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Economic dispute resolution by administrative organs and courts in China : from a transparency perspective Liu, Yanyan 2004

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E C O N O M I C DISPUTE RESOLUTION B Y ADMINISTRATIVE O R G A N S A N D COURTS IN CHINA —From A T R A N S P A R E N C Y P E R S P E C T I V E by  Y A N Y A N  LIU  L L . B . , China Youth University For Political Sciences, L L . M . , Renmin University of China, Postgraduate D i p l o m a  A  in C o m m o n  1998  2001  Law, University of Hong Kong,  THESIS S U B M I T T E D IN PARTIAL F U L F I L L M E N T O F R E Q U I R E M E N T S F O R T H E D E G R E E  M A S T E R OF  OF  L A W S  in  T H E F A C U L T Y OF G R A D U A T E  ( F A C U L T Y OF  STUDIES  LAW)  W e a c c e p t this t h e s i s as c o n f o r m i n g to the r e q u i r e d s t a n d a r d  T H E U N I V E R S I T Y OF BRITISH  APRIL  2004  © Yanyan Liu,  2004  C O U M B I A  2002  T H E  Library Authorization  In presenting this thesis in partial fulfillment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make it freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the head of my department or by his or her representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission.  Y/WY4V  Liu  08104-1'»to>f  Name of Author (please print)  Title of Thesis:  J^COKo^  Department of The University of British Columbia Vancouver, BC Canada  Date (dd/mm/yyyy)  Vii put*.  / CW(J  RtoJuJZtft.  ABSTRACT The increasingly dynamic interplay between national legal construction and normative international practice is shaping China's ongoing legal reforms. Transparency, a concept which has become so widespread that it has reached an exalted status in the arena of multilateral trade, now goes well beyond international trade circles and has become a buzzword in China since its accession to the WTO. In entering the WTO, China is taking on many very significant obligations. Certainly one of the most challenging is the obligation of greater transparency. To varying degrees, the core definition of transparency, though not yet widely enforced due to the friction between it and some of China's cultural components, has gone to many aspects of China's current legal reforms. Accordingly, China's compliance with the WTO must extend beyond general principles and performance in government regulations generally, to include compliance with WTO norms on dispute resolution. Dispute resolution is essential to the process of empowering economic actors to seek enforcement of substantive norms of law and the government regulations. This thesis therefore singles out transparency with respect to business-related dispute resolution, trying to look into how China's transparency obligation improves its rule of law in the dimension of economic dispute resolution. Notably, all possibilities of economic dispute resolution include negotiation, mediation, arbitration and litigation. However, those involving the exercise of the power and resulting in binding force on the parties merit special attention in current China as a series of obligations under the WTO impose on it and one of them is transparency which is supposed to run through all dispute resolution mechanisms involving the state power. Hence, this thesis, from a transparency perspective, focuses on economic disputes resolved by administrative organs and judicial bodies. It concludes with a discussion of institutional and cultural approaches that might prove useful in seeking greater transparency in economic dispute resolution by administrative organs and judicial bodies.  ii  T A B E L OF CONTENTS  Abstract  ii  Table of Contents  hi  Table of Cases  v  T a b l e o f Statutes  vi  List of Abbreviations  vii  Acknowledgement  Chapter I  C h a p t e r II  C h a p t e r III  viii  Introduction  1  Principle of Transparency and Economic Dispute Resolution  5  2.1  T r a n s p a r e n c y u n d e r the W T O a n d C h i n a ' s C o m m i t m e n t s  5  2.2  Implications o f Transparency C o m m i t m e n t s for C h i n a  9  2.2.1  Going beyond Legal Regime  9  2.2.2  G o i n g beyond Foreign Trade Regime  11  2.3  Interpretation o f "Transparency"  15  2.4  Constituents of Transparent E c o n o m i c Dispute Resolution  21  2.4.1  Transparent Applicable Legislation  21  2.4.2  Procedural Fairness  28  2.4.3  Independence o f Dispute R e s o l v i n g Intuitions  32  Economic Dispute Resolution by Administrative Organs  3.1  Introduction  3.2  C o m m e r c i a l administrative  34 disputes:  Administrative reconsideration 3.2.1  34  Transparent applicable legislation (a) A p p l i c a b l e l e g i s l a t i o n (b) P u b l i c a c c e s s i b i l i t y  44 45 45 47  (c) Certainty, u n i f o r m i t y , c o n s i s t e n c y a n d s t a b i l i t y . . . . 5 1 3.2.2  Procedural fairness  55  (b) I m p l i c a t i o n s f o r the future  58  (i)  Reconsideration on documents, hearing and cross-examination  (ii) (iii) 3.2.3  54  (a) A p p l i c a n t - f r i e n d l y P r o c e d u r e s  Independence  Challenge System R i g h t to L o o k u p C a s e M a t e r i a l s .  58 61 62  of  administrative reconsideration organs  62  3.3  Chapter IV  Economic Dispute Resolution by Courts 4.1 4.2 4.3  4.4 Chapter V  Commercial Disputes: Administrative Adjudication 3.3.1 Transparent Applicable Legislation 3.3.2 Procedural Fairness 3.3.3 Independence....  67 70 71 77 79  Introduction 79 Transparent applicable legislation 80 4.2.1 Public accessibility 86 4.2.2 Uniformity, consistency, certainty and stability 86 Procedural fairness 89 4.3.1 Openness system 89 4.3.2 Recent progress 92 4.3.3 Problems to be resolved 96 4.3.3.1 Common issues 96 Adjudicatory Committee 97 Second Instance 98 Trial Supervision 99 Instruction-request system 100 Political-legal Committee 101 Pronouncement of judgment 102 Open written judgement 102 Written Judgement 103 4.3.3.2 Specific issues 104 Administrative litigation 104 Commercial litigation 108 Judicial independence 112  Closing commentary Transparency: an institutional and cultural discourse in China  119  Bibliography  127  Appendix: Chinese Cases Cited  141  iv  T A B L E OF CASES  F e n g x i a n g T r a d e L t d . , S h a n g h a i v. S a l t A d m i n i s t r a t i v e B u r e a u , S h a n g h a i J i n M a n K e E l e c t r i c L t d . v. S t a t e R e v e n u e o f S h e n z h e n K l o p f e r v. N o r t h C a r o l i n a , 3 8 6 U . S . 2 1 3 , 2 2 3 - 2 4  49 4 9 , 83 37  M r . C h u a n l i n T u v. I n d u s t r i a l a n d C o m m e r c i a l Administrative Bureau, Qinghuai District, Nanjing, Jiandsu Province Mr. Liangren Sun v Administrative  Commission of  85  High  Technology Development Areas, People's Government of Chongqin M r . W a n g E n w u v. P e o p l e ' s G o v e r n m e n t . H e p i n g D i s t r i c t , T i a n j i n  84 58  S h i t o n g C o m m u n i c a t i o n E q u i p m e n t L t d . o f G u a n g z h o u v. People's Government of Guangzhou  57  V  TABLE OF STATUTES  General A g r e e m e n t on Tarrifs and Trade 1994  6 - 7 , 9, 15  General Agreement on Trade in Services  6-7  Agreement on Trade-related Aspects of Intellectual Property Rights  6, 9,  Agreement on Trade-related Investment Measures A d m i n i s t r a t i v e L i t i g a t i o n L a w o f the P R C  102 16  82, 84, 87, 90  A d m i n i s t r a t i v e P e n a l t y L a w o f the P R C  59, 74  A d m i n i s t r a t i v e R e c o n s i d e r a t i o n L a w o f the P R C . . . 4 0 - 4 1 , 4 5 , 5 1 , 5 4 - 5 8 , 6 0 - 6 3 , 7 8 , 8 0 Administrative Reconsideration Regulations  4 5 , 41  A r b i t r a t i o n L a w o f the P R C  13  C i v i l Litigation L a w o f the P R C  81, 89-90  C o m m e r c i a l I n s t r u m e n t L a w o f the P R C  Ill  C o n t r a c t L a w o f the P R C  Ill  C o n s t i t u t i o n o f the P R C  38, 114  Detailed Rules for Administrative Reconsideration Procedures o f N a n j i n g  4 6 , 61  F i s h e r y L a w o f the P R C  69  G e n e r a l P r i n c i p l e s o f C i v i l L a w o f the P R C  Ill  Land Administration L a w of P R C  69  L a w of P R C on Chinese and Foreign Contractual Cooperative Enterprise  53  L a w o f the P R C o n C h i n e s e a n d F o r e i g n E q u i t y J o i n t V e n t u r e s  53  L a w of P R C on Foreign-capital Enterprises L e g i s l a t i o n L a w o f the P e o p l e ' s R e p u b l i c o f C h i n a Measures of C h i n a Insurance Regulatory  49, 53 48, 84-85  Commission  for Administrative Considerations  49  M e a s u r e s o f the C u s t o m s o f the P R C for Implementation o f Administrative Reconsideration L a w  60-62  M e a s u r e s o n E l e c t i n g C h i e f Justice o f the P e o p l e ' s C o u r t  95  Regulations on Handling Cases Involving Foreign Elements  81  R e p o r t o f the W o r k i n g P a r t y o n the A c c e s s i o n o f C h i n a  87,  R u l e s o n R e f o r m i n g the M o d e l o f C i v i l a n d E c o n o m i c T r i a l  108-109  Rules on Evidence o f administrative Litigation  121  109  T h e S u p r e m e C o u r t o f the P R C : Regulations o n H e a r i n g A d m i n i s t r a t i v e C a s e s I n R e l a t i o n to I n t e r n a t i o n a l T r a d e  87-88  vi  LIST OF ABBREVIATIONS  A L L :  A d m i n i s t r a t i v e L i t i g a t i o n L a w o f the P R C  A R L :  A d m i n i s t r a t i v e R e c o n s i d e r a t i o n L a w o f the P R C  CCP:  Chinese Communist Party  CPL:  C i v i l P r o c e d u r e L a w o f the P R C  GATT:  General A g r e e m e n t o n Tarrifs and Trade  GATS:  General Agreement on Trade in Services  NPC:  N a t i o n a l P e o p l e ' s C o n g r e s s o f the P R C  PRC: TRIPS:  1994  People's Republic of China Agreement on Trade-related Aspects o f Intellectual Property Rights  TRIMS: W T O :  Agreement on Trade-related Investment Measures W o r d Trade Organization  vii  ACKNOWLEDGEMENTS  I o w e m y s u p e r v i s o r , P r o f e s s o r P i t m a n . B . P o t t e r a g r e a t d e a l . It i s b e c a u s e o f h i m ,  I  a t t e n d e d U B C . It i s b e c a u s e o f h i m , t h i s t h e s i s e v e n t u a l l y c a m e i n t o b e i n g . W h e n  I  f i r s t a r r i v e d at U B C , I w a s p r e p a r i n g f o r a v e r y d i f f e r e n t t h e s i s t o p i c . D u e to P r o f e s s o r Potter, I w a s a b l e to p a r t i c i p a t e i n a r e s e a r c h p r o j e c t titled A s i a P a c i f i c P r o g r a m C r o s s - c u l t u r a l a n d C o m p a r a t i v e R e s e a r c h o n D i s p u t e R e s o l u t i o n d u r i n g the  on  summer  o f 2 0 0 3 as a r e s e a r c h assistant r e s p o n s i b l e f o r W T O - t r a n s p a r e n c y i s s u e s i n C h i n a . w a s t h e r e that t h i s t h e s i s t o p i c w a s f i r s t c o n c e i v e d a n d e x p l o r e d ; it w a s t h e r e I i n s p i r e d a lot b y  weekly  conversations among  all the participators  of  the  It  was  project.  T h e r e f o r e , I a m d e e p l y i n d e b t e d to P r o f e s s o r P o t t e r f o r h i s c o n s t a n t h e l p , a d v i c e e n c o u r a g e m e n t d u r i n g m y g r a d u a t e s t u d i e s at U B C a n d s e e i n g t h i s t h e s i s t h r o u g h  and to  its c o m p l e t i o n .  M y  g r a t e f u l t h a n k s are a l s o d u e to P r o f e s s o r L j i l j a n a B i u k o v i c . H e r p e n e t r a t i n g  and  p r o f o u n d v i e w s i n the W T O - r e l a t e d a r e a s g r e a t l y o p e n m y e y e s to C h i n a ' s P o s t - W T O issues. I a m f o r t u n a t e to h a v e h e r as m y s e c o n d reader. H e r t h o u g h t f u l a n d  valuable  c o m m e n t s o n m y thesis p r o v i d e m e w i t h invaluable insights w h i c h w e r e a n essential c o m p o n e n t to m a k e m y w o r k m o r e i n t e l l e c t u a l l y  enlightening.  T h e year i n w h i c h this thesis w a s w r i t t e n w a s b o t h w o n d e r f u l a n d c h a l l e n g i n g . I  thank  m y b e s t f r i e n d , R i c h a r d R o s e c k y , f o r h i s great h e l p to p r o d u c e a m o r e r e a d a b l e t h e s i s ; m y good friends, A l e x , A m y , H e n r y and H e l e n , and m y colleagues in L L M 0 2 seminar g r o u p , w h o m a d e m y t i m e s p e n t at U B C m o r e e n j o y a b l e a n d r e w a r d i n g as w e l l .  A t t i m e s o f s e l f d o u b t , I c o u l d a l w a y s g a i n d r i v i n g f o r c e to m o v e f o r w a r d p a r e n t s a n d sister. T h e i r w e e k l y p h o n e c a l l s a n d u n f a i l i n g s u p p o r t a n d  from  my  encouragement  w e r e v i t a l i n c o m p l e t i n g m y thesis. T h i s w o r k is d e d i c a t e d to t h e m .  viii  [I]instrumental freedoms freedom  contribute,  directly or indirectly,  to the overall  people have to live the way they would like to live...  Transparency  guarantees  can be an important  guarantees  have a clear instrumental  irresponsibility  category  The  world  role in preventing  and underhand dealings.  Chapter I  in w h i c h w e are living  of instrumental  freedom.  corruption,  These financial  1  Introduction  is rapidly  shrinking  in terms  interconnectedness a n d interdependence i n e c o n o m i c life  o f the increasing  a m o n g different  national  e c o n o m i e s . I n r e s p o n s e to this f u n d a m e n t a l c h a n g e , m o r e a n d m o r e nation-states h a v e  adopted internationally  recognized a n d institutionalized principles a n d practices  conducting their e c o n o m i c activities.  2  T o d a y s u c h states i n c l u d e a g r o w i n g  in  number  o f d e v e l o p i n g c o u n t r i e s w h i c h f i n d it n e c e s s a r y t o p l a y b y t h e r u l e s f o r m u l a t e d b y t h e  leading  industrialized  international  economic  1  2  countries  economic  exchanges.  3  and manifested  organizations  Although  i n order  to  i n the legal  fully  framework  participate  in  of  major  international  it is c o n t r o v e r s i a l a b o u t w h e t h e r the a d o p t i o n  of  Amartya Sen, Development as Freedom (Oxford University Press, 1999), pp. 38, 40. See Thomas Yunlong Man, "National Legal Restructuring in Accordance with International  Norms: GATT/WTO and China's Foreign Trade Reform", 4 Ind. J. Global Leg. Stud. p. All. 3  In this sense, these countries have strengthened the tendency toward the globalization of law,  although there is no universally accepted definition of the concept "globalization" of law. For some efforts to delineate important aspects of this concept, especially its connection with and  internationally r e c o g n i z e d n o r m s is m o s t l y externally d r i v e n o r internally driven,  has  been  noted  that  in  construction a n dnormative  reforms.  5  China,  the dynamic  international  interplay  between  national  practice is shaping C h i n a ' s ongoing  4  it  legal  legal  S u c h interplay has been increasingly obvious since C h i n a ' s entry into the  W T O because f r o m t h e m o n , C h i n a has started f o r m a l l y  (zhengshi)  to integrate  itself  into the w o r l d capitalist e c o n o m i c a n dpolitical system, the basic characteristics o f  which  are market  economics  a n d democratic  politics.  6  Transparency, a  concept  w h i c h h a s b e c o m e s o w i d e s p r e a d that it h a s r e a c h e d a n e x a l t e d status i n t h e a r e n a o f  multilateral  trade, n o w goes w e l l  beyond  the international  trade  circles  7  and in  C h i n a hasb e c o m e a b u z z w o r d i n thelegal regime since its a c c e s s i o n to the W T O .  In entering the W T O , C h i n a is taking o n m a n y very significant obligations. Certainly  distinctions from "internationalization", see Peter Dicken, Global Shift, The Internationalization of Economic Activity (USA : Sage Publications, 1992, 2 ed.), pp. 1-5. nd  4  One view is that the main driver of change in the Chinese legal system will be internal  developments in China, not foreign legal assistance programs, see Donald C. Clarke, "China's Legal System and the WTO: Prospects for Compliance", 2 Wash. U. Global Stud. L. Rev. 97, (Winter 2003); others hold that China's entry into the WTO has provided a much-needed outside impetus for it to adopt certain universally accepted principles such as transparency and judicial review, as discussed by Chris X. Lin, "A Quite Revolution: An Overview of China's Judicial Reform", 4 Asian-Pac. L. & Pol'y J. 9 (June 2003); more discussion of various concerns about internationalization is available at David Kennedy, "Receiving the International", 10 Conn. J. Int'l L. 1. 5  See Nanfang Zhoumo {Southern Weekend), 25 Oct 2001, p.6.  6  Joseph Fewsmith, The Political and Social Implications of China's Accession to the WTO,  The China Quarterly, Vol. 167 (September 2001), p. 584. 7  See William Satire, "On Language; Transparency, Totally", N.Y. TIMES, 4 Jan. 1998, Sec. 6,  pp.4. 2  one o f the most  challenging is the obligation  o f greater  transparency.  Although  liberal norms o f transparency a n d uniform application o f l a w a n d regulation are not  widely accepted or enforced in China  9  d u e to t h e f r i c t i o n b e t w e e n it a n d C h i n a ' s  cultural c o m p o n e n t s , the c o r e c o n c e p t o f transparency, to v a r y i n g degrees, h a s g o n e to  m a n y aspects o f C h i n a ' s current legal reforms.  1 0  Accordingly, China's  compliance  w i t h the W T O must extend b e y o n d general principles a n dperformance i n government  regulations generally, to include c o m p l i a n c e w i t h W T O norms o n dispute resolution. 11  D i s p u t e r e s o l u t i o n is essential to the p r o c e s s o f e m p o w e r i n g e c o n o m i c actors to s e e k  enforcement o f substantive n o r m s o f l a w a n d the g o v e r n m e n t regulations. T h i s thesis  singles o u t t r a n s p a r e n c y w i t h respect to e c o n o m i c dispute r e s o l u t i o n , t r y i n g to  look  into h o w C h i n a ' s t r a n s p a r e n c y o b l i g a t i o n s i m p r o v e its rule o f l a w i n the d i m e n s i o n o f  s  Chief among these new obligations are: (i) a general requirement that businesses from other  WTO member states be treated in the same fashion as Chinese businesses; (ii) an end to dual pricing policies that discriminate against imports and in favor of exports; (iii) the elimination of restrictions on the rights of foreign enterprises to freely import, export, and trade throughout China within three years of China's accession to the WTO; (iv) a promise not to use price controls to protect domestic industries from foreign competition (except in the case of pharmaceutical products); (v) an elimination or relaxation of many state trading monopolies within three years of accession; and (vi) an agreement to comply with the WTO's Agreement on Trade-Related Intellectual Property Rights. See "WTO Members Agree on China's Accession; Compromise Reached on Insurance Clause," 18 International Trade Reporter, pp.1460-1462 (20 September 2001) 9  See generally, S, Lubman, "Introduction: The Future of Chinese Law", The China Quarterly,  No. 141 (1995), p. 1-21. 10  See Long Yingxia, "Dui Zhongguo 'Rushi' hou Zengqiang Toumingdu de Falv Fenxi"  (Legal Analysis of Strengthening Transparency since China's Accession to the WTO), NanFang Jingji [Southern Economy), No. 3 (2002). 11  See generally, Pitman B. Potter, "Evolution of Law in Contemporary China", in Ostry, et.  al, China and the long march to global trade (Routledge, 2002), pp. 138-140. 3  economic  dispute resolution. T o d a y , the g e n e r a l m e c h a n i s m s o f e c o n o m i c  dispute  r e s o l u t i o n i n C h i n a are arbitration, m e d i a t i o n , a n d litigation. D e p e n d i n g o n the nature  o f a d i s p u t e , the p a r t i e s m a y r e s o r t to o n e , t w o , o r e v e n a l l o f t h e s e a v e n u e s . I n d e e d ,  the  same institution  may  try  to r e s o l v e a d i s p u t e t h r o u g h  more  than one o f  m o d e s . F o r instance, in cases o f c o m m e r c i a l disputes, arbitration is the m o s t  mechanism,  even though  arbitrators  often  conduct  mediation  S i m i l a r l y , to c h a l l e n g e c e r t a i n t y p e s o f a d m i n i s t r a t i v e  r e s o r t to a d m i n i s t r a t i v e  reconsideration or  file  prior  to  popular  arbitration.  actions, citizens m a y  a lawsuit  these  in court. H o w e v e r ,  either  those  m e c h a n i s m s i n v o l v i n g the e x e r c i s e o f the state p o w e r f r o m the b e g i n n i n g to the e n d '  a n d r e s u l t i n g i n b i n d i n g f o r c e o n the parties m e r i t s p e c i a l attention i n c u r r e n t C h i n a as  a  series o f  obligations  under  the  W T O  impose  on  China,  and  one  of  them  is  t r a n s p a r e n c y w h i c h is a c o n c e p t g o i n g to the heart o f a c o u n t r y ' s l e g a l infrastructure,  a n d m o r e p r e c i s e l y to the nature a n d e n f o r c e m e n t o f its a d m i n i s t r a t i v e r e g i m e .  J u d i c i a l b o d i e s are the d i s p u t e r e s o l v e r s m o s t f a m i l i a r to u s . A s f o r the a d m i n i s t r a t i v e  organs,  although  they  are not  usually  included in  the  common  dispute  i n s t i t u t i o n s , t h e i r r o l e i n r e s o l v i n g d i s p u t e s c a n n o t b e o v e r l o o k e d . It  resolving  is t h r o u g h  an  exercise o f b o t h a d m i n i s t r a t i v e a n d a d j u d i c a t o r y p o w e r that a d m i n i s t r a t i v e o r g a n s get  the d i s p u t e s r e s o l v e d . B e i n g i n s t i t u t i o n a l l y a n d c u l t u r a l l y r e l a t e d to a great extent, this  particularity  brings  many  transparency  issues  since  China's  Therefore, this thesis, besides a study o n administrative  1 2  entry  litigation  to  the  and commercial  S e e O s t r y , S . ( 1 9 9 8 ) " C h i n a a n d the W T O : T h e T r a n s p a r e n c y I s s u e , " S p r i n g 3  Journal of International  W T O  UCLA  Law and Foreign Affairs 1. 4  litigation, also focuses on economic disputes resolved by China's administrative organs through administrative reconsideration and administrative adjudication. It is aimed to figure out how far China has to go to achieve transparency-enhanced economic dispute resolution by administrative organs and judicial bodies in China's cultural context.  This thesis proceeds as follows. After the introduction, Chapter II of the thesis deals with transparency and dispute resolution, discussing China's transparency obligations and how they fit into a broader thinking of economic dispute resolution, and identifying the elements of transparent economic dispute resolution. Chapter III explores how China's administrative organs resolve the economic disputes including commercial administrative disputes and non-administrative commercial disputes from the transparency perspective. Chapter VI views how the concept of transparency works in the setting of China's court adjudication, i.e., administrative litigation and commercial litigation, by which the courthouses get the economic disputes resolved. Finally, the thesis concludes by considering the role of institutional and cultural factors in seeking greater transparency in economic dispute resolution.  Chapter II  2.1  Transparency and Economic Dispute Resolution  Transparency under the WTO and China's Commitments December 11, 2001 marked the date of China's entry into the WTO and  5  C h i n a ' s integration into thew o r l d e c o n o m y . T h e i m p l i c a t i o n s o f this event m a y b e a s  f a r - r e a c h i n g a n d d r a m a t i c f o r C h i n a a n d t h e rest o f the w o r l d as C h i n a ' s a d o p t i o n o f  the O p e n D o o r P o l i c y i n 1 9 7 8 . I n order to g a i n a W T O m e m b e r s h i p , C h i n a h a sto  undertake  many  very  significant  obligations.  Transparency  is o n e o f the  most  c h a l l e n g i n g o n e . W h i l e C h i n a ' s a c c e s s i o n to the W T O is often portrayed as a matter  of  economics  governance,  and commerce,  institutions  it is at root  a n d culture.  a fundamental  The G A T T / W T O  challenge  principles  of  politics,  o f transparency  derive broadly f r o m liberal principles o f government accountability.  1 3  Accordingly,  C h i n a ' s adaptation to this ideal is n o t o n l y at the legal l e v e l , b u t also at institutional  level a n d c o u l d g o deep into thepolitical regime a n d cultural setting.  1 4  T r a n s p a r e n c y is c o n s i d e r e d as o n eo f the basic rules g o v e r n i n g the post w a r trading  system as e m b o d i e d i n the G e n e r a l A g r e e m e n t o nTariffs a n dTrade ( G A T T ) a n d n o w  the W o r l d T r a d e O r g a n i z a t i o n ( W T O ) .  refer, b o t h e x p l i c i t l y a n dimplicitly,  multilateral  trading  system, albeit  obligations  are directed  against  1 5  O nseveral occasion, theW T O agreements  to transparency as o n eo f k e y principles o f the  i n a limited,  Members  technical  sense.  1  6  and a i m for improved  Transparency  clarity  and  accessibility o f d o m e s t i c trade regimes a n dmeasures. Greater transparency i n turn,  increases rule adherence a n d renders the multilateral trading system m o r e predictable  13  See Pitman B, Potter, "Globalization and Economic Regulations in China: Selective  Adaptation of Globalize Norms and Practices", Washington University Global Studies Law Review 1 (2003), p.l 19-150. More discussion about transparency in institutional sense is conducted at Chapter V. 15  See Ostry, S. Supra Note 12.  16  See GATT Article 10, GATS Article 6 and TRIPs Article 63. 6  to states a n d b u s i n e s s a c t o r s .  U n d e r the W T O framework,  the transparency c o m m i t m e n t s o f each m e m b e r  country  are p r e s c r i b e d b y the A r t i c l e 10 o f G A T T , A r t i c l e 6 o f G e n e r a l A g r e e m e n t s o n T r a d e  in  Services  (GATS)  and Article  63 o f Agreement  o n Trade-related  Aspects  of  Intellectual Property Rights (TRIPs). Take theG A T T as a n example, A r t i c l e 10 (1) o f  the  GATT  requires publication  o f trade  regulations, while  Article  10 (2) requires  publication o f general measures affecting a n advance i n import duties, restrictions, o r  payments  before  enforcement.  1 7  In  addition  to  imposing  state  obligations  to  disseminate the content  o f rules, these p r o v i s i o n s m a y also p e r m i t the subjects o f  regulation opportunities  to consult w i t h government  and  practices.  regulations  in  1 8  a  Article  uniform,  10 (3) requires  impartial,  states  authorities  to  administer  trade  manner,  a n d to  a n d reasonable  independent judicial, arbitral, o r administrative  to learn about  tribunals  laws  laws and  establish  or procedures for prompt  r e v i e w a n d c o r r e c t i o n o f a d m i n i s t r a t i v e a c t i o n that fails to c o n f o r m to these criteria.  1 9  T h e transparency a n d enforcement p r o v i s i o n s o f the G A T T A r t i c l e 10 p r o v i d e the  f r a m e w o r k f o r implementing the substantive n o r m s o f the W T O . F o r i n theabsence o f  transparency about the content a n da p p l i c a t i o n o f trade regulations, trading  and their  17  business constituencies  cannot  know  whether  o r not the central  partners  G A T T  For text see The Legal Texts: The Results of the Uruguay Round of Multilateral Trade  Agreements 424 (World Trade Organization ed., 1999). 18  See John H. Jackson, World Trade and the Law of GATT 463 (1969).  19  For text see The Legal Texts: The Results of the Uruguay Round of Multilateral Trade  Agreements 424 (World Trade Organization ed., 1999). 7  principles o f trade liberalization are b e i n g granted o r denied. T h e substantive a n d  operational n o r m s c o m p l e m e n t e a c h other a n d set the tone f o r the G A T T ' s  culture.  2  regulatory  0  C h i n a w i l l n e e d to m a k e substantial c h a n g e s i n this respect to c o n f o r m to the relevant  requirements  o f W T O membership.  2 1  Among  China's  W T O commitments,  the  f o l l o w i n g is those w i t h respect to the transparency: A s part o f its W T O c o m m i t m e n t s ,  C h i n a agreed to enforce o n l y "those laws, regulations, a n d other measures pertaining  to o r a f f e c t i n g trade i n g o o d s , s e r v i c e s , T R I P s o r t h e c o n t r o l o f f o r e i g n e x c h a n g e that  are  published  a n d readily  available  to other  W T O members."  It  also  agreed  to  establish a n official journal publishing a l l trade-related laws a n dregulations, a n d to  establish  an inquiry  point  where  F u r t h e r m o r e , it h a s c o m m i t t e d  WTO-related  information  could  be  obtained.  itself to a d m i n i s t e r i n g a l l l a w s a n d regulations  in a  u n i f o r m , impartial, a n dreasonable manner. Finally, C h i n a agreed to " m a k e available  to W T O m e m b e r s , u p o n r e q u e s t , a l l l a w s , r e g u l a t i o n s a n d o t h e r m e a s u r e s p e r t a i n i n g  to o r a f f e c t i n g  trade i n g o o d s , services, T R I P s  o r the control  o f foreign  exchange  22  before  such  measures  are  implemented  or  enforced."  These  substantial  c o m m i t m e n t s w i t h respect to legal issues as part o f C h i n a ' s W T O a c c e s s i o n a r ea l l  u  2 1  See Pitman B , Potter, supra note 13, p. 119-150. See Deng Juan & Wang Qihong, "More should be done on foreign investment law",  Zhongguo Jingji Shidai (China Economic Times), 4 November 2000, p. 2. 2 2  Protocol on the Accession of the People's Republic of China (WT/L/432), Article 2 (C). 8  steps economic actors at home and abroad applaud.  2.2 2.2.1  Implications of Transparency Commitments for China Going beyond Legal Regime As  globalization has brought on more frequent and intimate interaction  among states and societies, more and more nations, to a varying degree, domestically legalize internationally recognized norms through the process of selective adaptation. 2 4  This process starts consciously in terms of the active efforts of a nation to integrate  itself into the global market. This process, at the same time, embodies a society's acceptance to some external norms but resistance to others, which may occur unconsciously. The selective process more depends on the specific circumstances in a specific context, in connection to long-developed social and cultural habits. In this sense, China's past pursuit to entry to the W T O reflects its eagerness to be a player of world economy and on the other hand, will be a paradigm to the world of how a Some specific examples are: (i) The substantive laws and procedures designed to protect patents, copyrights and trademarks under the TRIPS agreement must be accessible to the governments and enterprises of other Member states; (ii) If there is an action within China for the imposition of a countervailing duty, the entire process must be consistent with the GATT Agreement on Countervailing Duties and specific procedures used to compute the amount of the countervailing duty "shall be transparent and adequately explained"; (iii) Since one of the basic purposes of the GATT Agreement on Import Licensing is to ensure that the licensing procedures of member states are transparent, China's import licensing rules will have to be published, the licensing application forms will have to be as clear and simple as practicable, and the whole procedure will have to be consistent with China's overall obligations under the WTO agreements. From these examples, it is apparent that the obligation of transparency is intended to assure that the concessions agreed to by China are in fact available to enterprises of the other member states. Transparency also is one of the principal devices used to monitor China's adherence to the terms of the WTO agreements. 2 4  For more discussion of selective adaptation, see generally, Pitman B, Potter, supra note 13,  p. 119-150. 9  country, asancient asC h i n a w i t h som a n y political, e c o n o m i c a n d cultural carry-overs  o f the past, assimilates western liberal n o r m s under the W T O f r a m e w o r k . A m i d s t a l l  of  painless  and  painful  nationalization  of  internationalized  rules,  t r a n s p a r e n c y - o r i e n t e d r e f o r m s h a v e brought m u c h attention at h o m e a n d a b r o a d a s it  is a n o t i o n g o i n g b e y o n d the heart o f C h i n a ' s legal r e g i m e a n d t o u c h i n g u p o n the  C h i n a ' s culturally-rooted institutional setup a n d societal context.  In the administrative regime, the notorious internal regulations c a n b e explained b y  the b l u r r y line separating the administration f r o m the political p o w e r , the g o v e r n m e n t  from the C C P . F o r instance, m a n y important decisions are jointly issued b y the C C P  Central  Committee  regulations  a n d the State C o u n c i l ,  a n d circulations  concerning  PRC's  central  state-leading  government.  cadres  Numerous  o r functionaries are  drafted both b y the C C P Organization Department a n d theM i n i s t r y o f Personnel. A r e  these n o r m s political o r administrative ones? A l s o , the issue o f j u d i c i a l independence,  a n a v o i d a b l e t o p i c w h e n it c o m e s t o t h e t r a n s p a r e n c y , u l t i m a t e l y d e p e n d s o n c h a n g e s  in thepolitical system.  25  T h e l a wi n China, whether imperial o r communist, w a s a flexible tool, not a n absolute,  independent  standard. L a w s were  a n d are embedded i n , a n d often subservient to,  societal n o r m s a n d v a l u e s a n d the r u l i n g elite. H e n c e , C h i n a ' s transparency issues a r e  25  see Jean-Pierre Cabestan, "Administrative Law-Making in the People's Republic of China", in Eduard B. Vermeer and Ingrid d' Hooghe (eds.), China's Legal Reforms and Their Political Limits (Curzon Press, 2002), pp. 32. 10  not just legal o r even political but could firmly root i n Chinese cultural a n d societal  v a l u e s , w h i c h require a n insight into s o m e o f the v a l u e s a n d p r a c t i c e s that  structure  C h i n e s e s o c i e t y itself. A v e r y o b v i o u s e x a m p l e i s t h e g a p b e t w e e n l a w i n statues a n d  law  i n practice. I n the recent years, C h i n a ' s effortful legislative activities have n o t  brought  satisfactory  effects  i n practice.  T o a great  extent,  it is b e c a u s e  practical  significance o f the revisions w i l l depend o n their adoption b y the l a w enforcement  agents, lawyers, a n d even c o m m o n  change and m u c h culturally-rooted.  By  placing the transparency  people, something  2  that requires  an  attitudinal  6  issues i n the C h i n e s e cultural  context,  it w i l l  become  c o n s i d e r a b l y easier to g a u g e the c h a n g e s that h a v e t a k e n p l a c e i n this f i e l d a n d  figure  out the distance f o r C h i n a to g o . S i n c e the changes i n the C h i n e s e p o l i t i c a l s y s t e m o r  in Chinese society aresometimes misinterpreted from a Western cultural perspective,  this  cultural  amongst  approach  themselves.  2  is n e e d e d as it r e c o g n i z e s the w a y C h i n e s e act a n d t h i n k  7  (More  discussion o f cultural  approach  has been  done  in  Chapter V )  2.2.2  Go beyond Foreign Trade Regime China's transparency obligations under the W T O mostly focus o n the foreign  trade arena. B u t i n order to f u l f i l l those obligations,  2 6  more  comprehensive  reforms  see Geor Hintzen, "To Have One's Cake and Eat It? Human Rights in Chinese Culture", in  Eduard B. Vermeer and Ingrid d' Hooghe (eds.), China's Legal Reforms and Their Political Limits, (Curzon Press, 2002), pp. 50.  11  with an expanded range of trade area are desirable. As a Chinese officer said, entry to the WTO is to shake the whole legal system of China.  28  In principle, all domestic  laws and legal regulations must be in keeping with the WTO rules. All laws and regulations that conflict with WTO rules must be changed.  29  Although it still  remains to be seen to what extent those reforms can be implemented in the real life due to various reasons especially China's culturally-rooted bureaucratic traditions, to say the least, China has got an external engine pushing it forward on the way to be a well-behaved WTO Member. And this external engine, combining with China's increasing awareness of developing an orderly domestic market economy and of the critical need for adaptation to international legal standards if China is to truly integrate itself into the world economy, has come to be an internalized one. As a part of the engine, the ideal of transparency has driven China's response extending the trade circles to many other areas. Dispute resolution is certainly one of areas which should be and has indeed been affected for the sake of realizing the WTO commitments and for China's own sake.  China now enjoys an extremely energetic economic growth. With the marked growth in the economy, economic disputes occur more frequently and there is a growing need to resolve them. Among the available dispute resolution alternatives to litigation and administrative judicature, arbitration is the most important and is the preferred 28  2 9  Nanfang Zhoumo (Southern Weekend), 2 5 O c t . 2 0 0 1 . p.6. A m o n g o f t h e m l i k e the C h i n e s e g o v e r n m e n t a n n o u n c e d as e a r l y as M a y 2 0 0 2 that m o r e  t h a n 2 , 3 0 0 l a w s a n d r e g u l a t i o n s h a d b e e n a m e n d e d to c o m p l y w i t h W T O r u l e s , a n d 8 3 0 l a w s h a v e b e e n a b o l i s h e d s i n c e C h i n a j o i n e d the W T O . S e e ibid.  12  methods of dispute resolution in the commercial sector. The last few decades in particular have seen the importance and influence of arbitration grow to such an extent that they have had a significant effect on economic life in China.  3 0  Increased  share of China's economic dispute resolution market gained by arbitration impels us to think about why other dispute resolving mechanisms are much less welcomed. One of the reasons, inter alia, lies in that greater transparency can be obtained from arbitral proceedings.  31  Meanwhile, not all economic disputes can be resolved through arbitration in China. Commercial administrative disputes shall be handled either through administrative reconsideration or litigation; a part of commercial disputes, pursuant to law, shall be settled by administrative adjudication or by judicial proceedings.  3 2  Some economic  disputes, if involving social interests, may be excluded from arbitration, such as the internal disputes arising within agricultural collective economic organizations.  3U  3 3  See Wang Shengchang, Resolving Disputes in the PRC (Asia: Sweet & Maxwell Ltd.,  1996), pp.5. 31  The main advantages of arbitration are flexibility,  finality and enforceability and  confidentiality. One thing deserves to be mentioned is that, although greater transparency in arbitration has been recognized, it does not mean that China's arbitration is satisfactory enough. It also leaves quite a lot to be desired if compared with the elements of transparency discussed in the following text of this thesis. For an example, as for the applicable legislative law, there lacks clear guidance of why to apply the law of one country but not the law of others; for independence, the establishment of arbitration commission is still tainted with strong administrative influence. But, these issues are beyond the discussion of this thesis. 3 2  See the discussions in Chapter III & IV.  3 3  Zhonghua Renmin Gongheguo Zhongcai fa (Arbitration Law of the People's Republic of  China), Article 77, in The Laws of the People's Republic of China (1995), compiled by the Legislative Affairs Commission of the Standing Commission of the National People's Congress of the People's Republic of China (Beijing: Law Press of China, 1996), vol. 7. 13  T h e abovementioned e c o n o m i c disputes, especially those c o m m e r c i a l administrative  disputes, w h i c h arbitration  look.  A s it i s w e l l k n o w n ,  c o m m i s s i o n s are n o t q u a l i f i e d to resolve, entail a c l o s e  market  e c o n o m y m a y b e characterized as rule  of law  economy. W i t h i n the increasingly comprehensive legal system governing the market,  inevitably, there are a variety  enforced b y administrative  o f business l a w a n d regulations. M a n y o f them are  agencies a n d e m b o d y  the interaction o f administrative  authority a n d e c o n o m i c behavior. Disputes ensue w h e n administrative organs fail to  i m p l e m e n t their duties o r improperly exercise the p o w e r a n dtherefore m a y infringe  upon  rights  a n d interests o f the external parties subject to administration,  individuals,  legal  disputes  relation  in  persons  to  a n d other  business  organizations.  Such  l a w a n d regulations  type  of  (hereinafter  including  administrative  "commercial  administrative disputes") aren u m e r o u s i n current C h i n a . M e a n w h i l e , u n d e r the W T O  Chinese legislations can be accessed by a variety of Chinese and English language sources. Chinese language sources include Zhonghua renmin gongheguo fagui huibian (Compilation of Current Laws and Regulations of the PRC) (Beijing: Law Publishers, yearly); Zhonghua renmin gongheguo xinfagui huibian (Compilation of New Laws and Regulations of the PRC) (Beijing: Legal system publishers, periodical); Zhonghua renmin gongheguo duiwai jingji fagui huibian: 1945-1985 (Compilation of Economic Laws and Regulations Pertaining to Foreign Matters) (Beijing: People's Press, 1986); Zhongguo jingji tequ kaifaqu falu fagui xuanbian (Compilation of Lawsand Regulations for China's Special Economic Zones and Open Areas) (Beijing: 1987); Renmin ribao (People's Daily); Fazhi ribao (Legal System Daily); and Guoji shang bao (Journal of International Commerce). English language sources include Laws for Foreign Business (CCH Australia Ltd.); Victor Nee (ed.), China Commercial Laws and Regulations (New York: Oceana); China Economic News; China Law and Practice; The China Business Review and East Asian Executive Reports. In this thesis, the cited Chinese laws and regulations are taken from The Laws of the People's Republic of China (Chinese-English version, compiled by the Legislative Affairs Commission of the Standing Commission of the National People's Congress of the People's Republic of China, Beijing: Law Press of China, yearly starting from 1993, Vol. 5; before 1993, Vol. 1, from 1979-1982; Vol.2 from 1983-1986, Vol. 3, from 1987-1989; Vol.4 1990-1992) 14  framework,  the disputes  therein  are trade-related  a n d arise  from  administrative  activities. O n e party to thedisputes is business participators a n d theopposite party is  regulators o f trade, the g o v e r n m e n t o r relevant administrative organs. H o w to resolve  these disputes b y administrative organs a n d j u d i c i a l bodies, d u eto n u m e r o u s  Chinese  cultural nuisances encountered i n potential proceedings, is definitely a b i gconcern o f  international  community  commitments,  which  is scrutinizing  the concern o f foreign  China's legal environment  h o w China  investors  lives  w h o are paying  u p to its W T O  close attention to  including dispute resolution a n dremedies, a n dalso, the  c o n c e r n o f d o m e s t i c b u s i n e s s m e n w h o are a w a k e n e d to r e a l i z e the i m p o r t a n c e to s e e k  legal protection against  2.3  maladministration.  Interpretation of "Transparency" T h e principles o f transparency were firstly brought forward to the international  community  b y the G A T T .  strengthened  3  4  Since then, subsequent legal documents  these principles.  under the G A T T  After  the Uruguay  Round,  continuously  transparency  have b e e n included into various multilateral  obligations  trade agreements a n d  are a p p l i c a b l e to a l l areas o f international trade. H o w e v e r , t h e articles c o n c e r n i n g the  transparency u n d e r the a b o v e agreements reveal that therequirements o f transparency,  as set o u tp r e v i o u s l y , a r e a l l p r o c e d u r a l . W h a t i s t r a n s p a r e n c y , i.e., its c o n n o t a t i o n a n d  v a l u e s , is s c a n t f r o m t h e W T O a g r e e m e n t s . T h i s c a n b e e x p l a i n e d b y t h e fact that a n  understanding  3 4  o f transparency  is related  to  the specific  cultural  contexts  and  GATT, Article X: Publication and Administration of Trade Regulations. 15  c o n s e q u e n t l y there m i g h t be different  concept  among  differences,  the  c o m p r e h e n s i o n o f the u n d e r l y i n g n o r m s o f this  W T O Members.  procedural  design  calculable, a n d comparable  is  a  To  seek  relatively  common  effective  points  w a y . It  while  reserving  is m o r e  a n d is able to a v o i d possible divergence  visible,  arising  from  political, economic, legal, cultural andideological differences.  A s a matter o f fact, that transparency i s n o t a p u r e l y free trade issue b u t related to the  M e m b e r s ' legal a n d political system is a c k n o w l e d g e d b y the W T O f r a m e w o r k  U n d e r t h e T R I M s , it m e n t i o n s that t h e i m p l e m e n t a t i o n o f d o m e s t i c t r a n s p a r e n c y  itself.  must  be o n the voluntary basis a n d take domestic legal a n dpolitical system into account,  and  TRIMs  is n o t intended  to serve  as a basis  f o r the enforcement  of  3 5  specific  o b l i g a t i o n s u n d e r the A g r e e m e n t s o r f o r dispute settlement p r o c e d u r e s , o r to i m p o s e  new policy commitments on Members.  3  6  A l t h o u g h t r a n s p a r e n c y i s o n e o f p i l l a r s o f t h e W T O r e g i m e , it i s a l s o n o t e d that  is m i s s i n g f r o m  the legal f r a m e w o r k  o f the W T O A g r e e m e n t  a n d its a n n e x  what  is a n  e x t e r n a l d i m e n s i o n o f t r a n s p a r e n c y . I n its relations w i t h c i v i l s o c i e t y , the W T O m a y  have made factual progress towards transparency, but legal manifestations  ofW T O  o b l i g a t i o n s to g i v e p u b l i c a c c o u n t s o f its activities are scant.  Therefore,  the W T O principles  o f transparency  3 5  TRIMs B. "Domestic transparency".  3 6  TRIMs A. "Objectives".  are embodied  as a series o f basic  16  procedural  judgment  criteria.  on  These  protective  protective  objects.  In  m e a s u r e s per  order  to  se  learn  d o not constitute  connotation  a  value  a n d contents  of  transparency, g o i n g through the present stipulations under the W T O f r a m e w o r k m a y  not b e e n o u g h . F o r the p u r p o s e o f the d i s c u s s i o n i n this thesis, further clarification o f  r e q u i r e m e n t s o f t r a n s p a r e n c y i s to b e s o u g h t after. B y a r e v i e w o f d i f f e r e n t  expression  o f transparency, the thesis h o p e s to f i n d out h o w this c o n c e p t u s e d b y the international  investment  policy  community  fits  into  broader  thinking  on  economic  dispute  resolution.  Views:  •  Political science dictionary Florini(1999))  •  3  ( B r e w e r ' s Politics): " o p e n n e s s to the p u b l i c g a z e " ( i n  7  Business consultancy,  "the existence o f clear, accurate, formal, easily discernible  and widely accepted practices" (Price Waterhouse Coopers 2001).  •  OECD Public Management. different  5 1  " T h e term 'transparency' m e a n s different  groups [of regulators].  Concepts range from  Florini, A. (1999), "Does the invisible  transparency".  3 8  simple notification  things  to  to the  hand need a transparent glove? The politics  of  Paper prepared for the Annual World Bank Conference on Development  Economics, Washington DC, 28-30 April. Available at www.worldbank.org/research. (accessed date: 10 Oct 2003) 3 8  PriceWaterhouseCoopers,  The  Opacity  Index,  January  2001,  available  at  www.opacityindex.com. (accessed date: 12 Oct 2003) 17  p u b l i c that r e g u l a t o r y  discretion  d e c i s i o n s h a v e b e e n taken to controls  a n d corruption,  better  organization  o n administrative  o f the legal  system  through  codification a n dcentral registration, theuse o f public consultation a n d regulatory  impact  analysis  O E C D (2002a)  •  a n d actively  3  participatory  approaches  to decisions  making."  9  International Monetary Fund....  [b]eing o p e n to the p u b l i c about the structure  and functions o f government, fiscal p o l i c y intentions, public sector accounts a n d  fiscal p r o j e c t i o n s " I M F(1998).  •  4  0  Draft Multilateral Agreement on Investment: promptly  publish, or otherwise  make  publicly  "Each  Contracting  available, its l a w s ,  Party  shall  regulations,  procedures a n d administrative rules a n djudicial decisions o f general application  as  well  as international  Agreement.  Where  a  agreements  Contracting  which  Party  m a y affect  establishes  the operation  policies  which  o f the  are not  expressed i n l a w s o r regulations o r b y other m e a n s listed i n this paragraph b u t  w h i c h m a y affect  the o p e r a t i o n o f the A g r e e m e n t , that C o n t r a c t i n g party  promptly publish them or otherwise make them publicly available."  4  shall  1  OECD (2002a) Regulatory Policies in OECD Countries: From Intervention to Regulatory Governance. 4 0  International Monetary Fund (1998), Code of Good Practices on Fiscal Transparency —  Declaration on Principles. 4 1  April 1998 draft text, www.oecd.org/daf/mai/. 18  •  APEC Leaders' Statement to Implement APEC Transparency Standards (October  2002):  Transparency " i s a basic  principle  underlying  trade  liberalization  and  f a c i l i t a t i o n , w h e r e r e m o v a l o f b a r r i e r s to trade is i n l a r g e part o n l y m e a n i n g f u l to  the  extent  that  the  members  of  the  public  know  what  laws,  regulations,  procedures a n d administrative ruling affect their interests, c a n participate i n their  development... a n d c a n request r e v i e w o f their application under domestic l a w . . .  In monetary  a n d fiscal policies, [transparency]  ensures the accountability  integrity o f central b a n k s a n d financial agencies a n d provides the p u b l i c  and  with  needed e c o n o m i c , financial a n d capital markets data.  •  Monetary policy practitioners: with  a  view  to  enhancing  "The communication of policymakers'  their  credibility".  (Friedman  2002);  intentions  "The  4 2  communication o f policymakers' intentions" (King 2000).  World Trade Organization.  E n s u r i n g "transparency" in international  commercial  t r e a t i e s t y p i c a l l y i n v o l v e s t h r e e c o r e r e q u i r e m e n t s : (1)  to m a k e i n f o r m a t i o n  relevant  available. (2)  laws, regulations  a n d other  policies publicly  to  on  notify  interested parties o f relevant l a w s a n d regulations a n d c h a n g e s to t h e m ; a n d (3) to  ensure that l a w s a n d regulations  are administered i n a u n i f o r m ,  impartial  and  reasonable manner. W T O (2002).  Friedman Benjamin, "The use and the meaning of words in central banking: inflation targeting, credibility and transparency", N B E R Working Paper 8972 (2002). 19  Despite differences  meaning  in expression a n d nuanced differences  o f transparency  is revealed  from  the a b o v e  in connotation,  statements.  The  the core  following  perspective is a g o o d s u m m a r i z a t i o n o f the core m e a n i n g .  A t a conference in Washington in M a r c h 1998,  propositions o f transparency particularly  4  3  J o n a t h o n F r i e d set out the basic  s u c c i n c t l y . H e asserted that there a r e three  facets o f transparency, w h i c h are:  i.  ii.  the l a w s a n d regulations governing trade are p u b l i c l y available;  there  is  procedural  administrative  fairness,  decision  making  that  is  is,  that  the  principled,  process  of  comparatively  stable, a n d the basis for m a k i n g a d e c i s i o n c a nb e k n o w n ;  iii.  there  is a n independent  and impartial  system  for review  of  administrative decision making.  T h i s perspective w a s adopted b y a legal scholar, Sarah B i d d u l p h . S h e based o n these  three aspects o f t r a n s p a r e n c y to e x a m i n e the w a y s i n w h i c h a n d the extent to  they are reflected i n the C h i n e s e legal system.  4  which  4  ^ China/WTO Accession Washington Meeting, sponsored by the University of Toronto Centre for International Studies and the Institute for International Relations and Foreign Policy, UCLA 5-6 (March 1998) See Sarah Biddulph, "China's Accession to the WTO: Legal System Transparency and Administrative System", Ostry, et. al, China and the long march to global trade, (Routledge, 2002), pp. 155-187. 20  2.4  Constituents of Transparent Economic Dispute Resolution Jonathon's propositions  concerning  "transparency"  are c o m p a t i b l e  with  the  p u r p o s e o f this thesis too. T o explore e c o n o m i c dispute r e s o l u t i o n i n C h i n a f r o m  t r a n s p a r e n c y p e r s p e c t i v e , relevant r e q u i r e m e n t s u n d e r the W T O are the  a  fundamentals.  I n t e r m s o f e c o n o m i c d i s p u t e r e s o l u t i o n to b e d i s c u s s e d i n this t h e s i s , i.e., a p r o c e s s  involving  description  taking  substantive,  of  efforts  Jonathon's  procedural  China  is  propositions,  as  well  as  s u p p o s e d to  this  institutional  make  thesis clarifies  would  the  issues,  be  more  desirable.  following  specific  Therefore,  interpretation  of  t r a n s p a r e n c y as the b a s i s o f d i s c u s s i o n .  i.  ii.  iii.  2.4.1  Transparent applicable legislation  Procedural fairness  Independence o f Dispute R e s o l v i n g Institutions  Transparent Applicable Legislation A n u n d e r s t a n d i n g o f the l a w is a f u n d a m e n t a l p r e m i s e b y w h i c h a c o m p a n y ,  a n e n t e r p r i s e o r a n i n d i v i d u a l g u a r a n t e e s that its b u s i n e s s o p e r a t i o n s are w i t h i n  the  l a w . T h e y are entitled to k n o w w h a t c o m m e r c i a l a c t i v i t i e s are l e g a l , w h i c h are v i e w e d  w i t h legal tolerance a n d w h i c h activities are banned. M u c h like a soccer g a m e ,  when  o n e d o e s n o t u n d e r s t a n d the r u l e s , n o a m o u n t o f d i s c u s s i o n a b o u t h o w to o b e y  these  r u l e s c a n get y o u c l o s e r to k n o w i n g h o w to w i n the g a m e .  (a)  Publication: publicly accessible Publication of  law  includes  the  publicly  accessible procedures  for  drafting,  passing and promulgating laws.  T h e r e g u l a t o r y d r a f t i n g m o d e l u n d e r the W T O is d e r i v e d f r o m a c o r o l l a r y i n the U S  A d m i n i s t r a t i v e P r o c e d u r e A c t s . 5 5 3 . It i s p r e m i s e d o n t h e e x i s t e n c e o f a l e g i s l a t i o n  and rule-making procedure which  formal  system of scrutiny  requirement  before  incorporates  the  law  a consultation phase or some  or rule can validly  other  be passed. N o w  o f c o n s u l t a t i o n w i t h t h e i n t e r e s t e d p a r t i e s i s w i d e l y u s e d . It  the  reflects  a  g r o w i n g r e c o g n i t i o n that effective rules cannot rely s o l e l y o n c o m m a n d a n d c o n t r o l —  the i n d i v i d u a l s a n d o r g a n i z a t i o n s c o v e r e d b y rules n e e d to b e r e c r u i t e d as partners  in  t h e i r i m p l e m e n t a t i o n . C o n s u l t a t i o n i s t h e f i r s t p h a s e o f t h i s r e c r u i t m e n t p r o c e s s . It c a n  also generate information  a n d ideas that w o u l d n o t o t h e r w i s e b e a v a i l a b l e to  public  officials. Consultation m e c h a n i s m s are b e c o m i n g m o r e standardized a n d systematic.  This enhances effective access b y improving predictability  consultation  opportunities.  Now,  there  is  a  trend  and outside awareness o f  toward  adapting  forms  of  c o n s u l t a t i o n to the stage i n the r e g u l a t o r y p r o c e s s . C o n s u l t a t i o n t e n d s to start e a r l i e r  i n the p o l i c y m a k i n g p r o c e s s , is c o n d u c t e d i n s e v e r a l stages a n d e m p l o y s  different  m e c h a n i s m s at d i f f e r e n t t i m e s .  O p e n n e s s o f the p r o c e d u r e s b y  w h i c h the l a w  is p a s s e d strengthens the d e g r e e  transparency o f the l a w application. T o d a y , not o n l y the legislative bodies but  of  also  a d m i n i s t r a t i v e o r g a n s are e n t i t l e d to l e g i s l a t i v e p o w e r . B o t h o f t h e m are g o v e r n e d  by  22  c l e a r s t i p u l a t i o n s o f p a s s a g e o f l a w , w h i c h a r e s u p p o s e d to b e k n o w a b l e to t h e p u b l i c .  B e i n g a w a r e o f w h e n , w h e r e a n d h o w a s p e c i f i c l a w o r r e g u l a t i o n i s p a s s e d , a n d that  the e n a c t i n g a u t h o r i t y e x e r c i s e s its p o w e r i n l a w m a k i n g  intra vires, c o n t r i b u t e s t o  c o m p l i a n c e o f law; o n the contrary, non-public passage o f l a w only ends i n people's  u n w i l l i n g n e s s to o b e y the l a w .  To  make  the laws  a n d regulations  applied  b y the dispute  resolving  institutions  k n o w a b l e to the disputants, it i s r e q u i r e d to p u b l i s h t h e m o n c e e n a c t e d a n dm a k e  publicly accessible.  them  Proper legal procedures must be followed in promulgating a n y  l a w or regulation.  P u b l i c access to business l a w s , regulations a n d n o r m s , together w i t h a c c u r a c y a n d  t i m e l i n e s s o f s u c h i n f o r m a t i o n , i s the thread that l i n k s a l l c o n c e p t s o f t r a n s p a r e n c y i n  dispute  r e s o l u t i o n . It c a n b e t h o u g h t o f a s t h e i n n e r k e r n e l  from which  all other  c o n c e p t s a n d p r a c t i c e s g r o w . It i s s o f u n d a m e n t a l a s t o b e a l m o s t i n s e p a r a b l e  from  legislative a n d regulatory functions, compliance with a n d enforcement o f legislation.  Public  access to l a w refers to c o d i f i c a t i o n o f l a w , publication o f registers o f l a w ,  l i n k i n g enforceability to availability o n the register a n d access l i k e v i a Internet.  The  adoption  accessibility.  ^  o f centralized  4  registers  o f laws  a n d regulations  will  also  4  5  enhance  6  F o r a n e x a m p l e , three  quarters o f O E C D  countries n o w m a k e most  or all primary  l e g i s l a t i o n a v a i l a b l e v i a the Internet. 4 5  E i g h t e e n c o u n t r i e s o f O E C D stated i n end-2000 that t h e y p u b l i s h e d a c o n s o l i d a t e d r e g i s t e r  o f a l l s u b o r d i n a t e r e g u l a t i o n s c u r r e n t l y i n f o r c e a n d n i n e o f these p r o v i d e d that e n f o r c e a b i l i t y  23  Other  factors  are also relevant  when  t r y i n g to r e n d e r l a w a n d p u b l i c  more  complex  and  47  transparent:  Regulation complexity and choice of audiences. information  make  policy  Policies  are often  a b o u t it h a s t o b e c o n d e n s e d , s i m p l i f i e d a n d p u t i n t o c o n t e x t i n o r d e r to  it c o m p r e h e n s i b l e . I n s o m e areas, h o w e v e r ,  the p o l i c i e s to b e d e s c r i b e d are  inherently c o m p l e x a n d i n v o l v e s p e c i a l i z e d expertise. A p o l i c y that is understandable  a n d transparent to a n audience o f specialists, m a y not b e to other audiences. S o p l a i n  language drafting is called for.  Codification activities  and the transparency of administration and enforcement.  influenced  prudential  regulation  activities  in numerous  by  laws  a n d regulations  in banking  markets  is required  are very  to a c c o u n t  complex.  For  for financial  Business  example,  institutions'  a n d geographical locations. C o m p l e x i t y means  p o l i c y makers must m a k e choices about h o w they frame l a w a n d regulation  that  should  they set f o r t h b r o a d p r i n c i p l e s a n d let businesses d e c i d e w h a t these p r i n c i p l e s  mean  for their b e h a v i o r o r should they opt f o r m o r e detailed descriptions o f legal a n d illegal  behaviors?  requirements  These  choices  influence  approaches  to  transparency.  If  legislative  are f r a m e d as b r o a d p r i n c i p l e s , l e g a l c o d e s w i l l tend to b e short a n d  depended on inclusion in the register. Many countries now also commit to publication of future regulatory plans. 4 7  See generally, Organization for Economic Co-operation and Development, Directorate For  Financial, Fiscal and Enterprise Affairs & Committee on International Investment and Multinational Enterprises, "Public Sector Transparency and International Investment Policy", DAFFE/IME 2002 (16)/FINAL, approved and declassified by the CIME at its meeting on 9-11 April 2003, International Investment Perspectives (2003 Issue), also available at OECD website. 24  e a s i l y u n d e r s t a n d a b l e . Y e t , i n this case, a p p r o a c h e s to a d m i n i s t r a t i o n a n d e n f o r c e m e n t  determine  much  of  a  law's  substance.  F o r this  reason,  it  is  important  that  administration a n d enforcement also b e transparent.  Insiders versus outsiders. communicating  particular  legal  transparency  and even  Since transparency involves national institutions, w a y s o f  languages,  environment  arrangements  interest to the investment  than  "insiders"  might  be  "outsiders".  policy community,  people  more  This  w h o are native  comfortable  consideration  with  is o f  to  a  national  particular  s i n c e it i m p l i e s that, i n o r d e r f o r t h e  p r i n c i p l e o f n o n - d i s c r i m i n a t i o n to a p p l y i n matters o f transparency, g o v e r n m e n t s m a y  h a v e to m a k e s p e c i a l efforts to c o m m u n i c a t e effectively w i t h " o u t s i d e r s "  international  including  investors.  Y e t , thepublication o f l a w is n o t identical to having tools to b e able to determine the  substantive  content  of  the regulatory  regime  in  a  particular  area.  Regulatory  uniformity, consistency, stability a n d certainty are also indispensable f o r transparent  applicable law.  (b)  Regulatory Certainty, Uniformity, Consistency and Stability T h e W e s t e r n doctrine requires that a l l l a w s s h o u l d b e sufficiently o p e n , clear,  and relatively  Regulatory  certainty,  predictability  4 8  stable that p e o p l e w i l l b e a b l e a n d w i l l i n g  uniformity,  to b e g u i d e d b y them.  consistency a n d stability  make  calculability a n d  o f l a w possible. T h e y are w h a t m o d e r n capital enterprises m o s t l y  S e e N a n p i n g L i u , Judicial  Interpretation  rely  in China ( A s i a : S w e e t & M a x w e l l , 1 9 9 7 ) , p p . 2 0 4 .  25  on.  That  is, l a w a n d administrative  system  are r u n b y a series  o f rational a n d  predictable m e t h o d s a n d p e o p l e c a n at least m a k e p r e d i c t i o n i n p r i n c i p l e a c c o r d i n g to  the g e n e r a l n o r m s .  mechanically  machine",  4  9  M o d e r n capitalism, f o r the sake o f existence, entails a k i n d o f  calculable  l a w . Just  a n expectant  beforehand.  Judiciary  like  conclusion  putting  a coin  o n the top o f a  c a n be obtained  a n d administration  whose  through  Institutional  calculability  international  interaction.  different  is even  more  important  People coming  from  cultural background, legal thinking  the rules  functions  anticipated based o n fixed a n d general rules are highly desirable.  with  different  "vending  can be  5  enacted  rationally  0  the increasingly  countries  growing  a n d areas  have  a n dpolitical ideas. T r a d e a n dbusiness,  i n a sense, aregetting insecure d u e to the potential unpredictability a n d uncertainty o f  commercial transaction governed not only b y thek n o w a b l e  internationally-recognized  norms but also b y the diverse domestic laws w h i c h aremore culturally  the former. "International  institutional  bridging cost",  5 1  specific  than  therefore, strongly calls f o r  domestic transparency i n laws a n drules. P u b l i c accessibility to l a w is just the basic  requirement to e m b o d y the transparency i n theapplicable legislation. E v e n i f the l a w s  and regulations  business  4 9  risks  governing business activities are accessible to the e c o n o m i c  would  b e still  there  both  o f economic  disputes  actors,  avoidance and  See Max Weber, Economy and Society: An Outline of Interpretative Sociology (Guenther  Roth and Claus Mittich eds.) ( Berkeley: University of California Press, 1978), pp. 1394. 5 0  See Max Weber, Economy and Society (transplanted by Ling Rongyuan) (Beijing: The  Commercial Press, 1997), Part. II, pp. 738. 51  See Wolfgang Kasper & Manfred E.Streit, Institutional Economics: Social Order and  Public Policy (translated by Han Chaohua) (Beijing: The Commercial Press, 1997), pp. 738. 26  resolution  would  be  difficult  if  the  norms  themselves  are  ambiguous  and  lack  u n i f o r m i t y , c o n s i s t e n c y , stability. T h e degree o f t r a n s p a r e n c y i n the trade p o l i c i e s a n d  legal  system  has  become  an  important  factor  considered by  business  and  trade  d e c i s i o n m a k e r s i n international trade arena.  Admittedly,  d u e to e v e r - c h a n g i n g s o c i e t a l s i t u a t i o n s to w h i c h the l a w a p p l i e s , it  i m p o s s i b l e to m a k e l a w c o n s t a n t l y a d a p t a b l e to the r e g u l a t o r y e n v i r o n m e n t . A  is  statute,  i n a s e n s e , starts to l a g b e h i n d the s o c i e t a l d e v e l o p m e n t r i g h t a f t e r it h a s b e e n e n a c t e d .  However,  language  maximized  is  avoided  predictability  in  law  of  making,  legal  effect  attention  is  is  still  paid  to  possible  if  ambiguous  harmonization  between  legislations, a n d legal n o r m s e s p e c i a l l y u n d e r l y i n g ones are c o m p a r a t i v e l y stable.  In  addition, increasing use o f legislative codification a n d restatement  of laws  r e g u l a t i o n s is a b l e to e n h a n c e c l a r i t y a n d i d e n t i f y a n d e l i m i n a t e i n c o n s i s t e n c y .  C o n f l i c t s o f l a w are a b i g h i n d r a n c e to the a p p l i c a t i o n o f l a w a n d w o r s e n the  5 2  and  5 3  pursuit  o f t r a n s p a r e n c y w h e n c l e a r g u i d a n c e a b o u t h o w to h a n d l e the c o n f l i c t s is scant. T o d a y ,  the reality is that different d e p a r t m e n t s h a v e their l e g i s l a t i v e authority, so d o  government  and  local  governments.  In  any  particular  jurisdiction,  there  l a w - m a k i n g , rule-making and m a y b e other forms o f legal norms w i t h binding  Given  these,  law  conflicts  cannot  be  perfectly  avoided. In  case  such  central  are  force.  legislative  c o n f l i c t s o c c u r b e t w e e n r e l e v a n t l a w s a n d r e g u l a t i o n s , h o w to a p p l y the l a w s o as to  get the d i s p u t e s r e s o l v e d s h o u l d b e c l e a r l y stipulated.  5 2  See S a r a h B i d d u l p h , supra note 4 4 , p p . 165.  5 3  See supra note 4 7 . 27  Regulatory uniformity,  utmost  consistency a n d stability  c a n counteract  uncertainty  to the  extent a n d thus s h o u l d b e i n c l u d e d into the connotation o f the transparency  principles.  A c c o r d i n g to the a b o v e , the first aspect o f transparency i n v o l v e s b o t h b e i n g able to  k n o w w h a t t h e l a w i s a n d that it w i l l b e e n f o r c e d a c c o r d i n g to its t e r m s . R e l a t e d i d e a s  are that t h e d r a f t i n g p r o c e s s is o p e n a n d that o n l y those l a w s that a r e k n o w n w i l l b e  enforced.  5  4  T h e principles o f rule o f law w h i c h underpin a western understanding o f  the c o n c e p t o f rule o f l a w a n d transparency are that legal rules a n d p r i n c i p l e s are c l e a r  and k n o w a b l e , they  are enforced according to their  terms  a n d that they  are fairly  stable.  2.4.2  Procedural fairness As  m e n t i o n e d at the b e g i n n i n g o f the thesis, transparency h a s significant  instrumental value. T h e thread therein is fairness, substantive as w e l l as procedural  fairness.  Substantive  fairness is hardly  difficult  point  to  out what  a c c u r a t e l y m e a s u r a b l e . N o w a d a y s , it i s i n c r e a s i n g l y  is right  i n the substantive  substantive l a w ,inherently, has limitations  5 4  5 5  sense.  5 5  It  a n d obscurity, n o matter what  is b e c a u s e  legislative  See Sarah Biddulph, supra note 44, pp. 158. See Song Bing, et. al, Chengxu, Zhengyi yu Xiandaihua (Procedures, Justice and  Modernization) (Beijing: China University of Political Science and Law Press,1998), pp. 374. 28  techniques are e m p l o y e d . B r o a d a n d abstruse prescription a n d the loopholes  existent  in substantive laws provide dispute resolution decisionmakers with discretion.  Also,  dispute resolution i n itself is a process launched a n d operated b y m a n a n d inevitably  i n v o l v e s s u b j e c t i v e f a c t o r s a n d a p p r a i s a l c r i t e r i a . D u e to d i f f e r e n t v i e w s t o w a r d  and wrongs  o f different  people coming  from  different  cultural  rights  b a c k g r o u n d s , it i s  h a r d l y s u r p r i s i n g to f i n d o u t that there m a y b e n o u n i f o r m o p i n i o n s o n the e v e n t u a l  r e s o l u t i o n . Further, s u b s t a n t i v e fairness is n o t g u a r a n t e e d i n a n o t h e r sense. A s it i s  premised  o n correct  determination  o f facts  while  the happening  o f the cases  is  foregone a n d c o l l e c t i o n o f e v i d e n c e is limited to t i m e a n d space, resolution is m o r e o r  less tainted w i t h ambiguity.  fairness  are prominent.  5  6  Therefore, the value a n d significance o f procedural  B y providing  resolution procedures c a n deflect  a symbolic  attention f r o m  appearance o f legality,  the harsh or unfair  dispute  substance.  5  7  D i s p u t e resolution w i t h fair a n d transparent procedures remedies the deficiencies o f  substantive law. B e i n g aware o f h o w the disputes get resolved, disputants, e v e n w i t h  different c u l t u r a l c o n c e p t s , are i n c l i n e d to a c c e p t the d e c i s i o n s w h i c h a p p e a r  more  persuasive to t h e m a n d thus sparks f e w e r c o m p l a i n t s .  The  process o f dispute  resolution  should be principled  and comparatively  stable.  Further, a n o p e n system runs through the w h o l e dispute resolution process. That is,  the p r o c e s s i s o p e n b o t h to the p u b l i c  5 6  a n d the parties w h o s e access  to n e c e s s a r y  See He Jiahong, "Sifa Gongzheng Lun" (On Judicial Fairness), Zhongguo Faxue (China's  Law Science), No. 2 (1999) 5 7  See Prosser. T, "Pove "Poverty, Ideology and Legality: Supplementary Benefit Appeal Tribunals  and Their Predecessors" 4 BJLS 39, 1977. 29  information is clearly a n dadequately guaranteed b ylaw.  (a)  O p e n n e s s to the p u b l i c  T h e p u b l i c is entitled to access the dispute r e s o l u t i o n i n f o r m a t i o n : f o r e x a m p l e ,  court trial o r administrative judicature process. K e e p i n g the resolution process o p e n to  the p u b l i c u n l e s s o t h e r w i s e p r o v i d e d b y l a w is a b u i l t - i n r e q u i r e m e n t o f transparency. 58 Dispute  resolution  concerns  the rights  a n d interests  o f people.  Proper  public  e x p o s u r e i s n e c e s s a r y to p r e v e n t a b u s i v e e x e r c i s e o f state p o w e r i n this r e s p e c t .  A  supervisory role p l a y e d b y the p u b l i c promotes legalization o f every step o f dispute  resolution.  At  the same  time,  convenient  access  to  the information  of  dispute  resolution proceedings educates the p u b l i c o n the operation o f l a w a n d legal effect o f  their similar b e h a v i o r a n d thus enhances the predictability o f laws.  O p e n n e s s to the p u b l i c u s u a l l y requires that t h e p u b l i c b e l e g a l l y a l l o w e d to a u d i t t h e  dispute resolution. N o burdensome restriction should b e i m p o s e d o n the people w h o  want  to sit i n the dispute  resolution hearing except  for necessary and reasonable  p r o c e d u r e s u n d e r the l a w . N e w s m e d i a is a l l o w e d to report w h a t e v e r cases s u p p o s e  they areresponsible f o r the report.  5  9  Exceptions include arbitration which does not require open hearing, judicial trial and administrative adjudication, if they are concerning state, business or private secrets. 5 9  Also see Warren E. Burger, "The Interdependence of Judicial and Journalistic  Independence." 63 Georgetown Law Journal (1975), p.1195: in an address to the American Society of Newspaper Editors, Chief Justice Burger suggests that the independence of the judiciary and journalists are interdependent. Journalists depend upon the courts to protect and 30  (b)  O p e n n e s s to the d i s p u t a n t s  I f t h e o p e n n e s s to t h e p u b l i c i s i n a f o r m a l s e n s e , o p e n n e s s to the  disputants  m e a n s m o r e l i k e i n a substantive sense. F o r the a d m i n i s t r a t i v e j u d i c a t u r e  more  which  is  l i k e l y t h a n j u d i c i a l p r o c e e d i n g s to b e h e l d i n c l o s e d s e s s i o n d u e to its e a s i e r  c o n n e c t i o n to  state s e c r e t , b u s i n e s s s e c r e c y o r p r i v a t e  secret, openness o f  dispute  r e s o l u t i o n to the d i s p u t a n t s a p p e a r s e s p e c i a l l y i m p o r t a n t .  O p e n n e s s to the d i s p u t a n t s r e f e r s to the i d e a that the d i s p u t a n t s a r e e n t i t l e d to a c c e s s  the i n f o r m a t i o n  o f the w h o l e p r o c e s s , be i n f o r m e d o f their due rights, a n d exercise  these rights. I n f o r m a t i o n o f the dispute r e s o l u t i o n i n c l u d e s t i m e , p l a c e , c o m p o s i t i o n o f  d e c i s i o n m a k e r s a n d relevant case d o c u m e n t s l i k e the r e s p o n s e o f the other party  to  the  to  dispute,  evidence,  etc.  A  series  of  procedural  rights  including  the  right  c h a l l e n g e , the right to m a k e a statement, d e b a t e a n d c r o s s - e x a m i n a t i o n a n d the r i g h t  to a p p e a l s h o u l d b e n o t i f i e d to the disputants i n a t i m e l y m a n n e r . F a i l u r e to s a t i s f y a n y  o f a b o v e r e q u i r e m e n t s ends i n d e f e c t i v e dispute r e s o l u t i o n a n d entitles the  disputants  o f the right to c h a l l e n g e the d e c i s i o n .  O n e i d e a that d e s e r v e s to b e s i n g l e d o u t h e r e f o r the p u r p o s e o f the d i s c u s s i o n i n  following  text  is  that  the  reasons o f  decision-making shall be  given.  the  Procedural  fairness forms a k e y element o f m a n y Western legal systems. T h e requirement  that  r e a s o n s f o r a d e c i s i o n b e g i v e n to the a f f e c t e d p e r s o n is s e e n as b e i n g " a n e s s e n t i a l  e n f o r c e t h e i r p r e s s f r e e d o m s ; c o n v e r s e l y , the c o u r t s d e p e n d o n t h e a c t i o n s o f a f r e e p r e s s i n e x p o s i n g a n d c o m b a t i n g a s s a u l t s o n the j u d i c i a r y that w o u l d l i m i t its i n d e p e n d e n c e . 31  component  o f fair  procedure".  6 U  T h e disputants  expect  to k n o w  the applicable  legislations o f their behavior. T h e y surely expect to k n o w the specific g o v e r n i n g l a w  whose  application  application.  ends  i n the settlement  o f their  T h e y are the elements contributing  decision or judgement.  disputes,  a n d the reasons  of  to the persuasiveness o f a written  Persuasive dispute resolution then is relatively easier to b e  enforced b y the parties.  It i s m o r e  illustrative  to the p e o p l e about  possible  legal  significance o f their behavior. A c o n v i n c i n g ruling o rj u d g e m e n t i s n o less than al a w  textbook  a n d d u e to its c l o s e relation  to the reality,  even more  instructive a n d  enlightening to the public.  In s u m , although i n different s o c i a l contexts, cultural nuisances m a y result i n different  understanding o f w h a t procedures are acceptable a n d e v e n produce different effects i n  practice, it is u n d e n i a b l e that reasonable a n d stable p r o c e d u r e s g o v e r n i n g the w h o l e  process  o f dispute  resolution  to b e strictly  abided  b y is the k e y to prevent the  arbitrariness o f decisionmakers a n d abuse o f power.  2.4.3  Independence of Dispute Resolving Institutions Independence o f dispute resolving institutions  requires that d e c i s i o n m a k e r s  o b e y nothing b u t l a w . Specifically speaking, the dispute resolving institutions  whole  6 0  should b e externally  independent  from  as a  a n y public bodies, organizations, o r  See Richardson, G., "The Study to Give Reasons: Potential and Practice," Public Law 437  reproduced in Allars, M . , Australian Administrative Law Cases and Materials, (Sydney: Butterworths, 1997[1986]), pp. 212-213. 32  individuals. T h e specific dispute resolvers should b e independently responsible f o r  resolving  specific  disputes,  without  internally  institutionalized  interference,  like  so-called guidance f r o m higher officers o r higher level court. F o r a n instance, w h e n  administrative  organs  act as dispute  resolving  institutions,  they  should  b e the  independent adjudicative b o d i e s , n o t part o f the internal c o m p l a i n t s m e c h a n i s m s o f  government departments and other public bodies.  resolving institutions  inherently  6 1  Besides, impartiality  requires that dispute r e s o l v e r s b e a l s o  o f dispute  independent  f r o m the disputants themselves, n o t favoring either party. T h i s is especially important  when  o n e party  to the dispute  is governmental  organizations  with  state  K e e p i n g independence under such circumstance is a challenge f o r dispute  power.  resolving  institutions, theadministrative organs and thecourts as w e l l .  Independence  o f dispute resolving institutions  i s a l e g a l i s s u e i n t h e sense that  it  requires a l e g a l guarantee. H o w e v e r , t h e k i n d o f l e g a l guarantee that is a v a i l a b l e to  ensure the i n d e p e n d e n c e a n d to w h a t extent the guarantee c a n f u n c t i o n w e l l , is m o r e  an institutional issue than a legal issue d u eto its close relation to a nation's  political  regime  offering  a n d cultural  components.  Separation  o f power  aims  protection from the tyranny o f a single highly powerful branch.  system,  6 1  like  communism  in  China  where  assembly  f o r this,  A s regards to the  government  called  the  See Andrew Le Sueur, Javan Herberg & Rosalind English, Principles of Public Law,  (Cavendish, 1999), pp. 192-196. See J. Clifford Wallace, "Independence of the Judiciary: Independence from What and Why", 58 N.Y.U. Ann. Surv. Am. L., (2001), p.241; also see M. Vile, Constitutionalism and the Separation of Powers (1967); W. Gwyn, The Separation of Powers, Tul. Stud, in Pol. Sci. vol. 9, (1965) 33  combination  o f the legislature a n d executive is exercised, the j u d i c i a r y  independent f r o m the N a t i o n a l P e o p l e ' s C o n g r e s s .  of  functions  among  legislative  organizations,  6  3  T h e r e i s , thus, o n l y  administrative  organs  cannot be  separation  and judicial  b o d i e s . T h e w a y to k e e p i n d e p e n d e n c e o f dispute r e s o l v i n g institutions invites  much  controversy.  Chapter III  Economic Dispute Resolution by Administrative Organs  3.1  Introduction  General In the early twentieth century, the rapid e x p a n s i o n o f administrative p o w e r i n  western countries posed challenges for the theory o f "passive administration". T h e era,  d e s c r i b e d b y W a d e that e x c e p t the p o s t o f f i c e a n d p o l i c e m e n , a n E n g l i s h m a n w i t h  law abiding consciousness m a y spend his w h o l e life without realizing the existence o f  the g o v e r n m e n t , w a s over.  state  requires  that  6  4  T h e emergence o f a monopolized economy a n d welfare  the government  actively  involves  itself into  the e c o n o m y a n d  China's combination of legislature and execution is deeply rooted in Communist ideology held by Karl Marx and Lenin. See Mark, Civil War in France 73 (New York: International Publishers, 1932); See V.I. Lenin, State and Evolution (chap. 3, section 2-3). 6 4  See generally, H.W.R.Wade, Administrative Law (Oxford, 1989), pp.4-10; see A.V.Diecy,  Law of the Constitution, (Oxford, 1885), pp. 198. 34  society m a n a g e m e n t . H e n c e , the theory o f " a c t i v e a d m i n i s t r a t i o n " d e v e l o p s .  A c c o r d i n g l y , administration b y l a w is not limited to the parliament's legislation b u t  extends  to the r u l e  administrative  enforcement  making  departments.  of  and normative-documents  A n d , the g o v e r n m e n t  l a w a n d administrative  making  b y government  is not limited  legislative  power.  It  to  is  and  administrative  also  entitled  to  administrative judicature power, b y w h i c h the administrative a g e n c y c a n resolve the  disputes  occurring  between  the private  parties  a n d the administrative  d i s p u t e s b e t w e e n t h e p r i v a t e p a r t i e s . It i s n o t e d t h a t i n m a n y  countries  administrative organs play a n important role i n dispute resolution.  6  6  organs a n d  a n d areas,  F o ra n example,  i n the U K , u n d e r m a n y A c t s o f P a r l i a m e n t , tribunals h a v e b e e n set u p to h e a r a p p e a l s  against the determinations  of public  bodies. Tribunals  dwarf  the o m b u d s m e n a n d  j u d i c i a l r e v i e w i n terms o f the n u m b e r o f c o m p l a i n t s they deal w i t h e a c h year.  T h e t e n d e n c y t o d a y is to b e l i e v e that g o i n g to c o u r t s h o u l d b e a last resort;  6  7  litigation  is s e e n as e x p e n s i v e , l o n g w i n d e d a n d , m o r e o f t e n t h a n n o t , u n n e c e s s a r y . A s a U S  See generally, Jiang Mingan, "Administrative State and Control and Transformation of Administrative Power" (Xingzheng Guojia yu Xingzhengquan de Kongzhi yu Zhuanhua), in Fazhi Ribao {Legal Daily), 6 6  13 Feb. 2000, p.3.  Some countries and areas as follows: in the US, many administrative tribunals established  within some administrative departments are specialized in dealing with the disputes in the relevant areas; in Canada, there exist a large number of administrative tribunals or agencies with specialized jurisdiction, like hearing human rights complaints, disputes between employers and unions, etc; in France, administrative courts are professionally responsible for handling administrative disputes and in nature they are not judicial bodies but still belong to the administrative system; in Taiwan, how to play the role of administrative organs in resolving disputes has invited much attention. 6 7  See Andrew Le Sueur et al, supra note 61, pp. 192-196. 35  report  of  the  National  Commission  on  L a w  Observance  and  Enforcement  ( W i c k e r s h a m C o m m i s s i o n ) m e n t i o n e d , " i n n i n e t e e n t h - c e n t u r y A m e r i c a w e s o u g h t to  m a k e the courts d o the bulk  administration;  appropriately  o f what  to-day w e h a v e b e e n learning to d o  i n particular w e cast u p o n courts  administrative  work".  6 8  a heavy burden o f what  Successive  governments  have,  through  is  more  therefore,  encouraged the proliferation o f alternative methods o f dealing w i t h disputes.  Public  authorities have b e e n exhorted to establish their o w n internal procedures f o r d e a l i n g  with complaints.  6  9  These procedures range from recording complaints v i a telephone  'hotline' to m o r e elaborate r e v i e w s b y the p u b l i c b o d y itself o f w h a t allegedly  went  w r o n g . T h e shift to i n f o r m a l d i s p u t e r e s o l u t i o n h a s , i n large part, b e e n m o t i v a t e d b y  the desire to r e d u c e p u b l i c s p e n d i n g f o r t r i b u n a l h e a r i n g s a n d litigation  expensive.  The  i n court is  70  modern  society  provides  an  even  wider  space  for  the  development  of  administrative judicature. O n one hand, increasingly complicated knowledge included  in  disputes makes the courts'  ability  u n e q u a l to their  ambition  to get the d i s p u t e  r e s o l v e d ; at the s a m e t i m e , the c o u r t s ' b u r d e n is l e s s e n e d to a great extent w i t h  wide  a p p l i c a t i o n o f a d m i n i s t r a t i v e judicature. O n the other h a n d , less c o m p l e x p r o c e d u r e s  of  administrative  judicature  than judicial  proceedings bring  the disputants  higher  6 8  National Comm'n on Law Observance and Enforcement, Report No. 8, at 14 (1931).  6 9  For an example, in the UK, under the Citizen's Charter initiative, internal procedures have  been established by public authorities for dealing with complaints. See Andrew Le Sueur et al, supra note 61, pp. 192-196. 7 0  See Andrew Le Sueur et al, supra note 61, pp. 194. 36  efficiency, w h i c h sounds quite important  nowadays w h e n "justice delayed is justice  71 denied"  is v e r y m u c h e m p h a s i z e d . A s described i n a U K ' s report o n the future o f  tribunal adjudication i n the 1950s, tribunals w e r e better f o r r e s o l v i n g s o m e disputes  than courts. P e o p l e w i t h specialist k n o w l e d g e c o u l d b e a p p o i n t e d to sit o n t h e m ; f o r  instance, doctors o n tribunals hearing complaints against refusal o f welfare benefit f o r  disablement.  Tribunal  hearings  could  also b e conducted w i t h  litigation i n court, a n d b e s o speedier a n d less costly.  7  less  formality  than  2  In s o far as the a i m o f internal complaints procedures is to provide cheap a n d quick  resolution o f disputes, they are g o o d things. There is,however, also a darker side. I n  r e c e n t y e a r s , it h a s b e e n w i t n e s s e d a trend to c o m p r o m i s e a n d d o w n g r a d e p r o c e d u r e s  in a w a y w h i c h m a y endanger the proper application o f the principles o f openness,  fairness  a n d impartiality  which  should  underpin  tribunal  system  i n general.  I n f o r m a l grievance handling takes place b e h i n d closed doors; a n d i f public  7  3  authorities  are n o t c a l l e d to a c c o u n t i n p u b l i c , t h e w i d e r p u b l i c interest that j u s t i c e i s n o t o n l y  done b u t seen to b e done is c o m p r o m i s e d .  administrative  institutions  7  4  A l s o as the above report pointed out,  f o r dispute resolution  should be viewed  as independent  adjudicative b o d i e s , n o t part o f the internal c o m p l a i n t s m e c h a n i s m s o f g o v e r n m e n t  71  Klopfer v. North Carolina, 386 U.S. 213, 223-24 (1967) (referring to Sir Edward Coke's  belief "that the delay in trial, by itself, would be an improper denial of justice"). 7 2  Report of the Committee on Administrative Tribunals and Enquiries, Cmnd 218 (London:  HMS0.1957) 7 3  Annual Report 1989-1990, HC 64, p.l.  7 4  See Mulcahy, L and Allsop, J, "A Wolf in Sheep's Clothing? Shifts towards Informal  Resolution of Complaints in the NHS", in Leyland, P and Woods. T (eds.), Administrative Law Facing the Future (London: Blackstone, 1997). 37  departments  inform  and  the  resolution.  other  design  Thus,  public  and  so  bodies. Openness,  practices  far  as  of  fairness  administrative  appropriate,  such  and  organs  impartiality  in  administrative  charge  organs  should  of  dispute  should  use  p r o c e d u r e s s i m i l a r to those o f c o u r t s ; h e a r i n g s s h o u l d b e i n p u b l i c ; a p p l i c a n t s s h o u l d  h a v e the r i g h t to b e l e g a l l y r e p r e s e n t e d ; t r i b u n a l s s h o u l d g i v e f o r m a l r e a s o n s f o r  adjudications;  and  there  should be  r e s o l v i n g institutions to the court.  an appeal from  the  findings  of  these  their  dispute  7 5  China China's  context  is  culturally  unique.  China  is  an  administration-dominated  country all through the ages. In the past, there w a s n o separation b e t w e e n g o v e r n m e n t  a n d j u d i c i a r y i n dispute r e s o l u t i o n . G o v e r n m e n t w a s c a l l e d the parents o f p e o p l e  mu guan) a n d  was  responsible  for  handling  any  disputes. N o w a d a y s ,  (Fit  although  a d m i n i s t r a t i v e effects s t i l l p e n e t r a t e i n t o j u d i c i a l a d j u d i c a t i o n p r a c t i c a l l y , t h e r e is at  least a d i v i s i o n o f functions b e t w e e n administrative organs a n d j u d i c i a l b o d i e s u n d e r  the present C o n s t i t u t i o n .  Among  a  variety  of  7 6  administrative  functions,  one  is  dispute  resolution.  Such  administrative activities are titled as administrative judicature. A s a C h i n e s e s c h o l a r  describes,  administrative  administrative  judicature  legislation,  constitute  administrative  three  7 5  See Supra N o t e 72.  7 6  S e e C o n s t i t u t i o n o f the P R C ( 1 9 8 2 , 1 9 9 3 )  kinds  of  enforcement  administrative  of  law  activities  and  under  38  China's  administration  adjudication  framework.  Administrative judicature,  a n dn o n g o v e r n m e n t a l  system o f current China.  7  7  arbitration,  composes  together  the whole  with  court  adjudicatory  C h i n a ' s unique cultural context a n dinstitutional  setting,  however, shape the administrative judicature f r a m e w o r k w i t h m a n y so-called C h i n e s e  characteristics, encouraging ones asw e l l asdiscouraging ones.  A s d e f i n e d previously, e c o n o m i c disputes arecategorized into administrative disputes  w i t h r e s p e c t t o b u s i n e s s l a w a n d r e g u l a t i o n s , i.e., c o m m e r c i a l a d m i n i s t r a t i v e d i s p u t e s  and c o m m e r c i a l disputes. T h e s e t w o kinds o f disputes c a n b e settled b y resorting to  administrative  parties,  they  arbitration  agencies  agencies pursuant to law. F o r commercial disputes between  m a y b e resolved  o r administrative  a n d the parties  through  adjudication;  subject  administrative  f o r disputes  to administration,  they  mediation,  between  administrative  administrative  m a y b e settled  administrative reconsideration. Therefore, administrative judicature  private  through  is c o m p o s e d o f  administrative reconsideration w h i c h is a i m e d to resolve administrative disputes, a n d  administrative mediation, administrative arbitration a n d administrative  w h i c h are responsible f o r civil a n d c o m m e r c i a l disputes.  7  adjudication,  8  A s it i s e a s y t o get c o n f u s e d b y the a b o v e c o n c e p t s , a c l a r i f i c a t i o n i s necessary.  7 7  See Wen Zhengbang, Xue Zuomin & Wang Bing, "Shichang Jingji yu Xingzheng Sifa  Zhidu de Jianshe yu Gaige" (Market Economy and Establishment and Reforms of Administrative Adjudication System), Xiandai Faxue (Modern Law Science), No. 4 (1996) 7 8  See Zhang Shaohua, "Woguo Xingzheng Sifa Lilun zhi Pipan yu Chonggou" (Critique and  Reconstruction of China's Administrative Adjudication Theory), Xingzheng Faxue Yanjiu (Study on Science of Administrative  Law), No.3 (1999) 39  Administrative mediation  to  the agreement  (Xindzheng Tiaojie)  o f disputants  instead o f e m p l o y i n g  o n both  administrative  means administrative organs, according  sides, act as mediators  power,  or  intermediaries,  to r e s o l v e the disputes.  T h e agreed  mediation agreement has neither b i n d i n g force n o r executive force. E x e c u t i o n is o n  the voluntary basis. If m e d i a t i o n fails, o r o n e party refuses to accept the m e d i a t i o n  decision, he or she m a y apply for arbitration  or bring  a civil  litigation.  8  sense, except f o r m o r e authority o f the mediators, there is n o b i g difference  administrative  mediation  and non-governmental  mediation.  m e d i a t i o n i s m a d e at t h e r e q u e s t o f t h e p a r t i e s o n b o t h  mediation  is still  u p to both  parties,  there  Since  0  In  between  administrative  sides a n d enforcement  are accordingly  this  no many  of  procedural  c o n c e r n s o n dispute resovlers. T h i s is thus not the f o c u s o f this thesis.  Administrative  agencies,  arbitration  (Xingzheng Zhongcai) r e f e r s  b y w a y o f mediation  between certain equal parties.  or adjudication,  Since the  settle  to that  certain  the  administrative  disputes  occurring  Arbitration Law of the PRC c a m e  into  effect i n 1995, administrative arbitration has faded f r o m c i v i l a n d c o m m e r c i a l dispute  See Luo Haocai (ed.), Administrative Jurisprudence (Beijing: China University of Political Science and Law Press, 1989), pp. 202. 8 0  Zhonghua Renmin Gongheguo Xingzheng Fuyi fa (Administrative Reconsideration Law of  the People's Republic of China, hereinafter "ARL"), passed on 29 April 1999 and effective on 1 Oct 1999, Article 8, 81  See Luo Haocai ed. supra note 79, pp. 197. More discussion about administrative  arbitration is available at Ying Songnia (ed.), "Science of Administrative Acts" (Beijing: People's Press, 1993), pp. 787. 40  resolution except for labor disputes.  disputes  instead  was remained,  of  the  subject  labor  of  dispute  A l t h o u g h administrative  arbitration  administration.  Such  committees  activities  arbitration  act as  are  not  for labor  intermediary  featured  as  administration. In case the interested party refuses to accept the arbitral a w a r d , he o r  she cannot bring administrative litigation but c i v i l litigation. A s labor disputes are not  w i t h i n the scope o f e c o n o m i c disputes to b e d i s c u s s e d i n this thesis,  administrative  arbitration w i l l n o t b e treated either.  The meaning o f administrative  adjudication  (Xingzheng Caijue) i s  quite obscure i n  current C h i n a . T h e r e are at least three k i n d s o f different u n d e r s t a n d i n g o f this c o n c e p t :  the narrow, wider, a n d w i d e s t understanding.  I n t h e n a r r o w e s t sense, it is o n l y c i v i l  a n d c o m m e r c i a l d i s p u t e s that a r e r e s o l v e d t h r o u g h a d m i n i s t r a t i v e a d j u d i c a t i o n .  8  4  In  This is also evidenced by the legislative changes between original Administrative Reconsideration Regulations (enacted in 1990 and revised in 1994 by State Council) and ARL (1999). When it comes to what administrative acts are excluded from administrative reconsideration,  Article 10 of Administrative Reconsideration Regulations  clearly states  administrative arbitration cannot be submitted for reconsideration. Article 8 of ARL expressly mentions if the parties are not happy with administrative mediation and other determinations, they may apply for arbitration or bring the litigation to the courts. The change implies that except for the labor disputes, civil and commercial disputes are not more resolved by administrative arbitration. 8 3  See Zhang Shangzu, et al, Zouchu Digu de Zhong Xingzheng Faxue (China's  Administrative Jurisprudence Stepping out of Low Tide Development) (Beijing: China University of Political Science and Law Press, 1991), pp. 285-286. 8 4  See Ying Songnian, Xingzheng Faxue Jiaocheng (Administrative Jurisprudence) (Beijing:  China University of Political Science and Law Press, 1988), pp.362; see Zhang Shuyi, et. al, Xingzheng Faxue Xinlun (On Administrative Jurisprudence) (Beijing: Current Affairs Press, 1991), pp.174; see Wang Yujun, "Lun Xingzheng Caijue de Qisu Tujin yu Shenli"(On Ways to Sue Administrative Adjudicaiton and the Trials), Remin Sifa (People's Judiciary), No. 10 (1994); see Ji Ya, "Guanyu Bufu Xingzheng Caijue de Fuyi yu Susong Wenti" (On Administrative Reconsideration of and Litigation Against Administrative Adjudication), Xingzheng Faxue Yanjiu 41  the  wider  sense,  administrative  adjudication  c o m m e r c i a l disputes a n d administrative  is  disputes.  responsible  8 5  for both  In the widest sense,  civil and  imposing  administrative sanction and remedies is also included in the scope o f administrative  adjudication.  8  6  G i v e n then o n - u n i f o r m a n d c o m p l e x u s a g e o f this concept, this thesis attempts to seek  a w o r k a b l e definition o f administrative adjudication f o r the purpose o f this thesis b y  e x p l o r i n g its characteristics as f o l l o w s :  First, b y contrast to abstract administrative act, administrative a d j u d i c a t i o n b e l o n g s to  s p e c i f i c a d m i n i s t r a t i v e a c t . It a l s o m a k e s it d i f f e r e n t  from administrative  mediation  w h i c h i n nature is non-administrative behavior a n d has n o binding force.  S e c o n d , administrative adjudication is a k i n d o f s p e c i a l administrative act. U n l i k e the  bipartite  administrative relationship established because the administrative agencies  unilaterally take initiative i n exercising administration (fora n e x a m p l e administrative  penalties), administrative  adjudication builds u p tripartite relationship  similar to a  (Studies on Administrative Jurisprudence), No. 1 (1996); See Wang Lianchang et. al, Xingzheng Faxue (Science of Administrative Law) (Beijing: China University of Political Science and Law Press,1994), pp. 285; see Luo Haocai et. al, Xingzheng Faxue (Science of Administrative Law) (Beijing University Press, 1996), pp. 249. 8 5  See Long Qiang, "Chuyi Xingzheng Caijue Xingwei", Faxue and Shijian (Science of Law  and Practice), No. 6 (1992); see Hu Jianmiao et. al, Xingzheng fa Jiaocheng (Administrative Jurisprudence) (Hangzhou: Hangzhou University Press, 1990), pp. 203. 86  See Ma Huaide, "On Administrative Adjudication" (Xingzheng quan Bianxi), Faxue Yanjiu  (Studies on Law of Science), No. 6 (1990) 42  j u d i c i a l trial. A d m i n i s t r a t i v e agencies i n v o l v i n g dispute resolution are c o m p a r a t i v e l y  i n d e p e n d e n t f r o m the parties to the disputes.  T h i r d , the disputes that are r e s o l v e d through administrative adjudication are l i m i t e d to  civil  and commercial  disputes  in  relation  to  administration.  Purely  civil  and  c o m m e r c i a l disputes a n d p u r e l y administrative disputes aren o t i n c l u d e d .  Fourth,  administrative  adjudication  is conducted b y the exercise o f administrative  p o w e r a n d thus h a s d e t e r m i n a t i v e force, b i n d i n g f o r c e a n d e x e c u t i v e f o r c e , w h i c h a r e  lacked b y administrative mediation.  Therefore, administrative  adjudication herein c a n b e defined as a kind o f specific  administrative activities through w h i c h administrative organizations, b y l a w o r based  o n applications o f the parties, resolve c i v i l a n d c o m m e r c i a l disputes i n relation to  administration. S u c h understanding is the basis for o u r discussion.  The meaning o f administrative reconsideration  system  through  administration  which  and  administrative  administrative agencies.  with  87  administrative  the administrative  8  7  (Xingzheng Fuyi) i s f a i r l y  disputes  agencies  are  between  resolved  the  party  within  c l e a r . It i s a  subject  the  to  interior  U n l i k e t h e a b o v e three w a y s , it i s r e s p o n s i b l e f o r d e a l i n g  disputes  caused  by  administrative  acts.  Pure  civil  or  See Luo Haocai (ed.), supra note 79, pp. 191. 43  c o m m e r c i a l disputes are excluded. In the event  that the interested party  accept the administrative reconsideration decision, h e o r shem a y bring  refuses to  administrative  litigation.  3.2  Commercial Administrative Disputes: Administrative Reconsideration In  social  administrative  economic  life,  agencies in m a n y  various kinds o f registration  economic  actors  have  areas s u c h as a p p l y i n g  to  deal  with  8 8  different  for business licenses,  like changing a n d ending business, reporting  for  tax, and  undertaking import or export a n d so o n . Application for a permit m a y not b e issued;  registration  m a y b e refused;  administrative  category are brought  A c c o r d i n g to  penalties  decisions m a y lead to c o m p l a i n t s ,  interior administrative  administrative  administrative  m a y be imposed.  which  A l l  such  m a y be heard w i t h i n the  organizations apart f r o m the courts. W h e n the disputes i n this  to a d m i n i s t r a t i v e  o r g a n i z a t i o n s f o r r e v i e w , it is w h a t w e c a l l e d  reconsideration.  Administrative Reconsideration Law of the PRC  (hereinafter  "ARL"),  the p a r t y c o n c e r n e d m a y s u b m i t the r e v i e w a p p l i c a t i o n to the p e o p l e ' s g o v e r n m e n t at  the c o r r e s p o n d i n g l e v e l to the a d m i n i s t r a t i v e  8 8  a g e n c y at issue o r the  administrative  In China, although there is a debate as to whether the nature of administrative  reconsideration is self-supervision or dispute resolution and remedy. This thesis thinks both of them are the characteristics of administrative reconsideration, whose ultimate aim is to secure the rights of the external parties to the administration by supervising the exercise of administrative power. More discussion about the nature of administrative reconsideration can be found in Zhang Chunsheng & Tong Weidong, "Woguo Xingzheng Fuyi Zhidu de Fazhan he Wanshan" (Improvement and Development of China's Administrative Reconsideration System),  China's  Science of Law (Zhongguo Faxue), No. 4 (1999)  44  d e p a r t m e n t i n c h a r g e at t h e n e x t h i g h e r l e v e l . I f a d m i n i s t r a t i v e a c t at i s s u e is d o n e b y  some certain administrative  organizations, the administrative department  the next h i g h e r l e v e l is the r e v i e w o r g a n i z a t i o n .  8  9  i n c h a r g e at  N o matter w h i c h specific o r g a n is  responsible for reconsidering the application, applicable legislation, procedures a n d  i n d e p e n d e n c e o f the r e c o n s i d e r a t i o n o r g a n s s h a l l b e at least i n c o m p l i a n c e w i t h the  concept o f transparency spelled out as above.  3.2.1  Transparent Applicable Legislation What  review  organs  rely  on  to  reconsider  the administrative  decisions  l e a d i n g to a d m i n i s t r a t i v e disputes is a b i g c o n c e r n . W h a t is the l e g i s l a t i o n a p p l i e d b y  administrative r e v i e w organs? A r e they k n o w a b l e a n d accessible to the parties  subject  to a d m i n i s t r a t i o n ? A r e t h e y u n i f o r m , c o n s i s t e n t a n d s t a b l e i n n a t u r e ?  (a)  Applicable Legislation It  previous  is interesting  to see the legislative  c h a n g e s i n this  Administrative Reconsideration Regulations  9  0  regard  between  the  a n d the A R L . A r t i c l e 41 o f  the f o r m e r states that the a d m i n i s t r a t i v e r e v i e w o r g a n s r e c o n s i d e r the cases a c c o r d i n g  s y  ARL, Article 12: in the event that the applicant is not satisfied with the specific  administrative acts conducted by administrative departments under local governments above the county level, the applicant may choose to apply to People's Government at the corresponding level or the administrative department in charge at the next higher level for review. In the event of administrative acts conducted by custom, finance, state revenue, foreign exchange administrative departments where vertical leadership is exercised, as well as state security organizations, the applicant shall apply to the administrative department in charge at the next higher level for review. 9 0  Zhonghua Renmin Gongheguo Xingzheng Fuyi fa (Administrative Reconsideration  Regulations of the P.R.C),  promulgated on 24 Dec 1990 and revised on 9 Oct 1994. It now has  been replaced by ARL (1999) 45  to l a w , a d m i n i s t r a t i v e  r e g u l a t i o n s , l o c a l regulations, rules as w e l l as d e c i s i o n s a n d  orders with universal binding force made b y administrative  levels.  The  A R L  avoids  stipulating  the  applicable  organizations o f higher  legislation.  9 1  However,  application o f l a w is unavoidable i n practice. In handling each case, the review  organs  h a v e to w o r k o u t this p r o b l e m . A s it is k n o w n , the l a w , a d m i n i s t r a t i v e r e g u l a t i o n s a n d  local  regulations  will  applicability o f rules  administrative  Due  be  applied  (Gui zhang)  without  question.  a n d normative  T h e k e y issue  documents  than  is the  (Guifanxing wenjiari)  to  reconsideration.  to the fact that the rules a r e u s u a l l y m a d e b y the a d m i n i s t r a t i v e  higher  here  the review  organs  or even  by  the r e v i e w  organs  departments  themselves,  i m p o s s i b l e that the rules w i l l n o t b e a p p l i e d , o r a p p l i e d c o n d i t i o n a l l y o r a p p l i e d  their legality hasbeen confirmed. Therefore, the rules w i l l b e applied  it  is  after  unconditionally.  92  Legal validity  regulations  9 1  o f normative  a n d rules.  N o  d o c u m e n t s i s l o w e r t h a n that o f the l a w , a d m i n i s t r a t i v e  matte  whether  normative  documents  fall  within  the  However, application of law by review organs has been specified in local regulations. For  instance, in Jiangsu Province, under the Detailed Rules for Administrative Reconsideration Procedures of Nanjing, (Nanjingshi Xingzheng Fuyi Ban'an Chengxu Shishi Xize), Ning Fu Fa [2003]  No. 15, effective on 1 July 2 0 0 3 , article  27  states that officers in charge of administrative  reconsideration make a thorough review on appropriateness and lawfulness of the specific administrative action according to law, regulations, rules and normative documents as well as relevant state policies. 9 2  In China, it is noted that rules are applied by court in hearing administrative cases as  references, (see the discussion in Chapter IV) 46  constitutionally  are b i n d i n g  recognized category o f law  on officials  in the  or not,  practically, these  9 3  system within w h i c h they  documents  were formulated  and  to  w h o m t h e y are d i r e c t e d . T h e y are p r i m a r i l y w i t h i n the h i e r a r c h y o f a p a r t i c u l a r state  o r g a n o r d e p a r t m e n t as a m e a n s o f g i v i n g i n s t r u c t i o n s to l o c a l o f f i c i a l s o n the  and manner of performing  their  functions.  of  actors  e x t e r n a l to the a d m i n i s t r a t i v e s y s t e m to the e x t e n t that t h e y d e f i n e the w a y s i n  which  the sate a g e n c i e s c a r r y o u t their w o r k  T h e y affect  rights  and duties  content  and implement law. Concerns about both  p u b l i c a v a i l a b i l i t y o f l a w a n d c h a n g e a b i l i t y o f l e g a l r u l e s are o f t e n d i r e c t e d at  category  of  documents.  9 4  o r g a n s , it is u n i m a g i n a b l e  Since  they  are u t i l i z e d  that the r e v i e w  tremendously  organs w o u l d  by  the  this  administrative  disregard this  reality  and  refuse to a p p l y t h e m . O t h e r w i s e the w h o l e a d m i n i s t r a t i v e s y s t e m m a y not b e a b l e to  run  properly.  Given  the  chaos  and  complexity  of  these  non-law  documents,  r e c o n s i d e r a t i o n o r g a n i z a t i o n s m a y t a k e t h e m c o n d i t i o n a l l y o r a s r e f e r e n c e s . It m e a n s  a p p l i c a t i o n o f t h e m is u n a v o i d a b l e , a l t h o u g h h o w to a p p l y a n d to w h a t extent t h e y c a n  be applied is uncertain.  (b)  Public Accessibility As  for  normatively  9 3  law,  administrative  formulated  rules  regulations  under  the  and  rules,  Constitution  of  which  the  are  defined  P R C , publication  as  is  For a narrow view, see Zhou Wangsheng, Lifa Xue (The Study of Legislation) (Peking  University Press, 1988), pp. 263-264; for a more inclusive definition of the types of document that constitute law, see Ying Songnian et. al, Xingzheng Xingweifa: Zhongguo Xingzheng Fazhi Jianshe Lilun yu Sijian (Administration Action of Law: Theory and Practice of the Construction of China's Administrative Legal System) (Beijing: People's Press, 1993), pp. 93. 9 4  See Sarah Biddulph, supra note 44, pp. 161. 47  regarded as a part o f legislative process a n d a prerequisite to g o into effect  to  Legislation Law of the PRC.  forms  of making  publication  95  Legislation Law of the PRC  a n d the standard  text.  according  also stipulates the  S o the publication  o f law,  administrative regulations a n d rules has been guaranteed b y law.  With  respect  to the d o c u m e n t s  o f administrative  norms,  publication  is a  quite  complicated issue i n C h i n a . A c c o r d i n g to the Constitution a n d relevant organic l a w ,  besides  administrative  regulations  a n d rules, administrative  organizations  are also  entitled to issue administrative decisions, decrees a n d guidance w i t h universal b i n d i n g  force.  These  documents  documents". However,  are grouped  together  under  Legislation Law of the PRC d o e s  the heading  "normative  not deal w i t h the normative  d o c u m e n t s . Therefore, the p u b l i c a t i o n o f these d o c u m e n t s is o n l y b y w a y o f general  administrative  decided  by  procedures. T h e openness to the p u b i c  chief  administrative  officers,  is not required  depending  on  actual  b y law but  needs.  9  6  This  constitutes a threat against the i d e a l o f transparency u n d e r the W T O .  Among  these d o c u m e n t s  o f administrative  w h i c h have b e e n issued internally.  norms,  there  are normative  T h e y are called internal  ("Neibu Guiding", "Hongtou Wenjian").  documents  guidelines o r r e d letter  This category o f documents concerns finance,  9 5  Legislation Law of the PRC, passed on 15 March 2000 and came into effect on 1 July 2000.  9 6  See Tan Shigui & Wang Lin, "WTO zhong de Sifa Guize yu Woguo Sifa Gaige" (Judicial  Rules under the WTO and Judicial Reforms of China), Hainan Daxue Xuebao Renwen Shehui Kexueban {Humanities & Social Sciences Journal of Hainan University), Vol. 20, No. 1 (March 2002); see Yu An, "WTO Xieding de Guonei Shishi Wenti" (Issues on Domestic Implementation of WTO Rules), Zhongguo Faxue (China's Science of Law), No. 3 (2000) 48  tax, industry a n d c o m m e r c e , credit, material, import a n d export, etc.  internal  guidelines  for a time,  continued  to determine  Unpublicized  the ultimate  meaning  of  published regulations. Problems w i t h transparency o f such documents have been the  bane o f foreign investors f o r years. B e f o r e a n d around C h i n a ' s accession to the W T O ,  the subject m e n t i o n e d a n d c r i t i c i z e d m o s t i n t h e articles o r w o r k s w r i t t e n b y f o r e i g n  legal scholars is about C h i n a ' s non-transparent legal system, especially the internal  documents.  9  8  administrative  In the  Fengxians Trade Ltd.,  d e c i s i o n at issue partly  w h i c h w a s n o t o p e n to the public.  which  w a s applied  9  9  the administrative organ maintained the  b e c a u s e it r e l i e d  I n the  to b y the applicant  o n a n internal  Jin Man Ke Electric Ltd.,  for administrative  regulation  the defendant,  reconsideration  o f the  administrative penalties d e c i s i o n i m p o s e d o n t h e applicant, c o n f i r m e d the d e c i s i o n at  issue also based o n the internal documents.  1  0  0  S o , albeit not expressly b y l a w , the  r e v i e w o r g a n s r e f e r t o these d o c u m e n t s p r a c t i c a l l y , it m e a n s it m a y b e v e r y  difficult  for the external parties to k n o w the strength o f their applications f o r reconsideration  without obtaining access to thepotential applicable legislation.  y /  See Chen bin, "Shi Lun Waishang Touzi de Falv Tongyixing yu Toumingdu Wenti" (On  Uniformity and Transparency of China's Foreign-capital Law), in Guangxi Shehui Kexue (Guangxi Social Sciences), Vol. 87, No. 3 (2002) 9 8  For scholars' complaints, see J. Burns & S. Rosen, General Introduction, in J.Burns &  Rosen eds., Policy Conflicts in Post-Mao China 15 (1986); for complaints from members of the business community about "internal documents", see M. Moser, "Foreign Investment in China: The Legal Framework", in M. Moser (ed.), Foreign Trade, Investment, and The Law in the People's Republic of China (1987), p. 90, 96, 102. 9 9  See Appendix: Fengxiang Trade Ltd.. Shanghai v Salt Administrative Bureau, Shanghai  (2002). 1 0 0  See Appendix : Jin Man Ke Electric Ltd. v State Revenue of Shenzhen (1997) 49  Although  it i s i m p o s s i b l e to a b o l i s h t h e w e l l - e n t r e n c h e d  management  o f decision  making  overnight,  hope  e n c o u r a g i n g to note that s o m e l o c a l g o v e r n m e n t s  scale  down  the u s e o f internal  regulations.  m e c h a n i s m f o r the internal  is indeed  o n the horizon.  It i s  h a v e a d o p t e d specific m e a s u r e s to  F o r instance,  the Shanghai  municipal  g o v e r n m e n t has d e c i d e d to issue " S h a n g h a i M u n i c i p a l P u b l i c A n n o u n c e m e n t s " to the  public  on a complimentary  basis v i a a paper publication  a n d o n a website.  periodical used to b e restricted to internal circulation w i t h i n government  In  This  officers.  1 0 1  G u a n g d o n g P r o v i n c e , o n S e p t . 14, 2 0 0 0 , S h e n z h e n h a s d i s c l o s e d a l l r e g u l a t i o n s  and policies  being  up for review  issued.  b y municipal  Shenzhen will  phase  government  out a l l outdated  a n d legal authorities  — r e d letter  before  —governmental  p o l i c i e s f r o m w i d e r c i r c u l a t i o n . T h e list o f r e d letter d o c u m e n t s w i l l b e p u b l i s h e d o n  schedule  and i n a timely  documents  government  are annulled,  periodical.  1 0 2  fashion.  T o enhance  all the remaining  O n 1 January  regulations  2003,  Governmental Information of Guangzhou  transparency,  came  the  into  after  will  the r e d letter  be published  e v e n stated w i t h m o r e optimistic  effect.  It  is the first  tone that the p r i n c i p l e  had been  f r o m d o i n g things " a c c o r d i n g to superior o r d e r s " to " a c c o r d i n g to the l a w " .  More  importantly,  the A R L enlarges  the scope  a  Regulations on Openness of  regulation i n C h i n a about seeking transparency i n governmental administration.  officers  in  o f administrative  local  Some  changing  1  0  3  reconsideration,  101  See Zhongguo Qingnianbao (China Youth Daily), 5 December 2000, p.la.  1 0 2  See Beijing Qingnianbao (Beijing Youth Daily), on 22 September 2000, p. 36.  103  See Nanfang Zhoumo (Southern Weekend), 25 Oct. 2001, p. 6. 50  w h i c h n o w i n c l u d e s the abstract a d m i n i s t r a t i v e a c t i o n .  1 0 4  It m e a n s t h a t t h e r e d  letter  r e l i e d o n b y the a d m i n i s t r a t i v e a g e n c i e s c a n b e c h a l l e n g e d b y the external parties  to  the a d m i n i s t r a t i o n . I n a s e n s e , t h e r e i s n o w a s u p e r v i s o r y m e c h a n i s m at the h a n d s  of  c o m m o n p e o p l e to m a k e i n t e r n a l g u i d e l i n e s a n d r e d letter i n c o m p l i a n c e w i t h the l a w .  (c)  Certainty, uniformity, consistency and stability P u b l i c a c c e s s i b i l i t y o f a p p l i c a b l e l e g i s l a t i o n , h o w e v e r , is o n l y o n e s i d e o f  issue. Certainty, uniformity,  c o n s i s t e n c y a n d stability o f legislation are also  b y the t r a n s p a r e n c y p r i n c i p l e . E m p h a s i s o f this is e s p e c i a l l y important  required  for China,  country with multi-layered law making system. A s a foreign scholar observes,  China,  the  question about  knowing  what  the  law  is a n d h o w  it w i l l  the  be  1 0 5  a  in  enforced  i n v o l v e s m o r e t h a n m e r e l y the p r e s e n c e o r a b s e n c e o f m e c h a n i s m f o r p u b l i c a t i o n a n d  c o n s u l t a t i o n . C r i t i c i s m s o f the C h i n e s e s y s t e m o f rule m a k i n g are not  only  of  the  failure to p u b l i s h a l l r e l e v a n t rules a n d r e g u l a t i o n s but a l s o that p u b l i c a t i o n o f c e n t r a l  level laws a n d rules does not give business people a n accurate understanding o f  the  content o f the l e g a l r e g i m e w i t h w h i c h t h e y are o b l i g e d to c o m p l y . S o m e u n c e r t a i n t y  a b o u t w h a t the l a w is i n p r a c t i c e s t e m s f r o m the s y s t e m i t s e l f rather t h a n s i m p l y  from  a f a i l u r e to p u b l i s h d o c u m e n t s .  The  language and phrasing of Chinese  legislation and rules create w i d e  scope  for  administrative discretion in interpretation because a m a j o r goal o f C h i n e s e legislative  1 0 4  A R L , A r t i c l e 7.  1 0 5  See Sarah B i d d u l p h , supra note 4 4 , pp. 158-159. 51  drafting  is "flexibility."  A s a result, at a l l l e v e l s C h i n e s e l e g i s l a t i o n i s i n t e n t i o n a l l y  drafted i n "broad, indeterminate  the  specific  drafting  meaning  of  language," w h i c h w i l l a l l o w administrators to vary  legislative  language  with  circumstances.  0  Standard  6  techniques include the use o f general principles, undefined terms,  worded discretion, omissions, and general catch-all phrases.  As  1  1  0  broadly  7  legal experts observed, the p r o b l e m o f securing reliable information has created 108  severe problems  f o r effective  resolution o f c o m m e r c i a l disputes within  China.  T h e p r o b l e m is m u c h related w i t h C h i n a ' s hierarchically organized a n d multi-tiered  legal system. I n C h i n a , the N a t i o n a l People's C o n g r e s s creates laws, the State C o u n c i l  issues guidelines a n d rules a n d every m i n i s t r y o r c o m m i s s i o n has its o w n regulations,  not to mention regulations a n drules issued b y local governments. T h e s e laws, rules  and regulations  implementing  are prolific,  regulations,  both  in number  a n d content.  rules, measures a n d i n some  Plus,  there  situations,  are a lot o f  interpretations  m a d e b y therelevant administrative organs or b y the Supreme People's Court,  are particularization  o f legislation a n d are indispensable to implement  the general  t e r m s o f l a w s . It i s , q u i t e n a t u r a l l y , n o t p o s s i b l e f o r a n y g i v e n e n t e r p r i s e t o  IUb  which  know  See Perry Keller, "Sources of Order in Chinese Law", 42 Am. J. Comp. L. 711, 734 (1994);  Anthony Dicks, "Compartmentalized Law and Judicial Restraint: An Inductive View of Some Jurisdictional Barriers to Reform", in Stanley Lubman (ed.), China's Legal Reforms (1996), p.82, 99-103. See Stanley B. Lubman, Bird in a Cage: Chinese Law Reform After Twenty Years, 20 Nw. J. Int'lL. &Bus. (2000) 1 0 8  See Pitman B. Potter, riding the Tiger: Legitimacy and Legal Culture in Post-Mao China,  The China Quarterly (June 1994); Mattew Bersani, The Enforcement of Foreign Arbitral Awards in China, 10 J, INT'L ARB. 47 (1993); Donald C, Clarke, Dispute Resolution in China, 5 J, ChineseL, 245 (1991). 52  everything  about  every  law, regulation  a n d rule  i n detail,  especially under  the  c i r c u m s t a n c e that a n a l l - a r o u n d i n f o r m a t i o n s y s t e m is f a r f r o m b e i n g b u i l t u p i n C h i n a .  O n the other hand, such w i d e range o f sources o f l a w is not self-harmonized. T a k e  foreign-investment  l a w as a n example, time limit f o r examination a n d approval is  respectively 9 0 days under the  m o n t h s under the  1 1 1  1  0  9  three  Law of the PRC on Chinese and Foreign Equity Joint Ventures,  and 4 5 days under the  Enterprise.  Law of PRC on Foreign-capital Enterprises,  110  Law of PRC on Chinese and Foreign Contractual Cooperative  Besides,  as f o r the scope  o f investment  a n d nationalization, the  stipulations u n d e r the a b o v e l a w s aren o t h a r m o n i z e d .  In China,  it i s a s s u m e d that p o l i c i e s w o u l d  decisions determining  be applied experimentally  with  Party  local variations. Because o f lack o f experience a n d possible  consensus a m o n g the relevant departments, i n the early 1980s m a n y l a w s a n d rules  were designated "tentative", " i n t e r i m " , " c o n t e m p o r a r y " o r " f o r trial implementation".  M a n y o f them remained i n force unchanged for m u c h longer than originally intended.  112 S u c h tentativeness further leads to legal uncertainty.  T h e continued reliance o f  C h i n e s e d e c i s i o n m a k e r s o n p o l i c y directives a n d m a k e s h i f t regulations to i n t r o d u c e  reforms clearly compromises a n ym o v e m e n t towards a legislative m o d e l i n w h i c h the  l u y  Law of PRC on Foreign-capital Enterprises, effective on 31 Oct 2000, Article 6.  1 1 0  Law of the PRC on Chinese and Foreign Equity Joint Ventures, effective on 15 March  2001, Article 3 111  Law of PRC on Chinese and Foreign Contractual Cooperative Enterprise, effective on 31  Oct 2001,Article 5. 1 1 2  See Sarah Biddulph, supra note 44, pp. 165. 53  f o r m a l sources o f l a w provide a coherent foundation for interpretation a n d doctrinal  elaboration.  1 1 3  T h e s e p r o b l e m s s u g g e s t that the m a k i n g a n d interpretation o f l a w s i n C h i n a is m a r k e d  by  disorder a n d potential  f o r arbitrariness. L a w m a k e r s e x e r c i s e p o w e r to  interpret  rules o f their o w n m a k i n g , w h i c h are c o u c h e d i n indeterminate language. N o w o n d e r  o n e w r i t e r c o n c l u d e s that the disparate m a s s o f l a w s a n d r e g u l a t i o n s w h i c h m a k e s u p  the f o r m a l w r i t t e n sources o f C h i n e s e l a w does not possess sufficient  unity  to b e  regarded as a coherent b o d y o f law. In their disarray, the sources o f C h i n e s e l a w s e e m  barely capable o f p r o v i d i n g the basic point o f reference w h i c h a l l c o m p l e x systems o f - 1 1 4  ,  law  require.  3.2.2  Procedural Fairness Administrative  reconsideration  Reconsideration Law of the PRC replaces the  (ARL),  is  which  regulated  by  Administrative  was passed o n 29 April  Administrative Reconsideration Regulations  1 9 9 9 . It  w h i c h c a m e into effect  from  1 January 1991.  The  A R L establishes the principles  of conducting  administrative  reconsideration:  l a w f u l n e s s , justness, o p e n n e s s , timeliness a n d c o n v e n i e n c e to the applicants.  1 1 3  1 1 5  The  See Perry Keller, "Sources of Order in Chinese Law", 42 Am. J. Comp. L. 711, 734 (1994),  p.731; also see Lubman, supra note 106. 1 1 4  See Perry Keller, ibid, p.711; also see Lubman, supra note 107.  1 1 5  ARL, Article 4. 54  f o l l o w i n g i s a n e x a m i n a t i o n o f to w h a t extent the A R L e m b o d i e s these p r i n c i p l e s a n d  is t r a n s p a r e n c y - o r i e n t e d .  (a)  Applicant-friendly Procedures Compared  with  the  previous  provided b y the A R L arem o r e  Administrative Regulation,  the  procedures  applicant-friendly.  A s f o r jurisdiction, i n principle, the applicant is entitled to c h o o s e the r e v i e w  between the People's government  maker  at the s a m e l e v e l as the a d m i n i s t r a t i v e  a n d the higher level administrative  department.  1 1 6  That  organ  decision  the applicant m a y  d e c i d e w h i c h o r g a n to a p p l y f o r the r e v i e w , m a y contribute to c o u n t e r a c t i n g l o c a l i s m  a n d p r o f e s s i o n a l i s m to a certain degree. M o r e o v e r , i n the e v e n t that t h e a p p l i c a n t is  not  sure  about  the review  organ, he m a y submit  the application  to the P e o p l e ' s  g o v e r n m e n t at the c o u n t y l e v e l i n t h e s a m e r e g i o n w h e r e t h e s p e c i f i c  administrative  a c t i o n at issue o c c u r s . T h e P e o p l e ' s g o v e r n m e n t at the c o u n t y l e v e l is r e s p o n s i b l e to  transmit the a p p l i c a t i o n to the relevant a d m i n i s t r a t i v e o r g a n .  1 1 7  A s regards the f o r m o f application, the applicant m a y either a p p l y i n w r i t i n g o r orally.  In the event o f oral application, the r e v i e w organ shall, o n the spot, write d o w n the  basic situations o f the applicant, the claims, the facts, the reasons a n dthe time.  1 1 6  1 1 8  ARL, Article 12. This article also provides exceptions. In respect of decisions at issue  made inter alia by customs, finance departments, taxation authorities, foreign exchange control authorities and state securities agencies, the ARL excludes the jurisdiction of review organs established in local government. 1 1 7  ARL, Article 18.  1 1 8  ARL, Article 11. 55  I n c o n t r a s t to the p r e v i o u s A d m i n i s t r a t i v e  R e g u l a t i o n s w h i c h p r o v i d e s the  applicant  s h a l l a p p l y f o r r e v i e w w i t h i n 15 d a y s , t h e A R L e x t e n d s t h e p e r i o d t o 6 0 d a y s , a s  the date w h e n  period  is m o r e  the a p p l i c a n t k n o w s  advantageous  the a d m i n i s t r a t i v e  for  the  applicants  before,  the  A R L  to  a c t i o n at i s s u e .  seek for  remedies  1 1 9  A  of  longer  through  the  application  for  reconsideration mechanism.  In  the  meantime,  administrative  administrative  unlike  review  outlay  corresponding level.  is  which  free  of  charge.  clearly  The  shall be guaranteed b y  states  that  expenses  the  are  the f i n a n c e  covered  by  departments  the  at  the  1 2 0  It i s a l s o e n c o u r a g i n g t o s e e t h e A R L s p e c i f i e s t h e l e g a l r e s p o n s i b i l i t i e s o f t h e  organ in a m u c h more detailed manner,  1 2 1  review  w h i c h are f o r c e f u l l e g a l w e a p o n s to  drive  the r e v i e w o r g a n s to d o the w o r k p r o p e r l y a c c o r d i n g to l a w .  T h e r i g h t to sue entitled b y the a g g r i e v e d parties has b e e n f o r t i f i e d u n d e r the A R L .  U n l i k e the p a s t , it e x i s t s b e y o n d t h e s i t u a t i o n that the a p p l i c a n t r e f u s e s to a c c e p t the  review  d e c i s i o n . In the event that the l a w o r r e g u l a t i o n s  reconsideration prior  to  an administrative  require the p r e p o s i t i o n  suit a n d the r e v i e w  organ dismisses  a p p l i c a t i o n o r f a i l s to g i v e a r e v i e w w i t h i n the t i m e l i m i t , the a p p l i c a n t n o w is  1 1 9  of  the  entitled  A R L , Article 9.  1 2 0  A R L , Article 3 9 .  1 2 1  A R L , Article 3 4 - 3 9 . 56  to i n i t i a l i z e a n a d m i n i s t r a t i v e l i t i g a t i o n w i t h i n 15 d a y s f r o m t h e d a t e w h e n h e r e c e i v e s  the d i s m i s s a l n o t i c e o f a p p l i c a t i o n o r f r o m the e x p i r y date o f r e c o n s i d e r a t i o n .  1 2 2  P r o c e d u r a l requirements are strengthened u n d e r the A R L , so is greater openness. T h e  A R L  requires  agency  that  be given.  the r e a s o n s f o r d e c i s i o n s at i s s u e m a d e  Applicable  legislation,  evidence  b y the  a n d other  materials  s h o w n a n d c a n b e l o o k e d u p b y the a g g r i e v e d party a n d a third party.  of  Shitong Communication Equipment Ltd  (1999),  administrative  1 2 3  shall  In the case  the G u a n g z h o u Industrial  C o m m e r c i a l A d m i n i s t r a t i v e B u r e a u accepted the c o m p l a i n t brought b y three  legal person a n d stock rights w a s problematic because the supportive materials  A  d e c i s i o n for the complainants w a s m a d e but w a s later  administrative  reasons.  1 2 4  reconsideration organ  If the administrative  which  that  the  administrative  of  were  quashed b y the  a n d quite  detailed  a g e n c y fails to s h o w the e v i d e n c e , the a p p l i c a b l e  legislation a n d other relevant materials  deemed  set out c o n v i n c i n g  and  private  parties w h o a r g u e d that the t h i r d p a r t y ' s a p p l i c a t i o n f o r c h a n g i n g the registration  forged.  be  on which  action  authorities a n d thus shall be q u a s h e d .  1 2 5  at  In  issue  t h e d e c i s i o n at i s s u e b a s e s , it i s  lacks  evidence  Mr. Wang Enwu  and  legislative  (1997), the administrative  a g e n c y f a i l e d to p r o v i d e the r e l e v a n t l e g i s l a t i v e authorities, the a p p l i c a b l e l a w , b e f o r e  the first i n s t a n c e c o u r t trial e n d e d . E v e n i f it d i d p r o d u c e t h e a p p l i c a b l e l a w to t h e  c o u r t o f a p p e a l , it w a s f o u n d that t h i s a p p l i c a b l e l a w c o u l d n o t b e a d o p t e d a n d t h e  1 2 2  ARL, Article 19.  1 2 3  ARL, Article 23.  1 2 4  See Appendix: Shitong Communication Equipment Ltd. of Guangzhou v People's  Government of Guangzhou (1999) 1 2 5  ARL, Article 28 (4). 57  d e c i s i o n at i s s u e m a d e  support.  b y the administrative  agency  lacked necessary  legislative  1 2 6  In terms o f e n f o r c e m e n t o f the r e c o n s i d e r a t i o n d e c i s i o n s , the A R L p r o v i d e s that i n the  event that the administrative a g e n c y fails to i m p l e m e n t the r e v i e w d e c i s i o n o r d e l a y  the  implementation  without  due reasons,  the review  organ  o r the higher  level  a d m i n i s t r a t i v e d e p a r t m e n t s h a l l o r d e r it to f u l f i l l the duties w i t h i n the r e q u i r e d p e r i o d .  Otherwise, the directly responsible executive a n d other personnel i n charge m a y  b e subject to d i s c i p l i n a r y s a n c t i o n .  (b)  Implications for the future A d m i t t e d l y , m u c h p r o g r e s s h a s b e e n m a d e b y t h e A R L . Y e t it d o e s h a v e s o m e  d i s t a n c e to g o to m a k e p r o c e d u r e s m o r e transparent a n d fair.  (i)  Reconsideration on documents, hearing and cross-examination T h e A R L p r o v i d e s that r e c o n s i d e r a t i o n is to take p l a c e b a s e d o n the d o c u m e n t s  u n l e s s o t h e r w i s e r e q u e s t e d b y t h e a p p l i c a n t o r the r e c o n s i d e r a t i o n a g e n c y c o n s i d e r s it  necessary i n w h i c h case a n investigation m a y b e carried out a n d the opinions o f the  applicant, the administrative d e c i s i o n m a k e r a n d a third party m a y b e taken.  See A p p e n d i x :  1  2  Mr. Wans Enwu v People's Government. Heping District, Tianjin  9  (1997).  A R L , Article 32. A R L , Article 37. A R L , Article 22.  58  I n p r i n c i p l e , r e c o n s i d e r a t i o n i s c o n d u c t e d o n d o c u m e n t s . It i s i n a c l o s e d s e s s i o n a n d  thus non-transparent.  Without  participation  o f the parties, it is e a s y f o r the r e v i e w  officers to b e s u b j e c t i v e a n d b i a s e d . A l t h o u g h the a p p l i c a n t is entitled to a p p l y f o r the  o p i n i o n s t o b e h e a r d , i t i s n o t e d t h a t t h e r e v i e w a g e n c y may,  o p i n i o n s . It i m p l i e s t h a t t h e r e v i e w  organ retains the  right  n o t ought  hear the  to,  to refuse the applicant's  request. B e s i d e s , the p r o v i s i o n o n l y says the r e v i e w organ m a y take the opinions. B u t  how  to take  the opinions  is u n k n o w n . A l s o ,  the r e v i e w  agency itself m a y find  it  n e c e s s a r y to h e a r the o p i n i o n s o f the parties c o n c e r n e d ; b u t the A R L fails to s a y u n d e r  w h i c h k i n d o f c i r c u m s t a n c e t h e r e v i e w a g e n c y m a y t h i n k it n e c e s s a r y t o d o s o . I n t h i s  sense, this p r o v i s i o n is too r o u g h a n d is i m p r a c t i c a b l e .  1 3 0  In contrast to the general terms o f the A R L , l o c a l regulations i n this regard a p p e a r  m o r e particularized. S i n c e the A R Lw e n t to effect, m a n y l o c a l regulations c o n c e r n i n g  h o w to h a n d l e a d m i n i s t r a t i v e r e c o n s i d e r a t i o n cases h a v e b e e n issued. S o m e e v e n g o  further than the A R L i n terms  o f fairness a n d greater transparency  in the review  process.  the  the  For  Implementation  instance,  under  of Administrative  Measures  Reconsideration  of  the  Law  Customs  of  PRC  (effective o n 1 O c t  for  1999),  it  sets o u t f i v e k i n d s o f s i t u a t i o n s u n d e r w h i c h t h e o p i n i o n s m a y b e h e a r d b y t h e r e v i e w  o r g a n . T h e y i n c l u d e : the a p p l i c a n t a p p l i e s to b e h e a r d a n d the r e v i e w o r g a n c o n s e n t s ;  the dispute o v e r the facts b e t w e e n the applicant a n d the administrative d e c i s i o n m a k e r  1 3 0  China started to legalize the hearing system in Administrative Penalty Law of the PRC  (promulgated on 17 March 1996), under which, the model of hearing procedure has subsequently been adopted in other legislation, such as the Pricing Law of the PRC which was passed in 1997. 59  is  serious; the applicant  applicant  dissents  the  applies  to b e h e a r d  law, administrative  a n d the r e v i e w  regulations  organ  consents; the  a n d administrative  norms  a p p l i c a b l e to the a d m i n i s t r a t i v e act at issue; the case i s s i g n i f i c a n t , c o m p l e x , d i f f i c u l t  o r t h e o b j e c t o f d i s p u t e i s h i g h l y v a l u a b l e a n d t h e r e v i e w o r g a n c o n s i d e r s it n e c e s s a r y . 131  Cross-examination a n d debate are procedurally important for resolving disputes. B u t  u n d e r the A R L , there are n o s u c h stipulations to entitle the applicant w i t h these  rights.  A g a i n , the local regulations are m o r e developed. T h e y stipulate m o r e detailed r e v i e w  procedures, w h i c h are m o r e easily to b e i m p l e m e n t e d . T a k e J i a n g s u p r o v i n c e as a n  example,  its  capital  city,  Nanjing,  Reconsideration Procedures  Detailed Rules for  passed  (effective  on  1  Oct.  1999),  Administrative  which  provides  that  a d m i n i s t r a t i v e r e c o n s i d e r a t i o n is to take p l a c e o n the d o c u m e n t s i n p r i n c i p l e ; b u t i f  the  case  is too complex  a n d too important,  decision maker m a y apply  the applicant  a n d the  administrative  f o r face to f a c e c r o s s - e x a m i n a t i o n , a n d the o f f i c e r s  in  charge, subject to the consent o f the c h i e f a n d the director o f reconsideration o r g a n ,  '"" Measures of the Customs of the PRC for Implementation  of Administrative  Reconsideration Law, effective on 1 Oct 1999, article 25 states: administrative reconsideration is to take place on the documents. But under any of below circumstances, the review organ may collect opinions from the applicant, the administrative decision maker and the third party: (1)  the applicant applies for being heard and the review organ consents  (2)  the dispute over the facts between the applicant and the administrative decision maker is  serious (3)  the applicant dissents the law, administrative regulations and administrative norms  applicable for the administrative action at issue (4)  the case is significant, complex, difficult or the object of dispute is highly valuable.  The review organ considers it necessary. 60  m a y hold administrative reconsideration hearing.  under the  (ii)  3 2  S i m i l a r provision is also  found  Measures of the Customs of the PRC for Implementation of Administrative  Reconsideration Law provided.  '  where  detailed  procedures  of  holding  a  hearing  are  also  133  Challenge System There  There  is lack  is another  drawback  o f stipulation  o f current  A R L as regards  o f h o w to organize  the r e v i e w  the review  agency.  If  c o n c e r n e d thinks that the officers i n charge o f the r e v i e w h a v e interested  process.  the  party  relationship  w i t h the case, whether or not a challenge c a nb e submitted is not p r o v i d e d under the  A R L .  T h e limitations,  ministries  and  however,  commissions.  are remedied  The  by  some  rules  of  administrative  Measures of China Insurance Regulatory  Commission for Administrative Considerations example, clearly prescribes the challenge system.  (effective  1 3 4  The  o n 5 July  2001),  for an  Measures of the Customs  Detailed Rules for Administrative Reconsideration Procedures of Nanjing, (Nanjingshi Xingzheng Fuyi Ban'an Chengxu Shishi Xize), Ning Fu Fa [2003] No. 15, effective on 1 July 2003, Article 45 reads: administrative reconsideration is to take place on the documents in principle. However, as for complex and big cases, at the request by the applicant and the administrative decision maker application for face to face cross-examination, officers in charge, subject to the consent of the chief and the director of review organ, may hold administrative reconsideration hearing. 1 3 3  Measures of the Customs of the PRC for Implementation  of Administrative  Reconsideration Law, Article 26, 27. 1 3 4  Measures of China Insurance Regulatory Commission for Administrative Considerations,  passed and effective on 5 July 2001, Article 24 states: the applicant, the third party or the administrative decision maker, who considers that the staff members or the officers in charge of the review have interested relationship with the case or other relationship which may affect the justness of review, shall be entitled to apply for challenge. The staff members and the officers think they have interested relationship with the case shall withdraw voluntarily. The challenge to 61  of the PRC for Implementation of Administrative Reconsideration Law a l s o the s a m e c h a l l e n g e s y s t e m .  (iii)  designs  1 3 5  Right to Look up Case Materials The A R L provides  that the a p p l i c a n t a n d the t h i r d party  written response m a d e b y the administrative  m a y look u p the  decision maker, a n d the evidence, the  legislation a n d other relevant materials applied b y the administrative  The review  decision maker.  o r g a n c a n n o t r e f u s e u n l e s s t h e m a t e r i a l s c o n t a i n state s e c r e t s , b u s i n e s s  secrets o r i n d i v i d u a l privacy.  1 3 6  H o w e v e r , h o w about the legal p r o x y a n d authorized 137  proxy,  since they  are also entitled  to a p p l y  for administrative  reconsideration?  A l s o , w h a t is the m e a n i n g o f " l o o k u p " ? In practice, w h e n the a g g r i e v e d parties  for  administrative  review,  they  are not allowed  to  photocopy  apply  the response a n d  e v i d e n c e p r o v i d e d b y t h e a d m i n i s t r a t i v e d e c i s i o n m a k e r s . It i s a l l e g e d t h a t n o c o p y i n g but o n l y reading a n d writing d o w n is permitted.  3.2.3  138  Independence of administrative reconsideration organs T h e r e v i e w organs, a c c o r d i n g to the A R L , are the P e o p l e ' s g o v e r n m e n t  the  same  level  as  the  administrative  decision  maker  and  the  higher  at  level  staff members of review is decided by the chief officer for review. The challenge to the chief officer for review is decided by the principle of review organ. 135  Measures of the Customs of the PRC for Implementation  of Administrative  Reconsideration Law, Article 31. 136  ARL, Article 23.  1 3 7  ARL, Article 10.  138  See Beijing Chenbao (Beijing Morning), 30 Nov. 2001 (Real Estate Weekly). 62  administrative  customs,  department.'  finance  authorities  J y  B u t i n respect o f d e c i s i o n s at issue m a d e  departments,  taxation  The Draft  Protocol currently  decision  making  reconsideration  administrative  independent  The  foreign  exchange  by  control  a n d state securities a g e n c i e s , the A R L e x c l u d e s t h e j u r i s d i c t i o n o f r e v i e w  organs established i n local government.  parties'  authorities,  inter alia  is  1 4 0  d e m a n d s that tribunals  be  independent  an  important  of  and  the  for oversight o f  decision  widely  used  maker.  way  to  administrative  Administrative  review  disputed  decisions i n C h i n a . A c c o r d i n g l y , the r e v i e w organs are required to b e  from  the administrative  a g e n c y w h o s e decisions lead to the a g g r i e v e d  complaints.  A R L  is  claimed  to  have  established  an  independent  r e c o n s i d e r a t i o n m e c h a n i s m i n C h i n a w h i c h is n o t m e r e l y d e s i g n e d to  accompany the administrative  litigation  system.  1 4 1  administrative  institutionally  H o w e v e r , it m a y n o t b e e x a c t l y  the reality. U n d e r the A R L , P e o p l e ' s g o v e r n m e n t at the s a m e l e v e l a n d h i g h e r  level  a d m i n i s t r a t i v e o r g a n s a r e t h e r e v i e w o r g a n s b u t it i s silent as to h o w to o r g a n i z e t h e  1 3 9  In China, generally, it is administrative departments that are entitled to make  administrative reconsideration. But in reality, there are some government-sponsored institutions directly affiliated to the State Council, like China Securities Regulatory Commission (CSRC) and China Insurance Regulatory Commission (CIRC). Although they are not administrative departments in nature, they are granted with administrative power and functions. Administrative reconsideration is one of functions they are entitled to exercise. 1 4 0  ARL, Article 12. See Yu An, "Several Basic Questions about China's Administrative Reconsideration  Law," Fazhi Ribao (Legal Daily), 6 May 1999, p.7. 63  concrete review  institution.  In practice, as f o r the r e v i e w institutions  four  kinds  of  (section),which  second,  situations:  first,  is substituted  set u p i m p e r m a n e n t  Government  a n d its w o r k i n g  set  o f P e o p l e ' s G o v e r n m e n t , there are u s u a l l y  up  administrative  b y the O f f i c e  administrative  body  reconsideration  of Legality  Affairs  reconsideration  is w i t h i n  the O f f i c e  of  division  Government;  commission under  o f Legality  Affairs  the  of  G o v e r n m e n t ; third, set u p administrative r e c o n s i d e r a t i o n d i v i s i o n (section) w i t h i n the  working  bodies  o f the G o v e r n m e n t ;  d i v i s i o n (section) w i t h i n the O f f i c e  fourth,  set u p administrative  of Legality Affairs  reconsideration  o f Government. T h e fourth  k i n d is the most c o m m o n one. A s for the r e v i e w institutions o f department, the forms  are g e n e r a l l y three k i n d s : first, set u p a d m i n i s t r a t i v e r e c o n s i d e r a t i o n d i v i s i o n  w i t h i n the O f f i c e  administrative  of  Legality  o f Legality  Affairs  o f department;  second,  set u p  impermanent  reconsideration c o m m i s s i o n , w h o s e w o r k i n g b o d y is under the O f f i c e  Affairs  of  department;  third,  set  up  permanent  administrative  reconsideration c o m m i s s i o n , w h o s e director is the principle o f department  trademark r e v i e w board a n d the patent r e v i e w  The  independence  of  administrative  board).  See  (e.g., the  1 4 2  reconsideration,  independence o f the r e v i e w organ a n d the r e v i e w  142  (section)  therefore,  depends  on  the  institution.  He Jun, "Xingzheng Fuyi: Zhengzai Weisuo  de Zhidu" (Administrative  Reconsideration: A Depauperate System), Jingji Guancha bao (The Economic Observer), 13 Oct. 2003. 64  It c a n b e s e e n f r o m t h e a b o v e m o d e l s o f e s t a b l i s h i n g t h e r e v i e w i n s t i t u t i o n s  that, i n  essence, the r e v i e w institution  is o n e o f w o r k i n g b o d i e s o f P e o p l e ' s G o v e r n m e n t s at  various levels a n d o f different  d e p a r t m e n t s . It s h o u l d , s u b j e c t t o t h e a u t h o r i z a t i o n  of  the c h i e f a d m i n i s t r a t i v e officer, h a n d l e a d m i n i s t r a t i v e r e c o n s i d e r a t i o n w i t h i n the l e g a l  competence o f the r e v i e w  concerning  the rights  organ. W h e n the r e v i e w  and obligations  institution  o f the review  organ,  m a k e s the decisions  like  dismissal o f the  application, decisions o f review, consent f r o m the principle o f review organ should b e  obtained.  The review  institution  is entitled  to m a k e  the decisions c o n c e r n i n g  the  procedural issues instead o f the substantive issues, like accepting the application a n d  conducting the investigation, a n d advance the preliminary opinions o n the case. T h e  r e v i e w institution, f r o m a n y respect, has n o decisive p o w e r a n d is not a n independent  b o d y but a b o d y taking orders from the chief administrative  organ.  As  143  regards  review  principle o f the review  the r e v i e w  institution.  organ,  it s e e m s r e l a t i v e l y  However, governments  independent,  compared with  are affected b y notorious  localism.  the  They  c a n n o t r e m o v e the t e n d e n c y to protect l o c a l interests w h e n r e v i e w i n g the cases. T h e  higher level administrative  departments  extent that they are the departments  are i n the s i m i l a r v e i n o r e v e n w o r s e to the  i n charge o f the administrative  decision maker  a n d thus b y t h e m s e l v e s non-independent. W h a t ' s m o r e , the administrative d e c i s i o n at  1 4 3  See Ying Songnian & Yuan Hongshu, "Zouxiang Zhengfu Fazhi" (Taking to Rule of  Government) (Beijing: Chinese Law Press, 2001), pp. 299. 65  i s s u e is u s u a l l y m a d e a c c o r d i n g to the n o r m a t i v e  level administrative  taking  departments.  into a c c o u n t the d e p a r t m e n t a l  conducted  by  both kinds  between government  the  They  review  of review  or department  organs m a y  make  documents  are the j u d g e s  of  enacted b y the  themselves,  interests. T h u s , administrative  organs  i s to  the r e v i e w  unavoidably  reconsideration  seek a balance and  a n d the applicants.  1 4 4  higher  compromise  It i s h a r d l y h o p e f u l  d e c i s i o n s i n the interest  of  that  transparency,  fairness and justness.  Lack  of  independence  leads  to  people's  lack  of  confidence  in  administrative  r e c o n s i d e r a t i o n a n d h a s b e c o m e a b i g h i n d r a n c e f o r p e o p l e to s e e k r e m e d i e s  this  mechanism.  It  1 4 5  reconsideration were  effective  in  1999.  In  historical peak point.  is  reported  increased after  2001,  that  the  the n u m b e r  the  number  Administrative of  cases w a s  S i n c e then, the n u m b e r  1 4 6  The  third party  mistakes  that a n apparently  and  remedy  reassuring citizens.  144  1 4 5  1 4 7  independent  abuses o f  helps  of  to  administrative  Reconsideration over  80,000  Law  which  c a n b e c a l l e d u p o n to  legitimate  took  was  and was  government  the  even  correct  action  T h e b o d y to a c c e p t the a p p l i c a t i o n f o r a d m i n i s t r a t i v e  Fazhi Ribao {Legal Daily), S e e Jingji  power  cases  has been going d o w n  d e c l i n i n g in s o m e areas a n d departments.  fact  of  through  by  review  26 Sept 2 0 0 3 .  Guancha bao (The Economic Observer),  146  Fazhi Ribao (Legal Daily),  1 4 7  See A n d r e w L e Sueur, Javan Herberg &  13 O c t , 2 0 0 3 .  2 5 S e p t 2 0 0 3 , p. 9 Rosalind English,  Principles of Public Law,  ( C a v e n d i s h , 1999) 66  o f a n a d m i n i s t r a t i v e d i s p u t e s h o u l d b e n e u t r a l a n d i n d e p e n d e n t . O t h e r w i s e , it  b e v e r y d i f f i c u l t to b r i n g t h e i n s t i t u t i o n a l  functions of administrative  would  reconsideration  m e c h a n i s m into play. Fortunately, the s i g n i f i c a n c e o f e s t a b l i s h i n g the  comparatively  i n d e p e n d e n t r e v i e w institutions w i t h o u t the interference o f l o c a l i s m a n d d e p a r t m e n t a l  protectionism has been increasingly a c k n o w l e d g e d in modern China.  1 4 8  But  given  c o n t a g i o u s b u r e a u c r a t i c p o l i t i c s i n C h i n a ' s c o n t e x t , the e s s e n c e o f the i s s u e s is m o r e  institutional  a n d cultural rather  than just functional  or legal.  1 4 9  A c c o r d i n g l y , it  is  e x p e c t e d that the c o r r e s p o n d i n g i m p r o v e m e n t s h a l l n o t b e l i m i t e d to the l e g a l r e g i m e  but  e x t e n d to  institutional  setup and cultural  setting.  (For detailed discussion,  see  chapter V )  3.3  Commercial Disputes: Administrative Adjudication Administrative adjudication has been long standing in western countries  where  despite o f the i m p l e m e n t a t i o n o f c h e c k a n d b a l a n c e s y s t e m s , a d m i n i s t r a t i v e a g e n c i e s  are entitled to e x e r c i s e a d j u d i c a t i v e  a d m i n i s t r a t i v e tribunals i n the U K  functions  and resolve certain disputes, like  a n d C a n a d a , the administrative courts i n  the  France,  s o m e a d m i n i s t r a t i v e a g e n c i e s i n t h e U S , e t c . It i s n o t o n l y b e c a u s e e x t r e m e l y  clear  separation o f p o w e r s a m o n g l e g i s l a t i o n , a d m i n i s t r a t i o n a n d j u d i c i a r y is not p o s s i b l e ,  b u t a l s o b e c a u s e o f the a c t u a l n e e d s o f s o c i e t y d e v e l o p m e n t . In the last century,  the r a p i d d e v e l o p m e n t o f i n d u s t r i a l i z a t i o n a n d u r b a n i z a t i o n , a variety  1 4 8  see  "Post-WTO  China:  Adjustment,  Reforms  and  Enhancement  of  of  with  problems,  Competitive  S t r e n g t h — R e p o r t o n H i g h L e v e l F o r u m o f 2 0 0 0 o n C h i n a ' s d e v e l o p m e n t " , Takungpao ( H K ) , 2 A p r i l 2002 1 4 9  S e e the C h a p t e r V .  67  like  economic  crisis,  unemployment,  government's  role  administrative  agencies  regulations  from  emerging.  "night  were  environment,  watchman"  to  insurance,  "welfare  established, concomitant  country".  with  In the course o f active participation  etc, changed  Many  numerous  and macro  the  new  economic  control  by  administrative departments, disputes ensue. B u t the specialty a n dtechnology i n v o l v e d  i n these disputes areb e y o n d the capability o f j u d i c i a l bodies. U n d e r this c i r c u m s t a n c e ,  it i s t h u s n o t a s u r p r i s e t o s e e that a d m i n i s t r a t i v e a g e n c i e s o b t a i n t h e p o w e r t o r e s o l v e  s o m e disputes, n o matter h o w it s o u n d s c o n t r a d i c t o r y to t h e d o c t r i n e o f s e p a r a t i o n o f  powers.  1 5 0  B y contrast to the western countries, administrative adjudication has ancient roots i n  C h i n a . I n history there w a s n o separation b e t w e e n administration a n d judiciary. T h e  government w a s responsible f o r dispute resolution. S u c h tradition still influences the  current  China.  S o m e p e o p l e e s p e c i a l l y i n the rural areas m a y turn to the p e o p l e ' s  g o v e r n m e n t w h e n disputes o c c u r instead o f s u i n g at the court. T o s o m e extent,  administrative  compliance  agencies are granted w i t h the p o w e r to resolve s o m e disputes is i n  with  people's  long-formed  system o f check a n d balance, w h i c h  1 5 0  that  habit.  Besides,  C h i n a does  also makes administrative  not adopt  adjudication  the  more  See Bernard Schwartz, Administrative Law ( Little Brown Inc., 1976), pp. 6-16. The  author further points out that due to the needs of modem complex society, administrative organs are expected to have legislative and adjudicative power. In order to effectively manage economy, traditional doctrine of separation of powers shall be abandoned. Some even suggested that the doctrine of separation of powers is no longer a viable principle of government. See, Kinnane, "Some Observations on Separation of Powers", 38 A.BA.J.  19 (1952); J. Landis, The  Administrative Process (1938), cited in A. Vanderbilt, The Doctrine of Separation of Powers and Its Present Day Significance 3, 5, 6 (1953). 68  easily acceptable to C h i n a ' s s o c i a l matrix.  A s a n a l y z e d a b o v e , a c c o r d i n g to l a w , a d m i n i s t r a t i v e a g e n c i e s are entitled to r e s o l v e  c i v i l a n d c o m m e r c i a l disputes. State administrative  law,  adjudicate  administration-related  between two equal private  organs w i t h the p o w e r  parties.  civil  Current  o f administrative  organs, expressly authorized b y  and commercial  Chinese  adjudication  disputes  l a w authorizes  through  occurring  administrative  the f o l l o w i n g  three  w a y s : f i r s t , l e g a l r e s p o n s i b i l i t i e s o f a d m i n i s t r a t i v e o r g a n s . It m e a n s t h e a d m i n i s t r a t i v e  organs, i n h a n d l i n g the administrative affairs, must resolve the disputes b e t w e e n the  equal parties. F o r e x a m p l e , article 2 7 o f  Law of PRC on Fishery,  I  M  article  13 o f  152  Law of PRC on Land Administration;  s e c o n d , o p t i o n s o f t h e c o n c e r n e d p a r t i e s . It  m e a n s that t h e c o n c e r n e d parties a r e entitled to c h o o s e b e t w e e n the a d m i n i s t r a t i v e  organs  a n d the  courts  to  get  the  disputes  resolved,  like  Law  of  PRC  Pharmaceutical Administration, Law of Water Pollution Prevention;  on  third,  self-determination o f administrative organs, w h i c h m e a n s l a w o n l y stipulates that the  administrative organs m a y resolve the disputes a n d there is n o other restrictions. S o ,  the a d m i n i s t r a t i v e o r g a n s m a y take a n initiative i n r e s o l v i n g t h e disputes, o r d o it at  the request o f the c o n c e r n e d parties, o r m a y j u s t let the c o n c e r n e d parties a p p l y to the  151  Fishery Law of the PRC, Article 27 reads, in the event of fishing by stealth, robbing others  of fishery products, destroying others' water body and facilities, the fishery administration department or its supervisory organ is entitled to order that the losses be compensated and the fine be imposed. 1 5 2  Land Administration Law of PRC, Article 13 reads, as for the disputes concerning land  ownership and land-use right, the parties concerned may make a negotiated settlement; if negotiation fails, the disputes are resolved by the People's Government. 69  court. L i k e  Trademark Law of the PRC, Patent Law of the PRC, Law of PRC on Land  Administration; Law of PRC on Grasslands, Law of PRC on Maritime Environmental Protection.  U n l i k e administrative mediation, agreement between t w o parties is not the necessary  c o n d i t i o n t o s t a r t u p a d j u d i c a t i o n . It m a y b e l a u n c h e d b y j u s t o n e o f t w o p a r t i e s t o t h e  dispute. A l t h o u g h l i k e m e d i a t i o n , t h e a d j u d i c a t i o n d e t e r m i n a t i o n is n o t f i n a l , it d o e s  have  binding  force  a n d executive  force  i f the unhappy  party  fails  arbitration o r s u ew i t h i n a certain p e r i o d . I n this sense, it is s a i d that  adjudication  affects a n d changes the rights  a n d obligations  to a p p l y  for  administrative  o f the parties. F o r this  reason, h o wadministrative organs resolve the disputes is o f importance.  H o w e v e r , even i f administrative adjudication, asa c o m m o n m e a n s to resolve disputes,  is w i d e l y n e e d e d a n d u n i v e r s a l l y a p p l i e d i n C h i n a , it i s m o s t p o o r l y r e g u l a t e d ,  1  5  3  especially b y contrast to the requirements o f transparency.  3.3.1  Transparent Applicable Legislation It i s q u i t e a s t o n i s h i n g t o f i n d t h a t t h e r e a r e n o s t i p u l a t i o n s a b o u t t h e l e g a l  authorities u p o n w h i c h the administrative agency m a yrely to resolve the c o m m e r c i a l  disputes between t w o private parties. T h e relevant l a w a n d regulations usually  read  l i k e " a p p l y f o r administrative a g e n c y to h a n d l e the d i s p u t e s " w i t h o u t m e n t i o n i n g o f  1 5 3  S e e W e n Z h e n g b a n g et c l . , s u p r a n o t e 7 7 . 70  application o f law.  T h e l e g a l b a s i s u t i l i z e d to r e s o l v e the disputes is u n k n o w a b l e .  1 5 4  T h e parties c o n c e r n e d m a y have n o idea o f the strength o f the case.  H o w e v e r , s i n c e it i s a i m e d to r e s o l v e t h e d i s p u t e s , t h e a p p l i c a t i o n o f l a w is a l w a y s  u n a v o i d a b l e . E v e n i f there a r e n o c l e a r p r o v i s i o n s a b o u t w h a t to a p p l y a n d h o w , it c a n  be  imagined  what  decisionmakers.  even  the  applicable  spirits  kind  of  legal  L a w , regulations,  of  official  legislation.  authorities  administrative  administrative  Whether  will  they  satisfy  be  rules,  notices  applied  normative  usually  documents,  m a y all be  1 5 6  the requirements  of  by  the  the  1 5 5  possible  transparency  is  questionable.  Furthermore,  when  the parties  the decision  concerned are entitled  is m a d e .  Y e t , there  is n o  to k n o w  legal  the applicable  obligation  legislation  imposed  o n the  d e c i s i o n m a k e r s to p r o d u c e the legal authorities o n the written decisions. T h a t i s , the  reasons for the decision m a y not be given.  3.3.2  Procedural Fairness In contrast to the administrative reconsideration w h i c h h a s b e e n p r o c e d u r a l l y  regulated i n a n improved  b e h i n d i n this regard.  w a y under the A R L , administrative  adjudication  lags far  E v e n the circumstances i n w h i c h the administrative organs are  1 5 4  See above quoted legislations, Supra note 151-152.  155  See Wen Zhengbang et cl., supra note 77.  156  See Shanxi Wanbao (Shanxi Province Evening), 16 Sept. 2003. 71  i n v o l v e d i n r e s o l v i n g the c i v i l a n d c o m m e r c i a l disputes are s p o r a d i c a l l y set o u t i n l a w ,  separate  law  addressing  a n d regulations,  the  kind  of  not  procedures  mentioning  that  that  shall  be  there  is  followed  special  in  legislation  administrative  adjudication.  It i s e x p e c t e d t h a t t h e r e w i l l b e a s e r i e s o f p r o c e d u r e s a v a i l a b l e i n o r d e r f o r t h e p a r t i e s  to b r i n g t h e i r a p p l i c a t i o n s , f o r t h e a d m i n i s t r a t i v e o r g a n s to a d j u d i c a t e t h e a p p l i c a t i o n s ,  etc. H o w e v e r , it i s n o t e d that there a r e b a s i c a l l y n o l e g a l p r o v i s i o n s a s to h o w to b r i n g  the c l a i m s , h e a r the disputes, a n d h o w to m a k e the w r i t t e n d e c i s i o n s o r r u l i n g s a n d  h o w they c o m e into effect a n dare enforced. A s to h o w to p r o d u c e evidence, distribute  the b u r d e n o f e v i d e n c e , the p r e s c r i p t i o n is e v e n less.  1 5 7  Without legal restrictions, a  wide scope o f discretion hasbeen remained with administrative officials, w h i c h  in abusiveness o f administrative p o w e r and non-transparent  Take article 53 o f T r a d e m a r k L a w o f the P R C  1 5 8  ends  operation.  a s a n e x a m p l e , it states:  In the event that disputes arise from infringement upon right to the exclusive use of a trademark under article 52, the parties concerned may have compromise settlement; if the parties are not willing to do so or compromise settlement fails, registrant of trademark or interested persons may sue at the court or apply to the Industrial and Commercial Administrative Bureau for settlement. If  1 5 7  See Lin Zhong, Zhongguo Shangshi Zhengduan Jiejue (Commercial Dispute Resolution in  China), Law Publishers (1998), Beijing, pp. 185. 1 5 8  Trademark Law of the PRC, passed on 27 Oct. 2002 and came into effect on 1 Dec 2001. 72  Industrial and Commercial Administrative Bureau for settlementfindsthat infringing act is constituted, it is entitled to give the orders the act shall stop, infringing articles and tools used to produce infringing articles and forge registered trademark symbol shall be confiscated and destroyed and fine be inflicted. If the party concerned refused to accept the decision, it may sue according to the Administrative Litigation Law of the PRC within 15 days as of receipt of the notice. If the party concerned neither sues nor implements the decision, Industrial and Commercial Administrative Bureau may apply to the court for compulsory enforcement.  The  provision  says  under  which  circumstance  the  party  may  apply  to  the  a d m i n i s t r a t i v e o r g a n f o r d i s p u t e settlement. T h e r e is n o t h i n g a b o u t h o w to a p p l y ,  how  the a p p l i c a t i o n w i l l b e p r o c e s s e d o r h o w the d e c i s i o n w i l l b e m a d e . E x a c t l y the s a m e  p r o v i s i o n exists in  Patent Law  article  53.  Similar provisions can also be found  m a n y other e c o n o m i c laws and regulations.  It  1 5 9  is said that administrative  adjudication  adopts general administrative  procedures.  It i s a l s o s a i d t h a t s o m e j u d i c i a l p r o c e d u r e s a r e a p p l i e d b y a d m i n i s t r a t i v e  w h e n h a n d l i n g the disputes.  1 6 0  agencies  W h a t e v e r it i s , l a c k o f e x p r e s s r u l e s u n d e r the  law  o n l y ends i n the great d i s c r e t i o n o f a d m i n i s t r a t i v e a g e n c i e s i n reality.  159  See Ying Songnian, "Xingzheng Xingweifa" (Law of Administrative Acts) (Beijing:  People's Press, 1991), pp. 673, 1 6 0  680.  See Wen Zhengbang et cl., supra note 77. 73  in  A d m i n i s t r a t i v e adjudication has the features o f b o t h administration a n d judicature.  It  is u n d e r s t a n d a b l e that it i s u n n e c e s s a r y t o e x e r t t h e s a m e c o m p l i c a t e d p r o c e d u r e s a s  the l i t i g a t i o n o n t h e a d m i n i s t r a t i v e a d j u d i c a t i o n . O t h e r w i s e it m a y l o s e t h e e f f i c i e n c y  o f getting the disputes r e s o l v e d , w h i c h is e x a c t l y its strength as a dispute  resolution  m e c h a n i s m . T h e p r i n c i p l e o f s i m p l i c i t y a n d c o n v e n i e n c e is s u p p o s e d to r u n t h r o u g h  the  whole  process  of  administrative  adjudication.  However,  it  i s , after  all, a  m e c h a n i s m o f dispute resolution w h i c h w i l l influence the rights a n dobligations o f the  c o n c e r n e d parties. T h i s m e a n s that the p r o c e d u r e s s h o u l d n o t b e j u s t  the general  a d m i n i s t r a t i v e p r o c e d u r e s b u t s h o u l d b e m o r e r i g o r o u s t h a n that. A b a l a n c e s h o u l d b e  m a d e between the efficiency a n d fairness b y w o r k i n g out certain procedures.  A s p r e v i o u s l y s u g g e s t e d , a d m i n i s t r a t i v e r e c o n s i d e r a t i o n h a sb e e n subject to a series o f  p r o c e d u r e s . It i s t h u s s u g g e s t e d t h a t r e f e r e n c e t o t h e s e p r o c e d u r e s s h o u l d b e m a d e  when  administrative  improvement  of  adjudication  administrative  Administrative Penalty Law.  1 6 1  is  conducted.  procedures  has  Especially,  gone  even  It c h a n g e s t h e t r a d i t i o n  is  further  noted  under  that  the  I t i s t h e first t i m e f o r C h i n a t o s y s t e m a t i c a l l y s e t o u t  the administrative p r o c e d u r a l rules i n a national l a w , i.e., the  Law.  it  that a d m i n i s t r a t i v e  Administrative Penalty  procedures are mostly  e n a c t e d to  restrict the external parties to the administration a n d sends a s i g n a l that p r o c e d u r a l  restriction is o n both administrative agencies a n dthe parties subject to administration.  161  Administrative Penalty Law of the PRC, passed on 17 March 1996 and being effective as  of 1 Oct 1996. 74  W h e n it c o m e s to s p e c i f i c p r o c e d u r e s , this  law  absorbs advanced experience  o t h e r c o u n t r i e s i n c l u d i n g the spirit o f d u e p r o c e s s . T h a t is, b e f o r e the  administrative  o r g a n m a k e s t h e p e n a l t y d e c i s i o n , it s h a l l i n f o r m t h e p a r t i e s c o n c e r n e d o f t h e  the  reason,  the  legal  authorities,  Communication Equipment Ltd  and  (1999),  the  the  rights  they  enjoy.  administrative  from  In  Shitons  the  penalty  facts,  decision  p r o b l e m a t i c a n d w a s q u a s h e d b y the a d m i n i s t r a t i v e r e c o n s i d e r a t i o n o r g a n i n the  as w e l l as s e c o n d instance court. O n e o f the important reasons w a s the  was  first  administrative  o r g a n , the G u a n g z h o u I n d u s t r i a l a n d C o m m e r c i a l A d m i n i s t r a t i v e B u r e a u f a i l e d to  tell  the party c o n c e r n e d o f the fact, the reasons a n d the rights they w e r e entitled b e f o r e the  penalty d e c i s i o n w a s m a d e . In addition, the parties c o n c e r n e d also enjoy the rights  m a k e statement  parties'  a n d a r g u e . It  is the o b l i g a t i o n  of administrative  o r g a n to  hear  o p i n i o n s a n d c a n n o t aggravate the s a n c t i o n s i m p l y b e c a u s e o f the  argument.  introduced  The most  into  the  striking  thing  administrative  is that f o r  the  procedures. T h e  first  time  the  parties'  the h e a r i n g s y s t e m  challenge system is  to  is  expressly  prescribed. Strict time l i m i t for m a k i n g the administrative penalties has b e e n p r o v i d e d .  If the a d m i n i s t r a t i v e a g e n c y f a i l s to d i s c o v e r the i l l e g a l acts w i t h i n t w o y e a r s o f  their  h a p p e n i n g , n o a d m i n i s t r a t i v e p e n a l t i e s c a n b e i m p o s e d . H o w to p r e s e r v e e v i d e n c e i n  advance  and  the  methods  to  conduct  the  on-the-spot  fine  are p r o v i d e d  in  detail.  E s p e c i a l l y , it c l e a r l y sets o u t the l e g a l l i a b i l i t i e s o f a d m i n i s t r a t i v e o r g a n s i n c a s e  f a i l to f o l l o w the p r o c e d u r e s a n d p a r t i c u l a r l y stresses that i f the a d m i n i s t r a t i v e  they  penalty  is i n v a l i d in the event that there is a l a c k o f l e g a l authorities, o r p r o p e r p r o c e d u r e s are  not  complied with.  The  spirits  of  d u e p r o c e s s e m b o d i e d u n d e r the  Administrative  75  Penalty  should  Law  expressed  above,  i.e.,  be  extended  to  administrative  other  administrative  adjudication.  It  is  acts,  thus  p r o c e d u r e s therein s h o u l d b e integrated into the a d m i n i s t r a t i v e  According  to  the  above  analysis, together  with  the  one  of  which  suggested  that  is  the  adjudication.  requirements  of  transparency  m e n t i o n e d p r e v i o u s l y , it i s a l s o s u g g e s t e d that the o p e n n e s s p r i n c i p l e b e i m p l e m e n t e d  with  the  contents  following  of  the  measures. The  administrative  concerned parties  adjudication  should  procedures; the  be  legal  informed  of  authorities  the  and  f a c t u a l b a s i s o f d i s p u t e r e s o l u t i o n , the rights a n d the w a y s to e x e r c i s e the rights  in  c a s e that the d e c i s i o n is not a c c e p t a b l e . B e f o r e the d e c i s i o n is m a d e , the c o n c e r n e d  parties s h o u l d b e a l l o w e d to g i v e o p i n i o n s , m a k e statements a n d d o c r o s s - e x a m i n a t i o n .  T h e challenge system should be introduced and evidence rules should be improved.  The  reality  that  administrative  a g e n c i e s are  more  and  more  involved  in  dispute  r e s o l u t i o n c a l l s f o r a s y s t e m a t i c series o f p r o c e d u r e s . H o p e f u l l y , the u n i f o r m L a w  Administrative  Procedures whose enactment  procedures of administrative  162  is u n d e r the w a y  1 6 2  will  address  of  the  adjudication.  More discussions about uniform Law of Administrative Procedures are available in Yang  Yin, "Xingzheng Chengxu Lifa yu WTO Guize" (Legislating Administrative Procedures and the W T O Rules), Journal of China University of Political Science and Law, Vol. 20, No. 1( Feb. 2002); Yang Haikun & Liu Yanglin, "Guanyu Zhongguo Xingzheng Chengxu Fadianhua de Taolun" (Discussion of Codification of Chinese Administrative Procedures), Jiangsu Gongan Zhuanke Xueyuan Xuebao {Journal of Jiangsu Public Security College), V o l . 16 No.2 ( Mar. 2002); and Yang Haikun & Huang Xuexian, Zhongguo Xingzheng Chengxu Fadianhua - cong Bijiao fa Jiaodu Yanjiu (Codification of Chinese Administrative Procedures - From Comparative Perspective) (Beijing: Chinese Law Press, 1999). 76  3.3.3  Independence In  dispute  modern China,  resolution  institution  or  administrative  there  within  the w h o l e  personnel  organ  are no special administrative  administrative  responsible  either.  For a  for  long  dispute  period,  system;  organs in charge  there  resolution  there  is  within  has been  no  separation b e t w e e n the general administrative acts a n d administrative  no  a  of  special  specific  institutional  adjudication.  T h e independent administrative organizations responsible for dispute resolution have  not y e t b e e n universally established. S o far, the s i m i l a r adjudicatory  systems  exist i n the departments o f trademark a n d patent w h e r e the trademark r e v i e w  only  board  a n d the patent r e v i e w b o a r d h a v e b e e n set u p . A p a r t f r o m these, m o s t o f c i v i l a n d  c o m m e r c i a l disputes are directly resolved b y the administrative organs. C a n they b e  neutral  a n d independent  when  handling  the disputes  between  the equal  private  partners?  It i s s a i d t h a t t h e a d m i n i s t r a t i v e o r g a n s a c t a s i n t e r m e d i a r i e s i n s t e a d o f t h e s u b j e c t o f  administration  in handling  the civil  a n d c o m m e r c i a l d i s p u t e s . It  is true  that the  administrative organ is relatively detached since the dispute occurs b e t w e e n t w o other  p r i v a t e p a r t i e s . It a c t s a s t h e d i s p u t e r e s o l u t i o n d e c i s i o n m a k e r e i t h e r a t t h e r e q u e s t o f  the parties o r o n its o w n initiative.  departmental  adequate  However, more  protectionism penetrates into  procedural  restrictions  imposed  o r less, local protectionism o r  t h e p r o c e s s . It i s b e c a u s e t h e r e  on  the  administrative  organ  are n o  or any  77  institutional guarantee o f its i n d e p e n d e n c e .  Administrative subordination a n d institutional  bureaucracy should be overcome  in  o r d e r to r e a l i z e the i n d e p e n d e n c e o f the d e c i s i o n m a k e r s . Institutional setup is p i v o t a l  to a c h i e v e this g o a l . W e k n o w  France,  there  i n the U K , there are administrative tribunals, a n d i n  are administrative  courts,  and in  the U S , there  are  independent  administrative institutions. T h e s e institutions are n o t administratively subordinate to  any  specific administrative  department.  A s the dispute  resolution decisionmakers,  they are v e r y p r o f e s s i o n a l , s p e c i a l , a n d m o s t i m p o r t a n t l y , i n d e p e n d e n t to the u t m o s t  extent. I n this r e g a r d , C h i n a still h a s s o m e d i s t a n c e to g o .  * D e c i s i o n s m a d e b y a d m i n i s t r a t i v e r e c o n s i d e r a t i o n o r g a n s c a n b e c h a l l e n g e d at c o u r t  by  bringing  administrative  litigation.  1 6 3  Decisions made  through  administrative  a d j u d i c a t i o n are n o t subject to the a d m i n i s t r a t i v e r e c o n s i d e r a t i o n . T h e u n h a p p y  m a y a p p l y f o r a r b i t r a t i o n a n d b r i n g l i t i g a t i o n at c o u r t .  1 6 4  party  T h e same question arises  about the i n d e p e n d e n c e o f j u d i c i a l bodies. T h i s is to b e d i s c u s s e d i n the next chapter.  163  1  ARL, Article 16. ARL, Article 8. However, the ARL does not specify which kind of litigation  (administrative litigation or civil and commercial litigation) shall be brought in the event that the disputants refuse to accept the administrative adjudication decision. This invites lots of controversy in academic realm. The practice is not consistent in this regard. But mostly it is through civil and commercial litigation that judicial remedies can be claimed. Hopefully relevant law or judicial practice will come out in the future to address this problem. See Yang Shiming, "Qiantan Xingzheng Jujian jiqi Sifa Jiuji" (On Administrative Adjudication and Judicial Remedies Thereof), Fujian Faxue (Law Science ofFujian Province),,Vol. 73, No. 1( 2003) 78  Chapter IV  4.1  Economic Dispute Resolution by Courts  Introduction P a r t i e s to c o m m e r c i a l d i s p u t e s h a v e at least three c o n c e r n s a b o u t the p r o c e s s  through  which  their  disputes  will  be resolved:  fairness,  speed,  a n d cost  o f the  p r o c e e d i n g s . I n theory, a p r o c e e d i n g m a y b e c o n d u c t e d i n a m a n n e r that the parties  regard  a s fair, a n d it m a y p r o c e e d e x p e d i t i o u s l y  at m i n i m u m  expense. In  reality,  however, the p r o b l e m is o n e o f balancing the emphasis to b e given to each o f the  factors. T o o m u c h emphasis o n fairness m a y result i n considerable delay a n d cost;  likewise, too m u c h emphasis o n speed a n d l o w cost m a y i m p a i r the fairness o f the  proceeding.  1 6 5  C o u r t adjudication is o n e m e c h a n i s m a m o n g a variety o f processes u s e d for settling  disputes.  nearly  Although  always  impartiality  resolution  viewed  litigation typically  expensive,  and  this  mechanism  independence.  o f disputes  as independent  After  and inexpensive  values  is time  consuming, frequently  does  all, for  have  the  resolution  that c o m p e t e  with  a  reputation  judicial  system,  o f disputes  the value  dilatory  of  and  fairness,  expeditious  are not necessarily  o f fairness. T h e y  are  i m p o r t a n t p r i m a r i l y to the extent that they p r o m o t e the p r i m a r y g o a l o f fairness.  See Robert Force & Anthony J. Mavronicolas, "Two Models of Maritime Dispute Resolution: Litigation and Arbitration", 65 Tul. L. Rev. p. 1461. 79  Litigation, as a dispute resolving m e c h a n i s m , has gone through several h u n d r e d  in western  countries.  there w a s n o j u d i c i a l  But in China,  years  it started j u s t s e v e r a l d e c a d e s a g o . P r e v i o u s l y ,  litigation but feudal adjudication  to solve a l l disputes.  Shorter  p e r i o d o f d e v e l o p m e n t o f litigation, m o r e o r less feudal characteristics r e m a i n e d , a n d  current C h i n a ' s political regime have resulted i n m a n y problems w i t h C h i n a ' s judicial  l i t i g a t i o n s y s t e m . E s p e c i a l l y s i n c e C h i n a ' s e n t r y to t h e W T O , e v e n m o r e  challenges  have b e e n raised f o r C h i n a ' s litigation s y s t e m w h i c h is s u p p o s e d to b e i n k e e p i n g w i t h  W T O rules a c c o r d i n g to the c o m m i t m e n t s  C h i n a has made.  T h i s chapter examines the extent C h i n a ' s j u d i c i a l proceedings o f e c o n o m i c  satisfies  the requirements  o f transparency  set o u t at the b e g i n n i n g  disputes  o f the thesis.  Notably, i n C h i n a , most o f e c o n o m i c disputes c a nb e resolved b y the courts. A f e w o f  them  has  been  excluded  Reconsideration Law  4.2  from  litigation  according  to  the  and w i l l b e finally decided b y the administrative  Administrative reconsideration  Transparent applicable legislation The  court,  legislation, which,  in handling  the cases,  shall b e based o n transparent  a c c o r d i n g to the p r e v i o u s  analysis, shall be publicly  applicable  accessible,  '""ARL, Article 14 provides that in the event that the party refuses to accept the administrative reconsideration decision and applies to the State Council for adjudication, the adjudication by the State Council is final; also article 30 of the ARL provides that the administrative reconsideration, made by the provincial and municipal people's government and the government of autonomous region, confirming the ownership and right to use of land, mineral resources, water, forestry, mountain, grassland, wilderness, sands and sea area is final.  80  certain, u n i f o r m , consistent a n d stable.  In  China,  commercial  legislation under  suits  utilize  the c i v i l  litigation procedures. T h e applicable  Civil Litigation Law of the PRC  161  Obviously, the " l a w " here does not only  (hereinafter " C L L " )  is " l a w " .  1 6 8  refer to the l a w enacted b y the N a t i o n a l  P e o p l e ' s C o n g r e s s a n d its S t a n d i n g C o m m i t t e e . I n p r a c t i c e , n u m e r o u s r e g u l a t i o n s a n d  judicial  interpretation  are applied b y the courts. S o " l a w " under the C L L shall b e  u n d e r s t o o d i n this thesis i n a w i d e sense. A c c o r d i n g l y , the issues o f transparency are  related  to a l l legislation w h i c h  Challenges  mostly  interpretation.  derive  from  might  b e the legislative  unsystematic  regulations  practice,  has some  internal document.  confidential  1 6 9  which  characteristics  o f the courts.  and numerous  F o r a n e x a m p l e , a c c o r d i n g to t w o j u d g e s o f B e i j i n g ,  Handling Cases Involving Foreign Elements judicial  authorities  judicial  Regulations on  is oftentimes  and can only  applied  used  in  as a n  170  Civil Litigation Law of the PRC (hereinafter "CLL"), passed and went into effect on 9 April, 1991. 1 6 8  CLL, Article 7 reads that the People's court, in hearing the cases, shall be based on the  facts and according to the law. 1 6 9  Regulations on Handling Cases Involving Foreign Elements, enacted by the Ministry of  Foreign Affairs, the Supreme People's Court of PRC, the Supreme People's Procuratorate, the Ministry of Public Security of the PRC, the Ministry of State Security of the PRC and the Ministry of Justice on 20 June 1995. 1 7 0  See Li Dayuan & Gu Shaoyong, "Shewai Minshi Falv Guanxi Shiyong Lifa Yanjiu" (A  Study on Civil Legal Relation Involving Foreign Elements), Falv Kexue Zhazhi {Law Science Magazine), Vol. 24, No. 3 (2004). 81  The  Administrative  Litigation  L a w o f the P R C  (hereinafter  1 7 1  "ALL")  is  more  specific than the C L Li n terms o f application o f l a w but actually m o r e complicated.  The  A L L expressly  specifies  that  the courts  shall  take  the l a w , administrative  regulations a n dlocal regulations as the criteria a n d take the rules as references.  Civil  1 7 2  L a w o f the P R C , a great n u m b e r o f separate l a w s a n d regulations f o r m the  a p p l i c a b l e l e g i s l a t i o n o f c o m m e r c i a l l i t i g a t i o n . It i s t h e c o u r t t h a t i s r e s p o n s i b l e f o r  application  commercial  of law when  administrative  the dispute  disputes,  application o f administrative  invites  the  the litigation.  situation  l a w is the matter  is  B u t , i n the event  different.  o f both courts  B y  contrast,  of  the  a n d administrative  organs, a n d the a p p l i c a t i o n b y the latter p r e c e d e s the former. T h i s d e v o l v e s into a  q u e s t i o n , i.e., w h i c h c r i t e r i a s h o u l d the c o u r t s a d o p t to e x a m i n e the a d m i n i s t r a t i v e  acts. Is it t h e l e g a l a u t h o r i t i e s a l r e a d y a p p l i e d b y the a d m i n i s t r a t i v e o r g a n s o r t h e l e g a l  authorities determined b y the courts themselves? T h i s p r o b l e m is further reflected b y  171  Administrative Litigation Law of the PRC (hereinafter "ALL"), passed on 4 April 1989  and put into force on 1 Oct 1990. 1 7 2  ALL, Article 52 reads, in handling administrative cases, the people's courts shall take the  law, administrative rules and regulations and local regulations as the criteria. Local regulations shall be applicable to administrative cases within the corresponding administrative areas. In handling administrative cases of a national autonomous area, the people's courts shall also take the regulations on autonomy and separate regulations of the national autonomous area as the criteria; Article 53 provides that in handling administrative cases, the people's courts shall take, as references, rules formulated and announced by ministries or commissions under the State Council in accordance with the law and administrative regulations and regulations, decisions or orders of the State Council and rules formulated and announced, in accordance with the law and administrative regulations and regulations of the State Council, by the people's governments of provinces, autonomous regions and municipalities directly under the Central Government, of the cities where the people's governments of provinces and autonomous regions are located, and of the larger cities approved as such by the State Council. 82  different  the  stipulations o f the A R L a n d the A L L . T h e y adopt different  normative  documents  courts. T h e normative  by  the administrative  between  administrative  reconsideration  where  towards  organs  a n d the  d o c u m e n t s , w h i c h , as p r e v i o u s l y a n a l y z e d , are virtually  review  organs even i f they  are internally  applicable i n the administrative litigation. T h i s is reflected b y  (1997),  attitude  the court  pointed  o u t that  used  circulated, are not  Jin Man Ke Electric Ltd.  the l a w adopted  by  the  administrative  173  reconsideration organ is a n internal document a n d shall not b e applied.  Excluding  the a p p l i c a t i o n o f n o r m a t i v e d o c u m e n t s i s a g o o d i n d i c a t i o n a n d f a v o r e d b y t h e i d e a l  o f t r a n s p a r e n c y . B u t , it a l s o m e a n s that a s a m e a d m i n i s t r a t i v e a c t m a y b e l e g a l i z e d b y  a n administrative r e v i e w organ b u t o u t l a w e d b y the court, as i n  Jin Man Ke Electric  (1997) Nevertheless, legal validity o f normative documents is not quite certain.  Ltd.  A s s o m e o f n o r m a t i v e d o c u m e n t s h a v e b e e n a p p r o v e d b y the State C o u n c i l , it is n o  d o u b t that they are to b e a p p l i e d i n j u d i c i a l practice. F o r the rest o f t h e m , t h e y a r e  arguably applied, concomitant w i t h m u c h controversy.  Notably,  in handling  administrative  suits,  the rules  1 7 4  are taken  b y the courts  "as  r e f e r e n c e " . T h e e s s e n t i a l m e a n i n g i s that c o u r t s a r e n o t o b l i g a t e d to a p p l y the rules.  As  there  are n o legal criteria about  h o w to take  Jin Man Ke Electric Ltd.  State Revenue of Shenzhen  which  1 7 3  See A p p e n d i x :  1 7 4  T h e n o r m a t i v e d o c u m e n t s w i l l b e r e g a r d e d as l a w f u l l e g i s l a t i o n i f the f o l l o w i n g c o n d i t i o n s  are s a t i s f i e d :  vires;  firstly,  v  rules as reference, under  (1997).  t h e e n a c t m e n t a u t h o r i t y m u s t e x e r c i s e i t s p o w e r i n m a k i n g r e g u l a t i o n intra  any regulations made  ultra vires s h a l l  be unlawful; secondly, proper legal procedures must  b e f o l l o w e d i n the p r o m u l g a t i o n o f a n y r e g u l a t i o n s ; t h i r d l y , t h e s u b s t a n c e o f a n y r e g u l a t i o n s m u s t not  contradict  the C o n s t i t u t i o n , national  laws or administrative  Administrative Law - Procedures and Remedies in China,  r e g u l a t i o n s . See  L i n Feng,  (Hong K o n g • L o n d o n : Sweet  &  M a x w e l l , 1996), pp.260.  83  c i r c u m s t a n c e s the rules are a p p l i e d a n d h o w to a p p l y is the d i s c r e t i o n o f the courts. 1 75 In  Mr. Sun Liangren,  although  the administrative  agency  h a d to r e m a k e  the  d e c i s i o n f o r it f a i l e d t o s h o w t h e a p p l i c a b l e l a w , t h e c o u r t d i d c o n f i r m i t s o p i n i o n s o n  the  plaintiff's  uncertainty  behavior  by  taking  a  normative  o f application greatly mitigates  document.  the predictability  1  7  6  However,  such  o f law. People do not  k n o w clearly w h e t h e r their business activities are legal o r not, n o r d o they k n o w the  strength o f their b u s i n e s s suits at court.  It i s m u c h e a s i e r t o e n c o u n t e r l e g i s l a t i v e c o n f l i c t s i n t h e c o u r s e o f a d m i n i s t r a t i v e  trial  t h a n c i v i l a n d c o m m e r c i a l l i t i g a t i o n . It i s b e c a u s e l e g i s l a t i v e c o n f l i c t s u s u a l l y o c c u r  between  local  regulations  and national  law, administrative  documents a m o n g the ministries a n d commissions.  1 7 7  In  rules,  and  normative  Mr. Chuanlin Tu  (1996),  ' ° The term "take as reference" has been subject to different interpretation. Three different views exist in China. One view holds that "take as reference" means that the courts shall apply other applicable legislation as any review of the other applicable legislation by the people's courts shall contradict article 12.2 of the ALL, which provides that no abstract administrative acts shall be reviewable; the second view maintains that the term does not mean direct application. Instead, the people's courts should only take into account the spirit of regulations, but not the regulations themselves because the ALL does not provide that they may be applicable legislation and the quality of regulations is not that good. The third view takes the middle road by suggesting that the term actually means conditional application of regulation injudicial review. That is to say that the people's courts shall examine regulations first to see whether they are applicable. It is a sort of selective application which gives the court the discretion in this aspect. The third approach is supported by the judiciary. See Luo Haocai, 1993, pp. 464-469. 1 7 6  See Appendix: Mr. Liangren Sun v Administrative Commission of High Technology  Development Areas. People's Government of Chongqin (2001) 177  Just before Legislation Law of the PRC passed, disputes concerning managerial  competence occurred between Agriculture Administrative Department and State Supply & Marketing Department. The former based on Regulations on Pesticide Management enacted by State Council; the latter relied on Measures for Implementing Regulations on Pesticide 84  the d e c i s i o n m a d e b y the d e f e n d i n g party, the administrative  the  court  because the defending  party  agency was quashed b y  w a s based o n a n administrative  regulation  1 78 w h i c h w a s conflict  partly  w i t h the law.  addressed b y  the recent  The problem  o f legislative conflicts has been  Legislation Law of the PRC.  m  It  provides  five  180 principles to define the levels o f validity  level  is superior  general  to the legislation  legislation, n e w legislation  o f legislation:  at l o w l e v e l ,  is superior  the l e g i s l a t i o n at h i g h e r  special legislation  is superior  to  to o l d l e g i s l a t i o n , l e g a l v a l i d i t y  of  l e g i s l a t i o n at the s a m e l e v e l i s e q u a l , a n d d o c t r i n e o f n o n r e t r o a c t i o n . B e s i d e s , it a l s o  designates w h i c h organizations are entitled to determine the l a w application issues i n 181 case there  law  the  is c o n f u s i o n as to d e a l i n g w i t h legislative conflicts.  does contribute  to w o r k i n g  Legislation Law f a i l s  out legislative conflicts  The  Legislation  i n practice. However,  since  to p r e s c r i b e the t i m e f o r the o r g a n i z a t i o n w i t h authority  to  g i v e a n i n t e r p r e t a t i o n , it m e a n s that t h e i n t e r p r e t a t i o n m a y n o t b e i s s u e d o r i s s u e d i n a  Management toe nthe ofy this Beijing c o n s i d e r a b l eenacted w h i l e . according T h e susp s i orelevant n o f l i t iprovisions gation m a t h u sregulation. f a l l i n t o See grea t u n c eWanbao rtainty. (Beijing Evening), 22 March 2000. 178  See Appendix: Mr. Chuanlin Tu v Industrial and Commercial Administrative Bureau.  Oinghuai District, Nanjing, Jiandsu Province (1996). 1 7 9  Legislation Law of the PRC provides the extent of legislative competence of various  legislative organizations, Articles 7-11. 1 8 0  As for the legislative conflicts between the legislation with different level of validity,  Article 79 of Legislation Law of the PRC says the validity of law is higher than administrative regulations, local regulations and rules, and, the validity of administrative regulations is higher than local regulations and rules. Article 80 states that the validity of local regulations is higher than the rules made by the governments at the same and lower lever, and, validity of rules made by the People's Governments of provinces and autonomous regions is higher than the rules made by the People's Governments of the bigger cities within the same administrative region. As for the legislative conflicts between the legislation with same level of validity, article 82, 85 and 86 set out how to deal with them. 181  Legislation Law of the PRC, Articles 85-86. 85  E i t h e r time o r m o n e y w o u l d b e what the interested parties cannot afford.  1 8 2  B y this  t o k e n , this thesis suggests that a clear t i m e l i m i t f o r i s s u i n g interpretation b e regulated.  A n d , as f o r the legislative conflicts b e t w e e n the regulations o r rules (not c o n c e r n i n g  the l a w ) , t h e c o u r t s h o u l d h a v e d e c i s i v e p o w e r to c h o o s e the a p p l i c a b l e  legislation.  F o r the regulations or rules w h i c h h a v e not b e e n applied, the courts m a y issue the  j u d i c i a l s u g g e s t i o n to the r e l e v a n t a d m i n i s t r a t i v e  4.2.1  organs.  Public accessibility Like  administrative  reconsideration,  the l a w a n d regulations  are  usually  p u b l i c l y accessible. T h e c o n c e r n is also o n the openness o f the internal guidelines a n d  the w i d e l y - u s e d n u m e r o u s j u d i c i a l interpretation.  4.2.2  S e ethe previous discussion.  Uniformity, consistency, certainty and stability Besides the analysis conducted i n the previous paragraphs (under the heading  o f administrative  reconsideration), here the author emphasizes l a w application issues  i n r e l a t i o n to the a d m i n i s t r a t i v e a n d c o m m e r c i a l litigation i n v o l v i n g f o r e i g n e l e m e n t s .  It c o n c e r n s t h e i s s u e o f h o w t o a p p l y t h e i n t e r n a t i o n a l  rules i n the domestic  courts.  T h i s issue is e s p e c i a l l y important g i v e n C h i n a ' s entry into the W T O .  T h e W T O agreement should be implemented b y C h i n a i n a n effective  182  and uniform  See Liu Xin, "Lun Baituo Xingzheng Susong de Kunjing" (On Stepping out of Dilemma  of Administrative Litigation), Xingzheng Faxue Yanjiu (Studies of Administrative Jurisprudence), No.4 (1999) 86  manner  by  revising  its e x i s t i n g  domestic  c o m p l i a n c e w i t h the W T O agreement.  laws  a n d enacting  n e w ones  are transformed  in  It m e a n s that t h e W T O r u l e s s h o u l d n o t b e  directly applied b y the domestic courts. T h e y are, therefore, indirectly  they  fully  into the d o m e s t i c  applied  after  law. O n the o n e hand, the individuals a n d  e n t e r p r i s e s c a n n o t r e l y o n t h e W T O r u l e s to s u e a n d p l e a at C h i n a ' s c o u r t s . O n t h e  other h a n d , the W T O rules cannot b e a p p l i e d i n the trial a n d quoted i n the j u d g e m e n t s .  T h i s has b e e n reflected b y the n e w j u d i c i a l interpretation,  The Supreme Court of the  PRC: Regulations on Hearing Administrative Cases In Relation to International Trade  (2002)  related w i t h  1 8 4  .  That  international  is, the People's Court, i n handling  trade, take  the l a w , administrative  the administrative  regulations  cases  and local  185 regulations, a n d take the rules as reference.  T h i s is just like the provisions  Either for direct application o r f o r transformed  domestic  adherence to international  treaties.  application, ultimately,  Application o f domestic  under  the result is  law  through  Report of the Working Party on the Accession of China (WT/ACC/CHN/49), Article 67. 1 8 4  The Supreme Court of the PRC: Regulations on Hearing Administrative Cases In Relation  to International Trade, passed on 27 August 2002 and being effective on 1 Oct. 2002. 185  This is reflected by Article 7-8 of The Supreme Court of the PRC: Regulations on Hearing Administrative Cases In Relation to International Trade. It is provided as follows, when the People's court shall handle the administrative cases involving international trade according to law, administrative regulations, local regulations enacted intra vires, and referring to the normative documents enacted by the ministries and commissions under the State Council pursuant to law and administrative regulations, decisions and decrees made by the State Council, and also referring to normative documents enacted by the people's government of provinces, autonomous region, municipal cities directly under the central government, the cities where provincial government and government of autonomous region are located, according do law, administrative regulations and local regulations. 1 8 6  ALL, Article 53. 87  interpretation  international  s o as to c o n f o r m  community.  to the international  treaties  is c o m m o n practice  This has been absorbed b y China.  T h e above  in  mentioned  j u d i c i a l interpretation p r o v i d e s that i n the event that there a r e t w o o r m o r e k i n d s  of  interpretation  in  o f applicable l a w a n d administrative regulations, the interpretation  c o m p l i a n c e w i t h the W T O rules s h a l l b e a d o p t e d . S o , C h i n a ' s courts t r y to a v o i d the  conflicts o f domestic l a w a n d W T O rules through interpretation  and application  of  1 87 law.  However,  interpretation  some  problems  remain.  What  would  prevail  if  there  is  no  i n k e e p i n g w i t h the W T O rules at a l l ? H o w s h o u l d o n e d e a l w i t h the  conflicts between the W T O rules a n d C h i n a ' s l a w , administrative regulations,  local  regulations  it  a n d rules?  D u e to  the  low  level  of  legal  validity  of  rules,  u n d e r s t a n d a b l e that the courts w i l l n o t take t h e m as reference i n the e v e n t  is  conflicts  arise. A s to l a w , administrative regulations a n d l o c a l regulations w h i c h have conflicts  w i t h the W T O , there is n o clear a n s w e r as to w h e t h e r they c a nb e the legal authorities  o f t h e c o u r t s . It i s s u g g e s t e d t h a t c o u r t s  s h o u l d s e n d to the l e g i s l a t o r the j u d i c i a l  s u g g e s t i o n s that the l a w o r r e g u l a t i o n s i n c o n f l i c t w i t h the W T O rules b e r e v i s e d .  After  the revision, they  m a y b e applied b y the courts.  1 8 8  This  suggestion  makes  s e n s e i n t h e l o n g r u n . I n t h e short r u n , i.e., f o r t h e c a s e at i s s u e , t h e m a n n e r to a p p l y  l a w to get the dispute settled is still u n k n o w n . 187  The Supreme Court of the PRC: Regulations on Hearing Administrative Cases In Relation  to International Trade, Article 9 provides that when the people's courts handle the administrative cases in relation to international trade and the applicable law and regulations involve two or more than two kinds of interpretation, the interpretation in compliance with the international treaties China participates into shall be adopted, unless China has made reservation. 188  See Xia Jinlai & Ye Bifeng, "Dui WTO Tizhi xia Guoji Maoyi Xingzheng Susong de  Sikao" (On Administrative Litigation In Relation to the International Trade under the WTO), Faxue Pinglun {Law Review), Vol. 119, No. 3 (2003) 88  C o m m e r c i a l litigation s e e m s c l e a r e r than a d m i n i s t r a t i v e litigation w i t h respect to h o w  to d e a l w i t h c o n f l i c t s b e t w e e n t h e i n t e r n a t i o n a l treaties a n d d o m e s t i c l a w . U n d e r  circumstance, the international  Law)  treaties p r e v a i l pursuant to the C L L  unless C h i n a hasmade reservation.  4.3  Procedural fairness  4.3.1  Openness System  this  (Civil Litigation  1 8 9  Procedural fairness relies o n the openness system running through the w h o l e  of  litigation.  A s specified previously,  the openness s y s t e m entails  o p e n n e s s to the  parties a n d to the p u b l i c , a n d also includes a series o f legal protective measures to  guarantee the realization o f openness.  T h e o p e n n e s s s y s t e m o f trial requires that the trial s h o u l d b e o p e n b o t h to the p u b l i c  a n d the parties. O p e n n e s s to the p u b l i c m e a n s the court s h o u l d a n n o u n c e the n a m e o f  the parties, cause o f action, time a n d p l a c e o f trial before the trial is held. D u r i n g the  course o f the court  trial, people s h o u l d b e a l l o w e d  permitted  report  to  make  a n d gather  news  unless  to audit  and media should be  otherwise  provided  b y law.  Furthermore, thejudgements should b e pronounced publicly.  CLL, Article 238 reads, the international treaties or conventions which China concludes or accedes to shall supersede national laws in cases of conflict between them, except those provisions on which China has made reservations. 89  F o r both administrative  provided b y law.  1 9 0  litigation  and c o m m e r c i a l litigation,  o p e n trial is e x p r e s s l y  B u t i n j u d i c i a l practice, there has b e e n a m i s u n d e r s t a n d i n g that  o p e n n e s s to the p u b l i c is the s a m e as a n o p e n trial. O p e n n e s s to the p u b l i c a n d s o c i e t y  i s s u r e l y n e c e s s a r y . It i s a k i n d o f e x t e r n a l s u p e r v i s i o n o v e r t r i a l a c t i v i t i e s a n d c a n b e  c o n d u c i v e to p r e v e n t i n g the j u d g e s f r o m a b u s i n g t h e i r p o w e r . B u t it is a l s o  t h a t t h e r o l e o f o p e n n e s s at t h i s l e v e l i s l i m i t e d  b e c a u s e neither the p u b l i c n o r  m e d i a r e a l l y p a r t i c i p a t e s into the l i t i g a t i o n a n d thus c a n o n l y exert i n d i r e c t  o n t h e t r i a l . It  admitted  is quite u n d e r s t a n d a b l e that they m a y  the  influence  lack enough driving  force  to  s u p e r v i s e the trial s i n c e they are not the interested parties. A l s o , their i n v o l v e m e n t  is  o n l y l i m i t e d to the c o u r t trial. A s f o r pre-trial a n d p o s t - t r i a l p r o c e e d i n g s , they are n o t  m u c h i n v o l v e d a n d m a y not be very helpful in terms o f supervision. A l l these indicate  the  i n a d e q u a c y o f o p e n n e s s to the p u b l i c  a n d the  s i g n i f i c a n c e o f o p e n n e s s to  the  parties, w h i c h w e c a l l here the s u b s t a n t i v e o p e n n e s s .  O p e n trial  s y s t e m s , at a d e e p l e v e l , e n t a i l a s e r i e s o f l i t i g i o u s  exercised by  rights  entitled  the p a r t i e s s o as to a s s u r e the p r o c e d u r a l f a i r n e s s a n d g u a r d  abusive discretion o f judges. T h e parties enjoy  the rights  and  against  to l e a r n the t r u t h a n d  to  p a r t i c i p a t e i n t o t h e l i t i g a t i o n t o t h e u t m o s t e x t e n t . It m e a n s t h a t b o t h o f t h e j u d i c i a l  p r o c e e d i n g s a n d c a s e d o c u m e n t s s h o u l d b e o p e n to the p a r t i e s .  M o r e s p e c i f i c a l l y , first, the  1 9 0  right  to l e a r n the p r o c e d u r e s s h o u l d b e s a f e g u a r d e d . T h e  A L L , A r t i c l e 6 a n d C L L , A r t i c l e 10.  90  whole  judicial  proceedings,  including  the  extrajudicial  investigation  trial  and  p r e p a r a t i o n f o r the trial, s h o u l d b e o p e n to the parties. T h a t i s , the parties are entitled  to p a r t i c i p a t e i n t o a n d b e p r e s e n t at t h e w h o l e p r o c e s s o f t h e l i t i g a t i o n e x c e p t f o r t h e  judges'  private  sitting.  To  prevent  the  court  from  making  secret  or  illegal  i n v e s t i g a t i o n s , the court s h o u l d n o t e x e r c i s e p o w e r to d o i n v e s t i g a t i o n u n l e s s at the  request o f the parties. T h e parties are also entitled to learn the factual basis a n d legal  authorities o f the j u d g e m e n t s . I n the event that the a p p l i c a t i o n f o r a c t i o n is refused,  the reasons a n d the a p p l i c a b l e l a w s h o u l d b e g i v e n t o o . T h e right to learn the truth, o f  course,  includes  the right  to b e i n f o r m e d  o b l i g a t e d to c o r r e c t l y i n f o r m  the litigants  o f the litigious  o f their  litigious  rights.  rights  abdicate, alter a n d increase c l a i m s i n litigation; the defendants'  the parties'  rights  T h e courts are  like the  right  rights  to d e f e n s e ,  to  1 9 1  to a u t h o r i z e the r e p r e s e n t a t i v e to a t t e n d t h e p r o c e e d i n g s , to a p p l y  f o r the c h a l l e n g e , to i n q u i r e the w i t n e s s e s , appraisers a n d on-site e x a m i n e r s subject to  the a p p r o v a l o f the j u d g e s a n d to debate i n litigation; to l o o k u p a n d c o p y the c a s e  files ( u n l e s s i n v o l v i n g t h e state s e c r e c y a n d p e r s o n a l p r i v a c y ) ; the r i g h t to a p p e a l , e t c .  S e c o n d , pretrial procedures s h o u l d b e o p e n to the parties. I n this regard, C h i n a ' s l a w  o n l y r e q u i r e s that the c o m p o s i t i o n o f c o l l e g i a l b e n c h s h o u l d b e o p e n . F o r e x a m p l e ,  the C L L p r o v i d e s that o n c e t h e m e m b e r s o f c o l l e g i a l b e n c h a r e c o n f i r m e d , the parties  s h o u l d b e notified w i t h i n three days. If there are legal reasons, the parties are entitled  191  For the civil and commercial litigation, the defendant is entitled to counterclaim, but the  defendant in the administrative litigation, the administrative agency, is not entitled to counterclaim; also, the parties enjoy the right to apply for mediation, which is not allowed in the administrative litigation except for the state compensation case. 91  to c h a l l e n g e the m e m b e r ( s )  o f the c o l l e g i a l b e n c h . H o w e v e r , s o m e o t h e r  important  p r e t r i a l a c t i v i t i e s c o n d u c t e d b y the c o u r t s are not o p e n to the parties. F o r i n s t a n c e ,  t h e r e is n o l e g a l g u a r a n t e e f o r the p a r t i e s to l e a r n the e v i d e n c e c o l l e c t e d b y the  courts  p r i o r to the t r i a l , o n the k i n d o f p r o c e d u r e s the c o u r t o b t a i n the e v i d e n c e . T h e r e f o r e ,  is d i f f i c u l t f o r the p a r i t i e s to k n o w the l e g i t i m a c y o f the e v i d e n c e .  it  192  T h i r d , the c o u r t t r i a l s h o u l d b e t o t a l l y o p e n to the p a r t i e s . O n the o n e h a n d , e i t h e r s i d e  o f party s h o u l d not m a k e a surprise attack o n the other side w h e n p r o d u c i n g e v i d e n c e .  O n the o t h e r h a n d , the j u d g e s h o u l d g u a r a n t e e the p a r t i e s ' r i g h t s to s t a t e m e n t ,  debate,  r e s p o n s e , c r o s s - e x a m i n a t i o n a n d the r i g h t to p r o d u c e the c a s e d o c u m e n t s , a n d p r o v i d e  the parties w i t h adequate opportunities  noteworthy  a n d c o n d i t i o n s to e x e r c i s e a b o v e rights.  The  t h i n g h e r e is that the o p e n n e s s o f court trial here i n c l u d e s the o p e n n e s s  of  the s e c o n d i n s t a n c e o f trial.  4.3.2  Recent Progress E n c o u r a g i n g l y , C h i n a h a s a d o p t e d s o m e m e a s u r e s to r e a l i z e the o p e n n e s s  trial to the p u b l i c a n d the parties recently. O n 10 M a y  P e o p l e ' s C o u r t o f B e i j i n g t o o k the l e a d throughout  c i t i z e n at or a b o v e the age o f eighteen m a y  certificate.  1 9 2  On  1998, the N o . 1  of  Intermediate  the c o u n t r y i n d e c l a r i n g that a n y  audit the c o u r t  trial w i t h an  11 J u l y o f t h e s a m e y e a r , t h e s a m e c o u r t h e l d a t r i a l o f  effective  intellectual  See W a n g F u h u a , " M i n s h i S h e n p a n G o n g k a i Z h i d u de S h u a n g c h o n g H a n y i " , ( T w o - L e v e l  M e a n i n g o f O p e n n e s s S y s t e m o f C i v i l T r i a l ) , Dangdai Faxue (Modern Law  Science), N o . 2  (1999). 92  property  country.  case  1  9  3  which  w a s lively  In March  broadcast  1 9 9 9 , the Supreme  b y the C h i n a Central T V to the w h o l e  People's Court  Strictly Implementing the System of Open Trial.  promulgated  It e x p r e s s l y points  Rules on  o u t that u n l e s s  otherwise p r o v i d e d b y l a w , a l l the cases shall b e heard i n public; the w h o l e process o f  trial shall b e o p e n a n d responsible report b y the m e d i a shall b e a l l o w e d .  As  f o r the openness t o the parties, recent measures include the f o l l o w i n g  respects  including the trial system, evidence and j u d i c i a l power, etc.  T h e O p e n t r i a l s y s t e m c a l l s f o r a n i m p r o v e d l i t i g a t i o n m o d e l . O n 11 J u l y 1 9 9 8 , Rules  on Reforming the Model of Civil and Economic Trial w a s e n a c t e d b y t h e S u p r e m e People's  adversary  Court.  T h e traditional  proceedings.  ex officio p r o c e e d i n g s  The new ways  o f court  trial,  have  been  replaced b y  characterized  b y open  evidence-producing, cross-examination, debate, authentication, adjudication a n d court  trial a s the c o r e o f t h e w h o l e t r i a l h a v e b e e n c a r r i e d o u t b y t h e c o u r t s at a l l l e v e l s .  1  9  4  T h e investigation a n d collection o f evidence aren o m o r e undertaken b y the courts but  m o s t l y b y the parties themselves.  E v i d e n c e i s the essence o f litigation.  PRC  promulgated  I n D e c e m b e r 2 0 0 1 , the S u p r e m e C o u r t o f the  Rules on Evidence of Civil Litigation,  w h i c h w a s the first rule o n  e v i d e n c e m a d e b y t h e j u d i c i a l o r g a n o f t h e h i g h e s t l e v e l s i n c e t h e e n a c t m e n t o f Civil  1 9 3  See  Renmin Ribao {People's Daily),  1 9 4  See  Renmin Ribao  16 O c t . 2 0 0 2 , p. 10.  (Overseas V e r s i o n -  People's Daily),  14 N o v . 2 0 0 1 , p.4. 93  Litigation Law of the PRC. into  the  litigation  producing  T h e R u l e is v e r y s i g n i f i c a n t for the parties  a n d the j u d g e s  evidence which  means  cannot be heard or b e c o m e n e w  h e a r i n g t h e c a s e s . It  the  introduces  participating  a time  e v i d e n c e a d d u c e d e x c e e d i n g the  e v i d e n c e to o v e r t h r o w  limit  time  for  limit  the o r i g i n a l j u d g e m e n t .  s t r e n g t h e n s e v i d e n t i a l b u r d e n . T h e p a r t y w h o f a i l s to i n d u c e e v i d e n c e m a y l o s e  It  the  suit. V e r y i m p o r t a n t l y , A r t i c l e 5.7 o f this R u l e requires that i n the event o f s i g n i f i c a n t  a n d c o m p l e x c a s e s , the t w o p a r t i e s s h o u l d u n f o l d the e v i d e n c e to e a c h o t h e r p r i o r  to  t h e t r i a l . It i n d i c a t e s f o r t h e f i r s t t i m e C h i n a h a s i t s o w n e v i d e n c e e x c h a n g e s y s t e m .  Also  w i t n e s s e d is the  improvement  on  the  administrative  litigation  in  respect  e v i d e n c e . O n 2 7 J u l y 2 0 0 2 , the S u p r e m e C o u r t o f the P R C p r o m u l g a t e d  Evidence of administrative Litigation, w h i c h  c l e a r l y stipulates that the  of  Rules on  administrative  a g e n c y , as the d e f e n d i n g party, s h a l l p r o v i d e f a c t u a l e v i d e n c e a n d l e g a l authorities  on  w h i c h the a d m i n i s t r a t i v e a c t at i s s u e w a s m a d e . I n the e v e n t o f the f a i l u r e to d o s o o r  do  so  after  a  stated  date  without  reasonable  reasons,  it  is  deemed  that  the  a d m i n i s t r a t i v e a c t at i s s u e l a c k s e v i d e n t i a l s u p p o r t .  The above two  e v i d e n c e rules indicate the great efforts  procedural fairness through  done by  C h i n a to  achieve  s a f e g u a r d i n g the correct u s a g e o f e v i d e n c e d u r i n g  the  F o r a l o n g p e r i o d , j u d i c i a l p r a c t i c e , l i k e the a d m i n i s t r a t i v e m o d e l , has f o l l o w e d  the  litigation.  94  practice o f examination and approval level b y level, w h i c h m a k e s the collegial b e n c h  without virtual p o w e r and with w e a k e n e d functions. T h ecollegial bench is unworthy  o f the title. O n 16 A u g u s t 2 0 0 0 ,  Court  Measures on Electing Chief Justice of the People's  w a s p r o m u l g a t e d b y the S u p r e m e Court. T h e a c a d e m i c r e a l m regards this  as t h e s u p p o r t p o i n t o f the c o m p r e h e n s i v e r e f o r m s o f the c o u r t s .  rule  1 9 5  A d o p t i n g t h e e l e c t i o n o f c h i e f j u s t i c e , t h e c o u r t s at v a r i o u s l e v e l s r e t u r n t h e d e c i s i v e  power  o f the cases  to the responsible j u d g e  and collegial  bench.  T h e heads  of  divisions a n dthe presidents o f the courts d o not examine a n d approve the cases a n d  cannot personally change the decision m a d e b y the collegial bench. B o o s t e d b y the  S u p r e m e C o u r t , a l l o f l o c a l courts started to formulate concrete projects to elect their  chief justice  (e.g., the procedures o f r e c o m m e n d a t i o n , written e x a m s a n d interview  etc.) N o w , m o s t o f the courts h a v e f i n i s h e d this  As  reform.  for the openness o f decisions, for a long time m a n y observers i n the West  challenged the C h i n e s e courts  f o r their  failure  to p u b l i s h the l a w s a p p l i e d i n  have  their  a d j u d i c a t i o n . T h e y e v e n c a m e to t h e c o n c l u s i o n that C h i n a w a s a state w i t h o u t l a w .  1 9 6  N o w , things have been changed. T h e S u p r e m e People's C o u r t opens to the public  the first b a t c h o f full-text j u d g e m e n t d o c u m e n t s f r o m m a j o r cases. T h eC o u r t d e c i d e s  195  See Supra note 193.  1 9 6  For a full discussion of this subject, see Hsia, "Chinese Legal Publications: An Appraisal",  in Contemporary Chinese Law: Chinese Problems and Perspectives (J. Cohen ed. 1970), p.20, 68-71; also see Shao-Chuan Leng & Hungdah Chiu, Criminal Justice in Post-Mao China (1985) pp.10-20; Shao-Chuan Leng, Justice in Communist China (1967), pp. 84-87. 95  to o p e n s e l e c t e d j u d g e m e n t  reform  and  transparency  d o c u m e n t s to the p u b l i c i n the future  improve  their  quality.  The  exposure  will  o f trials.  M e a n w h i l e , the S u p r e m e People's  courts to o p e n full-text j u d g e m e n t d o c u m e n t s i n the future.  4.3.3  to e x p e d i t e  certainly  Court  will  their  enhance  require  the  local  1 9 7  Problems to be resolved D e s p i t e o f m u c h progress C h i n a has m a d e , this thesis also intends to  identify  the p r o b l e m s that still r e m a i n a n d the c h a l l e n g e s c o n f r o n t e d b y C h i n a o n the w a y to  seeking greater transparency i n j u d i c i a l adjudication.  4.3.3.1  Common issues Currently, the n u m b e r o f cases i n w h i c h court rulings are o p e n l y defied is  decreasing, but cases i n v o l v i n g  still  high  in number.  1 9 8  abuse o f p o w e r and administrative  A s the p o w e r  of judicial  bodies  grows,  intervention  the p r o b l e m  corruption i n the j u d i c i a l system is b e c o m i n g a m o r e serious focal point  are  of  for public  c o n c e r n . O u t m o d e d trial procedures s u c h as the refusal to a l l o w press c o v e r a g e  of  trials, a l a c k o f transparency i n trial procedures, a n d r u n n i n g questions throughout the  trial b y the j u d g e  not o n l y influence the fairness o f the trial but also influence the  r e s p e c t a n d trust o f t h o s e i n v o l v e d a n d s o c i e t y at l a r g e t o w a r d t h e l e g a l s y s t e m . T h e  quality o f j u d g e s has also p r o v e d to b e a difficult p r o b l e m , i n f l u e n c i n g the fairness o f  trial  a n d the justness  of judicial  proceedings, and more  197  Beijing Qingnian bao (Beijing Youth Daily),  198  FazhiRibao (Legal Daily),  20  June  importantly,  there  are a  2 0 0 0 , p. 2 c .  10 O c t . 2 0 0 0 , p . l .  96  n u m b e r o f structural weaknesses.  Adjudicatory Committee. colors  of  administration  T h e adjudicatory  of  China's  court  committee  system.  1 9 9  system  It  reflects  is o n e o f  the  strong  obstacles  to  actualize j u d g e s ' responsibility system. T h e committee is c o m p o s e d o f president, vice  president, the chief judge  a n d heads o f each d i v i s i o n o f the court. T h o s e w i t h  great  trial experience b u t w i t h o u t a leading title are n o t entitled to sit i n the c o m m i t t e e . T h e  functions  of  the committee  include  summarizing  trial  experiences,  deciding  challenge against presidents, d e c i d i n g retrial o f cases, etc. O n e important  the  function is  to d i s c u s s , e x a m i n e a n d a p p r o v e t h e cases i n trial. A c c o r d i n g to the r e l e v a n t l a w , i f  the  case  judgement,  whose  is  so complicated  that  collegial  bench  has difficulties  the president o f court m a y refer the case to the a d j u d i c a t o r y  decision shall be enforced  litigation,  the  b y the collegial bench.  in  making  committee,  A s with  administrative  i f the case concerns whether the defendant's administrative  act should b e  r e v o k e d , the c o l l e g i a l b e n c h is not entitled to m a k e the j u d g e m e n t . T h e case s h o u l d b e  r e f e r r e d to the a d j u d i c a t o r y  committee  would be astounding if w e had a look  w h i c h m a k e s the final decision. H o w e v e r ,  at h o w a n adjudicatory  committee  it  actually  m a k e s t h e d e c i s i o n . I n a w o r d , it i s a s e c r e t t r i a l l i k e a " m e e t i n g " . W h e n t o h o l d t h e  " m e e t i n g " is uncertain. E x c e p t for the committee m e m b e r s , reporters o f the case, a n d  the recorders, n o o n e else c a n b e present at the " m e e t i n g " . G e n e r a l l y , the c o m m i t t e e  does n o t r e v i e w the files o r e x a m i n e e v i d e n c e , n o t m e n t i o n to listen to the statements  199  See Zhu Chenxia, "Xingzheng Shenpan Heyiting Xianzhuang Lunxi" (On Collegial  System of Administrative Trial), Zhengzhou Daxue Xuebao (Journal of Zhenzhou University), Vol. 35, No. 6, (Nov. 2002) 97  o f the c o n c e r n e d parties. W h a t they d o is to h e e d the case report a n d then e a c h g i v e s  his o r h e r o p i n i o n s a n d the final d e c i s i o n is f o r m e d o n the basis o f m a j o r i t y principle.  T h e r e f o r e , the right to h a v e a p u b l i c trial e n j o y e d b y the parties h a s b e e n d e p r i v e d .  T h e parties to the final m a y n o t e v e n k n o w the true j u d g e s b e c a u s e the signers o n the  judgement  m a y n o t b e the ones w h o really give  adjudicatory  committee  creates r o o m  the judgement.  f o r secret operation  2  during  0  0  T h e system o f  the trial.  It  goes  against the concept o f transparency.  Second Instance.  F o r both c i v i l a n d c o m m e r c i a l cases a n d administrative  cases o f  first instance, p u b l i c h e a r i n g s s h o u l d b e c a r r i e d o u t a c c o r d i n g to the l a w . A s f o r those  cases o f second instance, legally or practically, public  expected.  Take article  152 o f  hearings are the thing to b e  Civil Litigation Law of the PRC a s  an example,  it  provides:  "The People s Court shall, in the case of an appeal, institute a collegial panel for its court hearings. Subject to review of files, investigation and inquiry of the parties, after the facts are checked, the collegial panel may make a direct judgment or ruling as it thinks unnecessary to hold a court."  T h i s p r o v i s i o n does not c o n s i d e r the scope o f cases o f the s e c o n d instance w h i c h shall  b e h e a r d p u b l i c l y . It, h o w e v e r , i m p l i e s t h a t i t i s t o t a l l y u p t o t h e c o l l e g i a l p a n e l o f t h e  s e c o n d instance to d e c i d e w h e t h e r a p u b l i c h e a r i n g is n e e d e d . A p u b l i c h e a r i n g is o n e  2 0 0  See W u X i a n h u a , " W T O y u Z h o n g g u o Sifa G a i g e " ( W T O & C h i n a ' s Judicial Reforms),  Guangxi Shehui Kexue {Guangxi Social Sciences),  C u m u l a t i v e l y V o l . 87, N o . 3 (2002)  9 8  o f p r o c e d u r a l rights e n j o y e d b y the parties. E x e r c i s e o f this r i g h t is not l i m i t e d to  the  f i r s t i n s t a n c e . T h e p a r t i e s c o n c e r n e d s h o u l d b e e n t i t l e d to r e q u i r e a p u b l i c h e a r i n g  s e c o n d instance too. Furthermore,  of  since the s e c o n d instance has b e e n triggered,  it  i n d i c a t e s t h e e x i s t e n c e o f d i s p u t e s . T h u s , the j u d g e at t h e s e c o n d i n s t a n c e s h o u l d h e a r  the o p i n i o n s o f the parties c o n c e r n e d a n d their debates. O n the other h a n d , the parties  are a l s o e n t i t l e d to b e d i r e c t l y h e a r d b y the c o u r t . O n l y b y h o l d i n g a c o u r t , c a n a l l the  reasons be elucidated i n a transparent  way.  O t h e r w i s e , there  may be an  operation  u n d e r t h e c o u n t e r . I n a w o r d , it is the r i g h t o f the p a r t i e s to h a v e o r n o t to h a v e  p u b l i c h e a r i n g o f s e c o n d - i n s t a n c e c a s e . It i s t h e p a r t i e s n o t t h e c o l l e g i a l p a n e l  a  who  s h o u l d d e c i d e w h e t h e r a p u b l i c hearing is needed.  Trial Supervision.  C h i n a adopts the s y s t e m w h e r e b y  B u t , it d o e s n o t m e a n t h e f i n a l i t y o f j u d g m e n t  the s e c o n d instance is  at the s e c o n d i n s t a n c e c o u r t . I n  there is a s y s t e m c a l l e d trial s u p e r v i s i o n w h i c h is l a u n c h e d b y the i n t e r e s t e d  the P e o p l e ' s C o u r t i t s e l f as w e l l as the P e o p l e ' s P r o c u r a t o r a t e , i f a n y o f t h e m  the j u d g m e n t ,  validity  which  has c o m e  into  effect,  o f the s o - c a l l e d f i n a l j u d g e m e n t .  is w r o n g .  In  a s e n s e , it  final.  China,  parties,  thinks  suspends  the  P u t t i n g aside the q u e s t i o n o f p r o p r i e t y  of  t h i s s y s t e m , o n c e this p r o c e d u r e starts u p , it is n o t e d that m o s t l y the c a s e s a r e t r i e d  on  d o c u m e n t s . N o court s e s s i o n is h e l d . A t m o s t , the courts m a k e s o m e i n v e s t i g a t i o n  or  i n q u i r e o f the parties. O n e b a s i c r e q u i r e m e n t to b r i n g the trial s u p e r v i s i o n is that n e w  e v i d e n c e is f o u n d . N o m a t t e r w h e t h e r n e w e v i d e n c e is c o l l e c t e d b y the p a r t i e s o r  the  court,  the  without cross-examination, authentication,  hearing, h o w  to  adopt  debate b e t w e e n the parties  s u c h e v i d e n c e j u s t d e p e n d s o n the j u d g e s  at  themselves.  The  99  process is n o t transparent. T h e i m p r o p r i e t y o f this is self-evident. A s the parties h a v e  n o o p p o r t u n i t y to g i v e statements at court, f a i r n e s s o f j u d g m e n t is h a r d l y g u a r a n t e e d .  Instruction-request  by  system.  I n C h i n a , there is a s y s t e m w h i c h is n o t c l e a r l y p r o v i d e d  l a w but is w i d e l y used i n judicial practice a n d hasbeen confirmed b y judicial  interpretation.  This is instruction-request  (qingshi)  system. W h e r e a case is difficult,  the court, o r a l l y o r i n w r i t t e n m a n n e r , refers the case to the h i g h e r l e v e l court f o r a n  o p i n i o n i n t e r m s o f s u b s t a n t i v e o r p r o c e d u r a l issues w i t h t h e c a s e b e f o r e it g i v e s t h e  judgment.  T h eh i g h e r level court, subject to d i s c u s s i o n a n dresearch, m a k e s  official  ^01 r e p l i e s t i t l e d Pifu.  "  T h i s i s a v e r y p o p u l a r m e c h a n i s m a m o n g t h e l o c a l c o u r t s . It  c a n b e e v i d e n c e d b y a b r i e f l o o k at gazettes o f S u p r e m e P e o p l e ' s C o u r t w h e r e  are lots o f instruction-requests  there  submitted b y local courts a n d replies given b y the  S u p r e m e P e o p l e ' s C o u r t . I n despite o f active role this s y s t e m m a y h a v e p l a y e d i n t h e  p a s t , t h e r e a r e m a n y p r o b l e m s a s s o c i a t e d w i t h it. It i s n o t i n c o m p l i a n c e w i t h l e g a l  procedures  a n d falls  short  of  the requirement  of  independent  trial  under  the  C o n s t i t u t i o n a n d l a w . It m a k e s p u b l i c h e a r i n g p r a c t i c a l l y n u l l . B e f o r e t h e trial, t h e  judges have already obtained the opinions o n the case f r o m the higher level court b y  requesting instructions. A l l the activities such as producing evidence, debating a n d  cross-examination, arepointless, n o matter h o wreasonable a n d c o n v i n c i n g they are.  It i s j u s t u n l i k e l y f o r t h e c o u r t t o g i v e u p t h e c o n c l u s i v e o p i n i o n s g i v e n b y t h e c o u r t a t  h i g h e r level. C r i t i c i s m o f this m e c h a n i s m arises also b e c a u s e it prejudices the right o f  litigants to appeal against d e c i s i o n w i t h w h i c h they are dissatisfied, asthe h i g h e r l e v e l 2 0 1  See Supra note 198.  100  court o f appeal m a y have already considered the case a n d f o r m e d a n o p i n i o n  before  t h e a p p e a l i s h e a r d . It i s e v e n w o r s e w h e n o n e l o o k s a t h o w t h e c o u r t a t h i g h e r l e v e l  m a k e s t h e r e p l y . G e n e r a l l y , it d e b r i e f s t h e c a s e f r o m t h e l o w e r l e v e l c o u r t , o r r e f e r s to  w r i t t e n m a t e r i a l s . C e r t a i n l y it d o e s n o t h e a r the c a s e directly. T h e c o r r e c t n e s s o f the  reply  made  in  such  situation  is therefore  hard  to  be  secured. In  a word,  such  b u r e a u c r a t i c w o r k - s t y l e o f c o u r t s strikes at the i d e a l o f t r a n s p a r e n c y .  Political-legal Committee.  Cases  which  involve  important  local issues  are  often  discussed b y the local C o m m u n i s t Party Political-legal C o m m i t t e e . T h e c o m m i t t e e  c o m p r i s e s r e p r e s e n t a t i v e s o f the court, p r o c u r a t o r a t e , p u b l i c security, state  security,  judicial  a n d the  bureau, civil  affairs,  nationality  and religious  s u p e r v i s i o n b u r e a u at that l e v e l o f the g o v e r n m e n t . A  following  observation:  "the court  often  reports  the  Party's  political-legal  committees  Chinese legal scholar has the  to the l o c a l p a r t y  s o l i c i t s o p i n i o n s f o r s o l u t i o n ... a n d i f c o n t r a d i c t i o n s  organs,  affairs  committee  committee  arise a m o n g different  often  steps  and  judicial  forward  to  A l t h o u g h the Political-legal C o m m i t t e e generally rarely involves  itself  203 coordinate."  in  pure  commercial  matters,  it  does  play  active  role  in  some  commercial  administrative disputes. 2 0 2  A western perspective of China's instruction-request (qingshi) system is available at  Edward J. Epstein, "Law and Legitimation in Post-Mao China", in Pitman, B. Potter ed, Domestic Law Reforms in Post-Mao China (New York: M.E. Sharpe, Inc., 1994), pp. 40. 2 0 3  See He Weifang, "Tongguo Sifa Shixian Shehui Zhengyi: Dui Zhongguo Faguan  Xianzhuang de Yige Toushi" (The Realization of Social Justice Through Judicature: A Look at the Current Situation of Chinese Judges), in Xia Yong ed., Zou Xiang Quanli de Shidai: Zhongguo Gongmin Quanli Fazhan Yanjiu (Toward a Time of Rights: A Perspective of the Civil Rights Development in China) (Beijing: China University of Political Science and Law Press, 1995), pp. 209, 249. 101  Pronouncement ofjudgment.  A c c o r d i n g to the l a w , f o r a n instance, article  Civil Litigation Law of the PRC,  judgment  134 o f  shall be pronounced i n public no matter  w h e t h e r the trial is p u b l i c o r not. P u b l i c p r o n o u n c e m e n t o f j u d g m e n t is v e r y i m p o r t a n t  to s e c u r e t h e t r a n s p a r e n c y o f t h e j u d g m e n t  a n d m a k e the parties k n o w their  relevant  due rights like the right o f appeal, time limit o f appeal a n d court o f appeal. H o w e v e r ,  unlike western countries, judgment m a y not be pronounced i n court even w h e n public  h e a r i n g i s h e l d . It i s c o m m o n t o s e e j u d g m e n t c o m i n g o u t s e v e r a l d a y s l a t e r a f t e r t h e  t r i a l . It i s s a i d t h a t j u d g e s a r e c l e a r o f t h e f a c t s o f t h e c a s e a t t h e e n d o f t h e t r i a l . A f t e r  a p e r i o d , it is l i k e l y  period  m a y create  that s o m e facts a n d e v i d e n c e m a y n o t b e recalled. A l s o ,  another  possibility  in  China,  that  is, some  kind  of  this  outside  interference m a y c o m e into p l a y a n d influences the i n d e p e n d e n c e o f judges to m a k e a  fair judgment.  Open written judgement. the  W T O .  2  0  4  Transparency i n judicial judgments is highly stressed under  T h e W T O transparency principles  require  the openness o f j u d i c i a l  judgements to the parties c o n c e r n e d a n d to the public. Judgements include n o t o n l y  t h o s e m a d e b y t h e f i r s t i n s t a n c e c o u r t s a n d t h o s e m a d e b y t h e c o u r t s o f a p p e a l . It i s a l l  of judgements  2 0 4  not just selected judgments  that s h o u l d b e o p e n e d . C o n s i s t e n c y o f  Taking TRIPs as an example, Article 63.1 provides that laws and regulations, and final  judicial decisions and administrative rulings of general application, made effective by a Member pertaining to the subject matter of the Agreement (the availability, scope, acquisition, enforcement and prevention of the abuse of intellectual property rights) shall be published, or where such publication is not practicable made publicly available, in a national language, in such a manner as to enable governments and right holders to become acquainted with them. Agreements concerning the subject matter of this Agreement which are in force between the government or a governmental agency of a Member and the government or a governmental agency of another Member shall also be published. 102  judgements  can be improved  transparency  principle.  More  b y the press o f p u b l i c a t i o n  importantly,  whether  requirements  Member  under  the  law  and  countries'  regulations are i n c o m p l i a n c e w i t h the W T O rules c a n revealed through the openness  of all judgements. In China, written judgments  the  selected judgments  are published  are n o t easily a c c e s s i b l e e x c e p t that  and some  courts  in  big  cities  put  some  j u d g m e n t s o n their w e b s i t e s . O n e r e a s o n m a y b e that the i n f o r m a t i o n s y s t e m h a s n o t  yet  set  up.  The  "good-looking"  second  reason  may  be  that  the judgments  e n o u g h a n d c a n n o t s t a n d u p to v a r i o u s c o m m e n t s  are  mostly  as they  not  are too  ^05 simple a n d lack a detailed rationale.  "  S o m e j u d g m e n t s c o n c e r n i n g the a p p l i c a t i o n  o f i n t e r n a l r e g u l a t i o n s are a n o t h e r p o s s i b l e r e a s o n f o r u s n o t b e i n g a b l e to r e a c h t h e m .  It i s e v e r a r g u e d t h a t u n l i k e c o m m o n l a w c o u n t r i e s , t h e r e i s n o c a s e l a w i n C h i n a a n d  judgments  have  no binding  force  o n other  cases  H o w e v e r , i n o r d e r to strengthen the p r e d i c t a b i l i t y  but only  the reference  value.  o f law, making written judgments  o p e n t o t h e p u b l i c i s o n e o f m e a s u r e s t o r e a c h t h i s g o a l . It h e l p s p e o p l e t o l e a r n t h e  l e g a l nature o f their b e h a v i o r a n d e x p o s e s j u d i c i a l activities to the p u b l i c e y e s .  Sketchy Written Judgement including  reasons  substantive  o f applying  In  written  judgments,  the  applicable  l a w a n d p r o c e d u r a l l a w , s h o u l d b e indicated as w e l l  them.  In  China,  the applicable  l a w a n d regulations  g e n e r a l l y q u o t e d . A l t h o u g h i n theory, courts are n o t r e q u i r e d to refer to  2 0 5  legislation,  as the  will  be  internally  See Chen Hu & Dong Jinghua, "WTO Toumingdu Yuanze yu Zhongguo Xingzheng  Shenpan" (WTO Transparency Principles and China's Administrative Trial), Wanxi Xuebao (Journal of Wanxi University), Vol. 18, Vol. 1 (Feb. 2002); also see Zhang Zhiming, "Sifa Caipan de Shuolingxing" (Rationale in Judicial Judgements), Renmin Fayuan bao (People's Court), 19 Oct. 2001, p. 3. 103  c i r c u l a t e d r u l e s o r to n o r m a t i v e  d o c u m e n t s . In p r a c t i c e they d o , as these  documents  o f t e n f o r m the s p e c i f i c b a s i s f o r the a c t i o n . T h e s e s o - c a l l e d authorities  are  usually  applied  the  written  is a l w a y s  applied  in  case  judgments.  of  administrative  suits  F o r civil and commercial  but not q u o t e d b y the j u d g e m e n t .  and  usually  suits, j u d i c i a l  do  not  appear  interpretation  on  It i s o u t s i d e t h e l i t i g a t i o n t h a t t h e p a r t i e s  m a y learn the g o v e r n i n g legislation.  B e s i d e s , the j u d g e m e n t  2 0 6  l a c k s the  concerned  convincing  r e a s o n i n g a b o u t a p p l i c a t i o n o f l a w . T h e parties c o n c e r n e d h a v e to d e t e r m i n e the e x a c t  ^07 reasons  by  themselves.  "  This  might  be  explained  by  the j u d g e s '  qualification  w h i c h is still to b e e n h a n c e d . B u t , o n e m o r e i m p o r t a n t r e a s o n lies i n C h i n a ' s j u d i c i a l  s y s t e m . A s the h i g h e r l e v e l c o u r t is e n t i t l e d to s u p e r v i s e the l o w l e v e l c o u r t a n d  launch  trial  supervision  proceedings.  A  sketchy  judgement  is  less  likely  to  may  be  challenged.  Specific issues  4.3.3.2  B e s i d e s the c o m m o n p r o b l e m s existent in j u d i c i a l action, b o t h  litigation  and  commercial  challenges for the ideal o f  litigation  have  their  own  special  administrative  issues  raising  the  transparency.  Administrative litigation Over  economy,  the past  democracy  10  years, a l o n g w i t h the  and  the  construction  2 0 6  See W a n g F u h u a , supra note 192.  2 0 7  See W a n g F u h u a , supra note 192.  development  of national  legal  o f the  socialist  market  system, awareness  of  104  individual  confront  rights  and law consciousness have been increasing. M o r e ordinary  government  o r g a n i z a t i o n s b y u s i n g the l a w to p r o t e c t t h e i r  rights  people  in  court.  T h e i d e a o f " p r i v i l e g e " h e l d b y g o v e r n m e n t o f f i c i a l s is u n d e r a t t a c k a n d a n a w a r e n e s s  that g o v e r n m e n t  administration  is s u b j e c t to the r u l e b y  law  is g r o w i n g .  With  the  b r o a d e n i n g o f p e o p l e ' s c o n c e p t i o n s , the g r o w i n g practice o f h a n d l i n g disagreements  through  the  legal  system  and  the  Administration  of  Litigation  Law,  China's  courthouses h a v e p r o c e s s e d 5 0 0 , 0 0 0 cases a n d a c h i e v e d r e m a r k a b l e results o v e r  the  208 past 10 years.  to  the  M o r e o v e r , a d m i n i s t r a t i v e l i t i g a t i o n is s u p p o s e d to c o n t r i b u t e  administrative  dispute  resolution  interpretation w a s issued. T h e y are  Implementing  Administrative  after  Interpretation  Litigation  Supreme People s Court on Administrative  Law  two  recent  applicable  of the Supreme People's  of the PRC  Litigation  (1999)  Evidence  and  more  judicial  Court on  Rules of  the  (2002).  H o w e v e r , C h i n a ' s a d m i n i s t r a t i v e litigation is e s p e c i a l l y affected b y C h i n e s e  politics  and culture. C h i n a ' s l o n g tradition o f f e u d a l i s m has created an attitude o f privilege  for  government officials and servitude for ordinary people. These traditional ideas have  had a profound  influence o n Chinese people for  r e m o v e d overnight.  E v e n w i t h the i n t r o d u c t i o n  generations a n d is n o  o f the  Administration  of  way  to  be  Litigation  j u d i c i a l practice still meets challenges f r o m feudal ideologies. O r d i n a r y p e o p l e  Law,  are  too  intimidated  to  take  action  against  government  organizations.  Some  g o v e r n m e n t officials h a v e contempt for ordinary p e o p l e a n d for the j u d i c i a l s y s t e m .  2 0 8  Fazhi Ribao (Legal Daily),  10 O c t . 2000, p . l . 105  T h e y i n t i m i d a t e the p l a i n t i f f ; r e f u s e to a p p e a r i n c o u r t a n d i s s u e a d m i n i s t r a t i v e  which  interfere  with judicial  procedures.  Because  of  pressure  from  orders  government  organizations, s o m e courts reject applications for litigation a n d in s o m e cases  pass  verdicts  they  know  to  be  incorrect.  2 0 9  Insufficiencies  of  even  administrative  litigation c a n b e further s e e n t h r o u g h f r o m the f o l l o w i n g respects.  Although  heard,  it  the  violates law  violate  the  is w h e t h e r  courts  the  always  o r not.  defendant's  conduct  concrete administrative  pretrial  investigation  on  act is legal that  whether  the  plaintiff  T h e r e is a p r e s u m p t i o n o f the courts that i f the p l a i n t i f f  law, the d e f e n d a n t ' s  administrative  act is legal.  is  does  Such measure  actually  h e l p s the defendant a d d u c e e v i d e n c e a n d therefore w o r s e n s the already w e a k  litigious  status o f the plaintiff. T h e p l a i n t i f f m a y h a v e lost the case e v e n b e f o r e the c o u r t  trial  gets started.  D u e to the fact that the d e f e n d i n g p a r t y to the a d m i n i s t r a t i v e d i s p u t e s is  administrative  agencies, in practice, whether  the  perpetually  case should be placed o n file  is  a l w a y s d e t e r m i n e d b y the p r e s i d e n t o f the c o u r t w h o d e p e n d s n o t o n w h e t h e r the c a s e  satisfies the  essentials o f  complaint,  but  on  whether  the  case  is c o m p l e x  or  not,  w h e t h e r a c c e p t a n c e o f the case w i l l i n f l u e n c e the r e l a t i o n s h i p b e t w e e n the c o u r t  and  the defendant or not, w i l l affect the i m a g e o f the leaders o f the administrative  agency  at i s s u e , w i l l i m p a c t t h e e x t e r n a l e n v i r o n m e n t o f t h e c o u r t o r n o t , o r p e r s o n a l p o s i t i o n  a n d future o f the court leaders, etc.  2 1 0  In the c o u r t trial, the d e f e n d a n t , a c t i n g l i k e a q u a s i - j u d g e , hears the p l a i n t i f f  w i t h the j u d g e s . A c c o r d i n g to the A L L , the c o u r t  together  s h o u l d s c r u t i n i z e the l e g a l i t y  of  d e f e n d a n t ' s a d m i n i s t r a t i v e act. B u t , w h e t h e r the p l a i n t i f f has i l l e g a l b e h a v i o r a l w a y s  b e c o m e s t h e s u b j e c t a n d e m p h a s i s o f t h e c o u r t t r i a l . It  is e v i d e n c e d b y the  court's  pretrial investigation, h a r m o n i z a t i o n a n d c o m m u n i c a t i o n w i t h the defendant p r i o r  to  the trial; i n the c o u r s e o f the court trial, b o t h the j u d g e s a n d the defendant q u e s t i o n the  p l a i n t i f f ; the d e f e n d a n t i n t r o d u c e s e v i d e n c e to p r o v e that the p l a i n t i f f b r e a c h e s the l a w  a n d the j u d g e s a l s o r e a d o u t the e v i d e n c e t h e y h a v e c o l l e c t e d to p r o v e the p l a i n t i f f h a s  v i o l a t e d the l a w ; the j u d g e s  are v e r y  friendly  to the d e f e n d a n t b u t  stiff in  manner  towards the plaintiff.  Unlike  the  civil  and  commercial  litigation,  mediation  is  not  applied  by  the  a d m i n i s t r a t i v e p r o c e e d i n g s e x c e p t f o r state c o m p e n s a t i o n . B u t , i n p r a c t i c e , the j u d g e s  often p e r s u a d e the plaintiff  to w i t h d r a w  the a c t i o n o r the d e f e n d a n t to m i t i g a t e  p e n a l t i e s so as to m a k e c o n c e s s i o n a n d thus a v o i d the t r o u b l e .  It o c c u r s w h e n  d e f e n d a n t ' s a d m i n i s t r a t i v e act is o b v i o u s l y i l l e g a l i n o r d e r to m a i n t a i n the a u t h o r i t y  the administrative  a g e n c y . It a l s o o c c u r s w h e n t h e d e f e n d a n t ' s a d m i n i s t r a t i v e  the  the  of  act is  p r o c e d u r a l l y i l l e g a l . T h e n the j u d g e s m a y c o n v i n c e the p l a i n t i f f to w i t h d r a w the c a s e  2 1 0  See Na Shuyu, "Woguo Xianxing Xingzheng Shenpan Fangshi de Jibi yu Gaige"  (Insufficiencies and Reforms of China's Current Administrative Trial), Xingzheng Luntan (Administrative Tribune), No. 49 (Jan. 2002) 107  by  s a y i n g that e v e n i f the case is f o r the plaintiff, the d e f e n d a n t is still entitled to  r e m a k e a n administrative act w h i c h is n o t necessarily advantageous to the plaintiff.  If  the p l a i n t i f f ' s act is i l l e g a l , the j u d g e s m a y assert to the p l a i n t i f f that h e w i l l l o s e t h e  case a n dsuggest the case b e withdrawn.  A l l o f above insufficiencies a n d limitations o f administrative litigation arise f r o m the  nature  of  the litigation,  administrative  China's  disputes  traditionally  which  leads  a n d threatens  cultural  to  unbalance  the ideal  components  of  which  between  two  transparency.  may  resist  parties  to  Entangled  the  the  with  function  of  administrative litigation, these insufficiencies are e v e n m o r e difficult to b e o v e r c o m e .  Commercial litigation Unlike  proof,  administrative  litigation  where  the defendant  the burden o f p r o o f i n case o f c o m m e r c i a l litigation  assumes the b u r d e n  of  rests o n the c l a i m a n t .  H o w e v e r , it is also noted that the court enjoys a v e r y w i d e right to investigate a n d  obtain evidence, w h i c h is not changed even under the recent legislation,  Rules on  212  Reforming the Model of Civil and Economic Trial.  U n d e r this rule, the court is  Rules on Reforming the Model of Civil and Economic Trial (passed on 19 June 1998 and being effective on 11 July 1998). Article 3 provides a wide scope of courts' power to collect evidence. It says, the following evidence can be collected by the People's court: (1) the evidence cannot be collected by the parties and their agents due to the objective reasons and the application for requesting the People's courts to collect evidence is submitted; (2) the inquisition shall be done by the People's courts and authentication shall be done under the authorization of the People's court; (3) the evidential materials adduced by the parties on both sides and used to prove the basic facts are contradictory, and their validity cannot be confirmed after the 108  entitled to o b t a i n the e v i d e n c e as it t h i n k s  fit w h e n h a n d l i n g c i v i l a n d c o m m e r c i a l  213  cases.  T h e court is therefore granted w i t h great discretion i n collecting evidence.  T h i s creates r o o m f o r l o c a l protectionism as the court m a y take initiative i n obtaining  the e v i d e n c e i n the interest o f o n e p a r t y f o r t h e s a k e o f l o c a l interest i n s t e a d o f g e t t i n g  evidence p r o a n d con. Since localism is already the b i g concern over C h i n a ' s judicial  activities, such legislation w o u l d o n l y w o r s e n the situations.  A l t h o u g h the  Rules on Reforming the Model of Civil and Economic Trial  t h e e v i d e n c e e x c h a n g e s y s t e m f o r t h e first t i m e i n C h i n a ,  2  1  4  introduces  it c a n n o t s t a n d a c l o s e r  e x a m i n a t i o n . T h e e v i d e n c e e x c h a n g e is p r e m i s e d o n the fact that the case is c o m p l e x  a n d there is lots o f e v i d e n c e ; a n d there are n o stipulations as to the s c o p e , the content  a n d a i m to b e a c h i e v e d through e v i d e n c e e x c h a n g e . T h e litigants' right to learn the  truth o f the case i s r e a l i z e d to s o m e extent. B u t , d u e to the l a c k o f a u x i l i a r y s y s t e m s  like the time l i m i t f o r p r o d u c i n g evidence, the parties m a y still m a k e a s u d d e n attack  o n the other party b y i n d u c i n g n e w e v i d e n c e d u r i n g the court trial. A l s o , the rule is  silent o n whether the evidence collected b y the court should b e disclosed o r not prior  cross-examination in the court trial; (4) other evidence shall be collected by the People's court as it think fit. 2 1 3  Although the court also enjoys the right to obtain evidence when handling the  administrative cases, at least under the law, the scope of such power is not so wide. Article 22 of Rules on Evidence of administrative Litigation provides two kinds of circumstances under which the court is entitled to obtain the evidence: (1) in relation to the state interests, public interests and a third party's interests; (2) procedural affairs like adding litigants, suspending the proceedings, terminate the proceedings and challenge. 2 1 4  Article 5.7 of Rules on Reforming the Model of Civil and Economic Trial says when the  cases are too complicated and there is lots of evidence, the People's court may arrange the parties to exchange the evidence. 109  t o t h e t r i a l . It i s h i g h l y d o u b t f u l t h a t t h e f u n c t i o n s o f p r e t r i a l p r e p a r a t i o n c o u l d p l a y  satisfactorily.  W i t h o u t e s t a b l i s h i n g the r u l e - b a s e d transparent pretrial p r o c e d u r e s , the r e f o r m e d  court  trial is h a r d l y a b l e to a c h i e v e the o r i g i n a l a i m . In  from  forming  the  decision  prior  to  the  trial  and  o r d e r to p r e v e n t  enhance  openness,  the court  democracy  and  e f f i c i e n c y o f t r i a l , s o m e c o u r t s s t a r t t o c a r r y o u t t h e d i r e c t t r i a l s y s t e m . It m e a n s t h a t  the c o u r t s d o not, b e f o r e the trial, c o n t a c t w i t h the parties a n d their a g e n t s , d o  undertake  obtained  any  by  investigation, inquiry  the  parties. W h a t  or  collect  the j u d g e s  evidence or  have prior  to  examine  the  trail  the  is the  not  evidence  plaintiff's  i n d i c t m e n t a n d the defendant's response. A l l o f other e v i d e n c e w i l l b e a d d u c e d b y  the  215 parties  in  the  court  trial.  However,  good  expectations  are  not  necessarily  t r a n s f o r m e d into the reality. W i t h o u t a n effective pretrial p r o c e d u r e t h r o u g h w h i c h the  t w o p a r t i e s d i s c l o s e r e s p e c t i v e e v i d e n c e a n d d e t e r m i n e the i s s u e s to b e r e s o l v e d , it i s  difficult  f o r the j u d g e s to c o m p r e h e n d the c a s e s t h o r o u g h l y j u s t f r o m t h e c o u r t  trial.  T h e c r o s s - e x a m i n a t i o n appears ineffective a n d the trial l o o k s u n f o c u s e d . O n e o f  r e a s o n s l i e s i n that the o p e n n e s s to the p a r t i e s , e s p e c i a l l y the o p e n n e s s o f the  the  pretrial  procedures, is inadequate.  I n c o n t r a s t to a d m i n i s t r a t i v e l i t i g a t i o n to w h i c h m e d i a t i o n is n o t a p p l i c a b l e e x c e p t f o r  the state c o m p e n s a t i o n cases, m e d i a t i o n r u n s t h r o u g h the c o m m e r c i a l l i t i g a t i o n ,  2 1 5  from  See Wu Mingtong, "Zhijie Kaiting yu Shenli qian de Zhunbei Zhi wo Jian" (On Direct  Trial and Pre-trial), Faxue Pinglun {Law Review), Vol. 94, No. 2 (1999) 110  the v e r y b e g i n n i n g till the j u d g e m e n t  is m a d e . M e d i a t i o n h a s m a n y m e r i t s to r e s o l v e  t h e d i s p u t e s . O n e o f t h e m is t h a t it d i s p e n s e s w i t h c o m p l i c a t e d p r o c e e d i n g s . H o w e v e r ,  it d o e s n o t  m e a n that n o  any procedure  is n e e d e d i n the c o u r s e o f  court-annexed  m e d i a t i o n . In C h i n a , the courts s h o u l d d o m e d i a t i o n o n the v o l u n t a r y a n d l e g a l basis  a c c o r d i n g to law. T h e r e are n o p r o v i s i o n s as to p r o c e d u r a l r e a s o n a b i l i t y . In  practice,  the pretrial m e d i a t i o n a n d the m e d i a t i o n out o f court m a y be u n d e r t a k e n b y the  court  w i t h t w o parties respectively. T h i s is s o - c a l l e d b a c k - t o - b a c k m e d i a t i o n w h i c h is  o p e n to the o t h e r party.  2 1 6  T h e openness s y s t e m is just a v o i d e d b y d o i n g s u c h k i n d  o f m e d i a t i o n . A s the m e d i a t o r s  a n d the j u d g e s  there  force  is  potential  realization  of  the  not  compulsory  voluntary  principle  behind  of  i n c h a r g e o f the case are the  the  mediation  mediation  and  which  worsens  same,  threatens  the  the  non-open  m e d i a t i o n . E v e n f o r the m e d i a t i o n i n court, there is n o g u a r a n t e e that the j u d g e s ,  who  are the m e d i a t o r s as w e l l , g i v e the l e g a l authorities o f m e d i a t i o n .  T h e r e is a s p e c i a l p r o b l e m  s p e c i a l l y e x i s t i n g i n the w r i t t e n j u d g e m e n t  of civil  c o m m e r c i a l l i t i g a t i o n i n v o l v i n g f o r e i g n elements. A l t h o u g h the rules o f l e g a l  and  conflict  are still d e v e l o p i n g in C h i n a , there are i n d e e d s o m e o f t h e m s p o r a d i c a l l y c o n s i d e r e d  under  General Principles of Civil Law of the PRC,. Commercial Instrument Law,  Contract Law,  etc. H o w e v e r , these rules o f c o n f l i c t are rarely a d o p t e d b y the  Those civil and commercial judgements  2 1 6  i n v o l v i n g f o r e i g n elements reveal that  courts.  most  See generally, Wang Yaxin, "Minshi Susong Zhunbei Chengxu yanjiu" (On Preparatory  Procedures of Civil Litigation), Zhongwai Faxue (Law Science of China and Foreign Countries), No. 2 (Feb. 2000); see Beijing Fazhibao (Beijing Legal Times), 15 Sept. 2002; Fazhi Ribao (Legal Daily), 10 Feb. 2002, p .3. Ill  courts directly  guided  a p p l y the substantive l a w o f C h i n a o r other counties without  b y rules  o f conflict.  This  phenomenon  influences  being  the reasonableness a n d  fairness c o n v e y e d b y the j u d g m e n t s , as w e l l as the authority o f j u d g m e n t s .  4.4  Judicial independence T h e p r i n c i p l e o f j u d i c i a l i n d e p e n d e n c e that originated i n the w e s t w a s p u t into  effect  with  the establishment  o f the m o d e r n  idea o f "separation  of powers."  2  1  7  Judicial independence is a principle universally admitted a n d entrenched i n m o d e r n  countries implementing rule o f l a w .  2  1  8  If judicial proceedings cannot avoid  being  intervened b y administrative organs o r other organizations o r people i n authority, all  legal institutions cannot fulfill their legal functions, n o r c a n necessary a n d expectant  security a n d stability b e obtained.  2  1  A s a Chinese scholar points out, " o n e o f basic  9  characteristics o f a w e s t e r n c o n s t i t u t i o n a l i s m a n d j u d i c i a l s y s t e m is to set u p tight a n d  rigorous supervisory m e c h a n i s m . . . h o w e v e r , judges, also exercising the public  constitute the h a r d - w o n exception."  2 1 7  2  2  power,  0  In Europe, the idea of "judicial independence" emerged in the England in 17th century.  But the French people first created this idea; see C. L. Montesquieu, The Sprit of Law (1748). For this reason, many Chinese scholars believe that the idea of "separation of powers" comes from western countries. For detailed information, see Li Long, Xianfa Jichu Lilun (The Basic Theory of Constitution) (Beijing: Chinese Law Press, 1999), pp. 4-21; also see Parker, The Historic Basis of Administrative Law: Separation of Powers and Judicial Supremacy, 12 Rutgers L. Rev. (1958), p.449 2 1 8  See W.F. Rylaaydsam, "Judicial Independence - A Value Worth Protecting", 66 S. Cal L.  Rev. (1993),p.l653. 2 1 9  See Martin H. Redish, "Federal Judicial Independence", 46 Mercer Law Review (1995), p.  707. 2 2 0  See He Weifang, Sifa de Zhidu yu Linian (Judicial System and Ideas) (Beijing: China  University of Political Science and Law Press, 1998), pp.136; also see Thomas E. Plank, "The 112  Judicial independence is a judge's  ability  to d e c i d e a case free  from pressures o r  inducements. Judicial independence has a n institutional character, w h i c h is best seen  in the constitutional  partially  protected  s e p a r a t i o n o f p o w e r s . It h a s a n i n d i v i d u a l  b y the Constitution  in the provisions  character, w h i c h is  f o r life  tenure  a n dthe  guarantee o f no d i m i n i s h m e n t o f salary, b u tw h i c h extends further to e n c o m p a s s those  conditions  in which  a n d under  which  a judge  decides the cases.  These  elements o f individual judicial independence, i n c l u d i n g security, facilities,  ancillary  support,  w o r k l o a d , rules o f procedure, a n dcase management, n o r m a l l y d o n o t impact  judicial  independence  but  under  extreme  circumstances  m a y do  upon  so. Judicial  independence is important n o t o n l y to thej u d i c i a l system. T h e independence o f the  judiciary must b e credible to those being judged. Therefore, the exercise o f judicial  p o w e r requires institutional a r r a n g e m e n t s w h i c h w i l l instill c o n f i d e n c e that the p o w e r  is b e i n g p r o p e r l y a p p l i e d .  2  2  1  F o r China's judicial reforms, seeking a n independent judiciary  without  perhaps s h o u l d b e a g o a l b e c a u s e C h i n a ' s courts aresubject to t o o m u c h  supervision  restriction.  Judicial independence has been a slogan o r a manifesto f o r a long time. A r t i c l e 126 o f  the C h i n a ' s C o n s t i t u t i o n p r o v i d e s that t h e P e o p l e ' s courts shall, i n a c c o r d a n c e w i t h  the l a w , exercise j u d i c i a l p o w e r independently a n d aren o t subject to interference b y  Essential Elements of Judicial Independence and the Experience of Pre-soviet Russia, William and Mary Bill of Rights Journal, Vol. 5. (1996) See L. Ralph Mecham, "Introduction to Mecer Law Review Symposium on Federal Judicial Independence," 46 Mercer, L. Rev. (1995), p. 637, 638. 113  administrative  organs, public organization or individuals.  2  2  2  T h o u g h this  provision  m a r k s t h e first t i m e i n recent d e c a d e s that t h e C o n s t i t u t i o n h a s u s e d s p e c i f i c l a n g u a g e  to g i v e c o n c r e t e d e f i n i t i o n t o t h e c o n c e p t o f i n d e p e n d e n t a d m i n i s t r a t i o n o f j u s t i c e i n  C h i n a through the c l a u s e " n o tsubject to interference b y administrative organs, p u b l i c 223 organization a n d individuals",  this specific language h a s left at least o n e p o i n t  unclear: are the C h i n e s e C o m m u n i s t Party a n d its m e m b e r s i n c l u d e d i n the a b o v e  categories?  I f the a n s w e r is negative, the party's  leading role upon  the court c a n  hardly b e challenged to b e unconstitutional under the C h i n e s e Constitution.  In China's  legal context, judicial  independence includes the internal  2  2  4  independence  a n d external i n d e p e n d e n c e . T h e f o r m e r refers to the court, as a w h o l e , is entitled to  independent  intervention  decision-making  in  adjudication.  independence is i n a relative  power  In  o n judicial  the  light  of  affairs  s o as to prevent  law, China's  sense. Courts exercise j u d i c i a l  external  power  outside  judicial  independently,  s u b j e c t to t h e s u p e r v i s i o n b y o r g a n i z a t i o n s o f state p o w e r , p r o c u r a t o r i a l o r g a n i z a t i o n s  a n d s o c i e t y . A m o n g o f t h e m , t h e s u p e r v i s i o n b y t h e o r g a n i z a t i o n s o f state p o w e r , i.e.,  the P e o p l e ' s C o n g r e s s , e s p e c i a l l y infringes u p o n t h e j u d i c i a l i n d e p e n d e n c e .  Without  clear conditions o f a n d restrictions o n exercising thesupervisory p o w e r under the l a w ,  the  case-by-case supervision m a y b e even utilized b y some representatives o f the  Constitution of the People's Republic of China (1982, amended in 1993). 2 2 3  See Fang Junyi, "The Adjudicating Bodies and Adjudicating System", in Weng Songran  ed., Zhongguo Xianfa Lunwenji {A Collection of Literature on the Chinese Constitution) (1987), pp.218, 250. See Nanping Liu, Supra note 48. 114  congress for personal purposes.  2  2  5  Internal  i n d e p e n d e n c e m e a n s the j u d g e ,  as an  individual judge, exercises the j u d i c i a l p o w e r independently during the proceedings,  which  has been  widely  recognized  in  the  independence o f the courthouse as a w h o l e  international  community.  is admitted while  In  China,  independence o f the  i n d i v i d u a l j u d g e s is n o t a c c e p t a b l e . T h i s h a s l e d to m a n y p r o b l e m s i n p r a c t i c e : the  judges hearing the case d o not m a k e the j u d g e m e n t  while the judgement  makers do  not hear the case; the judges f o r m v i e w s about the case prior to the trial; court  is h e l d j u s t i n the sense o f f o r m , etc.  2  2  session  6  J u d i c i a l i n d e p e n d e n c e is m o s t i m p o r t a n t  i n those cases where courts are called u p o n  to r e s o l v e d i s p u t e s b e t w e e n i n d i v i d u a l s a n d t h e state o r b e t w e e n d i f f e r e n t b r a n c h e s o f 227 government.  other  branches  importantly,  before  I n this sense, the j u d i c i a r y m u s t n o t o n l y b e i n d e p e n d e n t f r o m the  of  it m u s t  government,  but  also  appear independent  it f o r r e s o l u t i o n .  Judges must  from  a n y other  influences,  to those w h o w o u l d  be individuals  bring  o f the greatest  and,  their  most  disputes  integrity a n d  w o r t h y o f the p e o p l e ' s greatest c o n f i d e n c e . T h e y m u s t b e subject to n o i n f l u e n c e other  2 2 3  See Wang Liming, Sifa Gaige Yanjiu (Research on Judicial Reform) (Beijing: Law  Publishers, 2000), pp. 462, 465-466; see Liu Hainian, Guanyu Gean Jiandu de Sikao (On Case-by-case Supervision), in Xin Chunuin & Li Lin (eds.), Yifa Zhigu yu Sifa Gaige (Rule of Law and Judicial Reforms) (Beijing: China Legal Time Press,1999), pp. 563-564; see Wang Chenguang, "Lun Fayuan Yifa Duli Xingshi Shenpanquan he Renda dui Fayuan Gean Jiandu de Chongtu jiqi Taozheng Jizhi (On the Conflicts between Courts' Judicial Independence and People's Congress's Case-by-case Supervision and Adjustive Mechanisms), Falv Kexue (Law Science), No. 1 (1998) See Su Li, Song Fa Xia Xiang (Rule of Law in Rural Areas) (Beijing: China University of Political Science and Law Press, 2000), pp. 61-87. 2 2 7  See J. Clifford Wallace, "Independence of the Judiciary: Independence from What and  Why", 58 N.Y.U. Ann. Surv. Am. L. 2001, p.241. 115  t h a n that o f  the  force  o f the  law. A  judiciary  that is i n d e p e n d e n t  o f the  political  b r a n c h e s b u t b e h o l d e n to p r i v a t e interests o r i n f l u e n c e s , a n d therefore, corrupt, is not  t r u l y i n d e p e n d e n t . It i s s i m p l y d e p e n d e n t o n a n o t h e r , n o n - g o v e r n m e n t a l , e n t i t y .  In  C h i n a , administrative trial especially suffers f r o m lack o f j u d i c i a l independence. T h e  defendant is the administrative o r g a n w h i c h u s u a l l y enjoys great p o w e r a n d s o m e  t h e m , like l o c a l g o v e r n m e n t s , f i n a n c i a l l y support the courts, the j u d g e s h e a r i n g  administrative  always utilizes  cases do  its  face lots o f pressure. T h e administrative  power  to  force  the  court  or the j u d g e s  to  organ being  give  the  sued  in. U s i n g  c o e r c i o n a n d c a j o l e r y a n d e v e n m a k i n g retaliation b y the defendant, l i k e cutting  of  both  down  the f i n i c a l a i d o r c h a n g i n g the titles o f the j u d g e s , is a n o t h e r m e a n s to i n t e r v e n e i n the  independent trial.  That  the c o u r t s d o not h a v e a d e q u a t e j u d i c i a l authorities  judicial  independence  in  China.  The  courts'  lack  of  e x p l a i n s the situations  judicial  authorities  of  among  a d m i n i s t r a t i v e t r i a l m a y b e f u r t h e r c o m p r e h e n d e d b y a g l i m p s e at the l e g a l l e v e l a n d  the cultural level.  A t the l e g a l l e v e l , firstly, c u r r e n t l a w is n o t e f f e c t i v e to m a i n t a i n the c o u r t o r d e r  in  h e a r i n g a d m i n i s t r a t i v e c a s e s . A c c o r d i n g to t h e r e l e v a n t l i t i g a t i o n l a w a n d c r i m i n a l l a w ,  o n l y t h o s e w h o a s s e m b l e to m a k e t r o u b l e , strike court o r c o m m i t assault a n d  on judicial  criminal  staff a n d thus seriously disturb  penalty.  As  for  the  the c o u r t o r d e r w i l l  administrative  agency,  the  battery  be imposed o n  defendant,  by  using  116  i m p l e m e n t a t i o n o f p u b l i c d u t i e s a s a s h i e l d , t h e c o u r t h a s n o p o w e r to s t o p o r i m p o s e  c r i m i n a l liability. A l s o , there a r e n o stipulations as to h o w to d e a l w i t h the g e n e r a l l y 229 illegal acts.  H e n c e , the courts' authorities lack concrete a n d c o m p r e h e n s i v e legal  p r o t e c t i o n . It i s s u g g e s t e d t h a t t h e i d e a o f c o n t e m p t o f c o u r t s h o u l d b e i n t r o d u c e d a n d  thus grant the court w i t h the p o w e r to m a k e the t e m p o r a r y c o m p u l s o r y measures.  Secondly,  procedural  restrictions  on  administrative  agencies  are  scant.  If  2  3  0  the  administrative agency, as the defendant, resisted listening to the court b y a r g u i n g that  it is c a r r y i n g o u t its duties, c l e a r p r o c e d u r e s o n h o w to i m p l e m e n t the p u b l i c  w o u l d m a k e s u c h e x c u s e s u n w o r k a b l e . Fortunately, to m a k e u n i f o r m  duties  administrative  p r o c e d u r a l l a w h a s b e e n r e c o g n i z e d i n current C h i n a , as m e n t i o n e d previously.  If the rules m a y b e d r a m a t i c a l l y c h a n g e d overnight, there are other difficulties  will  take a long time  format,  to o v e r c o m e . D i f f i c u l t i e s  are more  that  e m b o d i e d i n the  cultural  i n c l u d i n g the ideology, attitude a n d understanding h e l d b y C h i n a ' s  judicial  professionals a n d people.  A s for the court, the court does not have a correct understanding o f the relationship  b e t w e e n it a n d the a d m i n i s t r a t i v e a g e n c y . I n the p o s i t i o n o f the a d m i n i s t r a t i v e a g e n c y ,  it asserts that that o n l y i f f o r t h e s a k e o f i m p l e m e n t i n g t h e p u b l i c d u t i e s , it s h o u l d , l i k e  2 2 9  Lord Denning points out that in all places where law and order shall be maintained, the  courthouses are the places most requiring the legal order. Judicial process should not be intervened or interfered. In order to maintain law and order, the judges are entitled to punish those who violate the normal judicial process. See, Lord Denning, The Due Process of Law, (Butterworths, 1980). 230  See Ma Huaide & Wang Yibai, "Tousi Zhongguo de Xingzheng Shenpan Tizhi: Wenti yu Gaige" (Examining China's Administrative Trial System: Problems and Reforms), Qiushi Xuekan (Seeking Truth), No. 3 (May 2002) 117  the c o u r t , n o t b e s u b j e c t to a n y i n t e r v e n t i o n . F r o m the s t a n d i n g p o i n t o f the c o u r t ,  it  w i l l n o t d e n y t h e p r o p e r n e s s o f t h e a d m i n i s t r a t i v e a g e n c y w h e n it a c t s i n o r d e r  for  exercising administrative  the  power. F o r judicial power and administrative  power,  c o u r t equates t h e m . U n d e r the c i r c u m s t a n c e that the court has n o " m o n e y " o r " s w o r d " ,  the  court  appears just  helpless in  case  the  administrative  agency acts under  the  disguise o f p e r f o r m i n g official business. J u d i c i a l p o w e r and administrative p o w e r are  different  i n nature. T h e c o r e o f the f o r m e r is " j u d g m e n t " ;  "compulsion".  They  cannot  be  equated  quantitatively  the c o r e o f the latter  or  qualitatively.  Recent  constitutional principles e m p h a s i z e a c h e c k a n d balance b e t w e e n these two.  t h e r e is c o n f l i c t , it is t h e j u d i c i a l p o w e r t h a t is s u p e r i o r to t h e a d m i n i s t r a t i v e  not  vise versa.  2 3 1  The  courts'  judicial  authorities  are  inviolable.  Even  a d m i n i s t r a t i v e o r g a n n e e d s to p e r f o r m its d u t i e s , the d i g n i t y a n d a u t h o r i t i e s  is  When  power,  if  the  of  the  court cannot be offended.  As  for  the  people,  take  administrative  litigation  as a n  example, in  the  external  d i m e n s i o n , m a n y C h i n e s e p e o p l e d o not b e l i e v e that the c o u r t h o u s e s are c a p a b l e to 232 handle administrative cases w i t h o u t adequate authority.  If a country's citizens do  n o t b e l i e v e t h a t t h e j u d i c i a r y i s i n d e p e n d e n t , b u t r a t h e r p e r c e i v e it to b e i n f l u e n c e d b y  o t h e r b r a n c h e s o f g o v e r n m e n t o r n o n - g o v e r n m e n t e n t i t i e s , t h e y w i l l n o t r e s o r t to it f o r  dispute resolution. Instead, they  will  a t t e m p t to  circumvent  the  legal process  and  See Xia Yong, Zou Xiang Quanli de Shidai (Toward a Time of Rights: A Perspective of the Civil Rights Development in China) (Beijing: China University of Political Science and Law Press, 1995), pp. 62. 118  resort to c o r r u p t i o n , b r i b e r y , a n d i n t i m i d a t i o n .  China's judicial  handling  bodies  have  acquired  o f disputes. T h e judiciary  a reputation  is not totally  for biased and unprofessional  independent  of government  and  extra-government committees. Judges are typically appointed a n d enjoy tenure o n the  basis o f political loyalty  n e e d to b e m a d e  to  establish a n d enforce reasonable rules o f evidence, reduce corruption, a n d prohibit  ex  parte  rather than merit.  F a r greater efforts  c o m m u n i c a t i o n s a n d the influence o f g o v e r n m e n t  departments i n arbitral a n d  j u d i c i a l b o d i e s . T h e j u d i c i a l s y s t e m i n C h i n a t o d a y is still c o n s i d e r e d m o r e a m e a n s to  achieve government  objectives than a system o f protecting the rights o f individuals  a n d enterprises, as the administrative g o v e r n m e n t exerts u n d u e i n f l u e n c e i n affecting  the o u t c o m e o f cases. A s l o n g as s u c h c o n f l i c t o f interest is a l l o w e d to persist, the  benefits o f a n y legal reform w i l l be m i n i m i z e d .  Part IV  Closing Commentary  Transparency: an institutional and cultural discourse in China  China  is  a  huge,  Opportunities  rapidly  are nearly  expanding,  unlimited.  and  as  yet  an  B u t at t h e s a m e t i m e  under-explored  it  is still  a  market.  developing  country w i t h a n u n d e r d e v e l o p e d infrastructure a n d institutions still not quite u p to the  standards  in the developed countries.  exemplified  2 3 3  by China's  efforts  This  is e s p e c i a l l y true  in seeking transparency  i n the area o f l a w ,  s i n c e its a c c e s s i o n to  the  See J . C l i f f o r d W a l l a c e , supra note 2 2 7 .  119  WTO.  While  there  is w i d e s p r e a d agreement  on  the  importance  of  transparency,  China's  e x p e r i e n c e i n s e e k i n g t r a n s p a r e n c y i n e c o n o m i c d i s p u t e r e s o l u t i o n s h o w s that a c t u a l l y  i m p r o v i n g t r a n s p a r e n c y c a n b e d i f f i c u l t i n C h i n a . It i s b e c a u s e t r a n s p a r e n c y per  se  a b r o a d s e n s e is c l o s e l y l i n k e d to n a t i o n a l institutions,  doing  things.  2 3 4  Challenges  transparency-orientated  for  reform  regulatory  in  China  construction  cultures and w a y s o f  are  thus  and  also  identified  including  beyond  in  pure  improving  the  i n s t i t u t i o n s n e e d e d to s u p p o r t t r a n s p a r e n c y , o v e r c o m i n g p o l i t i c a l o b s t a c l e s , r e d r e s s i n g  inconsistent localized performance and obtaining  a c c e s s to t e c h n o l o g y  and  human  r e s o u r c e s . O n the w a y to s e e k i n g g r e a t e r t r a n s p a r e n c y i n e c o n o m i c d i s p u t e r e s o l u t i o n  in  China,  institutional  arrangement  and  cultural  considerations  shall  not  be  overlooked.  T h e W T O r u l e s t e n d to f o c u s o n c o r e t r a n s p a r e n c y m e a s u r e s . T h e s e are the  points  for  other  communication  processes  that  are  closely  linked  to  starting  national  institutions w h i c h usually evolve s l o w l y and incrementally. W h i l e m o v i n g forward  core  m e a s u r e s , C h i n a h a s to  work  with  the  transparency practices. C h i n a ' s recent pursuit  distinctive  national  characteristics  of transparency-enhancing  d i s p u t e r e s o l u t i o n r e v e a l s m u c h a b o u t the i n t e r a c t i o n o f institutional  on  of  economic  processes and  social norms.  2 3 4  See Xie Xiaoyao, WTO Toumingdu: Guyou Jiazhi yu Baozhang Jizhi (WTO Transparency:  Inherent Value and Protective Mechanism), Falv kexue (Law Science), No.l (2003). 2 3 5  See Pitman B. Potter, "Legal Reform in China - Institutions, Culture, and Selective  Adaptation" (manuscripts). 120  Starting f r o m a base near zero i n 1978,C h i n a has achieved impressive progress i n  sixteen years i n building u p a legal framework  for conduct o f foreign business in  C h i n a a n d i n c o n s t r u c t i n g a d o m e s t i c l e g a l o r d e r as w e l l . T h e p a c e h a s a c c e l e r a t e d i n  recent years since C h i n a ' s entry to the W T O . H o w e v e r , w i t h o u t capable institutions to  perform  their  assigned  tasks,  2  3  6  even  if  under  a  transparent  legal  framework,  transparency practices a n d performance m a y not b e fruitful. Encouragingly, C h i n a ' s  e c o n o m i c a n d legal reforms have seen significant attention p a i d to establishing a n d  strengthening institutions f o r dispute resolution. R e c e n t efforts to r e o r g a n i z e the c i v i l  chambers o f the P e o p l e ' s Courts as courts o f general jurisdiction  over institutional capacity.  2  3  8  2  3  7  reflect concerns  E s p e c i a l l y i n response to calls f o r institutional  reform,  as e x p r e s s e d m o s t recently b y W T O r e q u i r e m e n t s about transparency a n d the rule o f  law,  2  3  9  the  Chinese  government  resolution system. Efforts  has attempted  to strengthen the ability  to  transform  o f the court  China's  dispute  system to  provide  prompt  review a n d correction o f administrative action a n d increase enforcement  foreign  arbitral  l i b  awards, m a y well  be aimed  at a c c o m m o d a t i n g  international  of  legal  Professor Pitman. B. Potter introduces the concept "institutional capacity" to describe  capable institutions performing their assigned tasks. See generally, ibid. 2 3 7  Recently, civil chambers of the China's People's Courts are divided into five chambers:  Chamber I is to deal with family and marriage law; Chamber II is to handle the ownership right, tort, unjust enrichment, negotiorum gestio, property right, personal right, etc; Chamber III and Chamber IV are responsible for the economic disputes, bankruptcy, foreign-related economic disputes; Chamber V is to deal with intellectual property cases. See "Civil case trial system reformed for WTO entry," Xinhua News Agency, 30 March 2000. 2 3 8  See Pitman B. Potter, supra note 235.  2 3 9  Report of the Working Party on Accession of China. 2001. WTO Docsonline Ref.  WT/MIN(01)/31, November 10. 121  forms, though their satisfaction o f a c c o m p a n y i n g legal n o r m s remains uncertain.  It  i s s a i d that  the increased numbers  o f commercial  reforms have created a certain degree o f institutional  dispute  resolution market.  considerations  shares  o f financial  o f China's  responsiveness  dispute  4  dispute  2  4  2  1  A s courts  gain  prestige  market,  o f disputants  by  market  competition f o r a share o f the  a n d arbitration institutions  and political  resolution  to the needs  process a n dpractice.  effective  2  disputes brought  to c o m p e t e  the possibility  f o r greater  rigor  are driven b y  for ever-larger  arises  of  increased  a n d predictability  of  This m a y bode well for the emergence o f independent a n d  resolution  processes.  However,  as for  the dispute  resolution  institutions d i s c u s s e d i n this thesis, i.e., the courts w h i c h , b e s i d e s the costs o f a c t i o n ,  are m o s t l y f i n a n c i a l l y supported b y the g o v e r n m e n t ,  a n d the administrative  organs  w h i c h d o n o t c h a r g e t h e a p p l i c a n t s at a l l , t h e y m a y n o t b e a b l e to o b t a i n t h e s a m e  driving force as arbitration c o m m i s s i o n s i n terms o f institutional improvement. S o f a r  there is little to i n d i c a t e that c o m p e t i t i o n f o r dispute r e s o l u t i o n cases h a s m o t i v a t e d  courts o r arbitral organs to increase their a u t o n o m y a n d / o r p r o c e d u r a l rigor.  institutional  c o m p e t i t i o n s e e m s to b e taking the f o r m m a i n l y o f increased efforts to  strengthen ties w i t h g o v e r n m e n t departments.  Actual  Instead,  institutional  performance  remains  2  4  3  contingent  on  domestic  political  and  See Pitman B. Potter, supra note 235. 1  See Pitman B. Potter, supra note 13, pp. 142.  2  see Pitman B. Potter, supra note 235.  3  See generally, Pitman B. Potter, supra note 13, pp. 137-142. 122  socio-economic conditions.  T h e m a i n obstacles to t r a n s p a r e n c y - e n h a n c i n g reforms  overcome  ongoing  the natural  struggle  government  political  for  officials  dynamic  all political  from  i n favor  systems.  accountability.  o f "concentrated  Lack  Thus,  are political. Attempting  of  benefits"  transparency  many  actors  also  — both  outside the p u b l i c sector ~ c a n have a stake i n non-transparent practices.  to  is a n  shields  inside a n d  2  4  4  It i s f o r  this r e a s o n that, d e s p i t e t h e b r o a d a p p a r e n t a g r e e m e n t i n p r i n c i p l e a b o u t their b e n e f i t s ,  actual implementation o f transparency-enhancing reforms are likely to involve  shifts  painful  i n the w a y policies are made a n d implemented, especially i n countries  with  h i g h l y o p a q u e p o l i c y e n v i r o n m e n t s s u c h a s C h i n a . It i s a d m i t t e d t h a t f u r t h e r o b s t a c l e s  to c o u r t a u t o n o m y  with  the courts,  will be resolved only b y political change. Political  for example,  is still  institutionalized.  Whilst  interference  interference  is less  e v i d e n t i n c i v i l c a s e s w h e r e t h e p a r t y a n d t h e state g e n e r a l l y h a v e little o r n o interest  in  the outcome,  in criminal,  interference is legend.  develop  2  the political  backsliding.  With  4  5  administrative,  and even  economic  cases  political  Therefore, the difficulty f o r greater transparency w i l l b e to  momentum  China's  more  for  pro-transparency  involvement  into  reform  a n d to  international  prevent  community,  transparency commitments under the W T O a n dinternational peer pressure m a y help  C h i n a face this difficulty.  2 4 4  See supra note 44.  2 4 5  See Edward J. Epstein, "Law and Legitimation in Post-Mao China", in Pitman, B. Potter  ed, Domestic Law Reforms in Post-Mao China (New York: M.E. Sharpe, Inc., 1994), pp. 41. 123  Efforts in seeking greater transparency m a y not be w e l l p a i d but for m o r e  regulatory  institutions a n d i m p r o v e d i n s t i t u t i o n a l p r a c t i c e not o n l y at a n a t i o n a l l e v e l b u t a l s o at  a l o c a l l e v e l . It h a s b e e n w i d e l y a c k n o w l e d g e d t h a t C h i n a ' s a c c e s s i o n t o t h e  W T O  s h o u l d be  viewed  local  conditions  of  challenges  for  in  rapid  light  of  domestic conditions.  socio-economic and  institutional  capacity  political  arise.  2 4 7  In  2 4 6  Hence, given  transformation,  the  view  of  China's  more  many  particular  Westerners,  C h i n a ' s l o c a l organizational interests a n d i d e o l o g i c a l perspectives h a v e often resisted  the  2 4 8  concessions  mandated  by  W T O  members  considering  China's  application.  H o w e v e r , r e c e n t l y , it h a s b e e n n o t e d that n u m e r o u s l o c a l o r g a n i z a t i o n a l n o r m s a r e  not  entirely  discouraging in  terms  of  C h i n a ' s pursuit  of  greater  transparency.  B y  contrast to the s k e t c h y a n d r o u g h s t i p u l a t i o n o f c e n t r a l l a w s , l o c a l r e g u l a t i o n s i n s o m e  developed, b i g m u n i c i p a l cities are m o r e particularized a n d m o r e practicable a n d thus  may  contribute  more  to  local  institutional  improvement.  2 4 9  O n  this  point,  unbalanced development o f dispute resolving institutions, w h i c h w i l l not disappear i n  2 4 0  See Merle Goldman and Roderick MacFarquhar (eds.), The Paradox of China's Post-Mao  Reforms (Cambridge MA: Harvard University Press, 1999); Elizabeth J. Perry and Mark Selden (eds.), Chinese Society: Change Conflict and Resistance (London: Routledge 2000) 2 4 7  See Pitman B. Potter, supra note 235.  2 4 8  Pitman. B. Potter, The Legal Implications of China's Accession to the WTO, The China  Quarterly, Vol. 167 (September 2001), p. 594; also see "China sets deadline for GATT re-entry, slams U.S. Road Blocks'," Agence France Presse English Wire, 10 July 1994, in China News Digest; "Foot-stomping helps China in GATT Bid," South China Morning Post, 1 August 1994, in China News Digest; "China vows not to beg for WTO membership," China News Digest, 23 September 1995. 2 4 9  Examples can be referred to the previous discussion in Part II about the procedural fairness  of administrative reconsideration, where some local regulations stepping forward than national law in terms of procedural fairness of administrative reconsideration are mentioned. 124  a short t i m e , strengthens the c o m p l e x i t y o f d o i n g b u s i n e s s i n C h i n a .  T h e i m p r e s s i v e p r o g r e s s o f the past s i x t e e n years has l a i d d o w n a n d c l a r i f i e d the rules  f o r d o i n g b u s i n e s s i n C h i n a , but e n f o r c e m e n t is still u n r e l i a b l e . S o m e t i m e s p e r s o n a l  relationships still  count more  than written contracts; conciliation m a y  h a v e to  be  r e s o r t e d to r a t h e r t h a n g o i n g to a r b i t r a t i o n o r to c o u r t e v e n t h o u g h it m a y s e e m t h e  less satisfactory w a y o f r e s o l v i n g a dispute.  2 5 0  D u e d i l i g e n c e a n d s e n s i t i v i t y to  the  cultural e n v i r o n m e n t in w h i c h o n e operates are absolutely essential for d o i n g business 251 in  China.  Protocol  E v e n if  on  institutions  the  transparency principle  China's Accession and  and  practices  of  the  to  an  is a p p l i e d to  expanded range  Chinese dispute  of  resolution  C h i n a through  trade  system  relations,  lag  arrangements.  the  seriously  b e h i n d , as the l o c a l c u l t u r e that i n f o r m s the b e h a v i o r o f C h i n e s e l e g a l institutions  actors c o n t i n u e s to p l a c e a h i g h p r i o r i t y o n l o c a l p a r o c h i a l c o n c e r n s a n d  the  and  political  252  Institutional a n d cultural factors m a k e the i m p r o v e m e n t s to the less c o n c r e t e aspects  o f C h i n a ' s l e g a l e n v i r o n m e n t not easy. A l t h o u g h foreign trade investment has b e e n  b o o m i n g these y e a r s , the d e g r e e to w h i c h f o r e i g n i n v e s t o r s ' l e g a l rights a n d interests  can be protected in C h i n a will  2 5 0  still largely influence their  d e c i s i o n to invest  here.  See Rajib N. Sanyal & Turgut Guvenli, American Firms In China: Issues In Managing  Operations, 9 Multinational Bus. Rev. (1 Oct. 1 2001), p.41. 2 5 1  See George O. White III, Navigating the Cultural Malaise: Foreign Direct Investment  Dispute Resolution in the People's Republic of China, Transactions: the Tennessee Journal of Business Law (Fall 2003), p. 55. 2 5 2  See generally, Pitman B. Potter, supra note 13, pp. 137-142. 125  T h e r e are frequent cases w h e r e the legal rights a n d interests o f f o r e i g n investors are  v i o l a t e d d u e to i m p r o p e r a c t i v i t i e s b y j u d i c i a l o r g a n s , a d m i n i s t r a t i v e i n t e r f e r e n c e  and  253 local protectionism.  take  them  time,  F o r e i g n investors are frustrated  energy  and money  to  resolve. In  by  year-long cases,  s o m e cases, problems  which  are  pending. T h i s situation, unless thoroughly i m p r o v e d , w i l l substantially shake  still  foreign  investors' c o n f i d e n c e i n investing in C h i n a . T h i s i m p r o v e m e n t depends not o n l y  on  p e r f e c t i n g the p r o f e s s i o n a l a n d m o r a l attitude o f j u d g e s a n d the e r a d i c a t i o n o f l o c a l  p r o t e c t i o n i s m , but a l s o o n the r e f o r m o f C h i n a ' s j u d i c i a l s y s t e m a n d the perfection  the  overall  legal environment.  Such changes, however,  will  take  longer  require m o r e effort than creating l a w s a n d regulations as these k i n d s o f  and  of  will  improvements  r e q u i r e c h a n g e s at a d e e p e r s o c i a l l e v e l a n d w i l l e n t a i l c h a n g i n g d e e p l y r o o t e d i d e a s  a n d c o n c e p t s that are n o w a part o f p e o p l e ' s t h i n k i n g . T h e t i m e a n d effort r e q u i r e d f o r  these c h a n g e s l e a v e C h i n a s t i l l a l o n g w a y f r o m its g o a l .  N e e d l e s s to s a y , e s t a b l i s h i n g a n d m a i n t a i n i n g a n e f f i c i e n t , t r a n s p a r e n t , a n d  l e g a l s y s t e m is e s s e n t i a l to C h i n a ' s e c o n o m i c a n d s o c i a l d e v e l o p m e n t ,  with  respect  to  foreign  investment  and  trade.  In  order  impartial  particularly  to  establish  t r a n s p a r e n c y - e n h a n c i n g e c o n o m i c dispute resolution m e c h a n i s m s i n C h i n a , this thesis  therefore calls for m o r e c o m p r e h e n s i v e efforts b y r e a l i z i n g c o m p l i c a t e d yet  important  institutional and cultural issues rather than pure legal construction.  2 5 3  Zhongguo Jingji Shidai (China Economic Times),  4 N o v . 2 0 0 0 , p. 2 c .  126  Bibliography  1.  A . V.Diecy. 1885.  Law of the Constitution.  2.  Bersani, Mattew.  1 9 9 3 . T h e E n f o r c e m e n t o f F o r e i g n A r b i t r a l A w a r d s i n C h i n a . 10  Oxford  Press.  J, INT'L ARB. 4 7  3.  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Implementation of W T O Rules).  No.  3.  94.  Zhang, Chunsheng &  Tong, Weidong.  1999. W o g u o  Xingzheng Fuyi Zhidu  F a z h a n he Wanshan (Improvement and Development  Reconsideration System).  95.  Zhang,  Shaohua.  (Critique  of China's  Administrative  China's Science of Law (Zhongguo Faxue).  1999. W o g u o  and Reconstruction  Xingzheng  of  Sifa Lilun  China's Administrative  de  zhi Pipan yu  Adjudication  N o . 4.  Chonggou  Theory).  Xingzheng Faxue Yanjiu (Study on Science of Administrative Law), N o . 3 .  96.  Z h a n g , S h a n g z u . et a l . 1 9 9 1 .  Zouchu Digit de Zhong Xingzheng Faxue (China's  Administrative Jurisprudence Stepping out of Low Tide Development). China University of Political Science and L a w  97.  Zhang,  Shuyi.  Jurisprudence).  98.  et.  al.  1991.  1988.  Press.  Xingzheng Faxue Xinlun (On Administrative  Beijing: Current Affairs  Zhou, Wangsheng.  Beijing:  Press.  Lifa xue (The Study of Legislation). P e k i n g  University  Press.  139  99.  Zhu,  Chenxia.  2002.  Xingzheng  Collegial System of Administrative  Shenpan  Trial).  Heyiting  Xianzhuang  Lunxi"  (On  Zhengzhou Daxue Xuebao (Journal of  Zhenzhou University). V o l . 3 5 . N o . 6 .  140  Appendix: Chinese Cases Cited  Fengxiang Trade Ltd., Shanghai v Salt Administrative Bureau, Shanghai  (2002)  Source:  Shanghai N o . 2Intermediate People's Court: Administrative  Judgment (2002) N o . 60  H u ErZhong Z i  •  Gazette o f the Supreme Court o f the P R C , v o l 8 1 , 1 J a n 2003  •  Shanghai N o . 2 Intermediate People's Court  http://www.shezfy.com/BigCaseDetail.  Website:  asp?id=42  Parties: Plaintiff (Appellant):  Fengxiang Trade Ltd., Shanghai  Defendant (Appellee): Salt Administrative  Bureau, Shanghai  Dispute Resolving Institutions: Administrative  Reconsideration Organ: Commerce Commission of Shanghai  First Instance Court: People's Court, Jingan District,  Shanghai  Court o f A p p e a l (final decision): Shanghai N o . 2 Intermediate People's Court  Date: Final decision: 24 M a y 2002  141  Summary of Facts:  T h e p l a i n t i f f i n t r o d u c e d i n d u s t r y salt to S h a n g h a i f r o m A n H u i P r o v i n c e o n 16  May  2 0 0 1 . A t the train station, the d e f e n d a n t f o u n d that the p l a i n t i f f v i o l a t e d the " S h a n g h a i  Regulations o n M a n a g e m e n t o f Salt" for lack of a business license o f industry  salt.  T h e d e f e n d a n t m a d e a n a d m i n i s t r a t i v e c o e r c i v e m e a s u r e to d e t a i n the i n d u s t r y salt o n  21 M a y 2 0 0 1 a n d s e r v e the n o t i c e o f this d e c i s i o n . T h e p l a i n t i f f r e f u s e d a n d a p p l i e d to  the  Commerce Commission of  Shanghai for  administrative  reconsideration,  which  m a i n t a i n e d the d e c i s i o n o f a d m i n i s t r a t i v e c o e r c i v e m e a s u r e o n 21 A u g u s t 2 0 0 1 . T h e  plaintiff sued.  Issues: W h e t h e r the d e c i s i o n o f a d m i n i s t r a t i v e  c o e r c i v e m e a s u r e m a d e b y the d e f e n d a n t  on  21 A u g u s t 2 0 0 1 is p r o p e r ?  Decision:  M a i n t a i n e d the d e c i s i o n o f a d m i n i s t r a t i v e c o e r c i v e m e a s u r e o n 21 A u g u s t 2 0 0 1 .  Reasons: T h e r e w e r e c l e a r facts a n d a d e q u a t e e v i d e n c e that the p l a i n t i f f i n t r o d u c e d the  salt  from  another  province.  The  argument  that the  behavior  industry  happened before  the  " S h a n g h a i R e g u l a t i o n s o n M a n a g e m e n t o f S a l t " a n d thus shall not b e b o u n d b y  this 142  was  objected.  T h e introduction  o f industry  salt  into  Shanghai was a  continuous  b e h a v i o r . It c o n t i n u e d t i l l w h e n t h i s r e g u l a t i o n c a m e i n t o f o r c e .  Appeal and Basis: T h e p l a i n t i f f a p p e a l e d . It w a s a r g u e d t h a t t h e f i r s t i n s t a n c e f a i l e d t o a p p l y t h e l a w  properly.  Decision on Appeal (with Reasons): Judgment rescinded.  T h e A p p e l l e e failed to a p p l y the right l a w .  The  Regulations on Salt of the PRC  s t i p u l a t e d t h e k i n d o f t h e salt, w h i c h s h a l l b e m a n a g e d b y t h e state. I n d u s t r y salt i s n o t  the subject.  Since the appellant's business license d i d include the industry  salt, the  a p p e l l a n t w a s entitled to d o s u c h business. T h e a d m i n i s t r a t i v e d e c i s i o n at issue m a d e  a c c o r d i n g to the " S h a n g h a i R e g u l a t i o n s o n M a n a g e m e n t o f S a l t " w a s n o t proper. T h e  Official Reply Salt Administrative Bureau, Shanghai.On Whether the Wholesale of Salt Shall Be Managed on a United Basis " Light  Industry Department  o f t h e P R C . It  b e l o n g e d to internal d o c u m e n t g i v e n b y  could  not be regarded  as a  legislative  authority a n dh a dn o external b i n d i n g force.  Jin Man Ke Electric Ltd. v State Revenue of Shenzhen ( 1 9 9 7 ) 143  Source: Renmin  Fayuan  Anli  Xuan  (Cases  Selection  of  People's  Court),  V o l 3,  2000;  cumulatively vol. 33.  Parties: Plaintiff: J i nM a nK e Electric L t d .  Defendant: State R e v e n u e o f S h e n z h e n  Dispute Resolving Institutions: A d m i n i s t r a t i v e R e c o n s i d e r a t i o n O r g a n : State R e v e n u e o f S h e n z h e n  (defendant)  Court: Shenzhen Intermediate People' Court  Date:  18 A u g u s t 1 9 9 7  Summary of Facts:  On  12 June  1996,the 2  concealed a n d unreported  administrative  n  d  branch bureau  taxes  during  o f the defendant  the previous  found  that t h e p l a i n t i f f  t w o years a n d then  made  an  d e c i s i o n that the p l a i n t i f f s h a l l p a y t h e d u e t a x a s w e l l as the late f e e  a n d the fine. T h e p l a i n t i f f o b j e c t e d a n d a p p l i e d to the defendant  for  administrative  144  reconsideration.  O n 3 1 D e c 1 9 9 6 , t h e d e f e n d a n t m a d e t h e d e c i s i o n o f a d m i n i s t r a t i v e r e c o n s i d e r a t i o n . It  c o n f i r m e d the administrative penalties i m p o s e d o n the p l a i n t i f f w h i l e it also c h a n g e d  the s p e c i f i c a m o u n t o f t a x p a y m e n t a n d the fine a n d c a n c e l l e d t h e late f e e ( " d e c i s i o n  at i s s u e " ) . T h e p l a i n t i f f s u e d a g a i n s t t h e d e f e n d a n t .  Issues: Whether  the defendant  shall make  the decision o f administrative  ( " d e c i s i o n at i s s u e " ) w h i c h c o n f i r m e d the o r i g i n a l a d m i n i s t r a t i v e  reconsideration  penalties  imposed  on the plaintiff?  Decision:  Q u a s h thedecision o f administrative  reconsideration.  Reason:  T h e l e g i s l a t i v e authorities w h i c h t h e d e f e n d a n t ' s d e c i s i o n at i s s u e b a s e d o n w e r e n o t  o p e n to the p u b l i c . I n addition, the hearing s h o u l d h a v e b e e n h e l d a c c o r d i n g to the  State Revenue: Implement Measures of Hearing Procedures of Administration Penalties on Tax Management.  145  Shitong Communication Equipment Ltd. of Guanezhou v People's Government of Guangzhou  (1999)  Superior People's Court o f G u a n g d o n g province: Administrative Judgment (1999) N o .  33 Y u e G a o F a X i n g Z h o n g Z i  Source: State I n f o r m a t i o n C e n t e r : State R e g u l a t i o n s D a t a b a s e  Number:  90193001999007  Parties: Plaintiff (appellant):  Shitong Communication Equipment Ltd. o f Guangzhou  Defendant (Appellee): People's Government o f Guangzhou  Third Party: B o w l i n g  Company  Dispute Resolving Institutions : Administrative  organ for resolving  Administrative  Bureau  Administrative  reconsideration  dispute:  organ:  G u a n g z h o u Industrial a n d C o m m e r c i a l  People's  Government  of  Guangzhou  (defendant)  First Instance: G u a n g z h o u Intermediate P e o p l e ' s C o u r t  146  Court of appeal (Final decision): Superior People's Court of Guangdong  province  Date:  Final decision:  1999/12/03  Summary of Facts: T h e third party was an effectively  representative.  established c o m p a n y . M r . C u i R o n g w a s the  The plaintiff company, Mr. X i h a o . Mr. Zhang Shujun and Mr.  S h a o y i n w e r e the shareholders.  Industrial and C o m m e r c i a l  legal  Zhang  T h e t h i r d p a r t y c o m p a n y a p p l i e d to the G u a n g z h o u  Administrative  B u r e a u for  changing  the  registration  of  stock right and legal person b y submitted relevant documents including A g r e e m e n t  of  S t o c k R i g h t s Transfer, D e c i s i o n o f R e v i s i n g the A r t i c l e s , C e r t i f i c a t e o f L e g a l P e r s o n  H o l d i n g Post (hereinafter  shareholders  were  "relevant documents"). T h e application got approved.  changed  into the p l a i n t i f f a n d M r .  X i h a o . Later, M r .  Cui  (original l e g a l p e r s o n ) , M r . Z h a n g S h u j u n a n d M r . Z h a n g S h a o y i n f l i e d the  to the G u a n g z h o u I n d u s t r i a l a n d C o m m e r c i a l A d m i n i s t r a t i v e  the  relevant  docuemtns  provided  by  the  third party  The  Rong  complaint  Bureau, by arguing  company  when  applying  that  for  c h a n g i n g the registration o f s t o c k right a n d l e g a l p e r s o n w a s f o r g e d . A t the s a m e time,  t h e y sent the r e l e v a n t d o c u m e n t m a t e r i a l s ( o r i g i n a l v e r s i o n ) to the C r i m i n a l S c i e n c e  Technology  handwriting.  documents  Institute o f G u a n g z h o u for authentication,  After  was  authentication,  not  done  by  it w a s  these  found  three  together  that the  complainants.  w i t h their  signature  Based  on  on  personal  the  relevant  this  experts'  147  conclusion, G u a n g z h o u Industrial  and Commercial Administrative  Bureau  revoked  the a p p r o v a l (hereinafter " c a n c e l l a t i o n d e c i s i o n " ) a n d i m p o s e d fine o n the third party  company.  The  plaintiff  defendant  applied  to  q u a s h e d the  conclusion  was  Bureau.  uncertain  complainants themselves, w h o  authentication;  Bureau  defendant  cancellation  Commercial Administrative  experts'  the  for  administrative  decision made  the  fine  because  h a d direct  when  it  The  G u a n g z h o u Industrial  and  T h e reasons were:  had  firstly,  handwriting  was  interested r e l a t i o n to  s e c o n d , that G u a n g z h o u I n d u s t r i a l  imposed  by  reconsideration.  made  the  the v a l i d i t y  provided  the  and Commercial  cancellation  of  by  application  the  the  for  Administrative  decision  violated  C o m p a n y l a w (article 205) w h i c h d i d not s a y thee t w o k i n d s o f p u n i s h m e n t c o u l d b e  a p p l i e d at the s a m e t i m e . T h i r d , the l e g a l p r o c e d u r e s w e r e n o t p r o p e r l y f o l l o w e d  by  t h e G u a n g z h o u I n d u s t r i a l a n d C o m m e r c i a l A d m i n i s t r a t i v e B u r e a u w h e n it m a d e  the  a d m i n i s t r a t i v e p e n a l t y d e c i s i o n . It v i o l a t e d t h e a r t i c l e 31  of Administrative  Penalty  L a w o f the P R C , w h i c h says, b e f o r e the a d m i n i s t r a t i v e p e n a l t y d e c i s i o n is m a d e , the  administrative  agency should inform  their due rights.  the c o n c e r n e d party  o f the face, reasons  T h e p l a i n t i f f r e f u s e d to a c c e p t the a d m i n i s t r a t i v e  and  reconsideration  d e c i s i o n a n d s u e d at the G u a n g z h o u I n t e r m e d i a t e P e o p l e ' s C o u r t .  Issues: W h e t h e r the d e c i s i o n o f a d m i n i s t r a t i v e r e c o n s i d e r a t i o n m a d e b y the d e f e n d a n t  was  148  proper?  Decision:  T h e d e c i s i o n at i s s u e m a i n t a i n e d .  Reason: It w a s r i g h t f o r t h e d e f e n d a n t  Administrative  because  to d e c i d e that G u a n g z h o u I n d u s t r i a l a n d  B u r e a u a p p l i e d the l a w i n c o r r e c t l y  Guangzhou  i n f o r m the due  Industrial  and  Commercial  Commercial  a n d v i o l a t e d the l e g a l  Administrative  procedures  Bureau  failed  to  rights  Appeal and Basis: The  plaintiff  a p p e a l e d . It  was  argued  that  the  application  for  the  administrative  r e c o n s i d e r a t i o n h a d e x p i r e d the l e g a l l i m i t a t i o n a n d thus the A p p e l l e e s h a l l not  accept  t h e a p p l i c a t i o n at a l l .  Decision on Appeal (with Reasons): Appealed  dismissed.  The  Guangzhou  Industrial  and  Commercial  Administrative  B u r e a u a p p a r e n t l y v i o l a t e d the l e g a l p r o c e d u r e s i n m a k i n g the a d m i n i s t r a t i v e  The  Appellee  reconsideration.  was  entitled  to  accept  the  application  for  the  decision.  administrative  Mr. En Wang  v People's Government. Heping District, Tianjin (1997)  Source: C a s e s S e l e c t i o n o f the P e o p l e ' s C o u r t ( R e n m i n F a y u a n A n l i X u a n ) , V o l 4 , 1 9 9 7  (vol  30 i n all)  Parties: Plaintiff (Appellee): M r . E n W a n g  Defendant (appellant): People's G o v e r n m e n t . H e p i n g District,  Tianjin  Dispute Resolving Institutions: First Instance:  Tianjin N o . 1 Intermediate People's Court  Court of appeal (final decision): Superior People's Court of  Tianjin  Date:  Final decision: 6 June  1997  Summary of Facts: The plaintiff was  an individual  license, License of Temporary  31  Dec  1996. O n  Oct  of  his  Occupation of R o a d was valid from 1 Jan 1 1996  till  1 9 9 6 , the  proprietor  defendant  with all necessary licenses. O n e  made  an administrative  decision  ("the 150  d e c i s i o n at i s s u e " ) to c l e a r u p t h e p l a i n t i f f ' s  the d e f e n d a n t i n f r i n g e d o n h i s m a n a g e r i a l  stall. T h e p l a i n t i f f s u e d o n the b a s i s that  authority.  Issues:  W h e t h e r the a d m i n i s t r a t i v e d e c i s i o n at i s s u e m a d e b y the d e f e n d a n t w a s p r o p e r ?  Decision:  T h e d e c i s i o n at i s s u e q u a s h e d .  Reason:  T h e defendant was  ultra vires  i n m a k i n g the d e c i s i o n at issue.  Appeal and Basis:  T h e d e f e n d a n t a p p e a l e d . T h e y a r g u e d that t h e y d i d n o t d e m a n d the A p p e l l e e to stop  the o p e r a t i o n .  The  A p p e l l e e a r g u e d that b u t f o r a p p e l l a n t ' s o r a l n o t i c e , h e w o u l d  not cease the  operation a n d w o u l d not suffer the e c o n o m i c loss.  Decision on Appeal (with Reasons): A p p e a l d i s m i s s e d . A l t h o u g h the appellant p r o v i d e d n e w regulation as the basis f o r  their administrative  a c t , t h e y f a i l e d to p r o v i d e the l e g i s l a t i v e authorities  before the 151  first instance. B a s e d o n these, a c c o r d i n g  PRC  (article  to  Administrative Procedural Law of the  3 2 , 54 (2)), the administrative  act shall  be withdrawn.  T h en e w  r e g u l a t i o n t h e a p p e l l a n t p r o v i d e d at t h e s e c o n d i n s t a n c e c o u l d n o t b e r e g a r d e d a s the  l e g i s l a t i v e authorities o f the  adjudication.  * Mr. Sun Liangren v Administrative Commission of High Technology Development Areas, People's Government of Chongqin  (2001)  Source: Renmin  Fayuan  Anli  Xuan  (Cases  Selection  o f People's  Court),  V o l .4, 2001  (Cumulatively Vol. 38)  Parties: Plaintiff (appellant): M r . L i a n g r e n S u n  Defendant (Appellee): Administrative Commission o f H i g h Technology  Development  Areas, People's Government o f Chongqin  Dispute Resolving Institutions: First Instance Court: C h o n g q i n N o . 1 Intermediate People's Court  Court o f A p p e a l (final decision): Superior People's Court o f C h o n g q i n  152  Date: F i n a l d e c i s i o n : 21 m a r c h  2001  Summary of Facts: The  defendant  collective-owned  defined  the  enterprise.  enterprise  in  T h e plaintiff  which  objected  the  plaintiff  a n d sued,  worked  arguing  as  that  a  the  enterprise b e l o n g e d to the private enterprise.  Issues: W h e t h e r t h e d e f e n d a n t ' s d e c i s i o n that t h e e n t e r p r i s e at i s s u e w a s c o l l e c t i v e - o w n e d  was proper?  Decision: The  d e c i s i o n at issue q u a s h e d . T h e defendant  shall  make  a new  administrative  decision.  Reason: It w a s c o r r e c t t h a t t h e d e f e n d a n t d e f i n e d t h e e n t e r p r i s e at i s s u e w a s c o l l e c t i v e - o w n e d  according  to  Provisional Measures on How to  Define  Collectively-owned Enterprises in Cities and Towns.  the Property Right of  H o w e v e r , the defendant failed to  s h o w the applicable l a w o n the written decision, w h i c h , therefore, shall b e remade.  Appeal and Basis: T h e p l a i n t i f f a p p e a l e d o n the b a s i s t h a t t h e e n t e r p r i s e at i s s u e w a s  o n t h e f a c e w h i l e it w a s p r i v a t e  collective-owned  actually.  Decision on Appeal (with Reasons): T h e a p p e a l d i s m i s s e d . T h e reasons adopted b y the first instance court  affirmed.  * Mr. Chuanlin Tu v Industrial and Commercial Administrative Bureau, Qinghuai District, Nanjing, Jiandsu Province  (1996)  Source: State I n f o r m a t i o n C e n t e r : State R e g u l a t i o n s D a t a b a s e  Number:  115611998025  I s s u e d b y : A p p l i e d L a w Institute o f the P R C , S u p r e m e C o u r t o f the P R C  Parties: Plaintiff: M r . C h u a n l i n T u  Defendant:  Industrial  and  Commercial  Administrative  Bureau,  Qinghuai  District,  Nanjing, Jiangsu Province  Dispute Resolving Institutions:  154  Administrative  reconsideration  organ:  Industrial  and Commercial  Administrative  Bureau, Nanjing, Jiangsu Province  Court: N a n j i n g Intermediate People's Court  Date:  30 O c t 1996  Summary of Facts: T h e d e f e n d a n t , f i n d i n g that t h e p l a i n t i f f c a r r i e d t o b a c c o w i t h o u t l i c e n s e , d e c i d e d that  the  plaintiff  violated  State Council: Provisional Regulations of Administrative  Penalties on Speculation and Profiteering ( a r t i c l e administrative  3 ( 1 ) (i)) a n d m a d e the decision o f  penalties ("decision at issue"). T h e plaintiff applied to the Industrial  and C o m m e r c i a l Administrative Bureau, Nanjing, Jiangsu Province for administrative  reconsideration, w h i c h m a i n t a i n e d the d e c i s i o n at issue. T h ep l a i n t i f f sued.  Issues:  W h e t h e r the d e c i s i o n at issue w a sm a d e  properly?  Decision:  T h e d e c i s i o n at issue q u a s h e d .  Reason:  155  It w a s w r o n g f o r t h e d e f e n d a n t t o a p p l y t h e  State Council: Provisional Regulations of  Administrative Penalties on Speculation and Profiteering. T h e shall be governed by  former  the  l a w b e l o n g s to  plaintiff's  Law of the PRC on Tobacco Monopoly ( a r t i c l e  administrative  regulation while  v a l i d i t y o f the f o r m e r is l o w e r t h a n the latter.  the latter  behavior  38).  is law. T h e  The  legal  In the event o f legislative c o n f l i c t s  a r i s i n g b e t w e e n the l a w a n d a d m i n i s t r a t i v e regulations, the l a w s h a l l b e a b i d e d by.  156  

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