AAS Annual Meeting

China and Inner Asia Session 755

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Session 755: Chinese Commercial Law Reforms in Practice

Organizer: Colin S. Hawes, University of Technology, Sydney, Canada

Discussant: Jianfu Chen, La Trobe University, Australia

Chinese commercial law has undergone enormous changes over the past three decades. China now has a comprehensive body of commercial laws, statutes and regulations, frequently revised and refined to keep up with the rapidly modernizing economy and society. Yet without a rational and fair system in place to implement these written laws, they will remain dead letters, superficially impressive but ineffective in practice. What efforts have Chinese lawmakers and the judiciary made to ensure that China’s commercial laws are implemented and enforced fairly and justly? How are commercial laws put into practice by legal professionals and business corporations? Are traditional Chinese influences and legal cultures re-emerging as the current regime seeks to blend rule of law with indigenous Chinese dispute resolution practices in the commercial arena? This panel addresses such questions from varied perspectives: Wang Jiangyu provides a historical context for current developments in commercial law reform and identifies a revival of pre-modern legal practices under the Hu Jintao regime. Randall Peerenboom wades into the controversy over whether Chinese courts today are an ‘adequate forum’ for commercial cases. And Colin Hawes discusses the impact of Chinese legal culture and political institutions on the implementation (or non-implementation) of the PRC Company Law. Running through all these papers is a sense that China is gradually, if unevenly, developing its own unique approach to rule of law: one that borrows from the West but adjusts its models to suit a markedly different social and cultural context.

Back to the Past? Assessing China’s Commercial Law Reform from an Historical Perspective
Jiangyu Wang, National University of Singapore, Singapore

Since the start of the Reform era, China has been undertaking the world’s most concerted legal construction and established a rather comprehensive and complicated “socialist legal system with Chinese characteristics”. Over most of the past three decades in China, legal reform, and particularly commercial law reform, has been conducted in a way that largely follows a rule of law model advocated by the West, with values including government under the law, transparency, procedural justice, and judicial independence-oriented formal dispute resolution. In recent years, especially in the second term of President Hu Jintao’s administration, some new directions in legal reform have emerged, which emphasize informal dispute resolution, the judiciary’s social and political accountability, and mass line oriented legal work. These new developments have been viewed by many commentators as a backward turn in China’s legal reform. This paper argues that these developments might signify the return of at least some elements of China’s imperial legal traditions, especially those concerning the Chinese view of the relationship between state and the people and of the legitimacy of the state. The re-emergence of such traditional elements represent part of the Chinese government’s effort to rebuild its legitimacy in a rapidly transforming society, which features a lack of core moral values, an expanding wealth gap, and growing social unrest. The ruling party must therefore selectively use elements of both rule of law and rule of man to build and manage its legitimacy.

Do PRC Courts Provide an 'Adequate Forum' for Commercial Disputes?
Randall Peerenboom, La Trobe University, China

US courts are often called on to decide whether PRC courts provide an adequate forum in the context of forum non conveniens motions. This paper considers standards objections to the adequacy of PRC courts, including allegations of the lack of judicial independence, judicial corruption, local protectionism, procedural shortcomings, and enforcement difficulties, as well as the relevance (or irrelevance) of well-known problems in criminal cases or cases involving the exercise of civil and political rights in ways deemed to threaten the state.

Judging Company Law in China: Perspectives on the Resolution of Chinese Corporate Disputes in and out of Court
Colin S. Hawes, University of Technology, Sydney, Canada

It is five years since the latest major amendments to the PRC Company Law (2005), and almost two decades since the first version of this Law was introduced in 1993. However, a significant proportion of large Chinese business enterprises still have not registered under the Company Law, and disputes between companies that have registered are frequently resolved without reference to the relevant Company Law provisions. Alternatively, Chinese courts may appear to enforce provisions in the Law, but in practice they have already decided the issues based on extra-legal factors. Using interviews with Chinese corporate lawyers, published court judgments, and writings by Chinese legal scholars, this paper critically analyzes the widespread reluctance of Chinese legal practitioners to follow the letter of the Company Law. The paper concludes that Chinese political and institutional culture still exert strong influence on courts and business firms, causing them to avoid fully accepting the rule of law in resolving commercial disputes.