Western law vs. Asian customs: Legal disputes on business practices in India, British Malaya and Hong Kong, 1850s?1930s

Abstract

In traditional Asian societies, economic activities were always embedded with political and religious forces under the protective disguise of such institutions as communal temples and lineage groups. In India and China, for instance, it was very common that wealth was retained and accumulated in the form of religious endowments, and in the names of deceased ancestors or patron deities. Business activities, therefore, was a segment of the complicated web of kinship, ethnicity, and personal relations. Nevertheless, with the rise of British colonialism starting from the 19th century, the presence of British legal system in Asia threatened the material interests of many of these endowments. Starting from the 1850s, the British courts have passed down as legal precedents that these “perpetual trusts” violated the British Rule against perpetuities. Nevertheless, the Hindu religious endowment was granted exemption to the Rule whereas the Chinese Tong was not – as the British courts ruled that endowments held in the name of Tong did not meet the test of being “religious” or “charitable.” This verdict was detrimental to traditional Chinese business practices, as Tong, being a common unit of share-holding in business investments, was not entitled to accumulate, transfer and inherit business shares. The gap between these decisions highlights the differences in the social and historical circumstances in which the respective British policies were formulated.