The Impartiality of the Judiciary in China - Coursework Example

Running Head: IMPARTIALITY OF THE JUDICIARY IN CHINA Impartiality of the Judiciary in China [The Writer’s Name] [The Name of the Institution] Impartiality of the Judiciary in China Nowadays China becomes one of the hottest market places all over the world. From the viewpoint of the investors, China seems to be the most potential market with the huge market and attractive economic situation. The apparent result is the increase in number of foreign investments put into China, besides that the Chinese government also releases some favourable policies to attract the investment from overseas. For the foreign investors who want to get into this fruitful market, it is necessary to have the general information what is going on in the market, the situation of the market and culture issues. This paper will give some ideas about the market situation in China as well as some issues related to how to do business in China. Corruption is the most attention-driven to the foreign investors. It may effect to the business by many ways. Some people say that it is a bad norm in society but some don't because they can get benefits from it. Even the Chinese government is trying to release policy in order to get rid of corruption but it is really an impossible mission now. The Chinese see it as a normal practice in society and hardly changeable, it is one of the deep roots existing in normal life and people accept it. For the hierarchy of bureaucracy system in China for a long time, officials seem to have more power and substantial financial well-being. Connection is also one of the most important things that should be mentioned. Chinese people don't easily deal with the strange person for the first time. It takes time to develop the relationship and gain the trust from the other. But once you obtain others' trust, your business will go smoothly. That's why it is essential to have a local representatives or local partners to aid with your business. One more typical problem that many foreign enterprises entering China are worrying about is piracy. Psychologically, Asian people like cheap and new commodity. Anything considered hottest in the market, they want it and easily find in the black market. Films, movies, computer software and many other luxury commodities are having the same fate. For the Western businessperson who wants to conduct business in China, the culture is one of the most important aspects they should take into consideration. The East and the West have so many differences in the social customs based on different roots of culture. Be aware of the social customs is always a good practice when dealing business with Chinese people. International standard is not an easy thing you can find in Chinese court for the lack of qualification of judgments. That is why it could be hard to settle the international commercial disputes between foreign and Chinese partners. Besides that, many observers have noted that it is often difficult for parties to enforce and obtain payment on court judgments and arbitral awards in China. While courts are required to receive approval from the Supreme People's Court prior to refusing to enforce a foreign arbitral award, courts have occasionally circumvented this requirement by employing delaying tactics when local interests are adversely affected by the arbitration rulings. In the worst case, it can be useful to get involved in an arbitration than bring the case to the court. (Zhiwu, 2003: 64-71) In China, arbitration apparently offers many advantages over litigation. A major advantage is the finality of the rulings. With the purpose of stimulating the activities of foreign investment into China, the government has released and adjusted some policies including the taxation system. Balancing the development between the East and West is also one of the main targets of the central government. The varying preferential tax imposing in different region in order to attract the foreign investment especially in the West and the Middle areas, such as financial support, infrastructure aid together with reduced tax imposed on business and income for foreign investors who are interested in some industries and regions are offered. China which had a good starting point in 1978 when reforms began, with no foreign debt, balanced government budget, sound currency and stable priced sounded as a fairytale comparing to the ex communist Soviet Union and some Eastern European Countries. Chinese leadership, which was prepared to throw overboard any person, policy, or belief, that threatened to damage drive of economic development, has heavily supported foreign companies with tax and other benefits. Chinese people determination, their hard work and investment culture could ensure Chinas position as the next Asian superpower and will assure Chinas top position in the world economy. Nevertheless the future looks bright there is a lot of uncertainties that the country and the foreign countries could face in the future. Issues as macroeconomic and political instability, resulting from lower government budgetary revenues than spending, as there is lack of profits from state owned companies and government revenues from principal and local authorities are only the first, which should be carefully investigated. The country faces high migration, income inequalities, crime rate is growing and the over growing population is a fact. Country needs long-term investment and carefully designed financial and monetary policy in order to assure enough money supply for high economy growth on the one hand and to prevent hyperinflation, which could result from the country experimental regime used in the past present. Recently China has been changing dramatically since the beginning of the 1990s with the amazing speed. The appearance of China in international arena is increasing noticeably; China is mentioned in every business conference as well as political meetings. After joining WTO, China has gained the trust from many countries in a stable economic growth and settled political situation. The second stage lasted from 1982 to 1991; there was further development on the legal system. It mainly focused on the development of civil and economic legislation. In 1986, the first comprehensive civil legislation, General Principles of Civil Law, was promulgated. Although it was not detail enough, it formed the framework of the fundamental operating rules for the transition to market economy. In 1991, the State Council published a white paper titled " The Situation of Human Right'. It implied that China officially accepted the concept of human rights. The third period began from the early 1992, Deng Xiaoping emphasized that the objective of China's economic reform was to develop a socialist market economy. There was an acceptance of the socialism with market economy. It was required that changes in legal system would inline with the corresponding transition. Many promulgated laws to serve in the centrally planned economy would be either amended or abolished. On the other hand, a number of important basic laws regarding civil procedures, criminal procedures, criminal law, and contract law were introduced or revived for the transition and the further developing market economy. In order to establish the rule of law, China has focused on the regulation of the practices of the administrative and law enforcement agencies to protect the citizens' legal rights. In 1990, the Administrative Litigation Law has become effective. To extent the protection of the citizen's right, in May 1994, State Indemnity Law was enacted. It stipulates "where a government agency or its personnel invades the legitimate rights an interests of citizen, legal person and other organization, resulting in injury while performing its functions. The sufferer shall be entitled to obtain state indemnity according to this law"4. To enforce this law, the people's courts at the intermediate level and above have all setup indemnity committees to hear such cases. Corresponding to the increasing demand of lawyers to safeguard the legal rights and interests of the citizen, the Law on Lawyers was promulgated in 1996. Before the establishment of this law, all lawyers were legal workers for serving the country and government and no private lawyers. This law contributed a remarkable progress. After submission of bills, examination and discussion of the draft law would be carried out and then deputies of NPC will vote the bills. After approval of a final version by the NPC, the President of the PRC would promulgate the law. The law making is tending to be more democratic. One of the major aspects of China's legal reform is the reform of judiciary. An independent judiciary is one of the most important measures to protect the citizen's rights because court is the last resort of people to resolve conflicts and to seek for justice. (Wong, 2000, p.66) From 1966 to 1976, China's judicial system broke down under the chaotic social and politic situation during the Cultural Revolution. Since the reform commenced, the judicial system has been gradually recovered with the establishment of a large number of people's courts at different level. The people's courts are divided by four levels: The Basic People's Courts, the Intermediate People's Courts the Higher People's Courts and Supreme People's Court. The rule of law would be understood in different area. The rule of law is required to assume the existence of rights. The law should sustain the various citizens' right. When the government abuses its power, citizens should have the right to seek legal way against the government's abuse. Fifth, judicial independence is crucial to the rule of law. It has been mentioned above. Under the rule of law, the judges should be aware that the courts are the last resort to resolve their disputes with each other or with the government. (Weng, 2002, 178-83) The judges, thus, are the ultimate protectors of the citizens' right. As China evolves from a socialist society to a market society, the legal structure must shift to rule of law. The more developed the market society is, the greater the need for the rule of law. Although legal construction has been carried out since 1979, many problems still exist within China's legal system, especially the judicial system. The Constitution law contains some very impressive statements on various freedoms but these freedoms have been hindered in practice in China. For example, the Constitution law stipulates that the citizens of the PRC shall enjoy freedom of speech. (Elsie, 2002: 110-14) In practice, all publications would be checked three times at three levels under the CPC extensive censorship system. (Wang, 2000; 39-43) As the mentioned above, the importance of the independence of the judiciary is the essence of the rule of law. “In principles the judiciary shall decide matters in accordance with law, without ay restrictions, improper, influences, pressures, threats or interferences, direct or indirect, from any quarter or for any reason.” (Kui, 2000: 77-82) The president, vice presidents, and judges of the Supreme People's Court and local people's courts are subject to the removal by the NPC or the local people's congresses respectively. Besides, the CCP have great influence on the nomination of candidates for these major positions in the people courts. The judges are subject to influence by political bodies in order to secure their jobs. The local governments support the financial resources of the corresponding local people's courts. The people's courts may need to be in line with the interest of local government when consideration of judgments. The NPC and local people’s congresses are representing the people to carry out both the functions of parliament and government under the CCP control. Most of the senior government officials and representatives of the People Congresses at different level are correspondingly held by the CCP members. The interrelationship between NPC and CCP conflicts with the principle of the separation of powers among the legislature, the executive and judiciary. It would increase the potential existence of mistakes or misconduct of its judges. It should not tolerate under rule of law. Many local people courts suffer to difficult financial situation. The salaries of judges are comparative low. Under this situation, the low salaries provide the incentive fro corruption among judges. It would impede the development of rule of law. The feudal China's culture is still influent current people's mind. It reduces their recognition of their rights, which did not exist in the past. It impedes China's efforts to establish a rule of law. However, the above problems are the major source of obstacle to convert China into a "Rule of Law' state. The fundamental rule of game in a modern market economy is the rule of law. The rule of law has two economic functions. First the rule of law regulates and limits discretionary interventions of the state in economic activities. The rule of law can safeguard a free economy. If the government's behaviour is not constrained, no economic freedom can be guaranteed. Secondly, the rule of law regulates the economic behaviour of individuals and enterprises to create an orderly, stable environment with fair competition, clearly defined and well protected property rights, and effectively enforced contracts. (Yingyi 2003: 121-26 For a functioning market-based economic system, there should be a clear definition and strict enforcement of the property law and contract law. Firstly, for the property law, the right of own, the right of transfer and the right of use are being protected. This gives people the certainty about who will stand to benefit from. In a functioning economic system, a well-protected property law provides investors with confidence on the ownership, the transfer or the use of their investments. In China, the situation is not that satisfactory. There are still many 'gray' areas which need more detailed clarifications. For example, the government may need to have a more precise definition on to whom the ownership and the management control of SOE belong to. Also, citizens have weak concessions of their rights. There should be more public education on the area. Secondly, the contract law should be clearly defined and strictly enforced too. Any exchange between two parties requires the support of a clearly defined and written contract document. The contract should align with the current contract law. With such supportive documents, the trading can be run smoothly with eliminated uncertainties on the terms laid down and so helps reducing the transaction cost. In China, the enforcement of the contract law is weak. The courts make the decisions but no enforcements followed. It is partly due to the weak judicial system where resources are limited for qualified and experienced judges and lawyers. Besides property law and contract law, the rule of law should clearly define and enforce intelligence property law, other business laws on competitions, foreign trades and foreign investments. All these law protections are essential to manipulate a function market-based economic system. In China, the awareness of the importance of these laws is limited. Most of the intelligence properties are imported; there are fewer incentives to protect them. However, the impediment of the development for market-based economic system under the current legal arrangement, there are two of them. By historical reason, there exists an unhealthy relationship between the state and the economic agents (including business enterprises) due to the absence of the rule of law. A substantial barrier to the effective enforcement of law is the judicial corruption, which gives rise to insecure property rights and ineffective contract enforcement, forces business enterprise to resort to the traditional way of making back-door deals instead of using legal methods when there is a dispute. For example, most of the bank loans are granted to SOEs rather than more eligible private institutions for political reason or closer relationships. This generally distorts the loan assessment and the risk management control of a bank or a financial system. The loan allocation should be based on the credit assessment and performance assessment. Otherwise, the resources granted will not be utilized correctly as to maximize profit and may eventually create liquidity problems to banks and cause high bad debt rate. Since there is no legal restrictive force to avoid the problems and this hurt the confidence of the investors as well. References Elsie Leung, Speech on China's Accession to the WTO and the Legal Services in Hong Kong, 2002: 110-14 Kui, H.W Chinese Commercial Law, Oxford University Press, 2000: 77-82 Wang, Z.M The Development Rule of Law in China, Harvard University Press, 2000; 39-43 Weng, S. J. & H. Chang, Introduction to Chinese Law, Ming Chong Public, 2002: 178-83 Wong, K. S. China: Reforming China's Judiciary, Asian Human Rights Commission, 2000, vol 10 p.66 Yingyi Qian, The Modern Market Economy and the Rule of Law, Perspectives, Vol.1, no. 5, 2003: 121-26 Zhiwu Chen, Capital Markets and Legal Development: the China Case, Yale School of Management Press, 2003: 64-71 Read More