Legal and Institutional Uncertainties in the
Domestic Contract Law of the People’s
Republic of China
Daniel Rubenstein*
This article attempts to fink characteristics of Chinese
contracts to the specific ideological, legal and institutional ar-
rangements that govern them. In the context of Hong Kong’s
reversion to Chinese sovereignty, this analysis of the domestic
law of the People’s Republic of China may now have important
implications for Hong Kong.
trace peculiarities
Since Chinese scholars often
in
China’s contract law to the pre-1980 planned economy, the ar-
tidcle begins by rehearsing key characteristics of contracts under
planning. After a brief analysis of the function of post-Mao le-
gal reform, of the civil law, and of the relations between the
legislature, judiciary, and Communist Party, the article exam-
ines, in turn, three stages of the contractual process: (I) On ca-
pacity, the author maintains that economic contracts are still
restricted to ‘juristic persons” (faren), and that this empowers
the state to “screen” economic actors. (2) On formation and per-
formance, the author argues that “liberalizing” changes imple-
mented by the 1993 Economic Contract Law still leave the state
considerable “principled ambiguity” to interfere. Moreover,
Chinese versions of liquidated damages, anticipatoty repudia-
tion, force majeure, and the absence of rebus sic stantibus all
reflect vestiges of the planned economy’s emphasis on specific
performance. (3) On dispute resolution, the author discusses
mediation, resolution by a common superior, arbitration, and
the courts..He stresses control of mediation by the state, and the
tendency for mediation to blur into arbitration; the influence on
courts from local cadres and the Ministry of Justice; and the in-
ability of the judiciary to form an internally consistent, self-
referential corpus of case law.
This analysis concludes that despite the importance of le-
gal reform (viz., a prospective “unified” contract law), real pri-
vate-law protection for contracts will require a fundamental re-
thinking of the institutional arrangements which make up party-
state rule.
Le prdsent article vise A expliquer certains principes du
droit chinois des contrats
la lumi~re de leur contexte iddologi-
que, l6gal et institutionnel. Au moment do retour de Hong-
Kong A la Chine, cette analyse pourrait avoir des consdquences
importantes pour tous ceux qui font affaires & Hong-Kong.
La plupart des juristes chinois expliquent les particulari-
t#s du droit chinois des contrats A partlr de l’6conomie planifi6e
d’avant 1980. L’auteur ddbute donc par une analyse des con-
trats dans une 6conomie planifide. Apr~s une br&ve analyse de
la rforme du droit civil dans l’ re post-Mao et des relations
entre la 16gislature, le systemejudiciaire et le parti communiste,
l’article explore une A une trois dtapes du processus contractuel.
(1) A propes de la capacit6, l’auteur note que les contrats A ca-
ract&e 6conomique demeurent l’apanage des
