The Retroactivity in the Application of PRC Civil Code
The Retroactivity in Application of PRC Civil Code
Fleur Chen April 28 2021
Upon the Civil Code of People’s Republic of China takes effect, one of the first issue to address is its retroactivity, especially while concerning new rules set in the Civil Code. In order to answer this question, the Supreme Court had issued a judicial interpretation on the retroactivity of for application of the Civil Code (“Judicial Interpretation”) in December 2020, and takes effect simultaneously with the Civil Code on January 1, 2021.
The Judicial Interpretation provides the following rules regarding the retroactivity of the Civil Code:
1. Disputes arising from legal facts occurring prior to the Civil Code takes effect:
· Generally speaking, disputes arising from legal facts occurring prior to the Civil Code takes effect shall be governed by the laws and judicial interpretations effective then, except as otherwise provided for by any law or judicial interpretation.
· Civil disputes arising from the legal facts occurring before the Civil Code comes into force and relevant legal provisions are provided for by any laws or administrative interpretations in force then, such laws or judicial interpretations shall apply, except that the application of the Civil Code is more conducive to protecting the lawful rights and interests of the parties, maintaining the social and economic order, and upholding core socialist values.
· Legal provisions related to the civil disputes arising from the legal facts occurring before the Civil Code comes into force are not provided for by laws and judicial interpretations in force then but are provided by the Civil Code, the Civil Code may apply, except that the application of the Civil Code obviously impairs the lawful rights and interests of the parties, increases the parties' legal obligations or deviates from the parties' reasonable expectations.
· Civil disputes arising from the legal facts occurring before the Civil Code comes into force, if the laws or judicial interpretations in force then only set forth fundamental provisions whareas the Civil Code set forth specific provisions, the laws or judicial interpretations in force then shall apply, but adjudicative reasoning can be made according to the specific provisions of the Civil Code.
· If a case for which a final judgment has been made before the Civil Code comes into force is retried upon petition of a party or as decided under the trial supervision procedures, the Civil Code shall not apply.
· Civil disputes arising from the legal facts occurring before the Civil Code comes into force and lasting until after the Civil Code comes into force shall be governed by the Civil Code, except as otherwise provided by any law or judicial interpretation.
2. Disputes arising from legal facts occurring during one of the following time periods shall be governed by the Civil Code:
· The legal facts from which the civil disputes arising occur after the Civil Code took effect.
· The legal facts from which the civil disputes arising occurred prior to the Civil Code took effect and lasting until after the Civil Code comes into force.
3. Retroactive Application Related to Certain Infringements and Contracts
a. Civil disputes arising from infringements upon the names, likenesses, reputations, or honors of heroes or martyrs, among others, which cause damages to the public interest, before the General Provisions of the Civil Law of the People's Republic of China come into force shall be governed by Article 185 of the Civil Code.
b. Prior to the Civil Code comes into force, the parties agree before the expiration of the term for the performance of obligations that the mortgaged property or the pledged property shall belong to the creditor if the debtor fails to pay the due debts, Articles 401 and 428 of the Civil Code shall apply.
c. If a contract entered into before the Civil Code comes into force becomes invalid if any law or judicial interpretation effective then applies but shall be valid if the Civil Code applies, the relevant provisions of the Civil Code shall apply.
d. For a contract entered into before the Civil Code comes into force, if the party furnishing the standard terms fails to perform the reminding or explanation obligation, and thus the determination of validity of standard terms is involved, Article 496 of the Civil Code shall apply.
e. Before the Civil Code comes into force, if a party, without notifying the other party, directly claims the rescission of a contract according to the law by instituting an action, paragraph 2 of Article 565 of the Civil Code shall apply.
f. If a party to a contract entered into before the Civil Code comes into force fails to perform the non-monetary obligations, or fails to perform the non-monetary obligations as agreed, the other party may request such performance. However, under any of the exceptional circumstances in subparagraphs (1), (2) and (3) of paragraph 1 of Article 580 of the Civil Code, which makes it impossible to achieve the purpose of the contract, a party requests the termination of the relationship of contractual obligations and rights, paragraph 2 of Article 580 of the Civil Code shall apply.
g. If any dispute arises over a factoring contract concluded before the Civil Code comes into force, relevant chapter of the Civil Code shall apply.
4. Transitional Application Related to Contract and Tort
a. For a contract which is entered into before the Civil Code comes into force, and the performance of which will last until after the Civil Code comes into force as provided by any law or agreed upon by the parties, if a dispute arises from the performance of the contract before the Civil Code comes into force, the laws and judicial interpretations effective then shall apply; and if a dispute arises from the performance of the contract after the Civil Code comes into force, the relevant provisions of the Civil Code shall apply.
b. A party's claim for the application of paragraph 2 of Article 734 of the Civil Code when the lease term expires before the Civil Code comes into force shall not be supported by a people's court; and a party's claim for the application of paragraph 2 of Article 734 of the Civil Code when the lease term expires after the Civil Code comes into force shall be supported by a people's court according to the law.
c. For a contract entered into before the Civil Code comes into force, if the time limit for exercising the right to rescind the contract is neither provided for by any law or judicial interpretation in force at that time nor agreed on by the parties, and the other party does not make a demand for the exercise, if the party who has the right of rescission knows or should have known the cause of rescission before the Civil Code comes into force but fails to exercise the right of rescission within one year from the date when the Civil Code comes into force, the people's court shall determine in accordance with the law that the right of rescission is extinguished; and if the party who has the right of rescission knows or should have known the cause of rescission after the Civil Code comes into force, the provisions of paragraph 2 of Article 564 of the Civil Code on the time limit for exercising the right of rescission shall apply.
d. Civil disputes if a tort occurs before the Civil Code comes into force but the consequences of harm appear after the Civil Code comes into force shall be governed by the Civil Code.
5. For a contract of suretyship entered into before the Civil Code takes effect, if the agreement on the period for suretyship is ambiguous, if it is less than two years from the date of expiration of the time limit for performance of the principal obligation to the date when the Civil Code comes into force and a party claims that the period for suretyship should be two years from the expiration of the time limit for performance of the principal obligation, the people's court shall support such a claim according to the law; and if there is no such an agreement between the parties, if it is less than six months from the date of expiration of the time limit for performance of the principal obligation to the date when the Civil Code comes into force and a party claims that the period for suretyship should be six months from the date of expiration of the time limit for performance of the principal obligation, the people's court shall support such a claim according to the law.
In spite of above provisions, it is advisable to exercise legal rights and make any claims at the earliest time point, to protect your lawful rights, as statutory time limits will also apply, details of which will be discussed in forthcoming articles.
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