In trial activities, a Chinese judge will consider what kind of legal effect, social effect and political effect that may be incurred by a judgment to determine how to make a judgment.
In various documents of the Chinese courts, expressions such as “judges should pursue the unification of legal effects, social effects and political effects in case trials” are often seen. Among them, legal effects and social effects appear most frequently, while political effects appear less frequently.
This is not only the official requirement of the Chinese courts; in fact, according to my years of experience in litigation, the judges have habitually thought in this way when hearing cases, thus avoiding any unsatisfactory result for the Chinese courts because of their judgments.
1. Legal Effect
The legal effect means that judges should accurately apply the law when hearing cases and making judgments.
The Chinese courts usually supervise judges in a strict manner to prevent them from breaking the law in trial activities. This kind of supervision is sometimes so demanding that the judges have to rigidly apply the law when making judgments and dare not exercise their discretion.
For example, pursuant to the Contract Law of China, if the parties concerned have no agreement on the terms of the transaction or the agreement is unclear, the judge should first determine the terms of the transaction according to the business practices; if the terms of the transaction cannot be determined, the judge should use the relevant provisions of the Contract Law as the terms of the transaction. Therefore, the judge should first try to explore the terms of the transaction agreed by the parties, and the terms of the transaction stipulated by the law shall only be adopted if it is indeed impossible to find out the agreement. However, in most cases, the judge is not willing (or does not dare) to explore the authentic agreement (real intention) of the parties, which is reflected as follows: if the parties’ written contract does not specify the terms of the transaction, or divergent interpretations of the contract exist, the judge will tend to directly adopt the terms of the transaction stipulated by the law.
The reason for the judge doing so is because, on the one hand, if he speculates on the authentic agreement of the parties according to his own judgment, and this judgment will benefit one of the parties, then he is likely to worry that others will think that he colludes with the party benefiting from such judgment. However, if he strictly applies the law and others accuse him, he would have a solid reason to defend himself. On the other hand, the majority of Chinese judges are directly admitted to the court after graduating from law schools, so they mostly only work in the profession of judges without other professional experiences, which makes them lack enough experience and background knowledge to speculate on the authentic trading conditions of the parties.
2. Social Effect
The social effect means that judges should obtain positive comments and recognition from the public on their judgments when trying cases and making judgments.
Why should judges consider social effects? On the one hand, as China’s Supreme People’s Court (SPC) Vice President Justice Jiang Bixin (江必新) pointed out, Chinese laws cannot adapt to China's rapid development under certain circumstances or guarantee the fairness in some specific cases. Therefore, judges should make judgments based on the fair feelings of the public, thus making up for the inadequacy of the law. On the other hand, given that the Chinese judicial system is regarded as part of China's political power, if the judge's judgment cannot be recognized by the society, the public's trust in the Chinese political authorities will also be weakened.
In the latest round of judicial reform in China's courts (2015-2017), relevant measures were introduced consecutively, inter alia, the disclosure of all court judgments and the live broadcast of a large number of court trials on the Internet. This is aimed to facilitate the public to ‘circusee’ (“围观” in Chinese network language, a synthesis of two words “circus” and “see”.) and evaluate the work of judges.
Consideration of social effects has led judges to sometimes care more about the public's perception of justice, rather than the parties' perception of justice in a particular case. For instance, the Chinese public generally does not recognize huge liquidated damages, and the SPC also stipulates that liquidated damages cannot exceed 30% of the losses. Therefore, even if the parties agree that the defaulting party should pay huge liquidated damages, the judge is likely to lower the liquidated damages according to the public's perception of fairness. For another example, China's traditional concept adheres to “harmony”, which makes most Chinese people think that cooperation should avoid being terminated as much as possible, and transactions should be completed as much as possible, so the contract should avoid being terminated as much as possible. The judge will also follow this view. Unless the parties expressly agree on the conditions for the termination of the contract and such conditions are clearly fulfilled, the judge will not easily make a judgment in favor of the termination of the contract.
3. Political Effect
The Chinese courts usually do not mention political effects. Because there is a view that if the judge achieves social effects, the public's trust in the political authorities will be enhanced, that is, the political effects are achieved. However, sometimes political effects can be exhibited in a more concrete manner.
First, the SPC emphasizes that the court should provide judicial guarantees for certain political goals. The SPC often publishes documents entitled “Opinions on Providing Judicial Guarantees for XXX”, indicating what inclinations the court should have in making judgments in certain cases in order to achieve a specific political goal. In recent years, these political goals mainly include: the construction of the Free Trade Zone, the construction of the Belt and Road Initiative (BRI), and the improvement of the business environment.
Second, the court should maintain social order and economic order. The SPC often publishes documents entitled "Opinions on the Trial of XXX Cases in the Current Situation", instructing the court to consider the current economic situation or social situation when making judgments.
In addition to the SPC, local courts, especially high courts and intermediate courts, as second-instance courts, will also publish such documents within their jurisdictions to achieve local political goals.
4. Evaluation of the Three Effects
In some cases, it is difficult for judges to ensure that their judgments achieve the legal, social and political effects at the same time. Many disputed cases in China are caused thereby. For example, in some cases, because the judge's decision pays overweighed attention the public opinion at the time but fails to strictly observe the law, judgments like these are also vulnerable to criticism from the legal profession.
The judge's pursuit of these three effects, in many cases, is more conducive to the parties to the specific case for obtaining a relatively fair judgment. For example, when China is under pressure from the international community on intellectual property rights, China needs to show the international community its progress in intellectual property protection. At this time, in order to achieve this political effect, the courts will require judges to protect the legal rights of foreign parties (even the parties in a particular country) as much as possible when trying intellectual property cases.
For lawyers, if you don't understand the three effects that the Chinese judge is considering, then you will not be able to reasonably predict how the judge will make the judgment. For example, when the Chinese courts render a ruling on recognition and enforcement of a foreign judgment, such as the Kolmar Group AG case and the Liu li case, many people, even some Chinese lawyers, believe that this is likely to be an exceptional case, and similar cases may not necessarily achieve the same result in the future. However, if you understand that the Chinese courts are working hard to serve the political goal of the Belt and Road Initiative and hope that the foreign courts will also recognize the judgments made by the Chinese courts, then you will know that the Chinese courts will probably try to recognize foreign judgments in the future as much as possible.
Contributors: Guodong Du 杜国栋