Non-State Law in Chinese Choice of Law Rules

Abstract

Non-state law are norms or rules that are not domestic law of a particular sovereign country. It is a collective concept, which covers, in general, codified customs and rules, uncodified customs and rules and international conventions that stand alone without being implemented or transferred into any domestic legal systems. The issue of whether non-state law can be applied as the applicable law to decide the substantive rights and obligations in a dispute has generated debates. It has been argued by some commentators that non-state law should be treated, in private international law, as equivalent to state law, which should be able to be applied as the governing law of a contract, because lex mercatoria or other non-state norms has been frequently used in international arbitration as the governing law of an international commercial contract, because non-state law is more appropriate than national law for the purpose of international trade, and because non-state law is neutral. Opponents, however, argue that non-state law is ambiguous and uncertain and, more importantly, it may not be construed as “law” in the concept of choice of law. The status of non-state law in Chinese choice of laws has never been systematically examined in academic writings. In practice, no sufficient attention has been paid to it, either. The judgments vary largely from courts to courts, without sufficient reasoning. This issue has been ignored in the recent legislation of the new applicable law act. The final Act on the Applicable Law to Foreign-Related Civil Relations remains silence on this issue. It is unfortunate that the current uncertainty will remain for a considerable period of time until it is clarified by the relevant authorities. This article aims to explore the application of non-state law in Chinese private international law. Section 2 conducts a literal study of the existing Chinese legislation and judicial interpretation. Section 3 considers the interpretation of paragraph 2 of Article 142 of the General Principles of Civil Law (GPCL) on the status of international treaties in Chinese law and the courts’ practice in applying this provision. Section 4 examines the interpretation and application of paragraph 3 of Article 142 of GPCL, which concerns the status of customs. It is concluded in Section 5 China should adopt the general international litigation practice and only permits the parties to incorporate non-state law into contracts and enforcing them as contract terms.