Professor You Wei: The judiciary must be cautious in intervening in illegal economic activities

The judiciary must be cautious in intervening in illegal economic practices

——Professor You Wei's lecture at Fudan University (excerpt)

You Wei is the director of the Judicial Research Center of East China University of Political Science and Law, a professor of the Shanghai Research Museum of Culture and History, and a consultant and researcher of the Shanghai Zen Poetry and Painting Research Society.

Recently, everyone has been talking about the need to protect the healthy development of private enterprises in accordance with the law, and once again mentioned the need to be cautious about the behavior in the economic field. In my opinion, the first step is to study and establish evaluation criteria.

With regard to the criteria for the evaluation of crime, there are usually two criteria, the political criterion and the legal criterion. In handling cases, the court always emphasizes the unity of legal standards (effect) and social standards (effect), hoping to combine the two well, but this is a more macro idea.

In the early days of reform and opening up, there was a conflict between the existing laws and the evaluation criteria for new economic behaviors. At that time, there was no simultaneous reform of legislation, there was a serious legal lag, and many economic behaviors conducive to development were evaluated as illegal or even criminal, and sanctions were imposed "in accordance with the law". Subsequently, this kind of contradiction became more and more prominent with the process of marketization, forming a situation in which "it is difficult to follow the law". Finally, the issue of the "productivity criterion" was raised, and the criterion of "three advantages" also appeared, but a relatively specific and targeted criterion for evaluating illegal economic behavior has never been really established.

Since economic crime is a kind of order and legal crime, we should have some standards with our own characteristics in our evaluation of economic crimes.

So, which illegal acts should be declared criminalized legislatively, and which should be judicially intervened in sanctions?

Personally, through theoretical research and years of judicial practice, I believe that the following three aspects should be the main considerations.

First, it examines whether the behavior is conducive to ensuring economic freedom.

Freedom is the soul of a market economy, and whether a certain behavior is conducive to promoting economic freedom and promoting the free flow of resources is an important consideration.

An important foothold is that the criminal law should ensure the independence of market entities. Any act that undermines its independence should be included in the category of illegal acts, and if the circumstances are serious, it may be elevated to a crime through legislation.

This is because if the independent status of the main economic entities cannot be established and guaranteed, how can there be any establishment and development of a market economy? In the past, we were under the planned economic system for a long time because the independent qualifications and status of the main economic entities could not be properly recognized and established. The premise of emancipating the productive forces is to emancipate people and the main body, and without emancipation, there can be no motive force for competition. Therefore, acts that harm the independence of market entities and their interests should be included in the scope of violations or even crimes.

Second, it examines whether the behavior is conducive to ensuring fair competition.

In order for the market economy to develop healthily, it is necessary to establish an orderly competition system, and without fair competition, there will be no real market economy. Therefore, sanctions must be imposed for acts that undermine the order of fair competition. We already have laws and regulations such as the Anti-Unfair Competition Law and the Anti-Monopoly Law, and in fact, some economic crimes are based on violating these laws and regulations.

Some of the illegal acts listed in the Anti-Unfair Competition Law, etc., have been upgraded to crimes under the current criminal law, and their purpose is to effectively ensure the normal order of market competition.

Market entities need to obtain profits through competition, and competition must be fair and orderly, unfair and unfair competition is not conducive to or even undermines the cultivation and development of the market, and even brings huge social risks, and should be prohibited and punished in accordance with the law.

Thirdly, it is necessary to examine whether the behavior is conducive to maintaining good faith.

Honesty and credibility are important pillars of civil and commercial activities. In the field of economic activities, an important criterion for thinking about whether to classify a certain behavior as a violation or crime is to see whether it is in line with good faith.

Serious fraud is defined as a crime not only because they infringe on the property rights of others, but more importantly, because the perpetrator is seriously dishonest in the course of the transaction and in obtaining benefits.

Counterfeiting itself is a sign of dishonesty and may cause serious damage to personal safety. From the point of view of the interests to be protected by sanctioning economic crimes, the main thing is to protect the order of transactions.

Honesty and credibility should be regarded as the bottom line criterion of the main body of the transaction, which is also the inherent need to promote fair trade and efficient market economic development.

The development of the market economy should have a fair trading order and ensure the circulation of commodities and the rapid circulation of commodities, which is an important embodiment of the principle of market economic efficiency. Therefore, it is necessary to include commercial activities that seriously undermine honesty and credibility into the scope of crimes.

On this basis, we can further explore several principles of judicial intervention in illegal economic behaviors from the macro and micro levels.

First, the principle of proportionate criminalization. Criminalization is a judgment made on the basis of the overall trend of the mainland's current criminal policy. Since the focus of legislation has undergone a historical transformation from traditional crimes, public security crimes to economic crimes, economic crimes are still a relatively new criminal field, and in addition, mainland society is still in a period of transition, and many types of economic crimes have not yet been fully displayed, therefore, the mainland's future criminal legislation in the field of economic crimes will still face the process of criminalization.

With the development of society, the harmful nature of some illegal economic behaviors will continue to change, and their social harms will also increase, and legislators will gradually further elevate them from illegal to criminal acts. In addition, one issue that deserves attention is that there are still certain differences between the development of the mainland market economy and that of mature Western countries, because the mainland is in a period of social transition (which economics calls the "transition period"), while the developed countries have already entered a relatively mature market economy, and the types of economic crimes that appear on the mainland are not exactly the same as those of Western countries, showing individual characteristics at different stages of development, and the "Chinese characteristics" are obvious, and it is indeed necessary to study them independently in light of their own national conditions.

Of course, the tendency to further criminalize legislation needs to be commensurate with the actual judicial capacity of the mainland's judiciary.

In 1996, when there was a call for criminalization in society, I had some different voices arguing that we should properly control the scale of criminalization, and I also published a monograph. Because it is easier to criminalize legislation than to criminalize judicial. At that time, everyone consciously or unconsciously had a kind of idea and even passion for active criminalization, and of course the criminalization of legislation also required a certain social cost, but to transform an act that legally met the constituent elements into a crime confirmed by the judicial process, and to punish and enforce it, the judicial resources consumed would be greater. For example, the crimes of false capital contribution and evasion of capital contribution were criminalized in 1995, and although the number of such acts is very large, and many of them have not exceeded the retroactive statute of limitations, it is rare for them to be prosecuted separately. Therefore, the criminalization of legislation must be linked with the state and capacity of the judiciary; otherwise, it will not only affect the authority of the law, but will also bring tremendous pressure to the judiciary, and the judicial organs will easily bear the accusations of "not abiding by the law" and "not strictly enforcing the law" in society.

This is, of course, a concern about the tendency of legislation to be over-criminalized. However, as far as the development trend of criminalization of illegal economic acts in the future is concerned, the continuous tightening of the legal net is still an important idea in criminal policy.

The issue that needs to be further considered is that there is no direct correlation between the strict legal network and "heavy punishment", and the appropriate expansion of the scale of illegal economic behavior crimes will not necessarily lead to excessive growth in social costs, because most typical economic crimes do not need to use heavy punishments. This requires comprehensive research and design from the perspective of the type of crime and the structure of the proceedings as a whole.

Second, the principle of categorical disposal.

Some people may disagree with my point of view on classifying and dealing with economic crimes, because they will point out that economic crimes themselves are a basic category of crimes, so how can they be reclassified on the basis of criminal policy considerations for economic crimes? As you may all know, economic crimes were originally born out of traditional property crimes, but some of the economic crimes in the current criminal law have not yet been completely reborn.

In my early analysis of economic crimes on the mainland, I found that a considerable number of crimes still have obvious characteristics of traditional property crimes, especially fraud crimes (such as financial fraud), although they also undermine the normal order of economic operations, but most of the perpetrators are for the purpose of illegally taking possession of property, and even objectively cause huge property losses, causing great harm and arousing public outrage, that is to say, they are not relatively pure types of crimes that undermine economic order.

Therefore, when studying economic crimes, there are at least two broad categories that can be distinguished:

The first category is pure order crimes, such as false advertising, evasion of capital contributions, etc., which are relatively pure crimes that undermine the economic order, and even from the current criminal legislation and judicial situation, light punishments are set up and used, and there is no need to apply heavy punishments. Fraud crimes, which can be said to be a mixture of traditional property crimes and new economic crimes, are still subject to heavy punishment, and there is a need to set up and use heavy punishments. Because they are traditional property crimes in nature, they generally have a social basis for the use of heavy punishments, which are anti-ethical crimes, and the degree of repnomy in society is relatively high, and the people's demand for severe punishment is also relatively strong.

Therefore, in terms of criminal policy, it is not possible to use light sentences in general terms for economic crimes, but to classify economic crimes and distinguish which types of economic crimes they belong to.

For example, bill fraud in financial fraud often causes heavy losses to enterprises and individuals, while fund-raising fraud often involves a large number of people.

Therefore, the use of light sentences cannot stop the occurrence and spread of these crimes at all, and it is impossible to win the support of the public.

Therefore, when some scholars propose a more lenient criminal policy for economic crimes, the first thing that comes to mind is the definition of the scope of crimes targeted by this criminal policy.

My basic point is that if they are pure crimes of disorder, because they are more clearly detached from traditional crimes, light sentences can be applied more generally;

If they are possession crimes and fraud crimes that are closely related to traditional crimes (especially property crimes), although they are currently classified as economic crimes in law, because they have obvious characteristics of natural crimes, possession of huge amounts of property, causing major property or even serious personal injury or death, relatively heavy penalties should be used.

We must sort out the types of economic crimes and adopt the principle of categorical treatment in the judiciary.

Third, the principle of indirect adjustment.

The adjustment of the criminal law to economic crimes is not direct and must be adjusted indirectly. The establishment of this principle is based on the fact that economic crime is a statutory offense. In order for criminal law to intervene in economic crimes, when the court declares that an economic crime is established, it must prove that the act is in violation of the economic laws and regulations of the country at that time, and this is also true in the criminal legislation of economic crimes.

As a basic idea of criminal policy, in order for a legislator to declare an act an economic crime, he must first make a judgment that it is an economic offense.

When the laws and regulations of the country have not yet clearly defined the illegality of such harmful acts, the criminal law cannot rashly evaluate them as criminal. In other words, before the criminal law can be evaluated, there must first be an evaluation of economic and administrative violations.

Let me give you an example from the early years of the law, for example, in the Criminal Law revised in 1997 in mainland China, why did there be provisions on securities crimes but no provisions on futures crimes?

The 1997 Criminal Code provides for four types of securities crimes, but none of them are futures crimes. At that time, some scholars also proposed the addition of futures crimes, but the legislators ultimately did not adopt them.

The reason for this is that at that time, the regulations regulating futures trading in the country had not yet been promulgated, that is, the futures violations had not been clearly defined in law, and in this case, the criminal law could not directly "upgrade" them to criminal acts.

In other words, if this is done, it obviously lacks the premise and basis of illegality. The reason for this is that the State Council had already promulgated the "Interim Measures for the Punishment of Securities Fraud" and stipulated insider trading, stock market manipulation, and other acts as securities violations.

In other words, if we lack the idea of indirect adjustment of criminal law for economic behavior, it is very likely that we will directly declare it an economic crime without a legal basis, which is unjustified.

For example, in the early years, Shanghai dealt with the crime of "illegal business operation" involving this issue, and the defender was also my old friend, lawyer Chen Youxi, who is well-known in the country...... At that time, when the cost of international long-distance calls in cities was relatively high, some enterprises and individuals opened so-called "international IP telecommunications services" service services, which constituted competition for the business development of the state-owned telecommunications industry, so there were cases of prosecution as crimes at that time.

So, is there any basis for pursuing criminal responsibility? Formally, there is. Because the Supreme People's Court had a judicial interpretation at that time, which clearly characterized this kind of behavior as the crime of illegal business operation (I also want to mention it here, of course, I believe everyone must know that the crime of illegal business operation, like the crime of picking quarrels and provoking trouble, has now become a "pocket crime", which has been criticized a lot by the academic circles recently, and it really needs to be paid attention to and tried to be strictly controlled).

However, from a theoretical analysis, it is found that the State Council's Telecommunications Regulations had not yet been promulgated when the judicial interpretation defined such acts as criminal acts. In other words, the judicial interpretation was preempted, and it was only a few months before the State Council officially promulgated the Telecommunications Regulations and determined that such acts were illegal. In this way, it is obviously wrong for the Supreme Court to declare such acts a crime in the form of a judicial interpretation when the state has not yet recognized such acts as illegal.

Although the crime of illegal business operation is only a "small pocket crime" and has the characteristics of an open-ended catch-all clause like "other", when we interpret the scope of application of "other", we should also fully consider that the acts included in it must have the characteristics of economic or administrative illegality. The principle of indirect adjustment must be adhered to. (omitted later)

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