Abstract: Articles 641 to 643 of the Chinese Civil Code have perfected the retention of title system and the impact on the seller’s right to recover in insolvency proceedings is worth studying. The seller’s right to recover in insolvency is based on Article 38 of the Enterprise Bankruptcy Law, while the seller’s right of recovery is based on Article 642 of the Civil Code. The two rights are different in nature: the former is the seller’s right of objection in insolvency proceedings, whereas the latter is the claim basis of the former. The seller’s right of recovery is a substantive right of claim, the constituent elements of which have been stipulated in Article 642 of the Civil Code. As for the claim basis for the seller’s right to recover in insolvency, it is not limited to Article 642 of the Civil Code, but may even include Article 235 of the Civil Code. Where the Civil Code imposes additional restrictions on the effectiveness of the seller’s right of recovery, the restriction shall also apply to the seller’s right to recover in insolvency. The interpretation of Article 641 of the Civil Code by functionalism for security interest should not have a substantial impact on the seller’s right to recover in insolvency.

Keywords: retention of title; seller; insolvency proceedings; seller’s right of recovery; right to recover in insolvency

Author: Professor Zouhailin, a research fellow at CASS Law Institute.

Source: 4 (2021) Journal of Shanghai University of Political Science and Law (The Rule of Law Forum), pp. 1-15.