Chinese Journal of Law(6-2020)



The Dilemma of the Relationship Between “Unincorporated Organizations” and “Other Organizations” and Its Solution


Tan Qiping


Abstract: At present, there are two opposing theories, namely the "division theory" and the "identity theory", on the relationship between "unincorporated organizations" and "other organizations" in legislation, theory and practice. The "division theory", which is based on the interpretation of Article 102 of the Chinese Civil Code and Article 52 of the Judicial Interpretation of the Civil Procedure Law, longitudinally cuts off the historical connection between the concept of "unincorporated organization" and the previous legislation and horizontally splits the related structure of civil law and other legislation, and therefore should be abandoned. The relationship between "unincorporated organization" and "other organizations" should be explained by the "identity theory", which is based on the explanation of system, history and purpose. On this basis, China should incorporate "other organizations" in the subjective sense into "unincorporated organizations" by way of package amendment and, through the introduction of such legislative expressions as "other legal or unincorporated organizations" and "incapability organizations", let "other organizations" in the non-subjective sense to refer specifically to all organizations other than specific organization, thereby realizing the integration and unification of the concept of the third type of civil subject in the legal order.

Keywords: unincorporated organizations, other organizations, civil subjects, litigation subjects


Security Interests System over Movables and Rights in the Chinese Civil Code


Long Jun


Abstract: In order to tackle financing difficulties faced by SMEs and optimize business environment, the Chinese Civil Code has carried out major reforms on the security interests system over movables and rights. Specifically, the reform is divided into six interlocking steps: 1. eliminating invisible security interests; 2. establishing a register for movables and rights security interests, which is a person-based registration; 3. establishing a unified rule of priority for security interests; 4. expanding the scope of application of "the rule of buyer in ordinary course of business"; 5. combining floating mortgage and general chattel mortgage in the registration confrontation rules; 6. introducing purchase money security interest (super-priority). This reform has a profound impact on the theory of real rights. Firstly, it proves that there is a stable and meaningful intermediate state between real rights and claims. Secondly, it revises the publicity principle of real rights by discarding the expression of "all or nothing" and replacing it with that of "the effect of confrontation extends to wherever the publicity extends". Finally, it revises the object-specific principle of real rights, so that the object of real rights does not need to be specific at the beginning, as long as it is specific at the time of execution.

Keywords: the Chinese Civil Code, movables security interests, rights security interests, unified registration, registration confrontation


The Socialization of Adoption Law


Deng Li


Abstract: The modern adoption system achieves the institutional goal of creating blood relations in fiction of law by inheriting and reforming the linear logic of "legal behavior-legal relationship" in private law. After World War II, the actual needs of society and international human rights ideology have prompted many countries to continuously socialize adoption laws on the basis of their local conditions and develop an umbrella shaped framework for the protection of rights of the child with the principle of the best interests of the child as the command, and the adoption conditions, adoption procedures, adoption effectiveness and adoption services as the four pillars. In China, while the Chapter on Adoption in the Chinese Civil Code (CCC) generally keeps the private legal frame of Adoption Law, it also releases positive signals of socialization by such means as adopting the principle of "the best interest of the adoptee" and introducing adoption assessment mechanism into the legal adoption process. However, it is still unable to effectively deal with such prominent social problems as the jammed private adoption channel and the weak protection of adoptees. Five months after the adoption of CCC, the Law on the Protection of Minors was amended to specifically provide for the principle of “the best interest of the minor” and to strengthen the government and social protection mechanisms. At this point, the expression and the path of the principle of the best interests of the child in Chinese law have become more and more clear. From the perspective of field law, China's adoption law is gradually breaking through the boundary of private law, integrating itself into the legal norms of social protection, and shifting from the traditional legal norms of parent-child relationship to a clearer and more unified goal of protection of minors. Thus, a new structure with coordinated internal and external systems could be expected in the course of localization and socialization. In the future, relevant legal reforms should focus on loosening the general adoption conditions, facilitating special adoption needs, and establishing substantive examination mechanism and support service system, so as to meet the requirements of the principle of “the best interest of the adoptee".

Keywords: principle of proportionality; hierarchical order; judicial application; intensity of review


Judicial Argumentation on the Closing of Legal Loopholes


Huang Zemin


Abstract: The closing of legal loopholes is a traditional topic of legal methodology as well as a common problem in legislation and judicial practice. Judicial argumentation on the closing of legal loopholes includes two parts: identification argumentation and closing argumentation. According to the two constitutive characteristics of legal loopholes, the identification argumentation is composed of the rule-deficiency argumentation and the soundness argumentation: the former is aimed at proving the lack of applicable legal rules while the latter is aimed at proving that the case should be regulated by legal rules. For these two argumentations, argumentation scheme α and argumentation scheme β can be put forward respectively. Once legal loopholes are identified according to an argument scheme, the goal of the argumentation changes into the closing of the loopholes. Logically speaking, there are two judicial approaches to the closing of legal loopholes: rule introduction (closing with other rules) and rule creation (closing without any rule). Correspondingly, the closing argumentation can be divided into two types - introduction argumentation and creation argument - and two argumentation schemes, namely argumentation scheme I and argument scheme II, and their subsidiary argumentation schemes can be proposed respectively. These two argumentation schemes are in a competitive relationship with each other in the closing legal loopholes, and ultimately a principle of closing argumentation, namely principle P, needs to be established to avoid the difficulty of choice.

Keywords: legal loopholes; judicial argumentation, argumentation scheme, legal rules


Methodological Structure of Constitutionality Interpretation of Legal Norms


Liu Zhaocheng


Abstract:Constitutionality interpretation of law seeks the reconciliation and compromise between the interpreter’s obligation to respect the legislative power and his obligation to respect the basic values of the constitution, so as to ensure that the legislator’s will can be realized to the maximum extent within the scope of the constitution. To respect the legislative power, legal norms should not be required to be logically consistent with constitutional norms, but only be required to be consistent with constitutional norms in value evaluation. Therefore, constitutionality interpretation of law is not a method of logical systematic interpretation, but an independent interpretation method separated from systematic teleological interpretation. Compared with the classical interpretation methods, constitutionality interpretation method has a definite priority in the effectiveness of argument, which can suppress the explanatory tendency of classical interpretation methods and be realized first in the conclusion of interpretation. Its methodological structure differs significantly from that of constitution-based legal interpretation, which is not an interpretation method of priority, but an interpretation method of measurement. To realize the compatibility between interpretation conclusion of legal norms and the basic values of the constitution, the literal meaning of legal norms can be expanded or limited. However, the substantive aspects of the literal meaning may not be excluded or tampered with, so as to respect the legislative power.

Keywords: constitutionality interpretation of law, teleological interpretation, the constitution-based legal interpretation, judgment of constitutionality, constitutional renewal


Administrative Agreement from the Perspective of Functionalism


Xu Jian


Abstract: The behavioral element thinking is currently the mainstream thinking in the identification of administrative agreements. Since this thinking focuses on whether an agreement contains specific public law elements, it often ignores the purpose and function, as well as the limitation of the application scope of administrative agreement, thus making it difficult to distinguish between administrative agreements and administrative private acts. As we all know, administrative agreement is a product of reflections on the traditional hierarchical behavior mode and organizational mechanism in the field of public power administration. The identification of administrative agreements should therefore not go beyond the scope of public power administration. Faced with the lack of flexibility in traditional models of public power administration, administrative agreement improves the ability of administrative counterparts to communicate their intensions through the innovation of the behavior mechanism and responds to the need for cooperation in performing administrative tasks through the reform of the organizational mechanism. Based on the differences in purpose and function, administrative agreements can be divided into two types: procedural agreements and agreements for transferring administrative tasks. In order to identify administrative agreements more effectively, different identification rules and methods should be applied on bases of these two different types of administrative agreements.

Keywords: administrative agreement, behavioral elements, functionalism, identification of administrative agreement


The oretical Justification of Accelerated Expiry for Shareholder's Capital Contribution


Qian Yulin


Abstract: The term "accelerated expiry for shareholder's capital contribution" is not adequate to cover the whole phenomenon that a company's creditors require shareholders to pay in the capital contributions for which they have subscribed, irrespective of the fact that the deadlines have not expired for such capital contributions. The shareholder's obligation to contribute capital to the company is both a contractual obligation and a legal obligation. From the perspective of contractual obligations, shareholders should deliver their assets as capital contributions to the company in according to the articles of association, and at the same time have a defense against the company that period for the capital contribution has not yet expired. From the perspective of legal obligations, shareholders should be liable to the company to the extent of their respective capital contributions. The capital contributions subscribed for by the shareholders constitute the company's property in the form of value, rather than in the form of the shareholder's capital contribution, for which the company's creditors can apply for enforcement. In the case of non-bankruptcy, the essence of the so-called accelerated expiry for shareholder’s capital contributions is not that the shareholders lose the benefit of period for the capital contributions and perform the contractual obligation to pay in the capital contributions, but that the shareholders should assume the legal obligation to contribute the capital contributions they have subscribed for to the company, which is the substance of the limited liability of shareholders to the company. The supplementary liability of shareholders to the company’s creditors as stipulated in judicial interpretation is essentially the legal responsibility of shareholders to the company to the extent of their respective capital contributions. The rules on the shareholder’s obligations of capital contributions can be further improved by increasing the liability for delays in compensation for shareholders’ violation of obligations on their capital contributions and establishing the conditions of the application of Article 3 of the Company Law based on the inability of the company’s assets to pay off all expired debts.

Keywords: subscribed capital system, accelerated expiry for shareholder's capital contribution, benefit of the period of capital contributions, corporate property, supplementary liability for compensation/span>


Reflections on the Fraud-on-the-market Theory


Geng Lihang


Abstract:The Supreme People’s Court of China, by drawing on the fraud-on-the-market theory in the US, has established the adjudicative rule on the relations of transaction causation and loss causation between constructive misrepresentation and alleged shareholder losses in cases of disputes over securities civil liability. However, the fraud-on-the-market theory has not only been the subject of an intense and prolonged controversy both in theory and in judicial application, but also failed to realize its policy goals of compensating shareholders and deterring wrongdoers through civil class action against misinterpretation supported by this theory in the US. Policy dilemma is the main cause of this controversy. In the past judicial practice of civil class action against misrepresentation in China, which also took the fraud-on-the-market theory as its theoretical foundation, Chinese courts have experienced the same judicial application dilemma and policy dilemma. The direction of future legislative and judicial efforts should be to limit corporations’ external liability for compensation, and to take the punishment of the persons responsible for the fraud behind corporations as the core objective of civil actions against misrepresentation. A tentative and pragmatic reform scheme after the implementation of the new Securities Law would be for courts to moderately raise the threshold for constructing the transaction causation in representative litigation.

Keywords: misrepresentation, the fraud-on-the-market theory, transaction causation, class action, representative litigation


On Consensual Criminal Procedure


Wang Xinqing


Abstract: With the establishment of criminal reconciliation procedure, fast-track sentencing procedure, and the system of leniency for admitting guilt and accepting punishment by the Chinese Criminal Procedure Law, consensual criminal procedure has become a dominant form of criminal procedure in China. Scholars have made theoretical summarizations of this new form of criminal procedure and used different terms to describe it. Compared with the terms “cooperative criminal procedure” and “consultative criminal procedure”, the term “consensual criminal procedure” is deemed to be more appropriate. Consensual criminal procedure includes consensual criminal litigation act and consensual criminal procedure. The former refers to the act by which the prosecution and the defense agree on specific matters in the criminal procedure on the basis of the defendant’s admission of guilt, while the latter refers to the sum of consistent litigation activities and litigation relations composed of the defendant’s admission of guilt, the consensus between the prosecution and the defense, and the judiciary’s handling of cases in accordance with the law and the consensus. Consensual criminal procedure and adversarial criminal procedure are two basic forms of criminal procedure. The basic framework of the consensual criminal procedure has been established in the 2018 Criminal Procedure Law, but the procedure still needs to be systematized by establishing the special principles of consensual criminal procedure, defining the rights of the parties in the procedure, and improving the prosecution and trial procedures.

Keywords: consensual criminal procedure, adversarial criminal procedure, the system of leniency for admitting guilt and accepting punishment


The Essence and the Unfolding of the WTO Multi-Party Interim Appeal Arbitration


Shi Jingxia


Abstract: China, EU and other 17 WTO members notified the WTO of the conclusion of a Multi-Party Interim Appeal Arbitration (MPIA) among themselves on April 30, 2020. This is the most significant breakthrough in coping with the crisis of Appellate Body, which ceased its operation on December 11, 2019 due to the U.S.’ continuous blockage of the appointment of new members of the Appellate Body since 2017. A creative interim and open arrangement, MPIA serves as an alternative to appellate review aimed at maintaining the core features of WTO dispute settlement mechanism, i.e., a two-stage process and binding decisions. Based on Article 25 (“Arbitration”) of DSU, MPIA largely replicates appellate review procedures while incorporating limited elements of arbitration. Recourse to appeal arbitration requires consensus between disputants reached through an appeal arbitration agreement. The arbitral award is automatically binding on the parties without adoption by the DSB. These two arbitration elements differentiate appeal arbitration from the previous appellate review in WTO litigation. However, most aspects of appeal arbitration, including the connection with the panel stage, the selection of arbitrators, case hearing and decision-making procedures and enforcement mechanism, are basically replications of DSU Article 17 and Working Procedures of Appellate Review. The several innovative articles on streamlining the procedures are put into place in response to the criticism of the Appellate Body by the U.S. This may help alleviate the current crisis and bring WTO members together and solve the crisis in the future. Despite the fact that the MPIA is not in a position to solve trade disputes with the U.S., interim appeal arbitration not only functions as a practical appeal avenue that meets the need of participating members during the paralysis of the Appellate Body, but also showcases the confidence held by WTO members in reviving the Appellate Body. This is where the hope of solving the crisis lies. As a responsible member of the WTO with sense and sensibility, China plays a key role in negotiating and concluding the MPIA, which is aimed at saving WTO dispute settlement mechanism. It is advisable that China, despite its ultimate goal of reincarnating the Appellate Body, consider utilizing MIPA to bring its disputes with other participating members into a mutually satisfactory solution.

Keywords: appeal arbitration; Multi-Party Interim Appeal Arbitration; DSU Article 25; the Appellate Body crisis; WTO dispute settlement


Determination of the Applicable Law to Agency Involving Foreign Elements


Lin Qiang


Abstract:The provisions on types of agency, objects of connection and connecting factors in the Law on Choice of Law for Foreign-related Civil Relationships are all ambiguous and need to be redefined from the academic perspective. The “agency” in Art. 16.1 should not be interpreted directly in accordance with the civil law, but should, on the basis of the theory of functional qualification and teleological qualification, autonomously be interpreted as excluding statutory representation and representation by company organs, and only referring to voluntary agency. The doctrine and structure of substantive law of agency affect the construction of conflicts rules for agency. Considering both reasons from substantive law and conflict of laws, Chinese legislature should adopt the German theory of “independent determination of applicable law for authority”, rather than transplant the rules from English conflict of laws and the Hague Convention on the Law Applicable to Agency. In adopting the German theory, China should make it clear that conflict rules applicable to a contract between a principal and an agent or a contract with a third party can be found outside Art. 16 and that authority is the only object of connection in Art. 16. Under the condition that the law will not be revised in the near future, China should try to reform Article 16 through interpretation. For this purpose, the “agency” in Art. 16.1 should be interpreted more restrictively as authority, and the proviso in this paragraph should be removed in future revision of the law. When subjective and objective connecting factors are employed to decide the applicable law, elaborate balance of interests should be made in light of different types of substantive law, so as to concretize the employment of connecting factors.

Keywords: agency involving foreign elements, conflict of laws on agency, the place of representation, autonomy of will, balance of interests