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Summary

Introductory examples revealing confusion and dissatisfaction. A couple bought a couch. After delivery, they noticed that the legs of the couch were not rectangular, as they ordered, but circular. After angry phone calls and letters to the retailer, they introduced an action before a Belgian court seeking to terminate the contract in order to get their money back. Against all expectations, the Court of Appeal of Ghent decided completely against the couple. According to the court, the couple had disregarded the consumer sales rules in the Civil Code, implementing the EU Consumer Sales Directive (CSD). They did not respect the strict hierarchy of remedies which favors repair or replacement over termination and price reduction: the buyers should have sued for repair or replacement instead of trying to terminate the contract. Moreover, they transgressed the notification rules: they should have notified the seller about the shortcoming, before calling upon a remedy (such as termination). This case shows that confusion reigns in the area of the hierarchy of consumer sales remedies.

Not only confusion reigns in this area, but also dissatisfaction. Think about the Volkswagen (VW) scandal: the car giant admitted in September 2015 that it had cheated on the emission tests of its diesel cars. The cars appear to be multiple times more polluting than measured in the emission tests. Both in the EU and in the US, VW has been obliged to remedy the shortcomings to the cars. In the US a huge product recall has taken place and VW announced that a certain number of VW owners would be eligible to receive $ 1,000 in vouchers. VW also considered real ‘compensation’ measures for the affected US VW car owners. The final outcome was even more generous for consumers. From October 2016 until May 2017, several settlements were approved by the United States District Court for the District of Northern California. The settlement provided consumers with the choice between a buyback or a modification (‘ repair ’). All owners will also be entitled to an additional cash payment, depending on the model, mileage, and features of the car.

Summary

The organization of remedies. The main discussion of this book took place over three chapters. Chapter 2 discussed the so-called ‘hierarchy’ of remedies that is prescribed by consumer sales law in the US and the EU. Then, in Chapter 3 the (in)ability to invoke remedies extrajudicially was assessed. Finally, in Chapter 4, the role of notification duties was examined. When carrying out this analysis, the main question was: what is the best possible organization of remedies to protect consumers?

Current state of affairs. With regard to the hierarchy of remedies (damages, specific performance, and termination), the US system basically favors damages over specific performance, while the European system mostly sticks with the promised contract, 711 favoring specific performance. At first sight, the starting points for the two systems are very different. Nevertheless, the exceptions to these basic rules in both systems are sometimes so important that it cannot be denied that both systems are converging. When comparing the termination remedy (also called cancellation or rescission) in the different legal systems, it has to be concluded that oft en a certain degree of ‘seriousness’ of the breach is required, both in the EU and the US.

With regard to the extrajudicial application of the remedies, it has been seen that under almost all of the EU instruments examined in this book, the termination remedy can be applied extrajudicially (except for termination under the current Consumer Sales Directive in some EU countries). Similarly, in the US system, termination can be invoked extrajudicially. Concerning specific performance, the EU instruments do not explicitly provide or prescribe an extrajudicial application for this remedy (repair or replacement). However, in the opinion of the present author, those instruments allow the consumer to unilaterally invoke specific performance. In contrast, in the US system specific performance is certainly not considered a self-help right. As consumer, one has to go to a judge to enforce it. Finally, the damages remedy is typically, under both systems, applied judicially (and not extrajudicially) because of the necessary assessment of the amount of damages by a judge.

Summary

Meaning of hierarchy of remedies. The very concept of a ‘hierarchy of remedies’ might seem disturbing to a US scholar. Indeed, while EU scholars often refer to a hierarchy of sales remedies, US scholars almost never do. Does something like a ‘hierarchy’ of consumer sales remedies exist in case of breach of contract by a seller? The question that is asked is whether the legislator or case law consistently favors a certain remedy over another. If one remedy is favored over another – and one of the remedies is more readily available to the consumer – this implies a certain ‘hierarchy’ between them. On the other hand, it is also possible that the consumer is given a free choice between the remedies, if their respective conditions of application are fulfilled. In that case, there is no hierarchy between the remedies.

Of course, the mere examination of the ‘hierarchy of remedies’ in statutory law and case law, might give a distorted and rigid view of reality. This leaves out a lot of factors such as out-of-court negotiations, dispute resolution, and practical behavior that the seller and the buyer can adopt. One might think about a seller who agrees with the buyer to remedy a breach of contract in a certain way or a buyer informally asking a seller for the best solution. In this way, reality will be much more flexible than the theoretical rules that will be described and analyzed in this book.

Hierarchy of remedies as only a starting point towards an organization of remedies. Inquiring into the hierarchy of remedies is merely a starting point. When studying the ‘hierarchy of remedies’ only the ‘intrinsic characteristics’ of the remedy are taken into account: is the remedy subject to a seller's right to cure? Can it only be applied if another remedy is not adequate? Can it only be applied in case of a fundamental or substantial non-performance? The hierarchy of remedies is, of course, influenced by many other factors. Apart from the intrinsic factors, ‘extrinsic factors’ can also be taken into account. Two important factors that will be studied

Summary

Influence of notification duties. Notification duties directly influence the hierarchy of remedies. Remedies are easier to invoke if they are not subject to a duty of notification. Consequently, stringent notification duties will oft en limit the ability of consumers to invoke their remedies. On the other hand, the stricter the notification and examination duties, the more the stability of the contract is promoted.

Different kinds of notification duties. A first category of notification duties deals with warning the debtor of the fact that there is a shortcoming. Some systems require that the creditor ‘puts his debtor in default’ (‘mise en demeure/ingebrekestelling’, see infra, para. 139). Other systems introduce a ‘notification duty’ of the creditor, obliging the latter to inform his debtor that there is a shortcoming in the contract. A second category is the notification duties that deal with the remedies themselves. Certain remedies (especially extrajudicial remedies) require that the creditor must warn the debtor of his intention to invoke the remedy.

EU CONSUMER SALES ACQUIS

CONSUMER SALES DIRECTIVE

Optional Duty to Notify of Shortcomings

Facultative notification duty. In its 19th recital, the Consumer Sales Directive mentions a possibility for Member States to set a period within which the consumer must inform the seller of any lack of conformity, which may not be less than two months aft er the consumer has detected (or discovered) it (see also Article 5.2 CSD). The notification duty only runs after the actual discovery of the non-conformity, implying that the buyer is not under a duty to examine the delivered goods. It also allows Member States to ensure a higher level of protection for the consumer by not introducing such an obligation. Member States have currently regulated this possibility of a notification duty in various ways.

The Belgian law maker has decided that parties may agree to set a period within which the consumer must inform the seller of any lack of conformity, which may not be less than two months as from the day the consumer has discovered the defect. The Belgian implementation of the Consumer Sales Directive does not mention any sanction if (the agreed period for) the duty to notify has not been respected.

Summary

Self-help and the organization of remedies. The fact that a remedy/right can be applied without any court intervention also de facto influences the organization of remedies. The easier a remedy can be applied, the fewer hurdles a creditor (a consumer) has to take to be able to invoke a remedy, and the more consumer-friendly the organization of remedies will be.

Terminology. Another important aspect to consider is the terminology in this domain. In contributions about European (consumer) contract law, the terms ‘extrajudicial remedies’ or ‘unilateral remedies’ will oft en be encountered when describing a remedy for breach of contract that can be applied by the creditor without prior court intervention. A remedy that needs prior court intervention is oft en described as a ‘judicial remedy ’. Those terms are not used in US doctrine which makes a sharp distinction between, on the one hand, the so-called ‘remedies’ (such as damages and specific performance) that can only be applied judicially and require prior court intervention and, on the other hand, the so-called rights to self-help (such as suspension and termination of the contract) or ‘privately administered remedies’.

EU CONSUMER SALES ACQUIS

CONSUMER SALES DIRECTIVE PROVIDES NO CLEAR GUIDELINES

The doubtful case for self-help and termination. The 15th recital of the Consumer Sales Directive prescribes that it will be necessary to look at national law for the specific arrangement of the remedy of termination.

Bianca is of the opinion that the remedy of termination can be invoked unilaterally in every case (whether national law prescribes it or not), and that this 15th recital only counts for ‘secondary procedural aspects’. However, in Belgian law for example, doctrine correctly follows a different approach: namely, that for this aspect (the judicial or unilateral character of this remedy), national law applies. For Belgian law this means that termination must – in principle – be invoked judicially. Only in case of an express resolutory clause or in extraordinary circumstances can termination be applied without court intervention (unilateral or extrajudicial termination).

Self-help for repair, replacement, and price reduction. When focusing on the remedies of repair, replacement, and price reduction, it should be noted that these remedies are not mentioned in this 15th recital of the Directive.

Summary

The primary purpose of this book is to provide an in-depth study of the US and EU approaches towards the organization of consumer sales remedies. Chapter 2 treats the comparison of the hierarchy of consumer sales remedies in a multitude of EU instruments, in US contract law, and the Uniform Commercial Code. In addition, the latest developments in EU law, namely the amended Proposal for a Directive on (online and other distance) sales of goods of 31 October 2017, are briefly discussed. In a Chapters 3 and 4, the (extra)judicial application of remedies and notification duties are examined in the same EU/US instruments.

This book aims to contribute to the discussion of what the organization of remedies should look like to best protect consumers. Should we adopt the US system favoring the remedy of damages? Or is specific performance preferred? Or, is there another valuable alternative? How should we define ‘consumer protection ’? All these questions are raised at a time when the EU is considering a ‘new’ consumer sales directive, and US scholars have drafted a restatement of consumer contract law, which is intended for discussion at the Annual Meeting Agenda in 2019 (although, regrettably, it will not include all possible aspects of consumer contract law).

This book is designed for EU civil (and common) lawyers and US common lawyers to gain a better understanding of the remedial system and the logic behind it. Due to the differences between those systems, it is sometimes dangerous to use certain terms such as ‘termination’, ‘damages’ and ‘specific performance ’. Therefore, specific attention is paid to terminology. By giving a terminological overview, the most commonly used terms are framed and explained within their respective legal systems.

There is inevitably more work to be done in this area and it is ripe for further research by other scholars. The interaction of the remedies is fascinating, but also very complex, and many factors have to be taken into account. Not only their original set hierarchy, but their (extra)judicial application and the notification duties have an important role to play.

Summary

INTRODUCTION

Arbitration is one of the methods to solve international business disputes in China. Compared to court and other alternative dispute resolution systems, arbitration, in China as well as internationally, has two advantageous characteristics for business. First, the choice of arbitration is based on the autonomy of the parties who decide whether to use arbitration or not, which makes arbitration different from court procedure where one party can force another party to engage in proceedings. Second, the award of the arbitration body is binding, so one party can ask for the enforcement of the arbitration award where the other party refuses to implement the award. The second characteristic distinguishes arbitration from other alternative dispute resolution systems, such as mediation and conciliation. This chapter introduces commercial arbitration as regulated by the Arbitration Law of the People's Republic of China (PRC).

FOREIGN-RELATED COMMERCIAL DISPUTE

The disputes discussed in this chapter involve foreign-related commercial relations. They have the following common characteristics:

This book offers different perspectives on China’s business and law. It aims to offer an introduction into both theoretical and practical aspects of China’s law on foreign related business affairs. This comprises economic and political background information, including China’s economic evolution and China-EU trade relations, in addition to more detailed information on selected subject areas important to foreign related business affairs in China, namely commercial arbitration law, contract law ,company law , IPR protection, financial law, foreign direct investment law, and also the establishment of overseas branches of Chinese companies in the EU. Perspectives on Chinese Business and Law thus introduces the reader to the current Chinese legislations on foreign related business.Dr Łukasz Gołota is Assistant Professor at the Institute of International Relations, Warsaw University, Section of Political Economy, Poland.Dr Jiaxiang Hu is Professor of Law at KuGuan Law School, Shanghai Jiao Tong University, China.Dr Kim Van Der Borght is Professor of International Economic Law & Diplomacy at the Vrije Universiteit Brussel, Belgium. Saisai Wang is a Lecturer of Law at the Law School of the Shandong University of Finance and Economics, China and a lawyer at Shandong Jointide Law Firm, China.

Summary

LI AND FA, AND THE “THEORY OF LAW” IN TRADITIONAL CHINA

China, with its millenarian empire ranging from the first Qin dynasty (221 – 206 BCE) to the threshold of last century (1911), has known one of the longest and greatest political-institutional structures that ever existed. The country was managed by a powerful and learned literary bureaucracy, against the background of a highly civilized society, which lasted for a long time as one of the most advanced in the field of letters (books), politics (government), economics (agricultural production), technical development and arts. From the fifth century BCE, “Chinese philosophers were debating the nature and purpose of law ”. Furthermore, an “unparalleled continuity of Chinese legal thought and institutions “has been documented since then. It is also notable that” the only other legal sphere outside China that has an equally long history is that of Roman Law and its various modern adaptations. ”

However, according to a still widespread opinion, China has not experienced a development of the idea (and ideal) of “law”,'that is to say a ”legal tradition” comparable to the Western one. To be sure, such opinion reflects a dominant political-philosophical dimension of the Chinese traditional culture as resistant to the very notion of law, and has a strong hold among sinologists themselves. Indeed, it is usually thought that in classic China of ancient and modern times, notwithstanding a massive law-making consisting in the almost continuous series of so called imperial or dynastic codes, such an idea (and ideal) never ripened enough to affirm its conceptual and professional autonomy. It always had a rather instrumental and subordinate position with respect to politics, on the one hand, and to moral, religious, conventional, in short, “not legal” norms on the other. The notion of law was thus conceived either as solely bound with the sovereign (state) interest to guarantee order and social stability, and therefore reduced to a governmental (bureaucratic) function, or confused with social morality embedded into ritual manners and behavioral patterns that affect the lives of individuals, both in private and in public, in order to assure natural harmony in the relations among people.

Summary

INTRODUCTION

The goal of this chapter is to present to readers the most important structural and systematic information concerning internal political and economic arrangements in China. This combination is thought to introduce the subject in a way that would be useful for professionals, students and researchers. China will be analyzed as one of the most interesting examples of the development and implementation of political and economic thought in modern history.

The purpose of the chapter is not to judge or value those solutions, only to present and help to understand mechanisms and phenomena governing them. The positivist approach has no right to become more normative in this meaning. It will present the economic and political spheres separately, providing general principles and important details. Then, the effects of their mutual functioning in the People's Republic of China (PRC) will be summarized.

Readers must be aware that we are dealing with the second biggest economy in the world and the highest population in the world, a permanent member of the UN Security Council, nuclear superpower, the biggest industrial producer in the world and the longest lasting civilization in history. The chapter aims not only to describe a static state but tries to capture the dynamic nature of matters in the historical, cultural and social context. Aft er this Introduction it consists of two further sections. Section 2 introduces the Chinese political system, while section 3 presents Chinese economic issues. This dichotomous approach should provide readers with the basic terms and knowledge concerning China. The economic and political system of China is a result of Chinese history, culture, tradition, the perception of reality and, most of all, logic (by way of understanding the reality and the perception thereof). Without a proper understanding of Chinese perception and motives, communication with the “central state” 2 would be hard to establish. The framework for proper, mutual understanding and cooperation is a correct perception of reality which is reached only as a result of a correct research process.

Summary

HISTORY AND DEVELOPMENT OF CHINESE INTELLECTUAL PROPERTY LAW

HISTORY OF CHINESE INTELLECTUAL PROPERTY LAW

In China, the accepted definition of intellectual property law is the sum of regulations of social relations connected with intellectual achievements. It is a specific legal system for ensuring, protecting and utilizing copyright, industrial property and other exclusive rights related to intelligence.

The origins of intellectual property law in China may be derived from the Reform Movement of 1898 and attributable to the unequal treaties of the late Qing dynasty. In 1898, Emperor Guangxu formally issued the Regulation for Revitalizing and Rewarding Industrial Techniques, which is the first law for patents in Chinese history. Unfortunately, this law did not come into force. Some unequal treaties with foreign counties were forced followed: there were special articles for protecting foreign intellectual property written into the Sino-British Commercial Treaty of Renewal of Subscription of 1902, the Sino-America Matters Arising Treaty of Commerce and Navigation of 1903 and the Sino-Japan Matters Arising Treaty of Commerce and Navigation of 1903. Thereafter, under trade pressure from foreign powers and the eagerness for prosperity through reform, the Qing feudal government initiated the establishment of a modern regulation system. In 1910, the government issued the Qing Copyright Law, which is the first copyright law in Chinese history, yet the law did not enter into force since the Qing dynasty perished the following year. Even so, the early laws of the Qing dynasty had a big impact on the later legislation of the Provisional Government of The Republic of China, the Beiyang Government and Nationalist Party Government.

After the People's Republic of China was established in 1949, intellectual property legislation was laid aside owing to some complicated reasons. China did not emphasize protecting innovation and wisdom achievements with property law until the Reform and Opening-up Policy carried out in 1979. China issued a succession of intellectual property regulations as follows: the Standing Committee of the National People's Congress (NPC) discussed and adopted the Trademark Law on August 23, 1982 (amended in 1993, 2001 and 2013), the Patent Law on March 12, 1984 (amended in 1992, 2000 and 2008) and the Anti-unfair Competition Law on September 2, 1993.

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Chapter 1 - Introduction

Summary

Bibliography

Chapter 5 - Conclusion

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Chapter 2 - Hierarchy of Remedies – So Different and Yet So Alike

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Index

Chapter 4 - Notification Duties

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Contents

About the Author

List of Cases

Chapter 3 - Self-Help

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Preface

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frontmatter

Foreign Related Commercial Arbitration in China

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Perspectives on Chinese Business and Law

The Idea of “Law” in China: An Overview

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About the Editors

Domestic Political and Economic System of China

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Chinese Intellectual Property Rights

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Frontmatter

Acknowledgements

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