Introduction 15
nation. In a more general sense, the two-decade long reform in China has made the country reach the point where all major laws are well in place. What is critical, however, is not what laws the country has, but whether the laws adopted would be strictly observed and effectively enforced. Needless to say, this is the greatest challenge that now faces China.
7. Unsolved Issue: Judicial Independence
A fundamental issue concerning Chinese judicial system is the judicial independence. Chinese courts in general are regarded as being lack of independence, which has vitally threatened the judicial justice. Confronted with the growing criticism from the public, the Supreme People’s Court since 1999 has made it the main work theme of the courts to build “justice and efficiency”.51 Despite the fact that there has been an increasingly strong voice calling for independent judicial system, the people’s courts seem to still encounter insurmountable hurdles in exercising their judicial power independently.
Indeed, it is fair to say that judicial independence is a recognized principle in the Chinese Constitution and laws. Take a look at the Chinese Constitution. In 1954 when the first Constitution was adopted, it was provided that the people’s courts shall adjudicate cases independently and abide only by laws.52 Article 126 of the current Constitution, adopted in 1982, further provides that the people’s courts shall exercise the judicial power independently according to stipulations of laws, free of any interference by administrative agencies, social organizations or individuals.53 This constitutional provision is also embodied in 1979 Organic Law of the People’s Courts (as amended 1983),54 and 1995 Law of Judges (as amended 2001).55
51See Supreme Court President Xiao Yang, Working Report of the Supreme People’s Court to the First Session of the 10th National People’s Congress, March 11, 2003. The full text of the report is available at http://www.court.gov.cn/work/200303280001.htm.
52See the Constitution of the People’s Republic of China 1954.
53See the Constitution of the People’s Republic of China 1982. English translation is available at http://www.qis.net/chinalaw/lawtran1.htm.
54Article 4 of the Organic Law of the People’s Courts (as amended 1983) is exactly a copy of Article 126 of 1982 Constitution.
55The Law of Judges of China was adopted on February 28, 1995 and amended on June 30, 2001. In Article 1 of the Law (as amended), it states that purpose of this Law is to safeguard the independent exercise by the people’s courts of judicial power and judicial justice. Article 8 provides that a people’s court judge shall have the right to adjudicate cases independently without interference by administrative agencies, social organizations and individuals.
16 Chinese Contract Law
Therefore, literally speaking, the people’s courts are granted an independent judicial power under the Chinese Constitution and laws. The problem, however, is that the judicial power may not be exercised independently. Even for the Supreme People’s Court, its activities are not completely free of interference. On this matter, there is nothing wrong with the laws, but there is something that actually cripples the judicial independence. The cause is the inherent defects that exist in the current judicial system. China is a communist- party-dominated socialist country and the separation of powers is not the main theme of the nation. The political system of China is the system of people’s congress and this is also the basically organizational form of the nation’s political power.56 According to the Constitution 1982, the National People’s Congress (NPC) is the highest body of the state power.57 But this highest body is required to be under the leadership of the communist party.58 The Supreme People’s Court, though defined as the nation’s top judiciary body, is required to report to the NPC.59 Under the NPC, there are local people’s congresses at the level of provinces and counties to which the lower people’s courts at corresponding level are responsible.60
The current organizational structure of the judicial system has an obvious system defect, which makes the judicial independent extremely difficult. As noted, China maintains a unitary judicial system with four levels from the Supreme People’s Court down to the county trial courts. But the Supreme People’s Court has no control over any of the lower courts except for work connections. All judges at the lower people’s court are selected and appointed by local people’s congress that is heavily influenced by local communist party chief and government heads. More importantly, the operation expenses including salaries of the judge are provided locally from the local government budget. In addition, judges in China do not have a statutory term, and they could be replaced or removed anytime by their corresponding people’s congress at will. It is therefore quite common that judges at a local people’s court would have to follow the “instructions” or “opinions” from local government on particular cases. Also, it has been a long tradition in Chinese history that government power and judicial power are always intertwined.61
A recent case that was tried at Luo Yang Intermediate People’s Court of He Nan Province may serve as an excellent example to help illustrate the current
56See generally Xu Congde, supra note 9 at pp. 102–136.
57See Chinese Constitution (1982), art. 57.
58See Xu Congde, supra note 9 at pp. 117–118.
59See supra note 51, art. 128.
60See id.
61For thousand years in the Chinese history, judicial power was rested with executive branch. Thus, a mayor was not only the administrative head but also the chief judge.
Introduction 17
fate of judicial independence in China. The case, named as Ru Yang County Seeds Co. v. Yi Cun Seeds Co. (known as Luo Yang case), involved a dispute over the contract to provide parent corn seeds. What is significant, however, is not the case itself but the court decision with regard to the application of local regulation that is inconsistent with the State Seeds Law. For purposes of discussion, the full text of the court decision is translated as follows:
Luo Yang Intermediate People’s Court of He Nan Province
Civil Judgment Document
Ru Yang County Seeds Co. v. Yi Cun Seeds Co.
(2003) Luo Min Chu Zhi No. 6
Plaintiff: Ru Yang County Seeds Co.
Official Representative: Cui Hao Xian, Manager of Plaintiff
Legal Counsel: Chen Zhan Jun, Attorney from Luo Yang Ju Xing He Law Firm
Defendant: Yi Cun County Seeds Co.
Official Representative: Zhang Xia Lei, Manage of Defendant
Legal Counsel: Wang Xiang Ru, Attorney from Luo Yang Da Xin Law Firm
Agent ad litem: Song Yan Jun, Head of Commodity Pricing Division of Commodity Pricing Bureau of Yi Cun County
This case was filed by Plaintiff Ru Yang County Seeds Co. (hereinafter referred to as Ru Yang Co.) to sue defendant Yi Cuan County Seeds Co. (hereinafter referred to as Yi Cuan Co.) for the dispute involving a contract on entrusted reproduction of corn seeds. After taking the case, this Court has formed a collegial panel according to the law and the penal has held open court hearings, attended by Chen Zhan Jun, Legal Counsel for plaintiff, and Zhang Xia Lei, Official Representative of defendant, Wang Xiang Ru, Legal Counsel and Song Yan Jun, Agent ad litem for defendant. The court hearings now have come to an end.
Plaintiff Yu Yang Co. claimed that on May 22, 2001, plaintiff entered into a “Contract on Entrusted Reproduction of Corn Seeds” with defendant. Under the contract, plaintiff agreed to provide defendant with 4,857 jin of parent corn seeds (1 Chinese jin is equivalent to 0.5 kg, note added) and defendant agreed to use them to reproduce 200,000 jin of hybrid corn seeds specified as Nong Da 108 with a quality matching the national standard of second grade or above. The term for the reproduction expired on October 31, 2002. The contract also contained explicit provisions with regard to other rights and obligations of the parties.
Plaintiff asserted that during the course of actual performance of the contract, defendant failed to fulfill its obligations and did not deliver to plaintiff any hybrid corn seeds reproduced. As a result, on the basis of market profit margin between RMB 3.4 to 3.9 Yuan per jin, plaintiff has suffered a loss of expectation interest for about RMB 680,000 to 780,000 Yuan, and plus other economic damages, the total actual loss was around RMB 1,000,000 Yuan. After several unsuccessful negotiations, plaintiff brought this lawsuit, and asked the court to order: (1) defendant pay plaintiff RMB 1,000,000 for contract damages and other economic loss, and (2) defendant bear all litigation costs. During the court hearings, plaintiff modified its claims to request instead to recover from defendant (1) RMB 12,185 for the cost of parent seeds, and (2) RMB 703,784.60 for contractual damages.
18 Chinese Contract Law
Defendant argued that its failure to perform the contract was caused by the significant drop in production resulting from the severe drought, and plaintiff should also bear certain liability for breach of contract because during the production and processing of the seeds plaintiff did not conduct any on-site inspection nor did plaintiff participate in any seeds purchasing. Defendant further argued that the “Regulations for Administration of Crop Seeds of He Nan Province” explicitly provided that purchasing and selling of seeds must strictly follow the provincial policy of unified pricing, and that the “Notice of Methods for Administration of Major Crop Seeds” jointly issued by the Commodity Pricing Bureau of He Nan Province and the Bureau of Agriculture of He Nan Province clearly provided a formula for calculating the selling price of seeds. Defendant contended that under the formula, the overall profit rate for the hybrid seeds shall be within 23% margin, and the net profit should be between 8% and 10%, and therefore even if Yi Cuan Co. had fully performed the contract, plaintiff’s retainable interest should be within RMB 16,800 and 25,000 Yuan.
During the hearings, the Court found that:
Plaintiff and Defendant entered into the “Contract on Entrusted Reproduction of Corn Seeds” on May 22, 2001. Under the contract, plaintiff would at its own cost purchase 4,875 jin of Nong Da 108 hybrid corn seeds, and entrust defendant to reproduce 650 mu (about 97 acres, note added) with a total output of 200,000 jin hybrid cord seeds and a quality standard of the State Second Grade or above. The period for performance of the contract would end October 30, 2002. After receiving the produced hybrid corn seeds, plaintiff would pay defendant a seeds reproduction fee at RMB 0.2 Yuan per jin (including the expenses of reproduction management, purchasing, shelling, short-distance transportation to plaintiff’s processing factory, and other expenses). The price for plaintiff to accept the seeds (the contract price, note added) would be the base-purchasing price plus reproduction fee and the base-purchasing price would be calculated at 2.2 to 2.5 times as much as local corn seeds market price at the time of purchasing. Plaintiff’s expenses for purchasing the parent seeds would be off set from the contract price when it receives the reproduced seeds.
According to the contract, Defendant would be responsible for the reproduction management, technical instruction, purchasing and shelling, and transporting of the seeds to plaintiff’s processing factory. During the course of reproduction, plaintiff would visit the site for 3 to 4 times. When purchasing the reproduced seeds, plaintiff would send one person to participate in examining the quality of the seeds. The total weight of the reproduced seeds received by plaintiff would be the net weight after a deduction of the water content of the seeds at the ratio of 3–5% of gross weight. It was provided in the contract that plaintiff would unconditionally accept all reproduced seeds provided by defendant while defendant would unconditionally provide plaintiff with total output of the reproduced seeds regardless of the corn seeds market situation.
On the day of the contract, plaintiff provided defendant with 3,899 Jin of Nong Da 108 maternal corn seeds and 975 jin of paternal corn seeds at a cost of RMB 12,185 Yuan. Defendant then under the contract planted these seeds into 650 Mu of the seed reproduction base. As of today after the harvest of the seeds, defendant did not make any delivery of the reproduced corn seeds of Nong Da 108 to plaintiff.
The Court further found that:
1.The accounting vouchers of defendant from May 1, 2002 to June 30, 2002 revealed that during the same period of time, the price dependant used to purchase Nong Da 108 corn seeds from farmers at the reproduction base was RMB 2.904 Yuan/kg. The “Monitoring Report of Yi Cuan County of Luo Yang Municipality on the Standard of Price and Fees for Major Agricultural Products” also showed that the medium
Introduction 19
corn market price at Yi Cuan County in October 2001 was RMB 1.00 Yuan/kg. In the meantime, defendant’s accounting vouchers during April 1, 2002 and June 30, 2002 indicated that the wholesale price for the coated corn seeds of Nong Da 108 was RMB 10.60 Yuan/kg, and the wholesale price of the bare corn seeds was 10.00/kg. For the same period, the wholesale price for coated and bare corn seeds at each of retail stations of Ru Yang County was the same as that of Yi Cuan County.
2.The accounting records of Yi Cuan County (from May 1, 2002 to June 30, 2002) evidenced that the cost of the corn seeds sun-drying was RMB 8 Yuan/ton, cost of turnover for shelling was RMB 8 Yuan/ ton, labeling fee was RMB 5.253 Yuan/ton, packaging fee RMB 30 Yuan/ton, and unloading fee RMB 3.5/ton. On this basis, the processing cost for the corn seeds was RMB 0.062154 Yuan/kg. Plaintiff agreed to computer this cost into the price of the reproduced corn seeds.
3.Defendant Ru Yang Co. was exempted from paying Business Income Tax and Value Added Tax for the year 2002 under the State Policy.
4.The “Regulations for Administration of Crop Seeds of He Nan Province” (Provisional) took effect on Aril 27, 1884, and its successor “Regulations for Administration of Crop Seeds of He Nan Province” was effective on November 8, 1989, which was amended again on October 22, 1993. Article 36 of the Regulations provides:
“the purchase and sale of seeds shall strictly comply with the provincial policy of unified price, and no price may be raised without authorization. With regard to the seeds for which there is no provincially unified price, the price shall be determined jointly by the city (district) or county administrative department of agriculture and department of pricing.”
On August 20, 1998, He Nan Provincial Bureau of Commodity Pricing and Provincial Bureau of Agriculture together issued the “Yu Jia Nong Zhi (1998) No. 188 Document”, namely the “Notice of Methods for Administration of Major Crop Seeds” (Notice). The first paragraph of the Notice required that the method for price administration of major crop seeds be the government guiding price, and the principle of the price management be that of “unified leadership and level-by-level management”. Under the Notice, the calculating formula for the sale price of seeds is set as “sale price (cost of purchase seed-selecting process fee) (1 rate of composite deviation) tax”. On July 8, 2000, “the Seeds Law of the People’s Republic of China” was adopted, and it went to effect December 1, 2000, which repealed the “Regulation of Seeds Administration of the People’s Republic of China” promulgated by the State Council on March 13, 1989.
The Seeds Law is silent about the price of purchase and sale of seeds, and in addition, the price category made by the State Commission of Planning and other relevant departments of the State Council does not make the price of corn seeds the State fixed price or State guiding price. More over, there is no provincial price category in He Nan. Therefore, the price of goods and services that are not listed in the price category at both State and provincial levels shall be determined by market.
5.The Book “Fine Seeds of Crops in China” tells that Nong Da 108 corn seeds will produce about 600 kg corns per mu if planted in Spring, or around 500 kg/mu if planted in Summer. The “Yearbook of Luo Yang Statistics” indicates that in 2001 the production output of corns per mu was about 208 kg.
It is therefore held that:
The contract entered by and between plaintiff and defendant is a valid contract because it is a manifestation of the true intent of the parties, and its contents do not violate any
20 Chinese Contract Law
prohibitive provisions of law or regulation. Once the contract is established, the parties shall fulfill their each contractual obligation conscientiously. In the case at bench, after plaintiff provided defendant with the parent corn seeds under requirement of contract, defendant failed to deliver to plaintiff the corn seeds with agreed quantity and quality in accordance with the contract. Such failure constitutes a breach of contract, for which defendant shall be held liable. According to the “Yearbook of Luo Yang Statistics”, the production output of corns per mu was about 208 kg in 2001, which was lower than the average output during the past years. In addition, the drought situation in the three-month period of May, June and July 2001 can be proved from the meteorological records provided by the Meteorology Bureau of Yu Cuan County. Therefore, the agreed output of corn seeds per mu by the parties should be reduced accordingly by 10%, and defendant’s argument in this regard is sustained.
With regard to agreed 3–4 times onsite inspection by plaintiff, it shall be regarded as plaintiff’s right, of which plaintiff shall be free to choose not to exercise. Thus, plaintiff’s choice to give up the inspection right does not constitute a breach of contract, and defendant’s assertion must be denied. After the Seeds Law took effect, the corn price is to be determined on the basis of the market situation. Since the “Regulations for
Administration of Crop Seeds of He Nan Province” is a local law subordinate to national law in terms of legal effect, any of its provisions that is in conflict with the Seeds Law shall necessarily be void. Furthermore, the “Notice” of He Nan Provincial Bureau of Commodity Pricing and Provincial Bureau of Agriculture was issued under the “Regulations”, and the any provision contained in the “Notice” that is inconsistent with the Seeds Law must also be void (emphasis added). Consequently, defendant’s argument about using the formula provided in the “Notice” to calculate the actual loss of plaintiff’s expected interest has no legal ground, and should not be supported by the Court.
The Court concludes that because defendant never delivered to plaintiff any reproduced corn seeds under the contract, defendant shall pay plaintiff for the cost of RMB 12,285 Yuan for the purchased parent corns seeds, and defendant shall also be liable for the loss of plaintiff’s expected interest on the ground of breach of contract. Therefore, in accordance with Article 4 of General Principles of Civil Law of People’s Republic of China, and Articles 109, 112, 113 and 118 of Contract Law of the People’s Republic of China, it is so ordered:
1.Defendant, within 10 days after this judgment becomes effective, pay plaintiff for the cost of parent corns seeds in the amount of RMB 12,185 Yuan;
2.Defendant, within 10 days after this judgment becomes effective, pay plaintiff for its economic loss in the amount of RMB 597,001 Yuan;
3.Plaintiff’s other claims be dismissed.
The cost for hearing the case is RMB 12,170 Yuan, property attachment cost RMB 3,520 Yuan, and other costs RMB 2,434 Yuan. Of these three items with a total cost of RMB 18,124 Yuan, defendant shall bear RMB 16,500 Yuan, and plaintiff RMB 1,624 Yuan.
If any party disagrees with this judgment, it may appeal to the High People’s Court of Henan Province within 15 days after being served with this judgment by handing over to this Court the petition for appeal with copies of the appeal to the other party according to the number of participants.
Head Judge: |
Li Hui Juan |
Judge: |
Zai Tao |
Acting Judge: |
Zhu Meng (Sealed) |
|
May 27, 2003 |
Clerk: |
Zhang Yan Jun |
* |
* |
* |
* |
* |
Introduction 21
Apparently, this judgment, though not an ideal one, is among the fine judgments that are clearly written with some analytical reasoning. The most beautiful part of this judgment is the challenge that the judge made to the local regulations conflicting with the State Seeds Law (national law). In reaching the conclusion, the trial judge examined the local regulations in light of the national law, and made rational efforts to preserve the authority of the national law. Such efforts in every respect are with the four corners of the Legislation Law of China. Article 79 of the Legislation Law explicitly provides that the legal authority of State law is higher than that of local law and regulations,62 which is interpreted to mean that any existing local law or regulation that contradicts the lately enacted national law shall be void. In addition, under the Judge Law of China, judges are required to faithfully implement the Constitution and laws and it is the obligation of the judges to strictly observe the Constitution and laws.63
Unfortunately, however, when the judgment was handed down, it was immediately read as something offensive to the local government. The judge’s opinion concerning the application of the Seeds Law over local regulations was blamed as an intrusion into local government power and even more seriously a violation of Chinese people’s congress system. On October 13, 2003, both the Office and Legal System Division of the Standing Committee of the People’s Congress of Henan Province issued a flamingly worded notice condemning the judgment and urged the High People’s Court of Henan to vigorously look into and handle this “serious matter”.64
On October 21, 2003, the High People’s Court circulated a Notice of Criticism among its court system characterizing the judgment as a law-breaking conduct of the court that has threaten the authority of local law and regulation as well as the unified legal system. Ironically, when warning that if the same incident ever happens again, the judge and its direct superior both will be seriously held liable, the High People’s Court of Henan unequivocally stated that to prevent this incident from reemerging was an essential means to maintain “judicial justice and efficiency”.65
62Adopted on March 15, 2000, the Legislation Law of China regulates the enactment, amendment and repeal of laws, administrative regulations, local laws and regulations, regulations of autonomy region and specific regulation.
63See art. 3 and 7 of the Judge Law, supra note 55.
64See the Official Document of the Office of the Standing Committee of the People’s Congress of Henan Province, Yu Fa Chang Ban (2003) No. 78, and Official Document of Legal System Division of the Standing Committee of the People’s Congress of Henan Province, Yu Ren Chang Fa (2003) No. 18.
65See Official Notice of the High People’s Court of Henan Province,Yu Gao Fa (2003) No. 187.
22 Chinese Contract Law
Under the tremendous pressure from the local government, Luo Yang Intermediate People’s Court issued a self-criticism notice internally on October 28, 2003 directly blaming Judge Li Hui Juan and her supervisor, deputy chief judge of the first civil division of the court for their failure to duly perform their duties as judges. In its notice, the court stated that during the trial the people’s court may only apply the law and has no authority to question the validity of local law and regulations. Considering this is a serious political matter, the court further stresses that no judgment shall ever contain anything that would render the local law and regulation void.66 Consequently, Judge Li Hui Juan’s employment with the court was suspended for months and although her employment was later reinstated, clearly this incident may negatively affect her promotion in the court or even her career as a judge.
It is without doubt that the Luo Yang case set a very illustratable example about how the judges might be treated in China when they are tying to be independent. Of course, there has been great sympathy for Judge Li in Chinese legal community and many openly offer strong support to Judge Li and her decision not to apply the local law and regulations that contradict the national law. Indeed, the issue whether the people’s court may question the validity of local law and regulations is clearly debatable under the Chinese Constitution, particularly when there is an obvious conflict between the national law and the local law. As a matter of fact, in early 1993, the Supreme People’s Court had made attempt in this regard. On March 11, 1993, in its “Answer to the High People’s Court of Fu Jian Province Concerning Application of Law When There Is a Conflict Between National Administrative Law And Local Law”, the Supreme People’s Court made it clear that when hearing administrative case, if local law and regulation were inconsistent with (national) law and administrative regulations, the latter shall be applied. According to the Supreme People’s Court, this Answer was made after consulting with the Standing Committee of the National People’s Congress.67
Applying the Supreme People’s Court’s “Answer” to the Luo Yang case, there was nothing wrong with Judge Li’s refusal to apply the local law. But the spark that caused the fire seemed to be Judge Li’s opinion on the validity of the local law – intolerable because it was deemed to have broken an unalterable rule: “You may not apply the local law in this case but you should not say so”. This would necessarily raise many legitimate questions that deserve
66See Official Notice of Luo Yang Intermediate People’s Court, Luo Zhong Fa (2003) No. 147.
67See Supreme People’s Court, “Answer to the High People’s Court of Fujian Province on the Question Which Law Shall Be Applied When in Administrative Cases the Provisions of Local Law and Regulations Were Inconsistent with the Law and Regulations” on March 11, 1993. Fa Han (1993) No. 16.
Introduction 23
serious discussions. These questions include: (1) what law should the judges preserve and follow – national law or local law? (2) what would the “unified legal system” really mean? (3) what would the judicial power be under the Constitution? (4) should a judge be held liable for his or her judgment?
(5)what would be the real relationship between national law and local law?
(6)would the legislative body have the power to interfere with judicial matters?68 The outcome of Luo Yang case could also best explain why in Chinese courts many judges are reluctant to offer detailed reasons for their decisions – because there are so many minefields lying ahead.
Interestingly, the trial court decision of the Lou Yang case was appealed by both plaintiff and defendant to the High People’s Court of He Nan Province. In its decision entered on May 9, 2004, the High People’s Court affirmed the trial court’s opinion concerning the legal effect of the National Seeds Law over the local regulations in question. The High People’s Court held that the since the contract in the instant case was concluded on May 22, 2001, its validity must be viewed in the light of the Contract Law and related judicial interpretations, and on this ground, the validity of this contract should be determined according to Article 52 (5) of the Contract Law and Article 4 of the Supreme People’s Court “Explanations to the Questions concerning Application of the Contract Law of the People’s Republic of China”. Under Article 52 (5), a contract is null and void if it violates the mandatory provisions of law and regulations. As required by Article 4, after the Contract Law took effect, the people’s court, when determining the voidance of a contract, shall apply the law passed the National People’s Congress and regulations adopted by the State Council, but not local rules or regulations.
68In Nov. 2003, a roundtable discussion on Luo Yang case was held at Tsinghua University School of Law in Beijing. Attended by a number of constitutional law scholars, lawyers and judges, the discussion dealt with several interesting questions arising from the Luo Yang case and some of them seemed both controversial and sensitive: Constitutional Question:
(a)The relationship between legislation and judiciary – who deals with what? (b) Review of law and constitutionality – should the people court have sort of judicial review power?
(c)Division between national legislative power and local one, and between central government authority and local one – how should such powers be divided? (d) Judicial effect of constitutionally legal question – what judicial effect should the Legislation Law have?
(e)Understanding of unified legal system – who has the obligation to maintain the unified legal system? Judicial Question: (a) Are the judges the State judges or local judges and what should the judges protect? (b) Should there be legal reasoning in the court judgment, and how should such legal reasoning be written? (c) Is judicial independence the independence of court or independence of judge, and should the “trial committee” be abolished?
(d)Relationship between a higher people’s court and its lower people’s courts – should the High People’s Court be responsible for the conducts of its lower people’s courts?
24 Chinese Contract Law
The High People’s Court upheld that trial court decision by stating that the trial court judgment should be affirmed because the facts on which the judgment entered are clearly ascertained, and the application of law is correct and there is no improper handling of the substance of the case. In the meantime, however, the High Court in particular pointed out that in the legal reasoning in support of its decision, the trial court inappropriately state that after the adoption of the Seeds Law, the price of the corn seeds is to be determined by the market, and the Regulations for Administration of Crop Seeds of He Nan Province” is a local law subordinate to national law in terms of legal effect, any of its provisions that is in conflict with the Seeds Law shall necessarily be void. The High Court then held that such a statement has to be corrected.69
This book is not intended to explore the answers to the questions about judicial independence in China, and it also should not be expected that the answers could be easily found. As it has been emphasized, China is the country where the courts must be positioned under the communist party’s absolution leadership for which there is lack of effective check and balance, and only on this basis may the judicial power be exercised independently. Of course, people may have different views about what the judicial independence would exactly mean. But given the reality in China, it is not difficult to understand why the Luo Yang case could happen in such a unique way. The bottom line is that no matter what solutions may come up with regard to the questions above, the road toward judicial independence in China is still considerably long.
69See Civil Judgment of the High People’s Court of He Nan Province, (2003) Yu Fa Min 2 Zhong Zhi No. 153.
Chapter I
Contract Law in Chinese Tradition
Once again, the most known term equivalent to contract in China is Qi Yue (commonly translated as “agreement”). Interestingly, according to some Chinese legal history scholars, the term “contract” (He Tong) actually appeared in ancient China 2000 years ago, but was soon replaced by the term Qi Yue. At that time, contract was regarded as a form of Qi Yue, and therefore, contract itself was not a Qi Yue rather it was used as a mark or symbol evidencing the existence of the Qi Yue between the parties.1 In this sense therefore, “contract” was once translated in Chinese as Qi Ju – certificate or written record of Qi Yue.
In modern China, the term “contract” was not commonly used until late 1970’s when western literatures on contract were gradually introduced into the nation. For many years before that, the term “contract”, when used, was always associated with the term Qi Yue and was phrased as He Tong Qi Yue (contractual agreement). Scholars in China had debated on the difference between He Tong (contract) and Qi Yue (agreement),2 but most now believe that it would have no any practical significance to differentiate them.3
1 See He Weifang, Analytical Differentiation between “Contract” and “Agreement”, 2 Jurisprudence Research (1992).
2Some scholar argued that contract refers to the meeting of minds in the same direction between the parties involved while the agreement means the declaration of wills between the parties, which would include a meeting of the minds not necessarily in the same direction. See Zhou Linbing, Comparative Contract Law, 80–81 (Lanzhou University Press, 1989).
3See Wang Liming, Contract Law, Fundamentals and Case Analysis, 7 (People’s University Publishing House, 2001).