Sun Xianzhong: The arbitration involves 10 issues related to the implementation of the Civil Code
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introduction
After the compilation of the Civil Code was completed, all sectors of society were learning and understanding. Of course, we arbitrators should also study carefully, because the business activities of arbitrators are the analysis and adjudication of civil and commercial cases, and the Civil Code is the basic law in the field of civil and commercial matters. The application of the Civil Code in arbitration practice should be said to be the basic skill of arbitrators, and arbitrators certainly apply the Civil Code more than ordinary judges. Moreover, the application of the Civil Code by arbitrators is slightly different from that of the courts. Because the development of arbitration activities must be limited by the parties' arbitration claims, arbitrators need to carefully analyze the parties' arbitration claims, neither omit nor exceed the arbitration, and be more cautious in grasping the legal principles. In contrast, the courts have more discretion. In addition, arbitrators need to conduct a more in-depth legal analysis of the parties' claims. I have been an arbitrator for many years and have adjudicated a number of cases, and I have found in practice that many lawyers and arbitrators do not have a good grasp of the basis for claims established by arbitration. One of the problems we often encounter is that because the lawyer's request for help is inaccurate, the arbitral tribunal is unable to support the client's reasoning when it sees that the client is reasonable. Therefore, the analysis and determination of the right of claim is very academic. Restricted by the requests of the parties, arbitral awards generally pursue more interpretation of legal principles, and a lot of arguments are required for each of them, from the determination of facts to the determination of various awards. This shows that the legal literacy of arbitrators should be very high. Now that the Civil Code has provided us with abundant resources for the application of law, we should make full use of this resource to handle cases well. Therefore, the study of arbitration business should focus on the study and research of the Civil Code. After the implementation of the Civil Code, I also began to apply the Civil Code to analyze and adjudicate cases in my arbitration practice. Combined with my years of study and research experience, I would like to share with you my learning and research experience on arbitration practice involving the implementation of the Civil Code.
1. The distinction between public law and private law in terms of legal sources
The first issue to be solved in the case filing is whether the arbitral tribunal has jurisdiction to determine whether a case is an administrative law case, or whether it is a civil and commercial case involving administrative management, and then it is necessary to take into account the jurisdictional issues unique to arbitration. If it is purely an administrative law case, it is basically impossible to file a case through arbitration, and if a case is a civil case attached to the administration, disputes will also arise when the case is filed. Arbitration often encounters situations where the local government is a party to a contract, such as a contract to which the local government tenders for a capital construction project, to which the government is sometimes a party. In fact, the comrades of the court also disputed this kind of case, some considered this kind of contract to be an administrative contract, and some thought that it was a civil and commercial contract. In this case, we need to analyze it on the basis of jurisprudence, especially to have a careful understanding of the relationship between public law and private law, and to have a full understanding of the approach to this issue when the Civil Code was codified.
The distinction between public and private law is an old topic in the history of jurisprudence, and we have to admire Roman law. As early as the 2nd century AD, Roman law had a very accurate description of the subject. At that time, the book "The Ladder of Jurisprudence" had already appeared in Rome, and the author of the book was named Gaius, but from the perspective of historical investigation, we cannot yet determine whether Gaius was a person or a group of authors. Even so, the book "The Ladder of Jurisprudence" still leaves us with a brilliant and very rich knowledge of law, one of the most important innovations is the distinction between public law and private law. In the 6th century, the Roman Emperor Justinianus (translated as "Justinian" in English and "Justinian" in Latin) renamed the "Ladder of Jurisprudence" as the basic theory and basic principle of civil law when compiling the "Encyclopedia of Civil Law". Article 4 of the overview of Justinian's General Treatise on Jurisprudence clearly states: "The present emperor considers that the laws of the world are divided into two kinds, one public law and the other private law. The so-called public law is the law that deals with the public interest, while private law is the law that deals with the private interest. This distinction is what later generations called the "public welfare theory" and the "private benefit theory". Later, there have been discussions about whether the division between public welfare and private interests is right or not, especially after the emergence of modern social law and socialist thought, and the interference of national legislation in the private sphere has increased, and there have also been controversies over whether the law can still exist such a division of public and private law. However, in terms of legislation and judicial practice, this issue is not too controversial. Because of the establishment of the court system, the establishment of the litigation system and the setting of the enforcement of judgments, all countries in the civil law system have adhered to the distinction between public law and private law. For example, in the courts, administrative, criminal, and civil and commercial litigation are conducted by different institutions according to different procedures, and the principle of distinguishing between public law and private law has not changed in practice.
The legal system of the mainland was once inherited from the jurisprudence of the former Soviet Union, and it once adopted a critical attitude towards the theory of distinguishing between public law and private law, but with the comprehensive restoration of reform and opening up and the construction of the rule of law, the mainland gradually accepted this theory, and also applied this theory in the entire practice of the rule of law. Of course, this theory has also been applied in the current compilation of the Civil Code in mainland China. However, this application is still different from the traditional civil law, and the reason is that the public authorities in the mainland are very generally involved in civil activities, and the Civil Code codified this time has more provisions on this. In particular, the government's investment in public-owned enterprises is, of course, a typical civil legal activity, but because it is a government act, this kind of civil activity is different from the civil activity recognized by the traditional civil law. Because the public law legal persons in the mainland include various entities such as government agencies, public institutions, grassroots social governance organizations, cooperatives, etc., we must pay full attention to this point when engaging in arbitration business.
This question happens to be related to my own participation in the compilation of the Civil Code and the efforts I have made in this regard. I hope you can take a look at the provisions of Chapter 3, Section 4 of the General Provisions of the Civil Code, on "Special Legal Persons", and I have found that since the implementation of the Civil Code, mainland society has not paid much attention to this part of the provisions. Some scholars, even some of those who participated in the compilation of the Civil Code, lack an understanding of the importance of this system. However, this part of the provisions is very important, because it involves the construction of the legal person system of public law in mainland China, and it is also related to arbitration and involves public law and private law issues in the implementation of the Civil Code.
When the Civil Code of the People's Republic of China stipulates the legal person system, the basic classification of legal persons is unique in legislation, distinguishing legal persons into for-profit legal persons and non-profit legal persons. Although this line of thinking basically follows the model of the German legal system, the basic distinction of the German legal system is to divide legal persons into foundations and associations, and to emphasize the membership and rights of legal persons. A corporation is a corporation that is organized by its members on the basis of membership, while a foundation is a corporation that has no members and is a corporation that is established on property. On this basis, German civil law further distinguishes between for-profit and non-profit associations. As for public law legal persons, there is no clear provision in German civil law, and the participation of public law legal persons in German civil activities is governed by its administrative law. In the legislation of the Civil Code in mainland China, considering that most of the foundations are public welfare legal persons in China, for-profit legal persons and non-profit legal persons are directly divided into basic types, and the basic model has changed from the German civil law. During the legislative process, the relevant leaders discussed with me the scientific and feasibility of this approach, and I agreed with it. I studied in Germany and am familiar with the legal entity system of German law. In my opinion, there is no need for the Continental Civil Code to copy the German Civil Code. The German Civil Code is a bit too much of a quest for theoretical perfection, and it stipulates that there is only one section in the chapter of the foundation, and this section has only a few legal provisions, which makes the model appear to be theoretically rigid. I agree that there is no need for a separate section or chapter for foundations in the Civil Code.
However, in the process of legislation, I also found that there is a relatively large loophole in this legislative model corresponding to China's special legislation and judicial practice, that is, the problem of a large number of public law legal persons or quasi-public law legal persons participating in civil activities that is common in the mainland. This is a characteristic of the economic and social life of the mainland, and for these public law legal persons with social management purposes and these legal persons with the nature of public law, their civil subject qualifications urgently need to be stipulated in the Civil Code, but such legal persons cannot be included in the general for-profit legal persons or non-profit legal persons. After discovering this problem, in the name of the NPC deputies, I put forward a legislative proposal, suggesting that a chapter similar to a special legal person be established in the legal person section of the Civil Code to make up for the shortcomings of the system. Therefore, the first, second and third drafts of the "Civil Code and General Provisions of the Civil Law Expert Suggestion Draft (Draft for Comments)" did not contain any special legal person content, and it was only later that the current "Section 4 Special Legal Person" part was written (but it must be noted that the concept of "special legal person" itself is not my idea). This provision has both the significance of filling the gap and the significance of China's originality.
The provisions of the Civil Code on special legal persons are not only of significant academic and other legal practice significance, but I believe that there are also issues that deserve special research for arbitration business. This is because this part of the provisions refers to public law legal persons, and among the public law legal persons, the most prominent ones are the familiar organ legal persons, and there are also legal persons that undertake public management functions and legal persons that have the color of public law legal persons, such as political parties, government organs, courts, procuratorates and other organs, social management institutions such as urban residents' committees, rural villagers' self-government committees, and so on. Some of the characteristics of public law legal persons are mainly cooperatives, and although they are also economic organizations, they are organized according to the idea of socialism, which is different from ordinary civil law legal persons.
The issue that this part of legal persons need to deal with in arbitration business is that, according to the division of traditional jurisprudence, the acts of public law legal persons, especially the acts of public office, cannot of course be included in the scope of arbitration. However, under the market economy system of the mainland, many of the businesses of these public law legal persons, and even their main business acts, should be included in the scope of arbitration, because these acts are typical civil acts or civil and commercial acts. In my opinion, this part of the law will often be applied to arbitration business in the future. In order to accurately identify the subject of legal relations, the special legal person part of the rule should be applied. According to the provisions of the Civil Code, there are four types of special legal persons: government agency legal persons, rural collective economic organization legal persons, urban and rural cooperative organization legal persons, and grassroots mass autonomous organization legal persons, but in fact there are at least eight types. Needless to say, the government corporation is not too much. The legal person of the rural collective economic organization refers to the legal person based on the rural land formed at the three levels of "team-based and three-level ownership" established since the establishment of the people's commune in rural areas in 1962, that is, the production team, the production brigade, and the commune. The so-called "urban and rural cooperative economic legal persons" in this article include cooperative legal persons stipulated in the Law on Professional Farmer Cooperatives, enacted in 2006 and amended in 2017, as well as supply and marketing cooperatives, credit cooperatives, handicraft cooperatives, etc. These legal persons exist in reality and will appear in the arbitration business in the future.
In my opinion, the most important issue that needs to be resolved by public law legal persons involved in arbitration business is the issue of the participation of government legal persons in civil activities, especially the legal business issues related to state investment or government investment in the mainland's public ownership, which is the most important embodiment of socialist public ownership. During my tenure as an arbitrator, I have encountered a number of cases involving government-invested and established public enterprises, some of which are equity disputes, some are disputes over trade contracts for goods or services, and some are property lease contracts. In these cases, all "public-owned enterprises" will put forward the claim that the public property should be protected and that the arbitral tribunal should not allow the loss of public assets. However, after the trial, these claims were largely unsupportable. I think other arbitrators have encountered these cases, and the relevant legislative provisions have indeed been flawed in the past. The compilation of the Civil Code this time has completely solved this problem, but I see that the interpretation of the Civil Code has ignored these institutional innovations, so I would like to explain it here.
The core provision of this provision, which you can see now, is Article 257 of the Civil Code, which stipulates the rules for state-invested enterprises, which shows that the so-called "state-owned enterprises" are established in accordance with the way of government contribution, and there is a difference between the central government and the local government, that is, the "differentiated contribution" mentioned in this article. However, most people do not know the complexity of the investment relationship of public enterprises involved in this provision, and many people may only know that the SASAC is the investor of public enterprises, but this article involves more investors in public enterprises, and the background of the legal theories supported by such investment will not be thought of by many people, so allow me to say a little more about this. Originally, an enterprise invested and established by the state is itself a kind of enterprise under the market economic system, and the jurisdiction and trial of arbitration will certainly arise when an enterprise participates in economic activities. In the past civil law of the mainland, there was a theory or principle called the priority protection of public property. This theory originated in the former Soviet Union and was recognized in the General Principles of Civil Law in 1986. When the Property Law was enacted, this issue also caused controversy, which is known as the "Property Law Turmoil" that occurred in 2005. Later, there was also a lot of controversy in the legislation of the Civil Code. The principle of equal protection was included in the enactment of the Property Law, and Article 113 of the Civil Code further stipulates this principle, so that the issue of equal protection can be solved.
Linked to this problem are the practical problems created by the "unified theory of sole state ownership". If this issue is not resolved, whether it is arbitration or court litigation, the resolution of disputes involving public assets and people's assets will encounter obstacles that cannot be eliminated. This theory, sometimes referred to as the "principle of unity and uniqueness of state ownership," was developed in 1934. At that time, the Soviet Union had established a highly planned economic system under the leadership of Stalin, and there was a jurist named Venediktov, who proposed that all public assets in a socialist state should be owned by the state, and that the state should be the sole owner of these properties. This is where the theory of unity and uniqueness of state ownership comes from, which is also simply called the "unification theory" and the "uniqueness theory". This theory was highly appreciated by Stalin, so it became a classic of the socialist theory of ownership, and was later introduced into China and became the authentic theory of the ownership of socialist states. This authentic socialist legal theory, which arose under the planned economic system, was only intended to provide a theoretical basis for the central government of the former Soviet Union to control enterprises by administrative order. According to this theory, the former Soviet Union divided the ownership of all social assets into three types: state, collective, and individual, which is the "trichotomy of ownership" that is common in socialist countries with which we are all familiar. This trichotomy is not only a division of types, but also a division of political status. Among them, state ownership is sacred, and political status is supreme; collective ownership is also public ownership and has a very high status; and the ownership of ordinary people cannot be defined as sacred or sublime. The most obvious defects in this theory are: First, it regards public-owned enterprises as the object of state ownership, essentially negating the status of public enterprises as independent legal persons; second, it denies that enterprises bear unlimited legal liability with all their assets, because it does not recognize the unique property rights of legal person ownership; and third, it despises or even denies the ownership rights of individual people from the perspective of morality and ethics.
Before the enactment of the Property Law in 2007, I wrote a legislative report proposing that the mainland's property legislation should include the principle of "integral recognition and equal protection", and recognize and protect public and private property without distinction. However, in 2005, this legislative plan caused a "turmoil over the Property Law", and it was only after the central leadership came forward to support the enactment of the "Property Law", stating that the "unified recognition and equal protection" was recognized under the Constitution, and the controversy was settled. Although this general principle has been resolved, the issue of the legal system for government investment, which is particularly necessary to be resolved by the mechanism for public-owned enterprises to enter the market, has not been resolved.
In 1990, when I put forward the theory of government investment, the mainland had not yet entered the building of a market economic system, but I believed that the legal theory of the former Soviet Union could not justify itself in legal theory and harmed the mainland's reform and opening up in practice. My point of view is that from the perspective of the corporate system that had begun to emerge in the mainland at that time, the government no longer set up enterprises by administrative order, but set up enterprises by investment, which was a very correct choice. According to the modern company system, the investor is not the owner but the shareholder, that is, the shareholder. Enterprises invested by the government can also reinvest in the establishment of enterprises, and seven or eight subsidiaries can be set up from level one to the next, which is very common in the world. In this case, it is necessary to insist that the investor enjoys equity rather than ownership, and the enterprise as a legal person has the ownership of all assets. In such a case, the sole theory or principle of the unity of state ownership cannot be established. Later, when I went abroad, I saw that in 1995, China began to implement the tax-sharing system and modernize state-owned enterprises, and this transformation was carried out in accordance with the government's investment, the enterprise's legal personality, and the right to operate all assets. I am very pleased with this. This time, Article 96 of the Civil Code stipulates that government agencies and legal persons are independent civil subjects, and there are many of them, so from this point of view, we know that the basic provision of the Civil Code is that in civil activities, we can no longer adhere to the only view of the unity of state ownership. In addition, Article 257 of the Civil Code stipulates that the central government and local governments shall contribute capital separately, enjoy their benefits and bear responsibilities separately, and no longer stipulate that the state shall be the sole contributor of the unit. This system has fulfilled my decades of academic pursuit.
In my past writings, I have talked about the mutton case in Ningxia many times. A company in Ningxia exported mutton to Egypt, but the mutton was not slaughtered by imams, but by machines, and the Egyptians believed that the mutton did not conform to their Muslim rules, so they threw the mutton into the sea. After that, the Egyptian side demanded a refund from the Ningxia company, but the Ningxia company believed that its performance of the contract was perfect and there was no breach of contract, so it could not refund the Egyptian company. While the two parties were entangled, two large Chinese ships COSCO (China Ocean Shipping Company) went to Egypt to load their cargo, only to be detained by the Egyptian court as soon as they landed on the ship. The representative of the Chinese ocean shipping company and the Egyptian court said, I have no dispute with you, why did you detain my ship? The Egyptian court responded in this way: According to your Chinese laws and the interpretation of jurists, the assets of all the state-owned enterprises in your country are owned by the state and the state, and whether it is the enterprise that exports mutton or your ship, it is the property of the legal owner. Therefore, the responsibility of Ningxia enterprises should be offset by the ships of the China Ocean Shipping Company. There is a lot of talk about the occurrence of this case in my writings, so I don't need to talk about it here. However, we can see from this case how bad the so-called authentic socialist legal theory, that is, the sole theory of the unity of state ownership, which was once upheld by the mainland society, is in theory and practice. Now the mainland's "Civil Code" has reformed this theory and reshaped the relevant system, and I hope everyone can grasp it.
I once reported to the general counsel of a large state-owned enterprise in the mainland and a senior arbitrator teacher on my thoughts on participating in the compilation of the Civil Code, and she told me that the "sole theory of unified state ownership" of the former Soviet Union was very harmful to the mainland's international economic and trade relations, and even more harmful to the development of the mainland's arbitration cause. The reason is that when foreign enterprises and mainland state-owned enterprises engage in economic and trade activities, they will pay attention to the provisions of the mainland law that the property of state-owned enterprises belongs to the state, and according to international practice, the property enjoyed in the name of the state enjoys the exemption treatment under the jurisdiction of foreign law. In addition, in the dispute resolution of foreign-related economic and trade relations, people often agree on arbitration clauses, but foreign state-owned enterprises are reluctant to arbitrate in Chinese arbitration institutions, also because of the provisions of mainland law on state ownership of state-owned enterprises. Now that this provision has finally been repealed in the Civil Code of the mainland, I believe that this will help the mainland state-owned enterprises to further integrate into international economic and trade relations, and remove obstacles for mainland arbitration institutions to expand their arbitration business.
As far as we general arbitrators are concerned, it is of great significance for us to grasp the jurisprudence and institutional content stipulated in Articles 96 and 257 of the Civil Code. We need to apply the following legislative spirit of this provision in the analysis of cases involving state-owned enterprises: first, all investment behaviors of public-owned enterprises, as well as related rights and obligations, are civil acts and can be governed by arbitration; second, the legal relationship between public-owned enterprises and their investors is not an ownership relationship, and cannot be expressed by the theory of unity and uniqueness of state ownership, let alone the assets of enterprises as state property, in pursuit of unequal competitive advantages (please note this point: Third, state-owned enterprises and other enterprises are equal market entities and should be treated equally in law (the third point has been clarified in the judicial interpretation of the Supreme People's Court).
2. The distinction between general law and special law in the sources of civil law
The applicable laws of arbitration are basically civil and commercial laws. In applying civil and commercial law, attention should be paid not only to the Civil Code, which is applied to the general law of civil law, but also to the special law of civil law. There are three main clusters of these special laws: 1) the commercial law group represented by the Company Law and the Negotiable Instruments Law, 2) the intellectual property law group represented by the Patent Law, the Trademark Law and the Copyright Law, and the special civil rights legislative group, i.e., the legislation of the special groups stipulated in Article 128 of the Civil Code, which involves the protection of women, the elderly, workers and consumers. In the study and practice of law, it is necessary to grasp the relationship between the general law and the special law of civil law.
Since commercial law is often applied in arbitration practice, we should first understand the situation between the Civil Code and commercial legislation in mainland China. In the compilation of the Civil Code, there was a debate on the integration of civil and commercial affairs or the separation of civil and commercial affairs, which was faced with this controversy since the compilation of the Civil Code was proposed, and then there was also a debate on whether the intellectual property law should be included in the code. In fact, in the era of traditional civil law, the legislative model of the integration of civil and commercial was discussed when the civil code was compiled, although it was theoretically possible, but in the end, except for the Dutch Civil Code, no other country adopted the model of integration of civil and commercial. In modern civil law legislation, it is completely impossible to formulate a code that integrates civil and commercial affairs. Because at the end of the 18th century and the beginning of the 19th century, the issues of civil law were not too complicated, and the issues of commercial law were not too complicated, and it was at least theoretically possible to stipulate civil law and commercial law in a single code. However, the vast majority of the civil codes on the European continent do not adopt the model of civil and commercial integration, because commercial legislation still has its own characteristics. The Dutch Civil Code wanted to adopt a model of civil and commercial integration, but so far it has not succeeded. In today's China, because of the emergence of the Internet, the complexity of market transactions is unimaginable, and the codification of the Civil Code is even more impossible. China's current Company Law and Negotiable Instruments Law contain hundreds of articles, plus other special laws, and the number of articles is even larger, and it is impossible to simply codify commercial laws into the Civil Code. At present, there are seven or eight hundred articles in the laws at the national level, such as the Patent Law, the Trademark Law, the Copyright Law, and the Copyright Law in Special Fields, as well as the Foreign Investment Law, the E-commerce Law, and so on. Special civil laws also include laws on the subject of special civil rights, such as labor protection laws, consumer protection laws, women and child protection laws, and so on. The law on the protection of these special groups is based on article 128 of the Civil Code of the mainland, which clearly states that the basic rights enjoyed by these special groups are civil rights.
In judicial practice, including the practice of arbitration, the application of law should take into account the Civil Code and the special laws of the above three groups. In some works in the legal circles, some scholars have particularly emphasized the difference between civil law and these special laws, and pointed out in particular that these special laws do not belong to civil law, and the rights enjoyed by these special subjects are not civil rights. For example, the labor contract relationship in which a worker participates is of course a civil relationship, the purchase and acceptance of services by consumers are also civil relations, and the commercial relationship and intellectual property legal relationship are of course civil legal relations. However, these are special civil legal relationships, and the rights enjoyed by these special subjects are special civil rights.
Under the circumstance that these three groups of special laws are becoming more and more developed, the civil legislation of the mainland can only adopt a legislative model that combines general law and special law. The Civil Code can only be codified as the general law, or basic law, of China's civil law. The Civil Code stipulates the general rules of commercial rights, intellectual property rights, and special civil rights (see the Civil Rights section of the General Provisions of the Civil Code), and the specific issues of these special rights will be carefully defined by the special law. For example, the Civil Code only stipulates the general rules for for-profit legal persons in commercial law, and more rules should be left to the Company Law to make detailed provisions. The IP law community also remained outside the Civil Code. The legislation on the civil rights of special subjects referred to in article 128 of the Civil Code will also be provided for by the social law community.
In addition, there are some laws on special contracts that are stipulated by the Special Contract Law (e.g., the Law on Tourism Contracts) and laws on special property rights (e.g., the Land Contract Law for rural land contract management rights). In general, there are many of these laws, which we must pay attention to when engaging in arbitration business. In addition, arbitration will also involve the application of administrative law rules governing civil activities. On the mainland, in fact, in today's world, administrative law includes a large number of legal rules that deal with civil activities. In the mainland's Administrative Laws such as the Land Law, the Forest Law, the Grassland Law, and the Water Law, many articles involve provisions on civil activities, and in fact, they are also provisions on the exercise of civil rights by civil subjects. The provisions of these laws on civil rights can also be said to be the provisions of special laws of civil law in another sense. Of course, the provisions of these laws should first obey the legislative guiding ideology of the Civil Code on the protection of civil rights, and secondly, these laws should make provisions in accordance with the spirit of public interest, environmental and ecological protection, and should also be complied with in arbitration practice.
In legal theory, what does the discussion of the question of general law and special law of civil law have to do with arbitration? That is, it is hoped that when applying the law, one basic principle must be observed: first, it is necessary to recognize the precedence of the lex specialis in the application of this rule. Since it is a lex specialis, it should be applied preferentially. The second is that you should pay more attention, especially when adjudicating the application of law, to pay attention to the fact that if there are no provisions in the special law or the provisions are not clear, then we should boldly apply the general provisions of the Civil Code, especially the provisions of the General Provisions of the Civil Code. The general provisions of the Civil Code are compiled in the entire civil law system, not as a repetition of stacked beds and frames, but as a special role in the command and program. The General Provisions of the Civil Code establishes a rule that can be applied universally by elaborating the general principles and principles of civil legal relations.
In the process of compiling the General Provisions of the Civil Code, I made a bold statement at that time that in the field of civil and commercial law, our adjudicators could no longer say that Chinese law could no longer be relied upon. Now that I think it's right, I don't think that was wrong. When there are no specific norms to be applied, the general norms in the General Provisions of the Civil Code should be applied. Because of this compilation of general provisions, the problem of the inability to follow the practice of civil law in the mainland can be said to have been completely solved. The General Provisions of the Civil Code provide a wealth of resources for the application of law, and we should make good use of this resource. The key problem is that some arbitrators, lawyers, and some judges do not have an understanding of the legislative significance of the General Provisions of the Civil Code.
3. The distinction between absolute and relative rights, the distinction between the right to dominate and the right to claim, and the distinction between the right to dominate and the right to claim
The distinction between absolute and relative rights, and between the right to dominate and the right to request in the classification of rights is a very meaningful academic distinction in legal theory and legal practice, but the relevant theories are not introduced much in Chinese legal circles.
The basic division of civil rights accepted by Chinese legal scholars is the division of property rights and personal rights. The division of property rights and personal rights is very meaningful in law, and China's civil law has so far been divided according to this system. Comparatively speaking, this division is easier for everyone to understand. The division between property rights and personal rights can highlight human dignity and the basic rights related to the person, and it is also of great significance. From the perspective of legal practice, since personal rights are supreme and belong to "exclusive rights", they cannot be transferred or have market behavior, and only property rights can have market behavior. It is precisely because of this that the number of legal norms of personal rights in legislation is not large, and there are no market-oriented rules, only tort law and protective rules. Therefore, it is impossible for the system division of the Civil Code to provide many provisions for it. On the contrary, there are many contents for the protection of property rights, and it must have many provisions and take into account the rules of the market.
From the perspective of the basic theory of civil law, why should we emphasize the distinction between absolute right and relative right, and the distinction between the right of domination and the right of claim corresponding to this theory? Because this distinction is something that arbitrators must master, or in other words, the basic skills of learning civil law. From the point of view of the origin of the theory of distinguishing between absolute and relative rights, this is an inherent theory in the German Pendecton jurisprudence, and its history is actually not too long. Why is it not so long? It has to do with man's right to self-determination, that is, to be able to decide his own things. As a subject of civil law, human beings are able to determine their own things and have the right to self-determination. However, in the history of the legal system, natural persons have been able to enjoy full self-determination on an equal footing, which has only been achieved in modern times.
In the ancient history of civil law, not all natural persons were equally entitled to self-determination. It can even be said that the vast majority of people do not have the right to self-determination. Because some people in ancient times were slaves, slaves were only property, objects of law, not subjects. Most of the others are inferior, and inferior people do not have the right to self-determination. Speaking of which, this brings us to the meaning of the word "right" in law, as well as the moral and ethical implications of these two words. In ancient law, the fundamental source of civil rights was not the majority of natural persons in society themselves, but God or the monarch. Because the original intention of the right is legitimate, and whether a matter is justified or not is not decided by these ordinary natural persons, but by God, the king and emperor, or the superior who has the final say. For example, the legal affairs that everyone is familiar with - marriage, in ancient times in the mainland, all had to be ordered by parents and matchmakers, but it is precisely the parties to the marriage themselves who say it does not count. Other civil activities, such as the conclusion of contracts, were carried out in ancient times through rituals to ask the gods to worship them.
In ancient societies, even natural persons who were not slaves, the legal status between people was unequal, and there was a distinction between superior and inferior people. Therefore, legally speaking, when carrying out civil activities, inferior people do not have full self-determination rights. Whether in property relations or in identity relations, the rights of the inferior are in the hands of the superior.
It was only in modern society, driven by the humanist revolution, that legal equality between people was realized, and the inferior and superior people had the same legal right to self-determination. The moral concept of self-determination soon evolved into a legal concept, which emphasized the right of people to self-determine the legal affairs of their own existence and development, including property and person. After the emergence of the legal concept of the right to self-determination, the "principle of autonomy of will" appeared in law, a highly ideological legal theory, which eventually evolved into a very important constitutional principle and civil law principle. The emergence of the principle of autonomy of will is of epoch-making significance in the history of legal development, which not only establishes the status of the people as the qualification of legal subjects from the perspective of morality and ethics, but also further defines the legal rights as the result of the real will of the people themselves. Looking back at the history of the birth of human society from the slave society and the hierarchical status society that existed since ancient times, we can know the great historical value of the emergence of the principle of autonomy of will. In the study and teaching of law in mainland China, the principle of autonomy of will has not been fully respected, which is a pity for mainland law.
It is precisely because of the emergence of this principle that the legal concepts of absolute rights and relative rights have appeared in civil law, and the rudiments of the legal concepts of domination and claim rights have already appeared in Roman law, and then they have gradually become clear and clear. The legal concepts of absolute and relative rights are so meaningful that I can only briefly describe them here. From the perspective of the principle of autonomy of will, we can see that some rights can achieve the purpose of the right only according to the right holder's own will. For example, property ownership is this kind of right, and the owner exercises the right according to his own will, disposes of and disposes of the subject matter, and his unilateral will can produce legal effects. This kind of right is defined as an absolute right, that is, the right of the right holder to exercise the right can have absolute effect. There are many rights of this kind, in addition to ownership, in fact, personal rights, including personality rights, are all such rights, and the effect of rights is only subject to the will of the civil subject.
However, there are some rights that, after unilaterally deciding on oneself, cannot achieve the purpose of one's own rights, but can only impose a certain kind of legal constraint on oneself and others, that is, requiring others to do a certain act or not to do a certain act. In other words, the right holder's right only has the legal effect of making a request to the other party. If the other party complies with the request, the purpose of the right holder can be realized. However, the other party may also fail to comply with the request of the right holder due to subjective or objective reasons, and the purpose of the right holder cannot be achieved. Therefore, the intention of the right holder cannot be absolutely realized. This right is called a relative right in civil law. The rights that arise under a valid contract are typical of relative rights. There are also many other relative rights, such as the right to claim damages from others. If we think about it a little, we can know that the rights in civil law are either absolute rights or relative rights, so the distinction between absolute rights and relative rights is the division of basic rights types in civil law.
The distinction between the right to dominate and the right to request is also significant. The right of domination refers to the right of a civil subject to dispose of an objective external object (including the situation where the right is the object), while the right of request refers to the right to make a claim to another specific civil subject. The division between the right to dominate and the right to claim emphasizes the appearance of the right. In the sense of modern civil law, the approach to the interpretation and understanding of this division and the distinction between absolute power and relative right are basically the same.
As mentioned above, the distinction between property rights and personal rights recognized and adopted by the civil law of the mainland is very valuable, but from the perspective of the analysis and adjudication of civil cases, from the perspective of judicial adjudication and arbitration business, the distinction between absolute rights and relative rights, and the distinction between the right of domination and the right to claim, this theory is more valuable and worthy of everyone to learn and master. This is because, in arbitration practice, the cases we handle are actually cases involving legal transactions, and the cases of legal transactions are essentially judged according to the true wishes of the parties. Whether it is the legal effect of concluding a contract or the legal effect of performing a contract, the principle of party autonomy must be implemented. This is the most basic judgment, and in addition, it is necessary to make an accurate judgment on the distinction between the legal effect between the formation and effectiveness of the contract and the effect of the performance of the contract. Both of these judgments are very important. The former judgment is relatively clear to ordinary people, but with regard to the latter judgment, the leading viewpoint of the mainland civil law scholars has been biased, which has led to problems in legislation. In the process of compiling the Civil Code, the problem was finally solved through hard work, and the current legislative provisions have been substantially improved compared with the provisions of the Contract Law. This is an important issue that needs to be emphasized here.
We can think about the conclusion and performance of a contract in a legal transaction. A contract is validly established, and the parties have the right to request others to perform, but his unilateral intention cannot achieve the purpose of the right, and whether the other party can comply or agree to the other party's request is very important. Whether from a legal or practical point of view, we all know that if one party asks the other party to perform the contract, the other party does not necessarily accept the request, so the contract only exerts a relative binding force. So how is the purpose of the right, that is, the purpose of the transaction (generally speaking, the acquisition of ownership of the subject matter) realized? French law holds that the purpose of the right can be achieved if there is a contract and a contract, so it stipulates that the change in the subject matter of a legal transaction and its ownership can be determined solely on the basis of the legal fact that the contract is in force. Article 1583 of the French Civil Code clearly stipulates that when a contract of sale is formed in accordance with the law, the ownership of the subject matter is vested in the buyer, regardless of whether the price is delivered or not, whether the subject matter is fulfilled or not, as long as the contract is formed and effective, the ownership of the subject matter belongs to the buyer. Its basic theory is to understand that the contract should be fulfilled as the absolute performance of the contract. However, German law holds that even if a contract is formed, the fact that the contract should be performed cannot be understood as absolute performance. A contract established in accordance with the law can only produce the binding force of relative rights between the parties, and the parties to the contract can only enjoy the right of claim. When the right holder makes a request to the other party, the contract may be performed, or it may encounter obstacles, so the request may not be absolutely realized. In such a case, the right of claim cannot be directly represented as an acquisition of ownership. From the point of view of jurisprudence and practice, German law has advantages.
This difference between the French civil law and the German civil law is precisely the development and change of our civil law legislation and judiciary in China over the past decades. In the nineties of the last century, when the mainland had just begun to establish a market economic system, the civil law scholars, including the civil law scholars, did not know much about the modern market legal system, and second, they were influenced by the immature legal concepts of the Japanese civil law scholars, and accepted the concept that the performance of the contract should be equal to the performance of the contract (in fact, this concept comes from the French civil law), and the legal consequences of the establishment and effectiveness of the contract were equated with the legal effect of the performance of the contractThere are even confusing rules that the contract of immovable property does not take effect if it is not registered, and the contract of movable property does not take effect if it is not delivered, that is, the rule that the contract does not take effect until it is performed. These rules are reflected in several laws enacted in 1994, 1995 and 1999. In the codification of the Civil Code, the concept has changed legislatively.
I would like to mention here three of the most significant changes in the Contract Law: the first is the repeal of Article 51 of the Contract Law. Article 51 of the original Contract Law provided that a contract could only be effective if the subject matter had been fulfilled and the seller had ownership. If there is no subject matter, or if the seller does not acquire title, the contract is not valid. This raises the fundamental question of the fact that the parties have entered into a contract and their intentions are true and consistent, but the contract cannot be validated. This is what the text of the law provides. Because the leading jurist held that there was no subject matter and that the seller did not have ownership, the contract could not be effective or even invalid. Its basic meaning is that a contract cannot be effective until it meets the conditions for performance. This concept is the same as that in the late nineties of the last century, the contract of immovable property did not take effect if it was not registered, and the contract of movable property did not take effect if it was not delivered. In short, for a contract to be effective, it must have the conditions under which it can be performed. However, if these conditions for performance are not met in the end, the contract will always be ineffective and cannot be recognized and protected by law. Later, with my efforts, this provision was repealed. The most basic reason for my abandonment of this provision is that the validity of a contract is a creditor's right and a right of claim, so the contract should take effect as long as there is a specific person and a specific person has the conditions to act as the debtor. The formation of a contract is a legal fact, and the performance of a contract is another legal fact, which are two legal facts, and they cannot be confused, let alone take the performance of the contract as a condition for the contract to take effect. If the effective contract in real life is not performed, it cannot be said that the contract is invalid. This is also a rule of law that everyone should grasp.
Now, when you are studying the contract section of the Civil Code, please carefully ponder some articles, and you will find that their meanings are different from those of the original Contract Law. For example, paragraph 1 of article 597 of the Civil Code stipulates that "if the ownership of the subject matter cannot be transferred because the seller has not obtained the right of disposition, the buyer may rescind the contract and request the seller to bear the liability for breach of contract." This provision means that if the seller does not acquire ownership, it will not be able to perform subsequently, and if there is no way to perform, the buyer may rescind the contract and request the seller to bear the liability for breach of contract. However, according to the provisions of Article 51 of the original Contract Law, it was deemed that the contract was not effective. Article 51 of the Contract Law stipulates that it will not take effect, while Article 597 of the Civil Code stipulates that the contract shall be terminated after it takes effect, and the liability for breach of contract shall be born, and the liability for breach of contract may only occur when there is a valid contract. There is a very fundamental difference between the two provisions. As arbitrators, we cannot fail to understand the differences. Of course, if the court is conducting judicial trial activities, the judge should also understand this point.
Second, there is another very well-known and controversial provision, namely Article 580 of the Civil Code, and I have different views from some teachers in the legal field on the understanding of this provision. What exactly does Article 580 of the Civil Code mean? How do we understand this provision? In fact, this article is intended to solve the problem of the different legal effects between the formation and effectiveness of the contract and the performance of the contract. Article 580 of the Civil Code stipulates that "if one of the parties fails to perform a non-monetary debt or the performance of the non-monetary debt does not conform to the agreement, the other party may request the performance of the ......", which is of course a right to request performance, but it later states that "except in the following circumstances: (1) it cannot be performed in law or in fact; (2) the subject matter of the debt is not suitable for compulsory performance or the cost of performance is too high; (3) the creditor fails to demand performance within a reasonable period of time." The point is that paragraph 2 of the article states that "if there is one of the exceptions provided for in the preceding paragraph, which makes it impossible to achieve the purpose of the contract, the people's court or arbitration institution may, at the request of the parties, terminate the contractual rights and obligations, but this does not affect the assumption of liability for breach of contract".
The biggest controversy I have with some teachers in the legal profession is that they refer to this clause as the right of the breaching party to rescind. However, from a legal point of view, this is not a provision on the right of termination of the breaching party. In the literal sense, the breaching party also cannot have a right of rescission. If the law still gives him the right to terminate the contract, this is actually contrary to the justice of the contract, and it does not make sense in legal theory. This is important, but it's secondary. The most important reason is that we should admit that a valid contract may eventually be unperformable, and understanding this point is the key, so the original meaning of this provision is "the handling of the failure to perform the contract".
You can take a look at the book "Guide to the Interpretation and Application of the Civil Code" edited and published in the name of the "Civil Law Office of the Legislative Affairs Committee of the National People's Congress", which can be said to expound the understanding of the comrades of the legislature, and the interpretation of Article 580, paragraph 2 of the book is that the termination of the contract here is "judicial termination of the contract", not the termination of the contract by the defaulter, which is basically the same as my view. In the event that the contract cannot be performed, the parties may submit a request to the court or arbitral tribunal to terminate the contract, and the court or arbitral tribunal will determine whether the contract has encountered a situation of non-performance, and then make a judgment on whether to terminate the contract. The claim of the parties is not because of breach of contract, but because the contract cannot be performed. The inability to perform and the right to discharge from breach of contract are two different concepts, and they are significantly different in terms of their constituent elements and legal effects. Why can't it be called a rescission of a contract? Because the legal provisions do not use the concept of rescission, but the concept of "the relationship of rights and obligations to terminate the contract". The most important thing is that in the case of termination of the contract, it is possible to pursue the liability for breach of contract, but in the case of termination, the person with the right to terminate has to bear the liability for breach of contract, which makes no sense. Because the termination of the contract requires the other party to bear the liability for breach of contract, not to be liable for itself. If he were to be held liable, would he still file a lawsuit in court, and would he still file a lawsuit with the arbitral tribunal to hold him liable for breach of contract?
In addition, the jurisprudence issues related to this concept are also briefly explained: the termination by agreement basically does not involve the issue of liability for breach of contract, while the statutory termination, that is, the termination through the court and the arbitral tribunal, the court and the arbitral tribunal generally require the other party to bear responsibility. However, Article 580 of the Civil Code stipulates that the termination of the contract may cause the plaintiff or the arbitration of the court to demand that the applicant be held liable. In any case, this cannot be construed as a right of rescission of the breaching party.
In any case, we cannot make a necessary and absolute connection between the formation and validity of the contract and the performance of the contract. This is the main point that I have emphasized, the main point of my academic efforts over the years, and the main point that I have adhered to in directly participating in legislation as a deputy to the National People's Congress and a member of the Constitution and Law Committee of the National People's Congress.
As for the issue of the inability to perform the contract, I will briefly explain it here. There are many situations in which contracts cannot be performed, and I have also encountered several cases in arbitration, including one case involving land acquisition and demolition. In the mainland land market, land prices change too much, coupled with the government's change of land use and non-refundable collection of transfer fees, which will lead to huge losses for developers and fall into a situation where they cannot perform. Article 580 of the Civil Code is designed to address similar issues. In addition, related to Article 580 of the Civil Code is the famous Article 533 of the Civil Code, which is the change of circumstances clause. In the event of a change of circumstances, we also have to take into account the circumstances in which the contract is formed, valid and cannot be performed.
When we do arbitration, we must strictly abide by the bottom line of the right to claim arbitration. The parties are raising the right of claim, and they must understand exactly what the right of claim means. The right to request cannot be turned into a right of domination, and the right of relativity cannot be turned into an absolute right. I have a case in which I am the presiding arbitrator, which also involves the issue of land acquisition and demolition. There was a legal cooperative relationship between the parties before the respondent was demolished, and later the respondent's land and house were requisitioned and demolished, and the respondent was compensated for several buildings. The claimant now requested the arbitral tribunal to make a direct decision and allocate the designated area and houses to itself from the buildings acquired by the respondent. A co-adjudicator also thinks so, believing that the arbitral tribunal can exercise the right of arbitration and allocate some houses to the applicant. I don't think that's okay. The basic principle is that the contractual relationship between the parties can only give rise to the right of claim in legal theory, but cannot directly give rise to the right of property or other right of control. The other party's acquisition of buildings through land acquisition and demolition is his other legal relationship with the government or with others. The right of claim is against the debtor, you cannot go to the debtor's building, and the arbitral tribunal cannot directly assign someone else's building to the claimant. In the arbitral tribunal, the status of the three arbitrators is the same, but I, as the presiding officer, have a greater responsibility. I told them this, and in the end both linesmen signed it off.
The basic function of arbitration business is the legal basis of the right of claim, and all arbitration activities are carried out according to the claimant's right of claim. Therefore, we must grasp the basic jurisprudence of distinguishing between absolute and relative rights, and between the right of domination and the right of demand, and be able to accurately apply them in practice.
4. The distinction between legal and non-legal acts on the basis of law
The distinction between legal and non-legal acts on the basis of law is of great significance in the theory and practice of civil law. As mentioned above, the history of the emergence of the right to self-determination in civil law is only a few hundred years now, and the history of the emergence of the concept of legal acts is even shorter. An important product of the above-mentioned theories and principles of autonomy in civil law is the theory of legal acts and the related legal system. As mentioned above, after the rise of the modern humanist revolution, civil subjects have the right to self-determination, and at this time, civil subjects have become real subjects in civil law, and only then have they become subjects who can decide their rights and obligations by their own will. The concept of legal acts requires that the creation, alteration and extinction of civil legal relations must be determined according to the true inner will of the parties; a further requirement is that the rights and obligations must be determined according to the inner wishes of the parties regarding the relationship of rights and obligations. A further requirement is to distinguish between the legal effect of property rights and the legal effect of the transfer of ownership arising from the conclusion of a contract and the legal effect of the transfer of ownership in the performance of a contract. Civil law adjudication must emphasize the autonomy of the parties, i.e., "Yes, I will".
Article 133 of the Civil Code of the People's Republic of China stipulates that "a civil juristic act is the establishment, modification or termination of a civil legal relationship by a civil subject through an expression of intent. This provision is different from the 1986 General Principles of the Civil Law, and is a manifestation of the significant progress of the civil law system in the mainland. I have some discussion on this in my book, so if you are interested, you can look it up.
From the perspective of humanist history, the value of the theory of legal behavior is very high, but the value of its judicial practice is even more significant, because legal behavior is the most important legal basis for the establishment and change of legal relations. We in the Chinese legal circles have not discussed much about this, so I will briefly say a few words. What is the humanistic value of autonomy of meaning? It is embodied in the right to self-determination that I just mentioned -- "Yes, I will", not God will, nor monarch will, but "I" as the subject of civil law -- "I will" -- it is I who decide this thing. However, how to understand "Yes, I will" in judicial practice? I will, cannot be understood as wanting to obtain rights from others, on the contrary, "Yes, I will" is my own legal obligations and legal burdens. Because I bear legal obligations and burdens, it will lead others to enjoy legal rights. I would like to ask for your full attention to this point. Because it is precisely this that leads to the creation of legal rights, obligations and responsibilities. The legal rights and obligations arise because I take the initiative to undertake the obligations, which is the basis of the legal relationship in the civil law and the legal basis for us to pursue legal responsibility. The main points of this legal basis are basically not pointed out in the civil law textbooks.
In addition to legal acts, there are many other legal bases that give rise to civil rights, obligations and liabilities. Arbitrators should pay full attention to the adjudication. There are four common situations for these legal bases: 1. Public authority. Public power will lead to the creation of legal rights and obligations. For example: expropriation, court judgments...... Changes in legal relations caused by expropriation and court decisions are clearly stipulated in the Civil Code. It was originally Article 28 of the Property Law, and now it is Article 229 of the Civil Code. 2. Natural events. Natural events lead to the extinction of rights, and they also lead to the occurrence of rights. 3. Actual acts. Although a factual act is also a human act, it is not an act that occurs because of the autonomy of the parties. 4. Timeliness.
As for factual acts, there is quite a lot of controversy in the legislation of the Civil Code in the mainland, and in the end, some of my ideas have been implemented, such as the provisions of additional payment, and some have not been implemented, such as finding lost property. After a period of public notice, the lost property finally became ownerless. As an unclaimed property, it should be acquired by the person who preempted it in law, and from possession to ownership. This is the legal principle and the international practice, but the mainland has not accepted this concept until the final stage of legislation, and we believe that all lost and lost items should belong to the state or the collective. At present, this issue is still very controversial.
There is also a more important legal basis that does not occur due to human conduct - the statute of limitations. There will be many provisions in the law on the effect of time, such as extinguishing the statute of limitations, excluding the period, and so on. The temporal effect is not due to the actions of the parties, but, on the contrary, often to the passive inaction of the parties. Because the rights, obligations and responsibilities arise at the time, which has nothing to do with the factors of the parties and is directly stipulated in the law. From a referee's point of view, we need to use this system a lot.
When adjudicating, we will often encounter questions about the legal basis, and when we ask how the rights and obligations arise, it is necessary to adjudicate the rights and obligations through the introduction of the legal basis, which also involves the application of evidence.
V. The distinction between burdens and punishments in legal acts
As for the distinction between burdened acts and dispositional acts, as soon as this issue is mentioned, some young scholars here, especially those with master's and doctoral degrees in civil law, know that this is a place where I have a relatively big controversy with the domestic civil law scholars, and the direct controversy is the issue of whether to recognize the act of property right in the theory of legal acts. In the nineties of the last century, the leading civil law theorists believed that the distinction between disposition and burden was not only meaningless, but even absurd in legal theory. Some scholars are reluctant to mention it, and many textbooks mention this theory in passing. In the last two decades, that has completely changed. First of all, this theory has been recognized and applied in the judicial interpretations and adjudication practices of mainland courts, and now the Civil Code of the mainland has also reformed the most critical system in civil law in accordance with this theory, and now the younger generation of scholars have basically accepted this theory. It can be said that through the efforts of me and some scholars, the theory of distinguishing between burdening behavior and disposing behavior has been successfully resurrected in the mainland.
There are some scholars who do not recognize the distinction between burden behavior and punishment behavior, and I will analyze this theory from the front, and everyone will judge whether it is right or wrong. I have adopted the basic analysis method of Mr. Wang Zejian, a well-known scholar from mainland Taiwan, and of course I want to make some more elaborations on the basis of Mr. Wang's viewpoint in combination with the actual situation on the mainland. Let's start with a specific case study of a purchase contract. Please think about it, if you go to buy a car or a house, when you enter into a contract for the sale and purchase of a house, will the contract only come into effect after the house has been built? Or will the car you want to buy only come into effect after it has been manufactured? From the buyer's point of view, can you only buy an existing house and an existing car? Obviously, you can come to a conclusion: No. Because the conclusion of a contract is only a binding force that creates a claim in the nature of a creditor's right between the counterparty, in real life, there are many contracts for the purchase of off-plan housing and futures, and these contracts do not need to take effect after the subject matter is completed.
The distinction between absolute and relative rights, the distinction between domination and claim, has been mentioned above. Regarding the binding effect of the right of claim, let's take a look at Article 510 of the Contract Part of the Civil Code, which stipulates that after the contract comes into effect, if the parties have not agreed on the quality, price, remuneration or place of performance or the agreement is not clear, they may sign a supplementary agreement, etc. After reading this article, it will suddenly dawn on you. According to this provision, even if the necessary terms of these contracts are not clear, they can be validated. The subject matter is not clear, the price is not clear, the place of delivery (performance) is not clear, and the quality is not clear, but the contract can be effective. Combined with this provision, I think everyone can understand the difference between the provisions of the current Civil Code and the provisions of Article 51 of the original Contract Law.
From this point of view, I am now going to use the analytical method of Mr. Wang Zejian. Taking the sales contract mentioned above as an example, Mr. Wang said that the generation of creditor's rights is "three don'ts", that is, no subject matter, no right to dispose of, and no need to register immovable property and deliver movable property. In the case of the "three don'ts", the contract can of course take effect. As long as the parties agree on their intentions and the basic framework is clear, the contract can be formed and take effect. For example, in the case of a contract for sustainable supply, the subject matter is not clear. In this case, the claim in the sense of a creditor's right can be established. Then, when the contract is performed, that is, when the ownership is transferred, this "three don'ts" is completely impossible. Let's also take the example of buying and selling a house and buying and selling a car. First of all, when fulfilling the contract, first, the house must exist, and to buy a car, you must have a car. This is not the same as the formation of a contract. Second, we know that the performance of a contract is a transfer of ownership of the subject matter, and therefore the seller must have ownership or full right of disposition of the house or car at the time of performance of the contract, so that he can transfer ownership to the buyer. Thirdly, how can ownership be transferred to the buyer? Because ownership is abstract, we can't see it, but it's the key to the transaction. Therefore, when the seller transfers the ownership of the subject matter to the buyer, it must go through the formalities of registration of immovable property or the delivery of movable property, which is the publicity of real rights.
Mr. Wang Zejian clearly pointed out that when the contract takes effect, there are "three don'ts", but the transfer of ownership must be "three musts" when the contract is performed. From these three distinctions, we understand at once the difference between the act of punishment and the act of burden, and the relationship between them. To put it simply, the conclusion of a contract creates a binding force of creditor's rights, and it is only an act of setting up an obligation between the parties to perform the contract in the future, that is, to set up a burden. Therefore, the act of concluding a contract is called an act of burden. As I mentioned above, legal conduct is actually the meaning of being bound by oneself, and entering into a contract is setting oneself in a binding.
The performance of a contract is the transfer of ownership of the subject matter. The transfer of ownership is aimed at the subject matter, so it is necessary to have the right to dispose of it, to register the immovable property or to deliver the movable property. Through the registration of immovable property and the delivery of movable property, the disposition of the object is completed, and the ownership of the subject matter is transferred to the other party, so this act is called an act of disposition. In retrospect, when Article 51 of the Contract Law of 1999 was legislatively stipulated, some scholars referred to it as a "contract without the right to dispose of it", and these scholars referred to the act of concluding a contract as an act of disposition, which was also very controversial in legal theory.
In all legal transactions, there is a difference between the conclusion of a contract and the performance of a contract, and between an act of burden and an act of disposition, not only the most typical act of buying and selling legal transactions, but also the transaction under the "Company Law" and the transfer of rights such as patents and trademarks under the Intellectual Property Law. With this in mind, we can effectively make a clear and unambiguous analysis and adjudication on the validity of the right to claim (i.e., the validity of the contract) and the validity of the right to dispose of the right in rem (e.g., the transfer of ownership in a sale).
These three "don'ts" and three "wants", that is, the distinction between burden and punishment, are actually the most basic method of distinction in civil law, and they are also the most basic methods of analysis and adjudication. The principle is clear and simple, and the jurisprudence is thorough. It is precisely because of this that my view was first accepted by the people's courts. The first to accept my theory was the Jiangsu Provincial High People's Court, and then the Shanghai Municipal People's Court. From 1995, when I first initiated this theory, to 2003, when the Supreme People's Court adopted my theory in the Judicial Interpretation of Contract Law (I), and finally to the Property Law and the General Provisions of the Civil Law, my theory was adopted. It took me 20 years to introduce this theory, and finally to establish the principle of distinction, which was adopted by legislation. As you can see, scientific truths are concise and clear, while unscientific truths are complicated. For example, the theoretical argument on the distinction between negative burdening and disposition is complicated.
VI. The distinction between norms of conduct and norms of adjudication in legal norms
There are two types of legal norms in civil law, one is the code of conduct and the other is the norm of adjudication. The so-called code of conduct is the code that guides everyone to do it. There are many such legal norms in contract law, such as Article 511 of the Civil Code, on how to deal with these clauses that are not clear in the performance of the contract. Article 511 is to guide the parties on how to act in many situations where the agreement is not clear. For example, if the quality agreement is not clear, the price is not clear, and the place of performance is not clear, guide the parties to what to do when performing the contract. It belongs to the code of conduct and is to guide the parties. The adjudication norm is to clarify the rights and wrongs between the parties through arbitration or the judiciary of the court, and determine the rights, obligations and responsibilities between the parties through adjudication. There is a general distinction between the code of conduct and the code of referee. Although there is such a distinction in theory in general, there are also some legal norms, which have the characteristics of both behavioral norms and adjudication norms.
The Code of Conduct not only plays a guiding role for the parties, but also for judges and arbitrators. However, in judicial practice and arbitration practice, it should be noted that the adjudication cannot be made simply based on the code of conduct. For example, Article 511 of the Civil Code is a code of conduct, which guides the parties to what to do when the contract is not clear. However, if an arbitrator encounters such a situation, if he wants to apply the provisions of Article 511, then he needs to do more work, and he also needs to use the rules of interpretation of legal acts to determine the true will of the parties from objective criteria and find the basis for the current market transaction in accordance with the provisions of the second half of the article, so as to make an analysis and adjudication. Obviously, he could not simply apply a code of conduct like Article 511.
7. The distinction between peremptory norms and arbitrary norms
The legal norms in civil law can also be divided into arbitrary norms and peremptory norms. This distinction is mentioned in various civil law textbooks, so there is no need to say much about it. In the laws of our country, peremptory norms are often expressed as "must not" carry out certain acts. For example, some prohibitive provisions on standard clauses in the contract section of the Civil Code, such as the contract stipulation that personal injury must not be harmed, and that workers must be protected, etc., are obvious prohibitive clauses.
In the middle of the contract part, there are also some norms on ecological and environmental protection, which are all prohibitive and mandatory clauses, which are the will of the parties and cannot be violated, and it is relatively easy for the arbitral tribunal to grasp in such cases. Arbitrary norms are often encountered in arbitration practice. If an arbitrary norm is turned into a contractual clause by the choice of the parties, then the arbitral tribunal can use it to analyze and adjudicate. Through the analysis from this perspective, we can see that the main point of the distinction between the code of conduct and the norms of adjudication, as well as the point of distinguishing between peremptory norms and arbitrary norms, is put forward above, and we can see the different analyses between these two points, which we hope to pay attention to in arbitration.
8. The General Provisions of the Civil Law and the Basic Principles of the Civil Law shall be applied to analysis and adjudication
The compilation of the Civil Code of the mainland adopts the structural model of general provisions and sub-provisions, in which the compilation of general provisions embodies the guiding ideology, basic principles and basic legal principles of legislation. The General Provisions have the role of a directive and programmatic function for each part of the Sub-Provisions. I have published a long paper on this point in the journal Legal Studies, and if you are interested, you can refer to it.
In arbitration practice, attention must be paid to the application of the General Provisions. In the above analysis of the basic relationship between the Civil Code as a basic law and a special law, it was mentioned that we cannot understand the general provisions of the Civil Code as merely the general provisions of the Civil Code, but as a general rule of the civil law system, including commercial law, intellectual property law and special civil rights legislation, and even the general provisions of many administrative laws.
When conducting arbitration or other legal practice, it is necessary to take into account the general provisions of the civil law. The provisions of the General Provisions of the Civil Code of the Continental Republic of China go beyond the provisions of the German Civil Code, because Chapter 1 of the German Civil Code stipulates that the legal capacity of a person begins at birth and ends at death, i.e. the creation of a natural person as a subject is provided for at the beginning. However, the first part of China's civil law stipulates the guiding ideology of civil law, such as the core socialist values stipulated in Article 1, such as fairness, law, honesty and other basic principles of civil law. Some scholars believe that the principles of civil law are six, while others believe that they are seven, and the difference between the two lies in whether they contain the principle of public order and good morals. Some scholars insist that public order and good customs are an independent principle, but some scholars believe that it is within the scope of the principle of legality, and there is a lot of academic discussion, but it is of little practical significance. Public order and good customs, legally speaking, are actually linked to the principle of legality. At present, it is rarely used in arbitration, and I hope that everyone can innovate and apply it in the future, what exactly is good customs, how to understand public order, and how much power the arbitral tribunal has? At present, the courts have applied public order and good customs to the adjudication of cases, and many other principles, such as the principle of good faith, can also be applied in adjudication.
9. The logic of legal relations is applied to civil law analysis and adjudication
The logic of legal relations is a basic tool for analyzing problems in civil law, and it is also the basic skill for learning law. The biggest difference between those who study law and those who do not study law is to see if they know the logic of legal relations. For example, in terms of the relativity of contracts and the relationship between husband and wife, those who study law know that the relationship between rights and obligations and the subject are clearly affirmed, and can clearly analyze the rights, obligations, and responsibilities in law, without involving others.
Give me a contractual example to illustrate the point I am trying to illustrate. If two parties to a contract refer their dispute to an arbitral tribunal for resolution, then our tribunal will only deal with the contractual relationship between the claimant and the respondent, as they are both parties. The arbitral tribunal will not take into account the opinions of other persons behind the parties, such as the superior or superior of the parties, nor will it take into account the opinions of the spouses of the parties who have a strong temper or their personal emotional state. However, people who study philosophy are different, and philosophy emphasizes the connection of all things, emphasizing the decisive role of external factors in individual behavior. However, civil jurists believe that this does not conform to the scientific definition of subject-specific in civil legal relations. There is a joke in European civil law that criticizes the philosophical view that everything is connected, saying that Hitler started World War II because Queen Cleopatra of Egypt had a nose that was too high and too good-looking. From a philosophical point of view, there is indeed a historical connection, because the Egyptian queen was so beautiful that it led to the invasion of the Romans, and history progressed step by step, and Hitler unleashed World War II. These so-called philosophical-historical analyses sound reasonable, but civil law science thinks them are absurd, because such analyses give people the final conclusion that the parties themselves are not responsible.
I have also encountered such a problem during the trial, and the claims put forward by the parties often cannot form a legitimate and effective defense, because they are always talking about other reasons, and we must pay attention to this. When we study the science of civil law, we must persist in analyzing and adjudicating on the basis of the logic of legal relations, and we must master this important point.
10. Liability for breach of contract and tort
Generally speaking, arbitration basically does not hear tort liability cases, although it will also be involved, for example, the arbitration rules of CIETAC do not exclude tort liability, but the basic content is about the trial of liability for breach of contract.
On the issue of liability for breach of contract, there are some differences between the provisions of the Civil Code on liability for breach of contract and the previous Contract Law. For example, Article 580 of the contract performance has already been mentioned to you, so I will not say more here. Secondly, Article 581 is an issue of compulsory performance involving a third party, and this issue involves a third party, can such a provision be used in arbitration to adjudicate in law? This is actually a question, because the arbitration hears the rights and obligations between the parties. From the perspective of arbitration, there are still some difficulties in whether the other party can request it to bear the costs of substitution by a third party, because this issue involves a third party, and whether the rights and obligations between the third party and the parties to the case form an effective correspondence needs to be judged by evidence and other legal logic. Both the lawyer and the court can do this through evidence, but the arbitral tribunal is bound by the legal relationship between the claimant and the respondent, and it is prudent to apply such a provision. I've come across cases like this, and there's really no way to adjudicate them. Finally, article 584 requires special attention. "If one of the parties fails to perform its contractual obligations or performs its contractual obligations in a manner inconsistent with the agreement, causing losses to the other party, the amount of compensation for the losses shall be equivalent to the losses caused by the breach of contract, including the benefits that can be obtained after the performance of the contract; "This involves the question of whether the agreement on liquidated damages can be boundless, and whether the arbitral tribunal can continue to calculate liquidated damages for many years in a row.
Recently, the leader of the arbitration commission in one city called me and said that they had come across a case in which a contract dispute between the parties had occurred for many years, and it was later determined that one party had breached the contract, and the liquidated damages had exceeded the principal many times even according to more market-oriented standards. The dispute over the principal of the contract of about 5 million yuan has now reached more than 20 million yuan. In response to this problem, the arbitration commission invited several famous professors to write legal opinions to them, and these scholars supported such high liquidated damages on the basis that since the liquidated damages were so agreed, they should be strictly enforced. Later, the leaders of the arbitration commission felt that this was particularly inappropriate, but there was no more precise way to deal with it.
I don't think the opinions of these scholars are appropriate. This is because Article 584 of the Civil Code stipulates the rule of foreseeability, or the principle of foreseeability, which means that in the context of the conclusion of the contract, the amount of damages should be equal to the foreseeable loss that may be caused by the non-performance of the contract, and the liability for breach of contract of the breaching party cannot be pursued infinitely. Therefore, I am not in favor of the calculation of liquidated damages that are too high. In my opinion, the "foreseeable" provision of this provision includes the foresight of rights and obligations, as well as the foresight of losses caused by breach. It is not possible to calculate the liquidated damages continuously, and finally exceed the principal many times, which actually violates the basic starting point of the law to set up this system.
At the same time, Article 585 also stipulates that the parties may agree that one party shall pay a certain amount of liquidated damages to the other party according to the circumstances of the breach of contract, and may also agree on the method of calculating the amount of compensation for losses arising from the breach. If the agreed liquidated damages are lower than the losses caused, the people's court or arbitration institution may increase them at the request of the parties; if the agreed liquidated damages are excessively higher than the losses caused, the people's court or arbitration institution may appropriately reduce them at the request of the parties. Therefore, I do not agree with the method of calculating the infinite amount of liquidated damages, and I hope that the arbitral tribunal can apply Articles 584 and 585 to reasonably determine the amount of liquidated damages.
The above ten questions are for your reference. Thank you!
[Sun Xianzhong: Member of the Chang'an Street Reading Club, Member of the Faculty of the Chinese Academy of Social Sciences]
Note: Authorized to publish, this article has been selected and included in the "Chang'an Street Reading Club" theoretical learning platform (People's Daily, People's Political Consultative Conference Daily, Beijing Daily, Xinhuanet, CCTV, National Party Media Information Public Platform, Vision, Beijing Time, Surging Government Affairs, Phoenix News Client "Chang'an Street Reading Club" column synchronization), reprinting must be uniformly marked "Chang'an Street Reading Club" theoretical learning platform source and author.
Editor-in-charge: Liu Xingyue, preliminary review: Cheng Ziqian, Chen Jiani, re-examination: Li Yufan
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