted a largely rewritten Company Law that radically increased the role of courts. This study, based on a review of more than 1000 Company Law-related disputes reported between 1992 and 2008 and extensive interactions with PRC officials and sitting judges, evaluates how the Shanghai People’s Court system has fared over 15 years in corporate law adjudication. Although the Shanghai People’s Courts show generally increasing technical competence and even intimations of political independence, their path toward institutional autonomy is inconsistent. Through 2006, the Shanghai Court system demonstrated significantly increased autonomy. After 2006 and enactment of the new Company Law, a new, if partial, limitation on institutional autonomy seems to be at work, as the Shanghai People’s Courts refused to accept or adjudicate claims explicitly permitted in the revised 2006 statute but not yet elaborated in Supreme People’s Court Regulation. This reaction is perverse, as the same Courts had liberally adjudicated the same claims before 2006 without any statutory or Supreme People’s Court Regulatory authorization. That strange dynamic illustrates the bureaucratic embeddedness of the People’s Courts in China’s modified authoritarian system and how such entrenchment can divert or constrain the progressive autonomy won by the same Courts in the formal legal system. The conclusions have positive and negative aspects. On the positive side, there is significant momentum toward ever-increasing competence and autonomy of the People’s Courts in Shanghai, at least for the application of corporate and commercial law. On the 1 The author would like to thank the following colleagues and friends for their help in researching and assembling this article: Professor and East China University of Politics and Law (“ECUPL”) Vice President Gu Gongyun, and Professors Li Xiuqing, Luo Peixin, Shi Tiantao, Tang Xin, Yang Zhongxiao, Wang Baoshu, Wu Hong, and Zhu Ciyun, and research assistant (and Luo Peixin student) Zhao Chenchen; and the following institutions for their support: the University of Michigan Law School and the University of Michigan Center for Chinese Studies, both in Ann Arbor, Michigan; the East China University of Politics and Law, Shanghai, PRC; and Tsinghua University School of Law, Beijing, PRC; and various justices, judges, officials and personnel at the Supreme People’s Court of the PRC in Beijing and the Shanghai Higher People’s Court system, including the Judges from the Shanghai Higher People’s Court No. 2 Civil Division and District Courts – notably the Chief Judge of the Shanghai Higher People’s Court No. 2 Civil Division Ms. Yu Qiuwei and the President of the Changning District People’s Court Mr. Zou Bihua -attending an open meeting on Company Law implementation in the Shanghai People’s Courts held on Dec. 5, 2008 at ECUPL chaired by Vice President and Professor Gu Gongyun and Professors Yang Zhongxiao and Wu Hong. A special thanks to my colleague and friend Professor Li Xiuqing for all of her help in arranging for a fruitful sabbatical on the premises of ECUPL during the Autumn of 2008. In addition, the author wishes to thank the following for their very helpful review of and comments on working drafts of this article: Laura Beny; Donald C. Clarke; Jerome A. Cohen; Mary Gallagher; Tom Ginsburg; Don Herzog; Vic Khanna; Benjamin J. Liebman; Kyle Logue; Liu Sida; Curtis Milhaupt; Carl Minzner; Jonathan Ocko; Randall Peerenboom; Adam Pritchard; William Simon; Rachel Stern; Tang Xin; Frank Upham; Tim Webster; Mark West; and Madeline Zelin; and the participants in the “China Judicial Developments” Conference at the Columbia Law School on Feb. 20, 2009; the China Law Center Workshop at the Yale Law School on Mar. 3, 2009; and the University of Michigan Center for Chinese Studies Noon Lecture Series on Mar. 10, 2009. A Table of Cases and a Key to Case Source References useful for (i) the Table of Cases and (ii) the footnoted references to specific opinions in the main text (all in Chinese), appears at the end of the article. All translations of Chinese language materials into the English language are by the author.