Source: https://lawprofessors.typepad.com/china_law_prof_blog/
Timestamp: 2019-04-20 19:12:20+00:00

Document:
Time to put The China Collection in your blog reader.
After twelve years (I started in May 2005) and almost a million visits here at the Chinese Law Prof Blog, I'm making some major changes in my blogging.
I'm changing the blog name.
Why? Basically, I wanted (a) to have more hands-on control over the blog's format and various bells and whistles, and (b) to get some co-bloggers with me so that the blog itself could feature more frequent posts on a wider variety of subjects, including not just law but also politics, economics, and finance. My co-bloggers at the moment are (or will be, to be more exact) Nicholas Howson (Michigan), Carl Minzner (Fordham), and Barry Naughton (UC San Diego). For more information, check out my first post.
To summarize: No more blogging at this address. From now on, it's all at www.thechinacollection.org. I'm grateful to Paul Caron for setting up this blog network many years ago and providing a very easy on-ramp to blogging for many of us.
Check out this recent post from the Lawfare blog. I've read the regulations to which it refers, and the post describes them accurately. Frankly, if I had given the matter any thought before this, I would have assumed that Chinese investigative authorities were already doing this whenever they wanted to.
Note to the "everybody does it" chorus: The blog post is also accurate in stating that this is not the normal practice of domestic police authorities, including in the United States; they seek permission from the foreign sovereign the same way they would seek permission for sending agents abroad to rifle through someone's file cabinet. Not that China necessarily has to follow the crowd in everything, but China would undoubtedly consider it the gravest violation of its sovereignty were foreign criminal investigators to hack into Chinese servers without permission in a search for evidence.
Here's the job announcement. It seems to be based in Washington, DC. Among the job requirements: "An advanced degree and 5+ years’ experience working with China trade and investment policy issues."
On March 15th, the National People’s Congress passed the long-awaited General Rules of Civil Law (中华人民共和国民法总则) (GRCL), a collection of general principles that will come into effect on October 1, 2017. Interestingly, the GRCL will not replace the 1986 General Principles of Civil Law (民法通则) (GPCL) when they come into effect; for various reasons, the decision was made to have the GPCL continue in effect to the extent that their provisions do not conflict with GRCL provisions.
What follows are some more or less random comments on particular features of the GRCL that struck me as I read through the text. They are not intended as a comprehensive evaluation.
Art. 62 states that legal persons (for example, corporations) shall be liable for damages caused to others by the acts of their legal representative in carrying out his responsibilities. Of course the legal person should be liable in such a case, but why apparently limit it to the acts of the legal representative? Surely it should state that the legal person is liable for the acts of any employee in the course of work (assuming such acts give rise to a claim for damages, of course).
Art. 87 and Art. 95 state that non-profit organizations do not and may not distribute their profits to investors, founders, or members. One sees what they are getting at. But why stop there? It would be simpler just to say that non-profits may not distribute their profits to anyone. That’s what makes a non-profit a non-profit: not the fact that it has no profits (if its revenues exceed its costs, it has profits), but the fact that nobody is entitled to a distribution of those profits. They have to be plowed back into the work of the non-profit. Situations where the non-profit wants to donate to another organization or liquidate are dealt with in Art. 95; it makes more sense to specify the limited number of situations where profits may be distributed to someone than to specify a few types of people to whom profits may not be distributed.
Art. 117 sets the standard for compensation for takings as “fair and reasonable” (公平合理). The point to note here is that this is understand as meaning something other than (and probably less than) fair market value. The GRCL could have specified this but elected not to, so it’s significant.
Here’s where things get interesting. In Art. 143, one of the conditions for validity of a civil law act (民事法律行为) (for example, the making of a contract) is that it not “violate mandatory provisions of laws or administrative regulations” (不违反法律、行政法规的强制性规定) and that it not go against “public order or fine customs” (不违背公序良俗) (Art. 143).
Let me take the second condition first. What does “public order or fine customs” mean? Both the term and the rule seem to have been taken from Art. 90 of the Japanese Civil Code. The term only started appearing with any frequency in legal documents in the last few years, and has been used in an official enactment of the National People’s Congress or its Standing Committee only once before, in an interpretation of the GPCL and the Marriage Law issued in 2014. No doubt it is intended as a catch-all term, similar to the “public policy” on grounds of which a common-law court can declare a contract invalid.
Interestingly, the GRCL take a different approach to validity than the GPCL, which list a number of grounds on which civil acts were invalid instead of listing the grounds for validity. Those grounds do not include any language about “public order or fine customs.” They do, however, include language about acts in violation of law (i.e., statute) (法律) or public interest. Note that “statute” here has a technical meaning in Chinese law: something passed by the NPC or its Standing Committee. A rule passed by a lower-level body—even the State Council – is not a statute (法律).
The GPCL also invalidate acts that use a lawful form to cover up an unlawful goal (以合法形式掩盖非法目的的). In this part of the GPCL (and in Art. 52(5) of the Contract Law, which duplicates the language), however, the scope of “law” in “unlawful” has been debated. “Unlawful” (非法) can plausibly be read to cover much more than formal statutes passed by the NPC or its Standing Committee.
This brings us to the first condition. Here, “laws” means (again) statutes: stuff passed by the NPC or its Standing Committee. It might well also include enactments of certain high-level sub-central people’s congresses. “Administrative regulations” means enactments of the State Council (not just, for example, a ministry or commission under the State Council). This condition, therefore, is quite narrow. If a civil act violates a mandatory provision of a regulation passed by, say, the Beijing municipal government or the Ministry of Commerce, it’s still valid. In fact, it might be even narrower than that: the identical provision in the Contract Law has been interpreted to mean that contracts are invalid where they violate mandatory provisions of laws or administrative regulations respecting the validity of contracts (for example, requirements of government approval for validity), but not otherwise.
In short, the GRCL seem to make it impossible to argue that a contract or other civil law act is invalid because it contravenes some low-level rule unless that contravention can be called a violation of public order or fine customs. Indeed, the GRCL add even more confusion to the subject when they revisit it in Art. 153, which embodies the logical corollary of Art. 143 by stating that civil law acts are invalid when they (a) go against public order or fine morals or (b) violate mandatory provisions of laws or administrative regulations (in each case understood in a restrictive, technical sense as explained above). But Art. 153 adds a kicker to part (b) of the previous sentence: “except when said mandatory provisions do not result in invalidity of the civil law act.” Result: violations of mandatory provisions of laws or administrative regulations will result in invalidity except when it doesn’t.
Article 159 states that civil law acts may be made conditional on the occurrence of certain events. It adds that where a party, for its own benefit, improperly prevents a condition from occurring, it shall be deemed to have occurred, and where it improperly causes an event to occur, it shall be deemed not to have occurred.
One understands what they are getting at, of course, but as stated this rule is going to create problems. Consider, for example, a contract under which an employer promises to provide housing to the employee as long as the employee is employed. The employer is (subject to the provisions of employment law) able to cause the event of non-employment to occur; does this mean that it must continue to provide housing even after lawfully terminating the employee? Of course, one could respond that that’s why the addition term “improperly” has been put there. But that’s an awful lot of weight for a vague and non-technical term to bear, and I have no confidence that Chinese courts would pay any attention to it at all.
Article 181 provides that a party shall not be liable for damages inflicted in the course of proper self-defense (正当防卫, which could perhaps include defense of others). If this means damages inflicted on the assailant, there is nothing to quarrel with here, although the premise that the self-defense was within appropriate bounds would seem to make liability a non-starter even without this provision. But as worded, it seems that if I am attacked and smash a shop window to grab a knife to defend myself, then as between me and the shopkeeper, the shopkeeper must bear the cost of the broken window.
But even this not enough for some delegates, and so the language specifying liability for aiders was removed altogether. In other words, it is very clear that the NPC does not want aiders to be liable even for palpably gross negligence.
Apparently discussions at the NPC actually resulted in the addition of a new article in the GRCL providing for liability for infringement on the name, image, reputation, or dignity of “heroes, martyrs, etc.” (英雄烈士等). This comes in the wake of two court decisions imposing liability (rather trivial, to be sure: an apology in one case and a fine of 1 yuan in another) on persons who questioned the truth of some stories about Communist Party heroes, and fits in well with growing official denunciations of “historical nihilism” (i.e., questioning the official version of history).
But the provision itself is an outlier relative to the rest of the GRCL in its vagueness and slipshod drafting – although the very vagueness may be deliberate message about its essentially political and therefore untouchable nature. Most obviously, how are “heroes,” “martyrs,” and especially “etc.” to be defined? Second, how will damages be measured? (We are talking about dead people here.) Third, who will have standing to sue?
In the two cases mentioned above, it was reported that “the family” sued, and in a previous case of defamation of the dead, the daughter of the allegedly defamed person was granted standing. Thus, it is possible that standing will be limited to those who would have standing in any ordinary defamation-of-the-dead case. But in that case, it is hard to see why this provision was necessary or how it changes existing law.
Article 196 says that if you have rights in real estate (registered or not) or registered title to movable property, it cannot be acquired by prescription – ever. The statute of limitations does not apply. Statutes of limitations are called rules of repose: if you fail for a sufficiently long period to vindicate your rights, the law won’t recognize them any more. This law was intended to help rural residents who leave the farm for the cities, find it difficult to keep tabs of their interests in land, and may end up losing them. That’s understandable. But surely after the passage of some period of time – twenty years, forty years? – it’s time to say that courts aren’t going to recognize ancient and hard-to-prove claims that nobody bothered about for decades. Otherwise you just generate a new set of injustices.
Another interesting wrinkle in the rule on statute of limitations is that of Article 197, which says that the period, calculation, suspension, and re-starting of the limitations period is a matter of law and cannot be the subject of negotiations between the parties. Similarly, the parties may not consent in advance to waive the benefit of the limitations period.
This has some important practical implications. In more than one case of which I have personal knowledge, defendants sued in the United States on China-related matters have attempted to have the suit dismissed on forum non conveniens grounds, and as part of their motion have promised that if sued in China, they will not raise a statute of limitations defense. Article 197 suggests that such a promise may be worthless; that the limitations period is a matter of subject-matter jurisdiction for the courts, not personal jurisdiction, and as such something that the parties simply lack the power to give the court if it does not already have it.
 See 关于《中华人民共和国民法总则（草案）》的说明, March 8, 2017. This might also be the place to note that calling the GRCL the “General Rules” to distinguish them from the “General Principles” is a bit unsatisfactory as a matter of translation, since the word that is different in the Chinese is the term for “general”, not the term for “principles” and “rules”. But the name of each statute essentially means “general rules”, so the main point is just to use different words to distinguish them for the English-speaking reader.
 I will discuss this question more fully in an upcoming blog post on a recent interesting Supreme People’s Court case involving a Variable Interest Entity.
 The details are too complex to go into here.
 As I have discussed in an article on the Peter Humphrey/Yu Yingzeng prosecution on charges of unlawful acquisition of citizens’ personal information, neither the prosecution nor the court spent any time showing that the defendants’ acquisition of information was unlawful. The presence of the word in the statute appears to have been entirely superfluous.
 第十二届全国人民代表大会法律委员会关于《中华人民共和国民法总则（草案）》审议结果的报告, March 12, 2017, Sec. 10.
 第十二届全国人民代表大会法律委员会关于《中华人民共和国民法总则（草案修改稿）》修改意见的报告, March 14, 2017, Sec. 5.
The American Bar Association Rule of Law Initiative currently has three open positions with a China focus: a Program Director, a Program Manager, and a pro bono longterm legal specialist. If interested, please follow the links to apply.
Here's a report on an interesting case in which a Chinese court (the Nanjing Intermediate-Level People's Court) enforced a Singapore court judgment.
Under China's civil procedure law, Chinese courts may enforce foreign judgments that are not fundamentally offensive in some way under two circumstances: (1) there is a treaty with the foreign country calling for mutual enforcement of judgments; or (2) on the basis of reciprocity, which has been interpreted to mean that the foreign country has a practice of enforcing Chinese judgments, or at least has done so before.
There is no Singapore-China treaty calling for mutual recognition and enforcement of judgments. The Nanjing court found, however, that in 2014 a Singapore court had enforced a Chinese judgment. On that basis, it decided to recognize and enforce the Singapore judgment (a default judgment against a Chinese corporate defendant).
The report does not claim, and I don't know for a fact, that this is the first foreign judgment Chinese courts have enforced on the basis of reciprocity. (It says it's the first enforcement of a Singapore judgment on that basis.) But I think it's fair to say that such cases are pretty thin on the ground.
China's Land Counterrevolution? Not Yet.
China’s Land Counterrevolution? Not Yet.
Both Chinese and western press reports over the last week (Caixin; New York Times; Financial Times) announced startling news about China’s land regime: holders of 20-year residential leaseholds in the city of Wenzhou in Zhejiang province would see their leases renewed automatically and without charge.
If true, this news would be momentous: it would mean nothing less than the return of private land ownership in China. But in fact it looks like the leaseholders got nothing more than temporary squatters’ rights. What’s going on?
Since the early 1990s, urban land in China (all state-owned) has been available for sale in the form of long-term leaseholds called “land use rights” (LURs)—up to 70 years in the case of land designated for residential use. The original rule about what would happen when the leasehold expired was very clear: the land would go back to the landlord (in the case of China, the state). If leaseholders wanted to extend the lease, they would have to pay for it.
Although this rule was absolutely clear in legislation, leaseholders of course didn’t like it. Proving the truth of Upton Sinclair’s dictum that “it is difficult to get a man to understand something, when his salary depends upon his not understanding it,” a widespread belief grew up that the rules about renewal were either unclear or unfair. The picture was further muddied by the 2007 Property Law, which proclaimed that residential LURs would be renewed “automatically”—but without specifying what that meant, and particularly whether it meant “without charge.” A prominent member of the drafting team later admitted that they had simply punted on the issue because it was too controversial. And the reason it was controversial is simple: to specify that a fee would have to be paid would have angered current LUR-holders—a vast and politically important vested interest group (probably 80 to 90 percent of urban families). But to specify that no fee need be paid would have meant overturning a sacred tenet of Chinese socialism: that private land ownership is anathema.
Why? Because a 70-year LUR that renews itself automatically and without charge is no longer a 70-year LUR. It is a permanent right to the land, indistinguishable in practice from the title known in American law as “fee simple”—the kind of title homeowners expect to get when they buy a house. Of course, the Chinese government can take the land (for a public purpose, and upon payment of compensation), it can regulate its use, and it can tax it. But governments in capitalist societies can do the same thing, and nobody has ever supposed that this means capitalist societies can’t have private land ownership.
Whatever the ambiguity, it has not noticeably stifled China’s residential real estate market, and real estate now accounts for more than 70 percent of overall household wealth – 80 percent in large cities such as Beijing or Shanghai. At the time of purchase, 70 years is a long way off – likely beyond the typical purchaser’s lifetime, and almost certainly beyond the lifetime of the building in which the residence is located, given construction standards and the pace of urban change. So far rising prices have meant that even resales – which necessarily involve a shorter term than 70 years, since the term is not renewed at transfer – are often for more, sometimes much more, than the purchase price.
But although most Chinese residential leaseholds won’t expire for a few more decades, dark clouds of uncertainty are already visible on the horizon. With the clock ticking ever downward, Chinese homebuyers are already starting to think about whether they will ultimately have anything left to pass on. They fear that as the end of their leaseholds approaches, they will find it more and more difficult to get a good price if they try to sell. Uncertainty about whether a homebuyer has a 70-year leasehold or a permanent fee simple doesn’t much matter in year one, because the difference in value is tiny under any realistic set of economic assumptions. But if a Chinese leaseholder is trying to sell in year 40, the price buyers will pay for the 30 remaining years is a lot less than what they will pay if they are confident they are getting a permanent property interest. Even if buyers are foolish enough to be willing to pay a price that assumes they can keep the property permanently, they will have trouble getting mortgage lenders to be equally foolish – and that’s bad for sellers as well. Once these problems start cropping up in earnest, leaseholders will start clamoring for certainty (in their favor, of course) decades before the leases are scheduled to expire.
Now let’s go back to the Wenzhou LURs. Back in the mid-1990s, Wenzhou offered residential LURs on a number of land parcels for sale for varying terms—some for as many as seventy years, which has become the standard term, but some (about 600 parcels) for as few as twenty. These 20-year LURs, apparently the only ones in China sold in that era, are now coming due, and the leaseholders have been clamoring for a solution to their dilemma (their dilemma being the need to pay, and a solution being a free renewal of their lease).
But that is not exactly what Wang said. Instead, he referred to an official document issued by the MLR on December 8th in response to an inquiry from the Zhejiang provincial government about how to handle the Wenzhou LURs. Critically, that document does not grant a renewal of the LURs. A renewal or extension, to be meaningful, must specify either (a) a future date on which the new term ends, or (b) that the term continues indefinitely. The MLR document does not do this. Instead, it says: (a) that leaseholders need not apply for a renewal upon expiration of the LUR; (b) that local land administration bureaus shall not collect a fee, and (c) that when the LUR is transferred, normal procedures for titling and registration should be followed. This means that the transfer will not be disallowed, as it otherwise would have been, on the grounds that the LUR to be transferred no longer exists.
Most importantly, the document states that the specified term for the transferred LUR should be the original starting and ending dates, with a note added saying that “relevant procedures have been undertaken in accordance with” the MLR document.
In other words, what the current leaseholders have received is an assurance that for the time being they can stay in their homes without having to pay anything. What they did not get, however, is significant. They did not get a renewal: new LUR with a new expiration date twenty years or more from now. They had something saleable before, but do not have something saleable—something that a transferee would confidently pay money for—now. All they have to offer a transferee is an LUR with an expired term and a vague and cryptic annotation. Will anyone pay good money for that?
What happened in Wenzhou will, in time, become a full-blown national issue. In some 50 years, the first batch of 70-year residential leaseholds will start coming due. Well before that, however, leaseholders will start having problems with buyers who are unwilling to pay large amounts of money for a leasehold with only a few years left on it and no guarantee of renewal. The state will have to choose: enrage about 90 percent of China’s urban population or admit that the 70-year residential leasehold is a mirage, an admission that would violate a core tenet of socialist rule.
Incredibly, 68 years after the founding of the People’s Republic of China and 38 years into the era of post-Mao economic reform, the Chinese government is still unable to state clearly what kind of residential real estate ownership system it wants to have. The system remains shrouded in uncertainty, and buyers cannot know for certain what they are getting. It’s likely that when the time comes, the government will blink – if there are any arch-conservative defenders of old-school socialism left, they will almost certainly be LUR holders themselves. But it has not blinked yet; for the time being, uncertainty still reigns.
Here's the announcement over at the China IPR blog.
My impression (possibly wrong) is that in past years, a number (still a minority) of such projects have been pretty non-academic, with topics such as “The Significance of Xi Jinping’s Speeches on National Rejuvenation for the Legal System”. This year, in a quick review I didn’t spot a single such project. This is not to say that none have political implications – there’s one, for example, on legal responses to radical separatists in Hong Kong – but they all seem to be the type of thing about which one could do serious research and thinking. They’ve even included some legal history projects – even on one Roman legal history.
I've been asked to help spread the word about this worthy program. The announcement with details about it is here. Preference is given to applicants 30 t0 45 years old. The application deadline is November 20th.
Not quite live streaming, but apparently close. You can see recorded Chinese court proceedings at this new website: http://tingshen.court.gov.cn/. Check it out.

References: Art. 62

Art. 87
 Art. 95
 Art. 95

Art. 117
 Art. 143
 Art. 90
 Art. 52
 Art. 153
 Art. 143
 Art. 153