The emergence of the People's Republic of China (PRC) as a market power and the reversion of Hong Kong to PRC sovereignty in 1997 have focused the attention of the international business community on the PRC's willingness to enforce contractual obligations according to the rule of law. Some scholars have questioned whether the rule of law can ever be realized in China without a change in the basic system of governance. This Note attempts to answer that question, at least in the context of the Foreign Economic Contract Law (FECL), the law governing contractual disputes between Sino and foreign enterprises in the PRC. This Note first discusses the importance of the rule of law in autonomous business transactions and differentiates the rule of law from an instrumentalist perspective of the role of law. The Note then addresses contract law in the PRC, including the traditional reliance on the rule by law, the government's attempt to move towards the rule of law, and the current status of the law governing contracts between Sino and foreign enterprises. The Note describes the characteristics of a society governed by the rule of law. Using these characteristics as a baseline, it assesses the possibility that Sino-foreign contractual disputes in the PRC may be adjudicated according to the rule of law. It includes a description of the obstacles facing the implementation of the rule of law, suggestions for overcoming them, and an assertion that it may be easier to overcome these obstacles in the limited context of the contract law governing foreign and domestic enterprises. The Note concludes that although the PRC could institute structural changes that would further the goal of achieving the rule of law without altering the current system of government, ultimately the true implementation of the rule of law in the context of the FECL will either be the result of political change or the cause of it.
Mark C. Lewis,
Contract Law in the People's Republic of China,
30 Vanderbilt Law Review
Available at: https://scholarship.law.vanderbilt.edu/vjtl/vol30/iss3/4