China-EU Law J (2013) 2:201–216

DOI 10.1007/s12689-013-0029-1

ARTICLE

Comments on the Supreme People’s Court’s

Interpretation No. 1 on the Private International Law
Act of the PRC

Peter Leibküchler

Published online: 27 September 2013

© China-EU School of Law 2013

Abstract In January 2013 the Supreme People’s Court (SPC) published its first
judicial interpretation on the 2010 Private International Law Act (PILA). The main
aims of this Interpretation are to clarify the meaning of several rules, to facilitate
judicial practice and to enhance legal security in private international law contexts.
In order to achieve this, the Interpretation contains rather detailed provisions, often
directly addressing certain issues that raised concerns among the courts when
applying the PILA. In addition, the SPC went beyond simple explanation and also
created a number of rules that could not be found in the Act. These cases mostly
concern issues that had been discussed by the legislator and among academia before
the enactment of the PILA, but which were finally not included. The article will
show that despite several points of critique, the SPC has successfully engaged in
finding solutions to existing deficiencies or potential problems in the PILA.

Keywords Chinese private international law · Judicial interpretation ·

Choice of law · Ascertainment of foreign law · Mandatory rules ·
Evasion of law · Habitual residence

1 Background

The “Act on the Applicable Law1 to Foreign-Related Civil Rela-

tions” (Private International Law Act, PILA) took effect as of April 1,
1
The author takes the freedom to deviate from most translations that speak of the “Act on the application
of law” or the “Law on the application of law” or similar versions. As the new law is not dealing with the
application of law but the determination of the applicable law this choice is taken only for the sake of
better understanding, not claiming grammatically perfect translation.

P. Leibküchler (&)
Hamburg Max Planck Institute for Comparative and International Private Law, Hamburg, Germany
e-mail: peterleibkuechler@hotmail.de

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202 P. Leibküchler

2011.2 Even before its coming into effect, the Supreme People’s Court (SPC) had
issued a notice which required all people’s courts to report on difficulties
subsequently encountered in when applying the new statute.3
The newly published judicial Interpretation4 (PILA-Interpretation) took effect on
January 7, 2013 and contains in its 21 articles several detailed provisions directly
addressing problems of the courts in the application of the PILA.5 Considering the
high degree of importance that the people’s courts are giving to SPC interpretations,
it can be expected that in the future the lower courts will follow the solutions given
in this Interpretation.6
This article will present most of the PILA-Interpretation’s provisions and analyse
them on their actual potential to resolve uncertainties and ambiguities of the PILA.
It should be noted that the Interpretation mainly focuses on general issues contained
in chapter one of the PILA. This fact and the denomination as “Interpretation No. 1”
make clear that another interpretation aimed at the special parts is to be expected
soon.7

2
中华人民共和国涉外民事关系法律适用法, in Gazette of the Standing Committee of the National
People’s Congress [全国人民代表大会常务委员会公报] 2010, Nr. 7, S. 640 ff.; Chinese-English in:
CCH Asia Pacific [Hrsg.]: CCH China Laws for Foreign Business, Business Regulations, Volume 1–5,
Hongkong 1985 ff., 19–870; a compilation of the several drafts during the legislative process: Huang
(2011a); for the legislative history of the act: Pissler 2012, p. 1 ff.; Zeng 2010, p. 2; see also: Ma 1995,
p. 334 ff.; China Society of Private International Law [中国国际私法学会], Model Law of Private
International Law of the People‘s Republic of China [中华人民共和国国际私法示范法], Beijing 2000
(Chinese/English); on the implications of that model law on the area of contract law: Gebauer 2008, pp.
62–70; another academic draft from 2006 can be found in Zhao and Du 2006, pp. 642–657; on the
legislative draft of 2002: Zhu 2007, p. 283 ff.
3
最高人民法院关于认真学习贯彻执行《中华人民共和国涉外民事关系法律适用法》的通知 (Notice
of the SPC on Earnestly Studying and Implementing the “Act of the People’s Republic of China on the
Applicable Law to Foreign-Related Civil Relationships“), of December 2, 2010, e.g. in: China Trial
Guide, Guide on Foreign-Related Commercial and Maritime Trial [涉外商事海事审判指导], Fourth
Civil Chamber of the SPC (ed.) 2010, vol. 2, p. 90 f.
4
最高人民法院关于适用〈中华人民共和国涉外民事关系法律适用法〉若干问题的解释(一)(Inter-
pretation (I) of the SPC on several questions concerning the application of the “Act of the People’s
Republic of China on the Applicable Law to Foreign-Related Civil Relationships” [最高人民法院关于适
用〈中华人民共和国涉外民事关系法律适用法〉若干问题的解释(一)]), e.g. in: People’s Court Daily
[人民法院 报] January 7, 2013, p. 6.
5
The prior notice therefore served the important purpose of allowing the SPC to become informed about
difficult issues arising in the lower courts and thus to react to the most important uncertainties Zhang
2013, p. 6.
6
Judicial interpretations by the SPC are primarily meant to interpret laws in order to harmonize judicial
practice and to promote a similar outcome of similar cases in the lower courts. Courts use and refer to
those interpretations by the SPC in the same manner as they do with laws. On many occasions the SPC is
overstepping the barriers of interpreting existent law and is, de facto, creating new law. This situation,
however, is one that is not met with much opposition in the legal community. See: Finder 1993, pp. 164
ff.; for the relevant questions on the legal basis and binding character of such interpretations by the SPC,
see comprehensively: Ahl 2007, p. 251 ff.
7
Due to the relatively short time since the coming into effect of the PILA, the SPC deemed it sensible to
first address general issues (mainly chapter one) but to wait a bit longer before interpreting the special part
(chapters two to seven), see Zhang 2013, p. 6.

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Private International Law Act of the PRC 203

2 Content of PILA-Interpretation

2.1 Application of the PILA (§§ 1–3 PILA-Interpretation)

Before dealing with the substantive questions, the SPC offers some clarifications on
the general applicability of the PILA.

2.1.1 Determination of the required foreign element

According to the prevailing view in the PRC, private international law is applied
only if the relevant legal relation contains at least one foreign element.8 In order to
help judges in determining this foreign element, a prior interpretation by the SPC on
the General Principles of Civil Law (GPCL-Opinions 1988) had already contained
relevant criteria, i.e. the foreign nationality of one of the parties, the location in a
foreign country of the object of the civil relation or the occurrence of relevant legal
facts outside of Chinese territory.9 The PILA does not contain any similar provision.
§ 1 PILA-Interpretation contains all the above-mentioned criteria of the GPCL-
Opinions 1988, but it extends them. Especially noteworthy is the inclusion of
habitual residence as a valid criterion.10 This denouement is reasonable as the PILA
mainly refers to habitual residence as a connecting factor rather than nationality.11
This was also the reason for the SPC to include it here.12 A positive side effect of
this broadened “definition” could therefore be the promotion of the application of
private international law in general.13
The second change of § 1 PILA-Interpretation in comparison to the GPCL-
Opinions 1988 is the introduction of a general clause in § 1 No. 5. § 1 No. 5 simply
states that the foreign element can also derive from “other circumstances”, without
giving any more specification. At first sight this rule seems quite odd. As it does not
contain any specification on the relevant circumstances, it could easily encompass
the criteria of Nos. 1–4, too. Therefore, one might argue that the clause in No. 5
shows that it is not reasonable, hardly possible and ultimately superfluous to give a
definition of the required foreign element at all. This would be true if the sole
intention of the provision was to give a clear definition of what could constitute the
relevant foreign element. This understanding, however, would ignore that the main
purpose of the rule is to support judges in the determination of a foreign-related
relationship. § 1 PILA-Interpretation is constructed in a way that, on the one hand,
allows those judges who are not very familiar with private international law issues

8
See Huo 2010, p. 8; Tu 2011, p. 563 (565); Du 2011 S. 1 ff.
9
Para. 178 最高人民法院关于贯彻执行《中华人民共和国民法通则》若干问题的意见(试行)(GPCL-
Opinions 1988) of January 26, 1988; Gazette of State Council [国务院公报] 1988, p. 65 ff.
10
Even before promulgation of the PILA the courts occasionally referred to domicile or a business
subsidiary’s location outside of China as a valid and relevant foreign element, Guo and Xu 2008, p. 135.
11
Habitual residence is the connecting factor in §§ 11–15, 19–26, 28–33, 41, 42, 44–47 of PILA.
References to nationality are all subsidiary and can still be found in §§ 21–26, 29, 30, 32 and 33 PILA.
12
See Zhang 2013, p. 6.
13
See for the tendency of the courts to directly apply Chinese law Du 2011, p. 108; He 2011, pp. 5–9.

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204 P. Leibküchler

to safely base their application of the conflict rules on the circumstances enumerated
in No. 1 to No. 4.14 On the other hand, more experienced judges as well as judges
more familiar with private international law may use the general clause in No. 5 to
base their decision on other circumstances they deem reasonable. In so far, § 1
PILA-Interpretation also has the potential to increase the use of the conflicts rules in
general.

2.1.2 Retroactive effect

Generally the PRC follows the rule that there is no retroactive effect of new laws, i.
e. new regulations are not applicable to facts that happened before the coming into
effect of these regulations, see § 84 Legislation Law.15 § 2 PILA-Interpretation
affirms that view, specifying that in order to determine the law applicable to civil
relationships that occurred prior to the coming into effect of the PILA, judges are to
make their decision according to the provisions in effect at that time. It is only when
there were no relevant conflict rules at this moment that judges may decide
“according to” the new provisions of the PILA.16
This provision seems to aim at the adjustment of the prevailing judicial practice.
After the promulgation of the PILA, the vast majority of published cases show that
judges do apply the new law on “old” cases without discussing the issue of
retroactivity.17 This is also the case under circumstances where relevant provisions
of international private law had actually existed at the moment of the occurrence of
the civil relation in question.18 In actuality, in judicial practice the PILA widely
enjoys retroactive effect.
Whether the judiciary in the future will focus more on this question seems at best
doubtful. From various conversations with judges, the author has learned that after
the promulgation of the PILA there is a certain relief in the courts to finally have at

14
See for the lack of quality and experience among parts of the judiciary when handling international
private law cases: Huo 2010, p. 55.
15
Gazette of the State Council [国务院公报] 2000, p. 112 ff.
16
The SPC Notice of 2010, mentioned earlier (see footnote 3), already contained an identical provision
in its para. 3.
17
In the first 100 relevant cases that were decided after April 2011, available on the databases of
www.ccmt.org.cn, www.westlawchina.com and www.chinalawinfo.com, only one court, to the best of the
author’s knowledge, denied the application of the PILA on the grounds of its lacking a retroactive effect,
see 国际金融公司与浙江玻璃股份有限公司、冯光成金融借款合同纠纷案 (International Finance
Corporation v. Zhejiang Glas Corporation ltd., Feng Guangcheng banking loan contract dispute),
November 2, 2011, 浙江省绍兴市中级人民法院 (Intermediate People’s Court of Shaoxing City),
reference number: (2010) 浙绍商外初字第76号.
18
E.g. in a 2011 tort case the Shanghai High Court based its decision on both § 273 Maritime Trade Law
(the relevant rule in force at the time in question) and (presumably incorrectly) on § 44 PILA, see. 东京海
上日动火灾保险株式会社与 P.T.德加卡特·劳埃德(柏斯若)船舶碰撞损害赔偿纠纷案 (Tokio Marine
& Nichido Fire Insurance Co., Ltd. v. P.T. Djakarta Lloyd (Persero) ship collision damages dispute),
August 25, 2011, 上海市高级人民法院 (High People’s Court Shanghai), reference number: (2010) 沪高
民四(海)终字第198号. Even though both provisions primarily use the connecting factor of the place of
the unlawful act, § 44 PILA allows the parties to choose the applicable law after the occurrence of the
unlawful act. Therefore, the granting of a choice of law (based on § 44 PILA) in this case would have
been wrong (the parties did not chose the law, though).

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Private International Law Act of the PRC 205

hand a relatively comprehensive set of rules of private international law.

Accordingly, judges are motivated to use this new law now on the cases that they
have to decide, even if the facts of the case had occurred earlier. Especially as long
as the parties do not oppose the practice, it remains to be seen whether changes will
be realized in this regard.

2.1.3 Relation to other conflict rules

§ 3 PILA-Interpretation deals with the relation between the PILA and other conflict
rules that still can be found in other laws.19 Even though § 2 I PILA foresees that
“special provisions” contained in other laws are to be applied, it was disputed under
which circumstances one could deem a provision to qualify as a “special provision”
in this sense. Some argued these provisions could only be those regulating areas in
which the PILA itself did not provide any rules.20 Others held that rules in other
laws would also supersede the relevant provisions of the PILA in the case of a
conflict.21 The main reason for this controversy is the lack of a clear solution in § 2
PILA for the case when there is existing legislation in a specialized law as well as in
the new PILA.
The dispute is resolved in § 3 PILA-Interpretation by adopting a compromise.
Principally, the provisions of the PILA enjoy supremacy over conflicting rules
contained in other laws. In so far the Interpretation follows the first view expressed
above. However, there is an exception to that principle for the case that those
provisions are found in the area of commercial law, with § 3 explicitly citing the
Negotiable Instruments Law, the Maritime Trade Law and the Civil Aviation
Law.22 Provisions of these laws prevail over the PILA in case of a conflict, as
advocated in the second opinion. In this respect the PILA-Interpretation reduces an
uncertainty of the PILA.

2.2 International treaties and international practice

(§§ 4, 5 and 9 PILA-Interpretation)

§§ 4, 5 and 9 PILA-Interpretation deal with the issue of international treaties and

international practice serving as the applicable law.

19
These can be found, for example, in the 中华人民共和国民法通则 (General Principles of Civil Law)
(GPCL) of April 12, 1986, Gazette of the State Council [国务院公报] 1986, p. 371 ff., 中华人民共和国
继承法 (Succession Law) 10 April 1985, 中华人民共和国海商法 (Maritime Trade Law) of November 7,
1992, 中华人民共和国民用航空法 (Civil Aviation Law) of October 30, 1995 or 中华人民共和国票据
法 (Negotiable Instruments Law) of May 10, 1995 amended as of August 28, 2004; see the overview at
Du 2011, p. 41.
20
Wang 2011, p. 17.
21
See Huang and Jiang 2011, p. 7f.
22
See footnote 19.

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206 P. Leibküchler

2.2.1 International treaties

For the application of international treaties, § 4 refers to § 142 II of the GPCL and
the—in this regard—identical rules in the Negotiable Instruments Law, the
Maritime Trade Law and the Civil Aviation Law. These provide for the application
of international treaties when their provisions are in conflict with national rules.23
This merely reaffirms the already existing legal situation prior to the enactment of
the PILA. Remarkable, however, is the exception the Interpretation contains for the
area of intellectual property rights. Treaties on the protection of intellectual property
that have been transposed or still have to be transposed into national law do not
enjoy superiority over conflicting national rules. The PILA-Interpretation itself does
not contain any grounds for that exception. The SPC explains this exception with
the principle of territoriality, according to which protection of intellectual property
can only be granted according to national rules of the country in which protection is
sought.24 This argument is not convincing. The principle of territoriality in the area
of intellectual property protection only indicates that the protection of intellectual
property rights in a given country can be granted solely according to the laws of that
country, and not according to rules in the home country of one of the parties or any
other country’s rules (lex loci protectionis). The principle does not rule out,
however, the possibility that this protection—although territorially limited to one
state—could stem from sources other than national provisions, such as provisions in
treaties ratified by that state. Yet, this exception follows the prevailing opinion in
both literature and within the judiciary according to which a direct application of the
provisions of TRIPS is impermissible.25
§ 9 PILA-Interpretation deals with the special case of international treaties not
ratified by the PRC serving as applicable law. Under this provision, if parties refer to
such an international treaty in their contract, the people’s courts may determine the
parties’ rights and obligations according to this international treaty as long as there
are no infringements of the ordre public or mandatory rules. § 9 PILA-Interpretation
is of special interest, as—at first sight—it seems to indicate that parties may choose
international treaties as the applicable law. This proposition is highly disputed as the
wording of § 3 PILA, according to which the parties may choose the “law”
applicable to their civil relation, is subject to multiple interpretations.26 § 9 PILA-
Interpretation, however, does not speak of “choice of law”, but of the parties
“referring” to that treaty in their contract. Thus, the SPC clearly does not foresee a
choice of law here but merely an incorporation of the treaty provisions into the
contract, and the SPC also limits § 9 to the field of contracts and does not allow this

23
Unless the PRC has made respective reservations before joining the international treaty.
24
Zhang 2013, p. 7.
25
See Cao 2002, pp. 379–390 (380); Yu 2000, p. 4 f.; for the application of international treaties in the
PRC legal order in general: Ahl 2009.
26
Rejecting the possibility of a choice of international treaties: Wang 2011, who stresses that only the
law of a state or jurisdiction could be chosen (“…一国家 [法区]…”), p. 26f.; also Zhao 2011, p. 305;
stating a different opinion: Huang and Jiang 2011, p. 12f; Huo 2011, p. 1085; apparently also in this sense
Qi 2011, p. 41.

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Private International Law Act of the PRC 207

kind of reference in other areas.27 Having said that, it is noteworthy that the
provision still grants the courts with the final decision on whether or not they apply
the relevant treaty referred to by the parties. From all this, one can sense a certain
reluctance towards the application of substantive rules contained in an international
treaty not ratified by the PRC. This may come as a surprise, considering that the
PILA in general widens the scope of party autonomy considerably and thereby
encourages parties to choose even the law of foreign states.

2.2.2 International practice

As to the application of international practice, § 5 PILA-Interpretation merely

reaffirms its possible application as according to § 142 III GPCL and as according to
identical language found in the three acts already singled out above.28 According to
these provisions, international practice can be applied if neither the laws of the PRC
nor international treaties ratified by the PRC contain any respectively governing
provisions. Consequently, potentially applicable would be, for example, interna-
tional practices dealing with delivery conditions or trade terminologies, standard
contracts or model laws. In the literature, explicitly mentioned are the UNIDROIT
Principles of International Commercial Contracts, the Incoterms 2000 and
sometimes also the Principles of European Civil Law.29

2.3 Choice of law (§§ 6–8 PILA-Interpretation)

2.3.1 Scope of freedom of choice

§ 6 PILA Interpretation resolves the disputes that arose from the wording of § 3
IPRG. The latter That statute provided for the freedom of choice by the parties
“according to the legal provisions.” This phrase has been understood by some
scholars as granting the parties free choice only in those areas in which that freedom
is expressly granted by law.30 Others saw this provision only as a declaration that
the choice of the parties may not infringe the national ordre public or mandatory
rules but should generally be allowed if not explicitly forbidden.31 Judicial practice
seemed to be in favour of this latter understanding.32 § 6 PILA-Interpretation,

27
See Zhang 2013, p. 7.
28
See § 95 II中华人民共和国票据法 (Negotiable Instruments Law) (footnote 19), § 268 II 中华人民共
和国海商法 (Maritime Trade Law) (footnote 19), § 184 II 中华人民共和国民用航空法 (Civil Aviation
Law) (footnote 22).
29
See Du 2011, p. 54 f.; some authors, however, exclude the UNIDROIT Principles of International
Commercial Contracts from this category, referring to their character as a “restatement of law”, see Xiao
and Long 2009, p. 202.
30
See Du 2011, p. 61; Wang 2011, p. 30f; Tu 2011, p. 567.
31
Huang and Jiang 2011, p. 13/19f giving a precise example; in this sense also Zhao 2011, p. 305, who
states that the applicable law may be chosen by the parties if this freedom is explicitly granted or not
explicitly excluded.
32
Several people’s courts based their acceptance of a choice by the parties by citing solely § 3 PILA
without reference to any special provision explicitly granting this freedom, see: 李飞婵与吴文亮股权转

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208 P. Leibküchler

however, clearly favours the first view and states that freedom of choice only exists
where it is expressly granted.

2.3.2 Relation between chosen law and the relevant civil relationship

The PILA does not contain any provision on the question whether there has to be a
certain relation between the law chosen by the parties and the civil relationship in
question. § 7 PILA-Interpretation clarifies that this kind of relation is not required.
Hereby the SPC follows the majority opinion in both academic literature and case
law.33

2.3.3 Time of choice

There is also no mention in the PILA of the time limits in respect of the choice of
law. § 8 PILA-Interpretation grants the parties the right to choose the applicable law
or to change their prior choice until the end of the hearings at first instance. By
doing so, the SPC follows its own solution found for the area of contract law in 2007
(SPC-Rules 2007).34 This understanding is also primarily shared in the literature.35

2.3.4 Silent choice of law

In addition, § 8 PILA-Interpretation contains a remarkable clarification concerning the

possibility of a tacit or silent choice of law. § 3 PILA clearly requires an “explicit”
choice, seemingly denying the possibility of tacit choice. As § 4 II of the SPC-Rules
2007 on contracts deemed a silent choice of law to be valid if both parties referred to
the law of the same state during the proceedings or the reference by one party to the law
of a certain state was not objected by the other party, the question arose whether this

Footnote 32 continued
让合同纠纷 (Li Feichan v. Wu Wenliang dispute on a transfer of shares) November 16, 2011, 福建省高
级人民法院 (High People’s Court of Fujian Province), reference number: (2011) 闽民终字第681号;
上诉人宜兴市明月建陶有限公司因与被上诉人北京和风国际物流有限公司多式联运合同纠纷 (Full
Moon Ceramics Ltd. of Yixing City v. Beijing Hefeng International Logistics Ltd. dispute on a multi-
modal transport contract) November 17, 2011, 天津市高级人民法院 (High People’s Court of Tianjin
City), reference number (2011) 津高民四终字第0169号; 陈伟雄与谢国材、谢永健、雷海敏、梁朝
昱、广州文化发展中心等7人股东侵权纠纷 (Chen Weixiong v. Xie Guocai et al. shareholder rights
violation dispute) November 18, 2011, 广东省广州市中级人民法院 (Immediate People’s Court of
Guangzhou City), reference number (2009) 穗中法民四初字第15号; 台湾凯霖企业股份有限公司与中
国银行股份有限公司江阴山观支行、江阴金潼纺织有限公司股东代表诉讼纠纷 (Taiwan Kailin
Corp. v. Jiangyin Shanguan branch of Bank of China Corp. et al., shareholder representation dispute) 江
苏省高级人民法院 (High People’s Court of Jiangsu Province) February 17, 2012, reference number:
(2011) 苏商外终字第0071号.
33
See Shen 2006, p. 224; Xiao and Long 2009, p. 197; Huo 2010, p. 183 with reference to judgments and
literature.
34
See § 4 I 1最高人民法院关于审理涉外民事或商事合同纠纷案件法律适用若干问题的规定 (Rules
of the Supreme People’s Court on the Relevant Issues concerning the Application of Law in Hearing
Foreign-Related Contractual Dispute Cases in Civil and Commercial Matters) of July 23, 2007 (SPC-
Rules 2007).
35
See Sun 2011, p. 149; Wang 2011, p. 32 f.; Huang 2011b, p. 182.

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Private International Law Act of the PRC 209

kind of choice should still be allowed after the promulgation of the PILA. In the
literature this question was mainly answered in the affirmative, some authors even
extending that possibility beyond the area of international contract law.36 § 8 PILA-
Interpretation follows this view and combines both alternatives found in the SPC-
Rules 2007. It allows a tacit choice of law if both parties referred to the law of the same
state during the proceedings and neither of the parties raised any objection to the
application of that law. This is not limited to the area of contracts. In these
circumstances and given the tendency of the people’s courts to apply Chinese law,37 a
party that intends to argue for the application of foreign law would as a practical matter
be advised to explicitly address the court with that request. Otherwise, it will be very
likely that a silent choice of Chinese law will be deemed to have taken place. This issue
is especially important as the choice can no longer be changed after the end of the
hearings at first instance.38

2.4 Ascertainment and application of foreign law

(§§ 17, 18 PILA-Interpretation)

2.4.1 Ascertainment of foreign law

Concerning the ascertainment of foreign law, § 10 I PILA adopts the principle that
in general the courts shoulder this duty. One important exception is made, however,
for the case that the parties themselves have chosen to apply a foreign law. Under
these circumstances the parties will have to provide the relevant foreign law. There
is, however, no rule in the PILA prescribing the possible methods of ascertaining
foreign law. In regard to this issue, only § 193 of the GPCL-Opinions 1988 provided
a guideline that some authors saw as being too rigid and inflexible.39
§ 17 PILA-Interpretation to a certain degree renews the approach of the GPCL-
Opinions and cites the following possible methods for the ascertainment of foreign law:
● its provision by the parties,
● receiving information on the content of foreign law in the manner provided by
international treaties,
● its provision by legal experts, or
● other appropriate means.
By including “other appropriate means”, the flexibility of judges has been
strengthened.40 Still unresolved, though, is the question whether the courts have to
use all of the mentioned means or at least as many as reasonably possible.

36
Seemingly only for the area of contracts: Wang 2011, p. 31f; also in the case of divorce: Huang and
Jiang 2011, p. 136; without indication of the respective limits Qi 2011, p. 67f.; reasoning that a choice
following the mentioned criteria should also be seen as an “explicit” choice: Huang 2011b, p. 182.
37
See footnote 13 above.
38
See for the time limitations above (II.3.c).
39
See Xiao 2010, p. 152.
40
Supposedly this development towards flexibility will generally be welcomed, as an exhausting
enumeration of all possible means of ascertainment would hardly be feasible in light of the current speed

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210 P. Leibküchler

According to § 17 II PILA-Interpretation the courts may conclude that the

foreign law was not ascertainable in cases where the parties were obliged to provide
the foreign law (§ 10 I 2 PILA) but neither did so within the reasonable time limit
set by the court nor had a valid excuse for this default. The consequence of this
situation is the application of Chinese law instead, see § 10 II PILA.

2.4.2 Application of foreign law

§ 18 PILA-Interpretation directs the people’s courts to hear the parties’ opinions as

to the content, meaning and application of the foreign law. According to the SPC,
this also holds true for the case that the foreign law has not been provided by the
parties but ascertained by the court ex officio.41 If the parties reach an agreement,
the courts may follow their understanding on the foreign law. It is noteworthy that
the SPC-Rules 2007 contained a similar rule,42 but was distinct in that it strictly
required the courts to follow the parties’ mutual understanding. With the new rule,
the people’s courts are free to either deviate from the parties’ view or accept it. If
the parties cannot reach an agreement, then the courts will make their own decision
on the content, meaning and application of the foreign law.

2.5 Mandatory rules (10 PILA-Interpretation)

The concept of mandatory rules in Chinese private international law has mostly
been treated in relation to the provisions on the evasion of law. The connection of
both concepts can best be illustrated by looking at § 194 GPCL-Opinions 1988.43 As
this situation embodies the risk of the two concepts being commingled, the creation
of a single provision on mandatory rules in § 4 PILA has been well received by
academia.44 § 4 PILA, however, does not elaborate on how to define or determine
mandatory rules. § 10 PILA-Interpretation endeavours to set guidelines on this
question. It explicitly names five areas of law where mandatory rules can typically
be found: the protection of rights and interests of employees (No. 1), product safety
(No. 2), safety of public health or environmental safety (No. 3), the safety of the
financial system (No. 4) and the area of antitrust and antidumping (No. 5). A No. 6
in the list provides a general clause for other circumstances that lead to the
determination of a rule as being mandatory. The first sentence of § 10 PILA-
Interpretation points out that such rules touch upon the socio-public interest,45 that

Footnote 40 continued
of development in information technology and communication tools, and it would rather risk hindering
the courts work, see Huo 2010, 1076.
41
Zhang 2013, p. 7.
42
See § 10 SPC-Rules 2007 (footnote 34).
43
§ 194 GPCL-Opinions 1988 (footnote 9): “Acts by which the parties aim at circumventing mandatory
or prohibitive Chinese law provisions, do not lead to the application of foreign law.”
44
See Du 2011, p. 67 f.
45
The use of this term can be seen as a reference to § 5 PILA and may be understood as a hint that
internationally mandatory rules are seen as the positive aspect of ordre public. See Huang and Jiang 2011,
p. 20 ff.; Gao 2011, p. 33 ff.

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Private International Law Act of the PRC 211

their application cannot be derogated from by the parties’ agreement and that they
are applied regardless of other rules of private international law.
The wording of § 10 PILA-Interpretation is—likely intentionally—somewhat
vague and results in misunderstandings.
From the wording, it could follow that all provisions falling into the five
enumerated areas should be seen as mandatory provisions and therefore should be
determined as such by the courts in their judgments. This understanding has to be
rejected, though. Firstly, the five areas are very broad, which would lead to an
immense amount of mandatory rules. Secondly, the general clause in No. 6 could
then result in an even less controllable expanse. Thirdly, understood in this way § 10
PILA-Interpretation could have named only these areas and would not have had to
add the reference to the socio-public interest, the impermissibility of derogation by
the parties and the direct application of such rules without regard to the conflict
rules as seen above.
It is therefore more reasonable to understand § 10 PILA-Interpretation as a
guideline that should help judges to determine whether the provision they are
dealing with in a given case actually is an internationally mandatory rule that has to
be applied regardless of the applicable law in general. This understanding is
supported by the statement made by the SPC stressing the necessity for judges to
consider the purpose of the legislation when determining internationally mandatory
rules in order to avoid an abusive expansion of mandatory rules that could result in a
derogation of the function of private international law as a whole.46
Still, even following this view, only the enumeration fulfills the preconditions of a
useful guideline by giving judges an indication of areas typically containing
internationally mandatory rules. The benefit of the three given criteria in the first half
of the provision, by contrast, is doubtful. Both the second criterion (no derogation
by choice of the parties) and the third criterion (the direct application of these
provisions) are the consequence of a determination of internationally mandatory
provisions but are not the precondition of this determination. The remaining criterion
of touching upon the socio-public interest is per se also insufficient for making this
determination. In this respect, § 10 PILA-Interpretation does not offer a practical
guideline or definition, but merely states the consequences of the determination of a
rule as being internationally mandatory. At best this provision will help to create a
consistent understanding of the concept among the judiciary.
Irrespective of these uncertainties, the provision may enhance a clear and explicit
designation of internationally mandatory provisions in people’s courts’ judgments. In
the long run this may create a rather comprehensive and stable body of internationally
mandatory rules which can serve as a reference for courts and academia.

2.6 Evasion of law (§ 11 PILA-Interpretation)

As already mentioned, a provision on the evasion of law already existed with § 194
GPCL-Opinion 1988,47 and a similar rule can also be found in § 6 SPC-Rules 2007.
46
Zhang 2013, p. 7.
47
Above (footnote 43).

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212 P. Leibküchler

The PILA, however, did not include any norm on the matter, even though this issue
had been discussed during the legislative process. § 11 PILA-Interpretation does
aim at filling this “gap” and rejects the validity of a choice of law if the intention of
that choice was the evasion of either mandatory laws or administrative provisions of
the PRC. Again, there are no criteria given as to the question under which
circumstances the required intention is deemed to exist.48
It is likely that the perceived need to regulate the evasion of law is partly
attributable to the unique legal dynamics resulting from four Chinese speaking legal
regimes being located in close proximity: as of today, the PRC, Hong Kong, Macao
and Taiwan have international private law regimes of their own that in most cases
are also applied to interregional cases between these legal regimes. Due to the
geographical and linguistic nexus, the creation of artificial connecting factors is
rather uncomplicated and the considerable differences in the legal regimes may
offer sufficient incentives such that parties seek to benefit from this situation.49
As §§ 4 und 5 PILA already contain rules on internationally mandatory rules and
the ordre public, it remains to be seen whether there will still be a scope of
application for the concept of evasion of law. In any case, judges’ discretion to not
apply foreign law is enlarged by this provision.

2.7 Preliminary question and multiple civil relations

(§§ 12, 13 PILA-Interpretation)

There is no rule in the PILA on preliminary questions or on how to handle several

foreign-related civil relations in one case. For both situations §§ 12, 13 PILA-
Interpretation envision—respective—independent characterization and connection.50

2.8 Validity of arbitration clauses (§ 14 PILA-Interpretation)

§ 14 PILA-Interpretation solves the problem arising directly from § 18 PILA.

According to § 18 PILA the law applicable to arbitration clauses in the absence of
any choice by the parties should be the law of the place of the arbitration institution
or the place of the arbitration proceedings. In the event the parties neither chose the
applicable law nor indicated either the place of the arbitration institution or the place

48
Prior to the PILA authors have suggested that a wide range of factual scenarios could establish this
intention. Examples given range from the creation of an artificial connecting factor, such as the
incorporation of an enterprise in a state in which it never intended to do business or the change of
residence or nationality in order to avoid the boundaries of the one-child-policy, but include the choice of
a foreign law which permitted contract clauses that would not be allowed under the regime of the
applicable law according to the conflict rules without that choice, see Huo 2010, p. 148.
49
See on this issue: Deissner 2012, p. 153 ff.
50
At least in the case of several foreign-related civil relationships in a given case, courts have already
followed this method subsequent to the release of the PILA, see 李飞婵与吴文亮股权转让合同纠纷 (Li
Feichan v. Wu Wenliang dispute on a transfer of shares) November 16, 2011, 福建省高级人民法院
(High People’s Court of Fujian Province), reference number: (2011) 闽民终字第 681号; 上海菲尔德成
衣有限公司与赵杰、朱莉公司证照返还纠纷 (Shanghai Feierde Garment Ltd. v. Zhao Jie, Zhu Li
Company certificate remittance dispute) 09 February 2012, 上海市高级人民法院 (High Court of
Shanghai City), reference number: (2011) 沪高民二[商]终字第48号.

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Private International Law Act of the PRC 213

of the arbitration proceedings, it was not clear which law applied. § 14 PILA-
Interpretation clearly states that in these cases the validity of the arbitration clause
can be determined according to the lex fori.51

2.9 Habitual residence (§ 15 PILA-Interpretation)

The habitual residence of natural persons is one of the main connecting factors of
the PILA.52 § 15 PILA-Interpretation defines the notion. According to that
definition, a natural person can be assumed to have a habitual residence at a given
place if that person has continuously been living there for at least 1 year at the
moment of the formation, change or termination of the civil relation and if that place
has been the person’s centre of life during that year. According to the statement of
the SPC, on the one hand this creates consistency with prior legislation that
similarly referred to the 1-year period;53 on the other hand the criterion of the
“centre of life”, known from Swiss and German law, is introduced.54 Exceptions are
made for hospitalization, deployment and public service.
From a practical point of view, the 1-year requirement seems rather arbitrary. It
ignores the fact that each case has its own characteristics concerning the social and
cultural integration and family ties of a person at the place of residence, the
circumstances and reasons for staying there and also the desire or intentions to stay
there for a long—or short—time. In so far the strict requirement of a 1-year stay
appears too inflexible and not pertinent.55 Even though the wording of 15 PILA-
Interpretation does not give much leeway, it remains to be seen how the courts will
deal with it in practice.

2.10 Place of registration of legal persons (§ 16 PILA-Interpretation)

§ 16 PILA-Interpretation provides that the people’s courts must find the “place of
registration of a legal person” in the sense of § 14 PILA-Interpretation to be the
place at which its establishment was registered. This provision may not be
completely clear at first sight, but in practice it does resolve the issue of multiple
registrations of legal persons. Such a double-registration may, for example, occur
when legal persons registered in a foreign country open a branch in the PRC.
According to §§ 192 ff. Company Law, branches of foreign legal persons on the

51
Whether this indicates that the scope of § 18 PILA is limited to the question of the validity of the
arbitration clause is an issue that remains open. On the scope of § 18 PILA, see Pissler 2012, p. 20.
52
See above (footnote 11).
53
E.g. § 9 GPCL-Opinions 1988.
54
Zhang 2013, p. 7.
55
See Zhao, who—in his own definition published prior to the PILA-Interpretation—also includes the
criterion of “center of life” but does not require a certain minimum time period, Zhao 2011, p. 306; see
also the understanding of habitual residence by the European Court of Justice: ECJ of April 2, 2009
(C-523/07), 30 ff., in which the court refers to several criterion but does not mention any required period
of time.

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214 P. Leibküchler

territory of the PRC have to be registered.56 The SPC clarifies that in these cases the
place of the registration of establishment is decisive.

2.11 Applicability of the PILA-Interpretation itself

(§§ 19–21 PILA-Interpretation)

2.11.1 Territorial application

§ 19 PILA-Interpretation states that the provisions of this Interpretation are also

applicable to civil relationships connected to Hong Kong and Macao. The PILA
itself does not contain any respective provision, but the application by analogy of
the private international law rules on cases concerning Hong Kong, Macao and also
Taiwan has already been accepted both by scholars and in judicial practice.57 An
almost identical rule was also contained in § 11 SPC-Rules 2007.

2.11.2 Temporary application

Additionally, § 20 PILA-Interpretation clarifies that the Interpretation is only

applicable to those cases having arisen after the implementation of the PILA58 and
not yet having been ruled upon at final instance.59 In case of a retrial of already
terminated proceedings,60 this Interpretation is not to be applied.

2.11.3 Relation to prior SPC-interpretations

§ 21 PILA-Interpretation lastly states clearly that it will prevail over prior

interpretations issued by the SPC in case both interpretations contain conflicting
rules.

3 Conclusion and outlook

The examination has shown that the PILA-Interpretation’s provisions can be

divided mainly into two categories:
Firstly, the SPC has given judges several clarifications for the correct
understanding of various PILA provisions. For example, this holds true for the
rules on the applicability of international treaties and practices and on the scope and
timeframe for the choice of law, as well as for the approach in defining the concepts
of both internationally mandatory provisions and the habitual residence of natural

56
中华人民共和国公司法 [Company Law of the People’s Republic of China], October 27, 2005.
57
See Deissner 2012, 26 ff.
58
This is the logical consequence of the rule on the applicability of the PILA that we have already seen
above as regards § 2 PILA-Interpretation (on retroactivity).
59
See § 175 中华人民共和国民事诉讼法 [Civil Procedure Law 2012 (§ 158 of the prior CPL)].
60
See § 198 ff. CPL 2012 (see § 177 ff. of prior CPL).

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Private International Law Act of the PRC 215

persons. Also belonging to this category is the solution found for the problem of
finding the right subsidiary connecting factor in the case of arbitration clauses.
The second category comprises rules in which the SPC itself displayed a certain
creativity. The reference to the habitual residence of natural persons as the required
foreign element is one example in this regard. Procedural issues, such as the
requirement of setting an appropriate timeframe for the parties to provide the
foreign law or the mandatory consultation of the parties on how foreign law is to be
understood, are other examples. The approval of a tacit choice of law for all parts of
the PILA even runs counter to the clear wording of § 3 PILA, and the provisions on
the evasion of law as well as on preliminary questions similarly fail to claim a basis
in the PILA itself. It has already been mentioned that this quasi-lawmaking by the
SPC is sometimes criticized but generally accepted.61
In addition, it is remarkable that the PILA-Interpretation devotes six of its
twenty-one provisions to its own applicability (§§ 19–21) and the applicability of
the PILA (§ 1–3). This shows that considerable doubts on the correct use of the new
law are persistent among the judiciary, doubts that this Interpretation strives to
overcome also in respect of the applicability of the conflict rules themselves.
It can be concluded that the PILA-Interpretation is by no means a disappoint-
ment. Even though some provisions lead to criticism, in many more areas the rules
of the PILA are given a clear explanation or complementation. Several concrete
issues that arose in practice or generated debate have been addressed and often
resolved. For judges, the application of the PILA has unquestionably been
simplified. This should result in greater legal certainty also among the parties to
international contracts. In this light, the prospect of another interpretation on the
special parts of the PILA is highly welcome.

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