A recent discussion on the Chinalaw listserv has revealed a fascinating loophole in Chinese real property law: nowhere does it seem to contain a clear prohibition against trespassing. The relevant laws regarding state-prosecuted offenses don't seem to include anything like this; at most, one is forbidden from disturbing order at a workplace, but that doesn't turn on whether one is trespassing or not, and is not an offense against the employer's rights to a particular physical space. On the civil side, one could (if one wished) construct an anti-trespassing norm by combining various provisions in the Property Law: Art. 2, stating that rights in rem include the right to exclude, Art. 32, which says that a rightholder can sue for damages resulting from infringement of his rights, and Art. 35, which says that an aggrieved rightholder may request a court to eliminate an impairment of the right. But whether this amounts to an action against trespassing - in particular, to an action for ejectment, or an injunction against further trespass - doesn't seem clear. A Chinese scholar specializing in real estate law, in his contribution to this discussion, said it does not; according to him, the most Chinese law requires is that someone entering onto the property of another should "restrain [himself]", minimize damage, and compensate for any damage done.

The interesting question, of course, is why this should be so. My hunch is that it's connected to China's pre-reform economy, in which all important urban spaces were under the more or less direct control of a governmental or quasi-governmental entity with access to tools of physical coercion (i.e., people with clubs). Physically as well as politically, pre-reform China was a very closed society - workplaces and apartment buildings were often walled or fenced, with all entrances manned by guards. Trespassing would have been difficult to accomplish simply as a practical matter. Furthermore, much urban land was owned by the state (technically, all of it after 1982), and the particular way of understanding state ownership of land may have contributed. In the US, we have no problem saying that citizens can be trespassers on state-owned land, because the state owns land more or less just like any private party owns land. But in China, state ownership, sometimes called "ownership by the whole people" (the terms are explicitly said to be synonymous) is sometimes and for some purposes interpreted as direct ownership by the citizens of China. Obviously, this couldn't be true in any practical sense - you would need the consent of all joint owners to alienate, for example - but perhaps it's felt just enough to make a notion of trespassing unthinkable.

It's hard to believe - and to the best of my knowledge it's not true - that in China you can simply waltz into someone's living room (provided the door is unlocked) and make yourself comfortable provided you act with restraint and are willing to compensate for any damage you cause. But the legal basis for saying you can't is surprisingly obscure.

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Many thanks to Gordon for his kind introduction and for inviting me on as a guest blogger. I'm a regular reader of Conglomerate and it's an honor to be asked to join in.

My research interest is in modern Chinese legal institutions generally and corporate governance in particular; recently I've been looking not at the substantive rules of corporate governance, but at the institutions that would make those substantive rules matter, and the extent to which they exist in China.

One can't spend much time studying Chinese law without being struck by the tremendous gap between what the rules say and what actually happens. This goes beyond the usual law-on-the-books versus law-in-practice gap that one can find in any jurisdiction, where the gap is attributable to obsolescence, resource constraints, and political factors such as government unwillingness to enforce certain types of laws. In China it seems to arise sometimes from a different view of law altogether:
essentially a kind of didactic text that regulated parties are supposed to read and obey. If obedience is not forthcoming, the response is to blame the regulated parties for their willfulness. An alternative response would, of course, be to look at the enforcement structure provided by the regulations in question: do regulated parties have any reason to obey? But this response is relatively rare.

Thus, for example, the Chinese Company Law provides that joint-stock companies (more or less the equivalent of the Delaware corporation) shall have both a board of directors and a board of supervisors. The latter is supposed to keep an eye on the former. But it is elected by exactly the same body that elects the board (i.e., the shareholders) and, while it can ask questions of the directors or request explanations of certain acts, it has no real power to do anything if the answers aren't satisfactory. A recent revision to the Company Law (in 2005) gave it the power to call a shareholders' meeting, but that's about it.

Another example is the director's duty of care and loyalty. This is stated in one provision of the 2005 revised Company Law, but there is no right of action clearly attached to it. Where the law does not very clearly provide you with a right of action (and even in some cases where it does), Chinese courts are typically very unwilling to give you one.

This in turn stems from another feature of Chinese law: that it often seems to make sense more as a set of instructions to officials than as a rights-granting instrument. For example, one type of company under the Company Law may dispense with a board of directors if it is "relatively small" and has a "relatively small" number of shareholders. But the law provides no clue as to how we are to know what counts as "relatively small" in each case. If we think of the law as a recipe for entrepreneurs, it's bad drafting. But if we think of it as instructions to officials in the bureaucracy that handles corporate registrations, then it's easier to understand: it's telling them to make a discretionary judgment. The same thinking is behind regulations that look like private law but say that something or other "should normally" be done or "should in principle" be done.

One might reasonably ask, "But is that so different from US (or other Western) law? Surely we have vague terms such as 'due process' and 'reasonable' that we happily give to judges, juries, or administrative agencies to interpret." This is not a bad point. I think the difference, though, is in the fact that in the US system, we now have a pretty good idea of who has the power to interpret what; when people draft legislation, they could probably readily tell you which body would be interpreting which term and under which principles. Very few of these matters are well worked out in the Chinese legal system. Legislation will always have problems, but the courts have very little power and prestige, and thus aren't a good institutional solution to these problems. As a result, while all legal systems generate uncertainty and contradiction, China's is unusual in not having well-understood techniques for resolving that uncertainty and contradiction.

The bottom line is that when one hears that Chinese corporate law requires such-and-such or imposes such-and-such a duty, one has to ask whether there's any reason to think that this alleged requirement or duty is at all meaningful. One doesn't have to be a card-carrying Holmesian realist to wonder whether a duty that is in substance wholly hortatory should really count, and be reported, as a legal duty just like the legal duty to drive carefully, refrain from embezzlement, etc.

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As luck would have it, I was in Boston this weekend and got a chance to hear the hometown perspective on the Patriots' version of "spygate"--Coach Bill Belichick videotaping the New York Jets' defensive signals.  As one would expect, there were plenty who believed that the punishment (fines on both the coach and the team as well as the potential loss of a first round draft pick) was too harsh, particularly because many felt that others in the league were guilty of similar conduct.  But there were also those who felt that the punishment was both necessary and appropriate, and hoped that the team could just move on.  In the end, though, it seemed that many were simply disheartened by the conduct and the shadow it would cast over the team and the game of football.  As a fan of both the Patriots and the NFL, I would have to put myself in that final category.

On a broader note, however, the debate regarding the appropriateness of the punishment reminded me of the debate regarding individual vs. collective liability in the corporate context.  Thus, many people's arguments seemed to suggest that the most appropriate penalty and the one most likely to deter future misconduct was one that focused on the individual--in this case Belichick.   As a result, these people scrutinized the $500,000 fine levied against Belichick.  Some thought it set the right tone--it was the highest fine ever levied against an NFL coach and according to ESPN, represents 12% of his 2007 salary.  But many others were dissatisfied and questioned why the fine was not stiffer and did not include any game suspensions.  For these any team penalty harms players and fans who had no control over the misconduct, but also because such a penalty was perceived as less effective than one that focused on the individual. 

Others seemed to believe that the most significant penalty should be aimed at the team, arguing that the only way to ensure that this kind of misconduct does not occur in the future is to hold the team responsible, which would create incentives for the team and its owner to more effectively monitor its coaches.  Most of these people were not happy with the $250,000 fine imposed on the team and thought it needed to be significantly higher to get the attention of management, and encourage them play a more active role in weeding out misconduct.  There also was debate about whether stripping the Patriots of its first round draft pick if the team made the playoffs was enough.  Regardless of how people resolved this debate, however, most people who focused on the team penalty seemed to think that such a penalty (and not whatever was imposed on Belichick) was the most important one and the one that would prove most effective in sending a message aimed at deterring future misconduct.

Certainly in the corporate realm we have seen a lot of debate regarding whether and to what extent individual executives or their corporations should be subjected to liability for misconduct.  And just like in the corporate context, the resulting punishment seems to satisfy very few.  More importantly, however, similar to the corporate context, there was an effort to impose both individual and collective liability, based on the recognition that both the individual and the corporation, or the team in this case, not only bear some responsibility for the misconduct, but also appear to reap whatever benefits flow from the misconduct.

For my part, while I do think we should ask questions that allow us to fully understand the extent of the misconduct and the reasons behind it, I nevertheless hope for the day when we can talk about the Patriots without hearing the word spy--or worse, the word cheater

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That line appears in a form letter I just received from Christine Durham, Chief Justice of the Utah Supreme Court. My name has been "drawn at random" for possible jury service. I am doubting the randomness of the draw. I suspect this has more to do with the fact that I recently registered to vote.

When I told a friend about the letter, he said, "That's good for you, right? I mean, wouldn't you be particularly interested in that because your are a law professor?"

No. Unlike Christine, I have never wanted to be on a jury. I don't care much for litigation of any sort. My only trip to the courthouse as a lawyer was the day I was sworn into the bar.

Anyway, this led to a conversation with one of my colleagues about exclusion of law professors. He felt that law professors would be highly unlikely to make the cut, but I know law professors who have served on juries. Still, I wonder whether I would want one of us on the jury if I were a litigant. Perhaps the decision requires too much context, but as a general matter, wouldn't law professors tend to exert a disproportionate influence over the other jurors?

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