Wednesday, October 10, 2007

China’s New Property Law Put to Test

Many have either mused about or questioned the true color of China’s new Property Law. Will it provide adequate protection to private owners of real property? Will it be seriously enforced to safeguard the burgeoning private ownership of property? Will it be sophisticated enough to cover myriad legal problems that surface in a growing market economy (assuming that all agree that China has a market economy already)? Will Chinese courts be knowledgeable enough to interpret the law to protect property owners? Will the courts withstand the ultimate test of judicial independence to adjudicate property disputes between private citizens and the government? Or, will the Property Law be just another “decoy” masterminded by the Chinese government to legitimize its continuous rein of the People’s Republic? These are tough questions, and the answers to which will unfold a telling map of China’s progress to establish a systematic institution of the rule of law.

Systematic changes do not occur overnight in China. As the Chinese firmly believe that “Rome was not built in one day”, they will likely continue with the experiment with establishing their version of the rule of law at their own pace. Therefore, answers to the above-posted questions will not come in one neat package. I think the Chinese government will afford extra caution to the Property Law given the political sensitivity of currently competing views on property ownership (government ownership versus private ownership).

Nonetheless, the great test on the new Property Law has begun. No sooner did the week-long national holiday end than a slew of case got filed under the new law. Two representative cases are particularly interesting and will be discuss here.

In the case of Shen v. Beijing Zhongjiaxin Auction Ltd., the central issue is whether the Property Law is applicable to disputes predating the effective date of the new law. Briefly, the facts of the cases are as follows in the form of an outline:
Plaintiff Mr. Shen purchased 6 condos for 120,000 Yuan from Mr. Yan.

Plaintiff received titles to the 6 units. Plaintiff leased the units to various tenants.

The Shijiazhuang Intermediate People’s Court convicted Mr. Yan for illegal business activities and bribery.

The Court also ruled that the 6 condos then in Mr. Shen’s possession were Mr. Yan’s property, and it subjected them to judicial auction. Beijing Zhongxiaxin Auction Ltd. was the court-appointed auctioneer.

Defendant Auction company evicted the lessees of Mr. Shen’s units, and auctioned the condos.

Plaintiff sued the defendant at the Chang Ping People’s Court (Chang Ping is a district in Beijing), claiming the defendant violated article 4 and 64 of the Property Law (governmental, collective and private ownership of property is protected by law).

The general rule is that a law is applicable to disputes following its effective date. But the plaintiff is petitioning the Court to apply the new law regardless of the general rule. What do you think the Court should do here?
--to be continued.

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