Chinese Law Prof Blog

Editor: Donald C. Clarke
George Washington University Law School

Friday, March 29, 2013

Hotel Loses Case in Breaching Contract for “Stability Maintenance”

Here's a fascinating case that makes for an interesting data point in what we think we know about the Chinese legal system. An anti-discrimination NGO reserved rooms at a hotel in Suzhou for a conference. The police got wind of it and instructed the hotel to cancel the reservations in the name of stability maintenance. The hotel, needless to say, did as it was told. Yawn. Dog bites man.

Now it gets interesting. The NGO sued the hotel for damages in a Suzhou. What would we expect? That no court would accept the suit, and that if it did, the plaintiffs certainly would not win. But what happened is that the court not only accepted the suit, but found for the plaintiffs. It rejected the hotel's argument that the police order to close was a kind of force majeure and that the state had expropriated the rooms ("政府临时征用客房开会"). But apparently the government did not in fact take the rooms in question for some other purpose, and the court rejected the force majeure argument, stating that it wasn't one of the events of force majeure spelled out in the contract.

Astonishingly, the vice-chief of the local police station, Mr. Pan, appeared in court and testified that they had indeed orally ordered the hotel not to allow the meeting to go forward:


        Pan: Around April 29, 2012, our station received an oral notice from the relevant superior departments saying that during the period of May 1st, because of the needs of stability maintenance work, hotels within our jurisdiction were requested not to permit the hosting of meetings. . . . Because of this, we orally requested the Motai Company [i.e., the hotel] to discontinue their hosting activities. The main objective at that time was not to permit large-scale meetings to go ahead.


        Court: Are there any written materials pertaining to this measure by the police?


        Pan: No. Everything was orally transmitted from above to below. At the time, officers from the Security Brigade of the Pingjiang Public Security Branch Bureau went with policemen from our station to the defendant Motai Hotel and worked on the hotel manager Feng Xiaojun. [I have translated "做工作" as "worked on"; the basic idea of the term is to try to persuade someone, but one can imagine it was done in a pretty coercive atmosphere.]

It's hard not to have some sympathy for the hotel here. It's unrealistic to suppose that they could just have blown the police off; I would have thought there was indeed a good case to be made for force majeure. What message is the court sending to hotels in cases like this? That they should not listen to police instructions? It seems extraordinary that a court, especially on in the same city as the police in question, should have come up with a judgment like this. Does this mean that courts are not as subservient to local powerholders as we thought? Or is there some fascinating behind-the-scenes story that explains this apparent anomaly? My inclination is to suspect the latter, but if enough data points like this accumulate then the former will start looking more plausible.

It's the old question of whether you make the observations fit the theory ("My theory tells me that this stuff doesn't happen, so there must be something fishy about the observation") or the theory fit the observations ("Time to reassess what we think we know about Chinese courts"). Although many people think the first method is obviously wrong - of COURSE we should adjust our theory to fit the facts, right? - in practice we constantly, and often correctly, question the validity of our observations precisely because they seem so out of whack with a theory in which we have confidence. Remember the Italian scientists who thought they might have found neutrinos that traveled faster than light? Even they doubted their own findings.

Here are two news reports:

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