Chinese Law Prof Blog

Editor: Donald C. Clarke
George Washington University Law School

Friday, October 3, 2014

Budget Law revisions tighten, not loosen, central government's control over local government bond issues

Recent amendments to the Budget Law have been reported as liberalizing the regime for local government bond issuance, but it doesn’t look that way to me.

For a long time, local governments in China have generally not been allowed to issue bonds. In order to finance projects such as infrastructure construction, therefore, they have turned to what are called local government financing vehicles (LGFVs): companies established and wholly owned by local governments that raise money through bank loans and bond issues. These LGFVs have some serious debt problems, as has been noted in many places, and those debt problems are generally viewed as local government debt even though local governments are typically not on the hook as a legal matter.

Many have proposed that local governments should be allowed to issue bonds directly, and that letting them do so would somehow alleviate the problems of LGFV debt. It has never been clear to me exactly why this should be so—infrastructure projects that don’t pay off when financed through LGFVs are not going to be more profitable when financed through direct local government bond issues—but that’s tangential to the purpose of this post, which is to discuss recent relevant amendments to the Budget Law regarding local government bonds.

The 1994 Budget Law (Art. 28) stated clearly that local governments could not issue bonds unless there was a statute or State Council rule stating otherwise. No statute ever gave this permission. Only in 2011 did the State Council first provide the explicit permission required by law for four local governments (Shanghai, Zhejiang, Guangdong, and Shenzhen) to issue bonds directly, and in 2013 the provincial governments of Shandong and Jiangsu were granted permission to issue bonds.

The Budget Law was revised on Aug. 31, 2014, with the revisions to be effective on Jan. 1, 2015.  The revisions relating to local government bonds (now in Article 35) have been reported as liberalizing the rules. For example,  a Bloomberg report is headlined, “China to allow local governments to sell bonds directly.” The rating agency Fitch welcomed the amendments as “formalising long-running proposals to enable local governments to issue debt directly for the first time.”

But how much have things really changed?

Under the previous Budget Law, local governments at any level could not issue bonds unless explicitly authorized by statute or by the State Council. Under the revised Budget Law, that condition is still in place. Bonds may be issued only by local governments authorized by the State Council. In fact, the revisions tighten the conditions in two ways: first, only local governments at the provincial level may issue bonds. Second, bond issues may be used only to finance public utility projects and not to finance commercial projects; neither limitation was in the original Budget Law.

In short, the revisions don’t allow local governments to do something they could not do before. State Council permission is still required, and in fact the terms upon which the State Council may grant permission have been tightened, not loosened.

UPDATE, Oct. 4, 2014: It occurs to me that I should add a clarification here: tightened standards don't necessarily mean few or no local government bond issues. Very possibly the revisions and the publicity around them are a sign that the State Council intends to change its cautious approach and grant permission liberally. But it's still up to the State Council's discretion, as before, and indeed the State Council has lost the discretion it had before the revisions to allow cities (such as Shenzhen) to issue bonds.

October 3, 2014 in Commentary, News - Chinese Law | Permalink | Comments (0)

Friday, August 8, 2014

Weibo transcript of Peter Humphrey trial

British corporate investigator Peter Humphrey and his wife and business partner Yu Yingzeng were sentenced on August 8th to 30 months and two years in prison respectively on charges of illegally obtaining personal information about Chinese citizens. I hope to have some commentary up shortly, but first I want to read the trial transcript, which was posted by the Shanghai No. 1 Intermediate People's Court on its Weibo site. I've collected all 31 entries (they are graphic files in jpg and png format) and put them in a zip file, available here.

August 8, 2014 in Commentary, News - Chinese Law | Permalink | Comments (2)

Sunday, July 6, 2014

Controversy over elder law in China

Those who are interested in elder law might be interested in a debate now going on in China over some draft legislation proposed in Shandong. According to the legislation, those who have a duty to support the aged (i.e., the children) must maintain their parents' standard of living at a level at least equal to their own, and they are not allowed to seek property from their parents on the grounds of being unemployed, etc. (有独立生活能力的成年子女要求老年人经济资助的,老年人有权拒绝。成年子女或者其他亲属不得以无业或者其他理由索取老年人的财物。) Yes, the last bit is as vague as it sounds. Here's an article in the People's Court News in support of the law; here's Peking University law professor Shen Kui's critique, in which he says that the nanny state (保姆国家) must not go too far.


July 6, 2014 in Commentary, News - Chinese Law | Permalink | Comments (0)

Murong Xuecun returns to China, asks to be arrested

Last May, the writer Murong Xuecun (慕容雪村, real name Hao Qun 郝群) published an op-ed in the New York Times protesting the arrest of Pu Zhiqiang and others for "stirring up trouble and provoking disturbances" and announcing his intention to turn himself in upon his return from Australia. Today (or perhaps yesterday - the statement is undated) he made good on his word, issuing a Statement of Surrender. Here's the Chinese text, followed by my translation.

MRXC statement of surrender


Statement of Surrender

Two months ago, Pu Zhiqiang, Xu Youyu, Hao Jian, Hu Shigen, and Liu Di were arrested on suspicion of “stirring up trouble and provoking disturbances.” This so-called “stirring up trouble and provoking disturbances” was in fact nothing more than people getting together at home: some ten-odd people met at Hao Jian’s home and discussed the Tiananmen Incident of 25 years earlier, and this became a crime. I was supposed to have been there, but on the day of the meeting I was to go to the University of Sydney to be a visiting scholar, so I made only a written declaration stating my own views of the Tiananmen Incident. I never imagined that in this so-called People’s Republic even this kind of trivial incident could become a crime. I made a declaration on the internet stating that I also participated in their stirring up trouble and provoking disturbances but was currently abroad, and asked the authorities to please wait for two months until I had finished by trip to the University of Sydney, when I would return to China and surrender.

I in no way accept the arrest of these people, but also don’t feel that I should get some special treatment. I did the same thing that they did and cannot stay outside of the matter. I have already returned to Beijing and await arrest at any moment. For the next 24 hours after issuing this statement of surrender, I will be waiting in my home in Haidian District, and request that those who come bring the appropriate documents. After 24 hours, please telephone in advance to arrange a time.

Hao Qun (Murong Xuecun)


July 6, 2014 in Commentary, News - Chinese Law, People and Institutions | Permalink | Comments (0)

Saturday, July 5, 2014

Creditor bank sues local government financing vehicle over unpaid debt

Reuters reported a few days ago about the lawsuit brought by Qilu Bank against a local government financing vehicle (LGFV) in the same city (Jinan in Shandong Province) for unpaid debt. The lawsuit is unusual for two reasons: first, it is apparently the first openly disclosed default of a LGFV on a bank loan, although few doubt that there have been others that have been quietly dealt with, and second, not only is the debtor a shareholder in the creditor (albeit small: only 0.08%), but the debtor is controlled by the local government, which probably controls the creditor as well. In addition to the informal influence the Jinan city government undoubtedly enjoys, what appear to be entities directly under its control hold more than 20% of Qilu's equity. And of course the Jinan political authorities also have the power to ensure that no local court will issue a verdict displeasing to them.

LGFVs exist because in general, local governments in China don't have the power to borrow, but they still want to spend more than they have for things like infrastructure projects. They then set up wholly-owned corporations (LGFVs) to do the borrowing and undertake the construction. The problem is that local governments also lack the power to guarantee debt. Thus, LGFV debt as a legal matter is either unsecured or secured by something other than a government guarantee - for example, land-use rights that the local government has transferred to the LGFV.

As the Reuters article reports, many lenders consider (or at least at the time of lending considered) LGFV debt to be informally guaranteed by local governments. Now, apparently, they are having second thoughts. They should have more of these. I was struck by a paragraph in an earlier version of the Reuters report (apparently removed from the version now at the link): 

A senior bond trader at a major Chinese state-owned bank in Shanghai noted that while investors still largely considered debt issued by provincial-level financing vehicles to be effectively guaranteed, that no longer held true for lower level entities.

Any non-central government guarantee of LGFV debt is invalid and legally worthless, full stop. And this is over and above the fact that even if the guarantees were legally valid, a creditor could not win a case and enforce a judgment against an unwilling guarantor government. What is remarkable is that creditors still continue to believe in these guarantees, and possibly quite improperly carry these loans on their books as if they were guaranteed. The worthlessness of the guarantee is evident in the sentence itself: it says that investors “no longer” consider lower-level LGFV debt to be effectively guaranteed. So they considered it guaranteed at time A, and at time B they do not consider it guaranteed, even though nothing of legal significance has happened. That’s not what “guarantee” means; it is a legal obligation that persists despite changing circumstances. If investors understand that a lower-level guarantee can evaporate, why do they think that a provincial-level guarantee can’t? It looks like the GITIC bankruptcy all over again.

Relevant links:

July 5, 2014 in Commentary, News - Chinese Law | Permalink | Comments (0)

Tuesday, July 1, 2014

"Picking quarrels and stirring up trouble" in Chinese law

Stanley Lubman has a column today in the China Real Time section of the Wall Street Journal online edition that discusses the charges against Pu Zhiqiang. With the greatest respect for Lubman, I think that his discussion could give readers an inaccurate understanding of those charges and what they say about the Chinese legal system, so I want to add this modest clarification to his discussion.

Lubman states that Pu

now awaits trial for “picking quarrels and provoking troubles,” a crime with no clear definition.

His case dramatically illustrates the contradiction between attempts to increase legality in an authoritarian regime and that regime’s overwhelming anxiety about maintaining social stability. The vagueness of the  “crime” of “picking quarrels” – authorities didn’t say who Pu allegedly picked a quarrel with, or about what — allows police unlimited discretion to detain and arrest offenders for almost any action.

This, I think, is misleading. There is in fact no general and vaguely defined crime of "picking quarrels and provoking troubles" (寻衅滋事), and there's no need for the police to identify the other party or the subject of any quarrel. The relevant article of the Criminal Law, Art. 293, states, "In the event of one of the following acts of picking quarrels and provoking troubles, ..." (emphasis added). It then lists four relatively specific acts -- or at least more specific than the vague "picking quarrels and provoking troubles." Things that could be called "picking quarrels and provoking troubles" but that do not fall within one of the four listed categories are not crimes. As a matter of written law, therefore, the police do not have unlimited discretion to detain offenders under this vague rubric. Moreover, as Jeremy Daum has pointed out in his excellent analysis of this crime, there is a further judicial interpretation of Art. 293 that narrow its scope even more. Lubman is aware of this and links to Daum's article, but the main message of the column seems still to be that there exists a very vaguely defined crime of "picking quarrels and provoking troubles."

The reason I think it's worth taking this issue up is that if the diagnosis is wrong, the cure is going to be wrong. If the diagnosis is that the law is vague, then it would seem to follow naturally that the solution is to make the law less vague. I want to stress here that in fact the law is not all that vague, and as applied to Pu's case has to be stretched beyond all recognition in order to apply. But the authorities are using it anyway. The problem lies in the lack of any independent body that could put boundaries around the ability of police to make words mean anything (or more to the point, not mean anything). In other words, it's a problem of institutions, not of legislative drafting.

I doubt Lubman would disagree with any of this, and possibly it's what he meant to say. I'm just not sure the column actually says this, so I want to add my two cents.

JULY 3, 2014 UPDATE: Here's a response from Stanley Lubman.

July 1, 2014 in Commentary, News - Chinese Law | Permalink | Comments (1)

Wednesday, June 25, 2014

Process, schmocess

There has been quite a bit of attention in the Chinese press recently to proposed and perhaps in-process reforms to the Chinese judicial system. These reforms were authorized in broad strokes by the 3rd Plenum of the 18th Central Committee last fall, and at least some are now on the road to implementation. An important reform is that of partially centralizing (i.e., up to the provincial level) the power of appointments and funding for local courts (see para. 32 of the Third Plenum Decision).

Recently, the Central Leading Group for Comprehensively Deepening Reform, a Party body headed by Xi Jinping, issued three documents relevant to judicial reform: (1) Opinion on Deepening Reform in the Judicial System and Social System and Plan for Division of Labor in Implementation (关于深化司法体制和社会体制改革的意见及贯彻实施分工方案); Framework Opinion on Several Issues Relating to Experimental Points in Judicial Reform (关于司法体制改革试点若干问题的框架意见); and (3) Work Plan for the Shanghai Experimental Point in Judicial Reform (上海市司法改革试点工作方案). Unfortunately, none of these documents have been made public, but their content has been sketched in the official press. Here are two articles from the Chinese press [first | second] and very helpful English-language summary courtesy of Chinese Law Translate.

These documents (at least as explicated by a government spokesman) contain a number of worthy and important reforms. Financing of all local courts is to be handled at the provincial level, as are appointments. Apparently this reform is already in process in Shanghai. (Shanghai has the administrative status of a province.) What this means is that district (区) governments and People's Congresses will no longer have power over finances and personnel respectively in Basic-Level People's Courts in their district.

This is all very well, but what seems to have been overlooked in the zeal to reform the court system is the fact that you can't do it just by making some decisions within the Party. The system whereby local authorities (i.e., Party, government, and People's Congress) control courts at the same level (at least as to personnel appointments) is enshrined both in the Court Organization Law (Art. 34) and the Constitution (Art. 101). To be sure, as reported it is not crystal clear that the reforms formally take the power of appointment away from local authorities. But it is crystal clear that local authorities will not be making the decisions. The decision as to who will be a judge in a local court will be made at the provincial level, and then "the local People's Congresses will appoint or dismiss in accordance with legal procedures" (人大依照法律程序任免).

In other words, a project designed to improve the legal system is treating legal rules as at best meaningless formalities and at worst non-existent. It seems that the problem of weak legal institutions is being dealt with the same way Simon Leys (quoting Alexandre Vialatte) describes the fate of cannibals in a certain republic: "There are no more cannibals in that country since the local authorities ate the last ones."

June 25, 2014 in Commentary, News - Chinese Law | Permalink | Comments (0)

Thursday, June 5, 2014

Chair in Chinese law available at Faculty of Law, Victoria University of Wellington, NZ

Here's a great opportunity for the right person. Note that the application deadline is July 6, 2014.

June 5, 2014 in Internships/Employment Opportunities, News - Chinese Law | Permalink | Comments (2)

Saturday, April 5, 2014

Chinese law news, Qing Ming Festival edition

Today is Qing Ming Festival, or Tomb-Sweeping Day in China, when one pays respect to the dead. And what better way to introduce today's topic, which is minor property rights in grave sites?

"Minor property rights" (小产权) is the term used to describe the rights you get (or think you get) when you "buy" rural, collectively-owned land. I use quotation marks because you can't actually buy collectively-owned land. You can't even buy a long-term use right to it, the way you can buy a 70-year use right to land for residential use in urban China. But villages purport to sell these rights and urbanites purport to buy them, because they're cheaper than the fully lawful and relatively robust rights you get when you buy urban land. And the developments on minor property rights land can be pretty substantial (see the photo below); we're not talking about tarpaper shacks here.

081100 Picture of Minor Property Right Development in Zhengzhou

Now the media is reporting that minor property rights land is being occupied not just by the living, but by the dead - and for the same reasons. It's getting too expensive to die in China, so people have to find cheaper options. Here are some reports:

April 5, 2014 in Commentary, News - Chinese Law | Permalink | Comments (0)

Sunday, March 30, 2014

Talk at GWU Law School by Prof. SHEN Wei on local government debt

Prof. SHEN Wei of Shanghai Jiaotong University Law School will give a talk at GW Law School this Thursday evening. The topic is "Understanding China's Local Government Debt Crisis: Causes and Solutions (or No Way Out?)". Click here for a flyer and a bio of Prof. Shen. The talk will be recorded and webcast live; here's the link for the webcast.

Date: April 3

Time: 6 p.m.

Place: Room 402, Lerner Hall, 2000 H St. NW, Washington, DC (Lerner Hall is where you are when you enter the law school at the 2000 H St. entrance).

March 30, 2014 in Conferences, News - Chinese Law, People and Institutions | Permalink | Comments (1)

Monday, March 10, 2014

Pershing Square, Herbalife, and Chinese law


You have to be impressed with Pershing Square's PR operation. Those who don't read the business section might still have heard of William Ackman and his hedge fund Pershing Square's campaign against Herbalife, as it was the top story on the front page of today's New York Times. Ackman has a huge short position in Herbalife and is trying to talk down its stock by saying it's a pyramid operation. (I report this simply as a fact and express no opinion on whether Ackman's allegations are true.)

Today I received an email from someone at the Global Strategy Group, a PR firm, alerting me to a webcast Pershing Square is putting on tomorrow. The webcast will charge that Herbalife's operations in China violate Chinese law, presumably because of their alleged pyramidal nature. (My recollection is that China passed a law prohibiting pyramid sales structures after some early bad experiences in the 1980s or 90s, but I don't have the details at my fingertips.) I don't plan on watching the webcast and (since I don't have an opinion on the merits) it's not really my job to provide publicity for one side in this dispute, so I'm not going to provide the link here. But at a time when China is cracking down disproportionately on foreign firms, it will be interesting to see if Pershing Square manages to stir up some official action in China against Herbalife.

March 10, 2014 in News - Chinese Law, News - Miscellaneous | Permalink | Comments (0)

Supreme People's Court Work Report to the National People's Congress

Here's the full text of the report on the China Law Translate site, where it's in the process of being translated. Click on the "Select Language" button on the right of the screen to ensure you're getting the version you want (i.e., Chinese or in-process English translation).

March 10, 2014 in News - Chinese Law, Publications | Permalink | Comments (0)

Friday, February 14, 2014

English translation of Xu Zhiyong verdict now available

Monday, February 10, 2014

Zhang Qianfan to speak at George Washington University Law School on Feb. 12th

Professor Zhang Qianfan of Peking University Faculty of Law will speak at George Washington University Faculty of Law on Feb. 12th. His subject will be "A Constitution Without Constitutionalism? Paths of Constitutional Development in China." Details here.The talk will be webcast live; please check back to this blog for the URL, which I will post before the talk.

For those who don't know him, Prof. Zhang is an impressive guy. In addition to a Ph.D. in government from the University of Texas at Austin, he also has a Ph.D. in physics/biophysics from Carnegie-Mellon. He recently published a book in English on the Chinese constitution.

February 10, 2014 in Conferences, News - Chinese Law, People and Institutions | Permalink | Comments (0)

Wednesday, February 5, 2014

Teng Biao talk at GWU Law School - update and streaming information

I blogged the other day about Teng Biao's talk at GW Law School today (Feb. 5th). Two updates:

1. Location has been changed to Burns 505 (Faculty Conference Center).

2. The talk will be live streamed on the web. Here's the URL:


February 5, 2014 in Conferences, News - Chinese Law, People and Institutions | Permalink | Comments (0)

Tuesday, January 28, 2014

Amendments to the Company Law: good on ya, China!

I was surprised, but pleasantly so, to see that China passed amendments to the Company Law last month that, among other things, completely abolish the minimum capitalization requirement for both limited liability companies (LLCs) (有限责任公司) and companies limited by shares (CLSs) (股份有限公司).

In the original 1993 Company Law, the minimum capitalization for LLCs was from 100,000 to 500,000 yuan, depending on the type of business; this was changed to 30,000 yuan in the 2004 revision. The minimum capitalization for CLSs was a world-beating 10 million yuan in 1993, reduced to 5 million in 204, presumably as a compromise between those who thought it should stay at 10 and those who thought it should be nothing. I say "world-beating" because this number is an extreme outlier globally; the legally required minimum capitalization for a US company of that type incorporated in Delaware is zero, and in Europe tends to range from about 50,000 to 100,000 euros (the EU mandates a minimum of 25,000). (My information on Europe may be outdated; remember that this is just a blog post.)

To go from 5 million to zero in one fell swoop is pretty impressive, especially considering that going to zero represents not just a modification of policy but a complete change in thinking about minimum capitalization. China has long been a slave to the myth that minimum capitalization requirements protect creditors; this doctrine is a staple of company law textbooks. In fact, such requirements simply pointlessly impede corporate formation while doing nothing to protect creditors Anyone contemplating lending to a company wants to know about current assets and liabilities and future earning prospects; the historical number represented by the initial capitalization is irrelevant. (For a thorough takedown of this myth, see Macey & Enriques, Creditors Versus Capital Formation: The Case Against the European Legal Capital Rules.) Initial capitalization is not some kind of savings stashed away in the corporate mattress; it is just a number on the books and may well not represent real cash or other assets in hand. This is the American approach and it doesn't seem to have crippled creditors of American corporations or otherwise stifled economic growth. The European approach is not much different in substance - 50,000 or 100,000 euros is probably not that big an obstacle to corporate formation in most cases - but it's quite different in principle, and it's surprising to see China, which self-identifies as a civil law jurisdiction, utterly abandon this European principle and embrace the American one so whole-heartedly and so suddenly.

One thing policymakers need to think about, though, is what does protect creditors if minimum capital requirements don't. The answer is: the institutions that make it easier for creditors to evaluate the creditworthiness of borrowers before the loan is made, and those that give borrowers an incentive to repay the loan after it is made. The latter institutions aren't just legal; they could include mechanisms for making reputational sanctions meaningful. Thus, the needed complementary reforms include opening up information flows and not (as the government is currently doing) vigorously stanching them, and strengthening the ability of courts to find hidden assets and enforce judgments.

Other revisions to the Company Law passed at the same time are essentially complementary and involve the dismantling of the whole regime that fetishized registered capital. There's a nice memo on the revisions by the firm of Davis Wright Tremaine here.

January 28, 2014 in News - Chinese Law | Permalink | Comments (1)

Sunday, January 26, 2014

What a short notice on arbitration tells us about the Chinese legal system

I recently came across a very short notice from the Supreme People’s Court instructing lower courts how to handle certain arbitration disputes. I think it’s worth writing about because in a few short sentences, it encapsulates a key feature of the Chinese legal system—that is, its essentially bureaucratic nature—that I think make it fundamentally different from systems that are essentially adjudicatory. One can have a view as to whether that difference is a virtue or a vice in general or in particular cases, but it’s not my purpose here to take a stand on that issue; I just want to argue that the system is indeed different.

First, some background. China has rules about the recognition and enforcement of arbitration awards by courts; there are two relevant ones here.

               (1) A valid arbitration agreement must clearly stipulate the forum. This is a general rule of contract law and not unique to China—if we can’t find a meeting of the minds on where to arbitrate, there’s no agreement to enforce—although Chinese courts have tended to be overly demanding about what constitutes “clearly”.

               (2) Domestic arbitration can be carried out only by state-approved arbitration bodies; ad hoc arbitration (i.e., arbitration by persons or institutions not recognized by the state even if agreed upon by the parties) is not recognized by courts.

One of China’s major officially recognized arbitration bodies is the China International Economic and Trade Arbitration Commission (CIETAC). In 2012, when the problem I am about to describe arose, CIETAC had offices (sub-commissions) in Beijing and other Chinese cities, including Shanghai (Shanghai CIETAC) and Shenzhen (South China CIETAC). Thus, if the agreement said, “Arbitration at Shanghai CIETAC” or “Arbitration at CIETAC in Shenzhen”, it would have met the requirements of both of the above rules and been valid; everyone knows which arbitration forum is meant and it’s an officially recognized one.

In 2012, CIETAC issued new arbitration rules that came into effect in May of that year. Shanghai CIETAC and South China CIETAC didn’t like the rules and essentially declared independence. South China CIETAC changed its name to “South China International Economic and Trade Arbitration Commission” or “Shenzhen Court of International Arbitration”, and both the Shenzhen municipal government and the Guangdong provincial government have recognized it as a qualified arbitration organization. In April 2013, Shanghai CIETAC changed its name to Shanghai International Arbitration Center, and I believe has also been officially recognized by the Shanghai government.

In response, CIETAC issued an announcement on Dec. 31, 2012 stating that it was terminating the authorization of Shanghai CIETAC and South China CIETAC to accept and administer arbitration cases and forbidding them to conduct any further arbitration in the name of Shanghai CIETAC and South China CIETAC. CIETAC has also opened a new sub-commission in Shanghai (I’m not sure about Shenzhen) and sent its arbitrators there. In its Dec. 2012 announcement, CIETAC stated that when parties had designated Shanghai CIETAC or South China CIETAC in their arbitration agreements, they should submit their requests for arbitration to CIETAC (in Beijing), which would then take care of it. (For a good backgrounder on the dispute, see this memo from Winston & Strawn.)

Obviously, we have here a recipe for great confusion. Try to apply Rule 1: when an arbitration agreement says, “CIETAC Shanghai,” for example, which arbitration body does it mean? And what about Rule 2: do the new local arbitration bodies count as officially recognized? Who has the authority to recognize them? The Arbitration Law doesn’t say. Until this confusion is cleared up, parties have no way of knowing whether their arbitration agreement will be upheld. Courts in Ningbo and Suzhou refused to uphold arbitration awards of the newly independent Shanghai CIETAC, but were overturned on appeal.

Clearly it’s time for somebody—anybody—to step in and make a definitive ruling on these issues. The Supreme People’s Court is the obvious candidate. In September 2013, it did so. Here’s the full text of a Notice (tongzhi 通知) it issued to lower courts at that time:

Supreme People’s Court Notice on Problems Related to the Correct Adjudication of Cases Involving Judicial Review of Arbitration

To the Higher-Level People’s Court of each province, autonomous region, and separately administered city; the military courts of the People’s Liberation Army; and the Production and Construction Corps branch courts of the Higher-Level People’s Court of the Xinjiang Uighur Autonomous Region:

               Recently, the China International Economic and Trade Arbitration Commission’s (“CIETAC”) May 1, 2012 implementation of its revised rules of arbitration, together with the name changes and implementation of new arbitration rules on the part of the CIETAC Shanghai Subcommission (“Shanghai CIETAC”) and the CIETAC South China Subcommission (“South China CIETAC”), have led to disputes among parties related to issues such as the application of rules of arbitration and the jurisdiction of the above-mentioned arbitration organizations. The people’s courts of all areas have accepted case after case of arbitration review resulting from such disputes. In order to unify the standard for judgments and ensure that people’s courts correctly adjudicate cases, we now notify you as follows regarding relevant issues:

               With respect to cases in which the above-mentioned disputes result in parties applying for a confirmation of the validity of the arbitration agreement, as well as cases in which the above-mentioned disputes result in parties applying for a cancellation or ruling of non-implentation of awards rendered by CIETAC, Shanghai CIETAC, or South China CIETAC, the people’s court must, before making a ruling, submit the matter for discussion by its Adjudication Committee and then report up level by level to the Supreme People’s Court. Only after the Supreme People’s Court has made its reply may the ruling be made.

Supreme People’s Court

Sept. 4, 2013

 There are two things worth noting about this document. First, it was not publicly issued. It’s an internal instruction to courts immediately below it, and they are to pass it on to courts below them. Second, and most importantly, it does not solve the problem. It does not purport to state any rule or even vague principle that courts should use in addressing problematic cases; it does not state how the SPC intends to handle them. Yet the SPC certainly does intend to handle them, and it will produce a result. If the result is the same in cases where the relevant facts are identical, then that’s a rule of law that it would be helpful to let parties know about; if the result is not the same, then apparently there are more relevant facts than we thought.

The key point here is that the SPC is not acting as adjudicator-in-chief in a system that applies laws. It’s acting as decider-in-chief in a system that maximizes administrative discretion to the point where even here, where it would be simple to come up with a rule to resolve any ambiguity, it is unwilling to do so and reserves the right to reach different results in cases that, as far as statutorily relevant facts are concerned, are identical.



January 26, 2014 in Commentary, News - Chinese Law | Permalink | Comments (0)

Text of decision in Xu Zhiyong case

Here's the text of the decision in the Xu Zhiyong case (full text below). Let's note the names of the judges hearing the case who refused to allow the defense to bring their own witnesses or cross-examine those of the prosecution so that they can receive appropriate credit for their work: chief judge Sun Qinghong (审判长孙庆宏); Zhang Peng (代理审判员张鹏), who is listed as "daili shenpanyuan" (a term that doesn't appear in any legislation but that probably is best translated as "acting judge" and probably means someone who holds an assistant judge (助理审判员) position in the court); and people's assessor Hong Xiaoda (人民陪审员洪晓达).

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发布时间:2014-01-26 10:38:43





























































































































































































January 26, 2014 in News - Chinese Law, People and Institutions, Research Resources | Permalink | Comments (0)

Saturday, January 25, 2014

Xu Zhiyong gets four years

Here's the report (in Chinese) from the court's Weibo feed, and here's some pre-sentence commentary from the Global Times. The spin is that Xu Zhiyong is being punished not for the content of what he was seeking, but for the way in which he sought it. Of course, the article contains the usual tendentious claims that people like Xu demand legal immunity for whatever actions they might take in pursuit of their goals - claims that are not backed by any evidence and are too silly to bother refuting.

[Some text and links changed from original post.]

January 25, 2014 in Commentary, News - Chinese Law, People and Institutions | Permalink | Comments (2)

Friday, January 24, 2014

More on the Xu Zhiyong case

Here's an informative and well-documented backgrounder, with links to original sources, on the Xu Zhiyong case from the Congressional-Executive China Commission.

January 24, 2014 in Commentary, News - Chinese Law, People and Institutions | Permalink | Comments (0)