Proposals for the Future of the Chinese Law of Unjust Enrichment

Lin, Siyi

doi:10.1007/978-3-031-06178-3_6

Siyi Lin⁸

Part of the book series: China-EU Law Series ((CELS,volume 8))

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Abstract

Chapter 3 concluded that the goal of the Chinese law of unjust enrichment is to fill the gaps where other areas of law fail to reverse benefits obtained without a legal basis to compensate another’s loss to achieve fairness. As also explained many of the issues covered by the Chinese law of unjust enrichment are already covered by other areas of law. Furthermore, it was demonstrated how deficient the current statutory rules in the area of China’s law of unjust enrichment are thus causing many problems in practice. This chapter now explores what all this means for the best way forward for the Chinese law of unjust enrichment by taking a reference to solutions provided by English law.

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Notes

1.
Interestingly, Nils Jansen raises a rather similar argument regarding the law of unjust enrichment in German-speaking civilian legal systems in his work. Jansen (2016), p. 123. He proposes that the law of unjustified enrichment has been split to different claims which belong to other areas of law respectively and thus there is or should be a farewell to the law of unjustified enrichment. To support this argument, he makes an analysis following the Wilburg/von Caemmerer typology, which is also the typology followed by this book. See supra, Chap. 4. Nils Jansen comes to the conclusion that claims for enrichment as a result of undue or failing transfers should find their places within general contract law. Claims for enrichment received through interference with another’s right should be regarded as a claim for damages (delict). Unjust enrichment claims based on the discharge of another’s debt and on expenditure on another’s property should be dealt with in the context of the negotiorum gestio. He argued that although treating unjust enrichment as a distinct area of law is wrong, the general notion of unjust enrichment should not be dispensed with.
2.
See supra, Sects. 5.4 and 5.6.2 in Chap. 5.
3.
See supra, Sect. 3.5.2.2 in Chap. 3.
4.
Ibid.
5.
See supra, Sect. 3.2.3 in Chap. 3.
6.
Fordham (2006), pp. 1 and 2.
7.
See supra, Sect. 5.8 in Chap. 5.
8.
Ibid.
9.
See supra, Sect. 4.3.1 in Chap. 4.
10.
Supra, Sect. 4.4 in Chap. 4.
11.
See supra, section “General” in Sect. 4.3.3.2 in Chap. 4.
12.
Ibid.
13.
Ibid.
14.
Supra, Sect. 4.3.2.2 in Chap. 4. The reason why this rule exists has been illustrated in this section as well.
15.
For the details of this ‘gap scenario’, see Scenario (2) in supra, sections “Benefits Transferred Under Mistakes” and 4.4.2 in Chap. 4.
16.
According to Peter Birks, the law of unjust enrichment is ‘the law of all events materially identical to the mistaken payment of a non-existent debt’. Birks (2005), p. 3.
17.
Ross and Charles (1997), pp. 83 and 89.
18.
Ibid; see also supra, Sect. 5.5.4.2 in Chap. 5. As the exercise of applying English law to the ‘gap scenarios’ is for the purpose of obtaining useful inspiration for the modification of Chinese law, this section does not discuss the situations where the legal title of property transferred has been mistakenly passed to the defendant, but the defendant should hold the property on constructive trust for the claimant on the ground of unconscionable retention of property. E.g. Chase Manhattan Bank NA v Israel-British Bank Ltd (London) [1981] Ch 105.
19.
Virgo (2015), p. 576.
20.
Barclays Bank Ltd v W J Simms Son and Cooke (Southern) Ltd [1980] 1 QB 677, 689 (Robert Goff J); discussed in Häcker (2013), p. 116. See also supra, Sect. 5.5.4.2 in Chap. 5.
21.
Supra, section “General” in Sect. 4.3.3.2 in Chap. 4.
22.
See scenarios (1) and (2) in supra, section “Benefits Transferred Under Mistakes” in Chap. 4.
23.
See supra, Sect. 5.6.2.3 in Chap. 5.
24.
See supra, Sect. 3.5.5.2 in Chap. 3.
25.
See supra, section “Property Law” in Chap. 3.
26.
See supra, Sect. 5.3.4.2 in Chap. 5.
27.
See supra, Sect. 5.3.6 in Chap. 5.
28.
Foskett v McKeown [2001] 1 AC 102 (HL) 128 (Lord Millett).
29.
Lipkin Gorman v Karpnale Ltd [1988] UKHL 12, [1991] 2 AC 548.
30.
Miller v Race (1758) 1 Burr 452, 97 ER 398. See also supra, Sect. 5.3.3.5 in Chap. 5.
31.
Ibid.
32.
Fox (1996), p. 547.
33.
The rules of tracing are illustrated in supra, Sect. 5.3.6 in Chap. 5.
34.
This example is discussed in Chambers (2004), p. 263; see also Black v Freedman (1910) 12 CLR 105 (HCA).
35.
See supra, Sect. 5.3.6 in Chap. 5; see also Chambers (2004), p. 263.
36.
In Chinese law, delivery alone cannot transfer the ownership of property without a legal reason. See Scenario (2) in supra, section “Benefits Transferred Under Mistakes” in Chap. 4.
37.
Supra, Sect. 4.3.2.2 in Chap. 4.
38.
Ibid.
39.
See supra, Sect. 3.2.3 in Chap. 3.
40.
See supra, Sect. 4.3.2.2 in Chap. 4.
41.
See supra, Sect. 4.3.2.4 in Chap. 4.
42.
Chinese Civil Code, art 114; see supra, Sect. 4.3.2.4 in Chap. 4.
43.
See supra, section “Property Law” in Chap. 3.
44.
See supra, Sect. 4.3.2.4 in Chap. 4.
45.
See supra, Sect. 5.3.3.5 in Chap. 5 and Sect. 6.3.2.2 in this chapter.
46.
For details of bona fide acquisition rules in Chinese property law, see supra, Sect. 4.3.2.3 in Chap. 4.
47.
As noted, for the sake of simplicity, this book treats money in bank and other accounts the same as tangible monies by way of analogy. However, this issue is still a subject of controversy. See supra, Sect. 4.3.2.2 in Chap. 4.
48.
Zuigao Renmin Fayuan Guanyu Shiyong Zhonghua Renmin Gongheguo Minfa Dian Wuquan Bian De Jieshi Yi (最高人民法院关于适用〈中华人民共和国民法典〉物权编的解释(一)) [Interpretation I of the Supreme People’s Court on the Application of the Book Real Right of the Civil Code of the People’s Republic of China] (promulgated by the SPC on 25 December 2020, effective since 1 January 2021).
49.
The transferor can raise an obligatory claim against the recipient based on the bona fide acquisition rule, Article 311 of the Chinese Civil Code, or Article 238 of the Chinese Civil Code for infringement of property rights. Article 311 stipulates that the original owner is entitled to claim compensation against the unauthorized disposer. See supra, Sect. 4.3.2.3 in Chap. 4. Article 238 allows a holder of a property right to ask for compensation for losses suffered due to another person’s interference of his property right. See supra, section “Property Law” in Chap. 3.
50.
For a detailed discussion of Article 238 of the Chinese Civil Code, see supra, section “Property Law” in Chap. 3.
51.
Ibid.
52.
For the details of this ‘gap scenario’, see Scenario (3) in supra, sections “Benefits Transferred Under Mistakes” and 4.4.3 in Chap. 4.
53.
See supra, Sec. 5.5 in Chap. 5.
54.
See supra, Sect. 5.5.2.2 in Chap. 5.
55.
See supra, Sect. 5.5.2.5 in Chap. 5.
56.
Ibid.
57.
Ibid.
58.
Cf McInnes (2004), pp. 184–191.
59.
Ibid 184–187.
60.
Ibid.
61.
Malette v Shulman (1990) 67 DLR (4th) 321 (Ont CA); discussed ibid 186.
62.
This example is given by Virgo. Virgo (2015), p. 82.
63.
See supra, Sect. 5.5.2.2 in Chap. 5.
64.
Burrows (1988), p. 576.
65.
Birks (1985), p. 114.
66.
For a discussion of ‘quasi-contract’, see supra, Sect. 5.4 in Chap. 5.
67.
See supra, section “General” in Sect. 4.3.3.2 in Chap. 4.
68.
See supra, Sect. 6.3.3.2 in this chapter.
69.
Ibid.
70.
Ibid.
71.
Ibid.
72.
Supra, Sect. 4.3.4.4 in Chap. 4.
73.
See supra, section “Introduction” in Chap. 4.
74.
Supra, Sect. 6.3.3.2 in this chapter.
75.
Ibid.
76.
Virgo (2015), p. 84.
77.
Ling (2002), p. 61.
78.
Chinese Civil Code, art 471.
79.
Chinese Civil Code, arts 472 and 479.
80.
Ling (2002), p. 63. Article 471 of the Chinese Contract Law stipulates, ‘Parties conclude the contract by means of offer and acceptance’.
81.
Ibid 62; Luo (2018), p. 148.
82.
Ling (2002), p. 96.
83.
See Luo (2018), pp. 153–154.
84.
Ling (2002), p. 106.
85.
Ibid 63.
86.
Ibid.
87.
Other items in Article 511 of the Chinese Civil Code are about the performance of obligations where quality requirements, the place of performance, the time of performance, method of performance and/or distribution of the expenses of performance are not clear. Because this section discusses the situation where service is rendered by mistake, the obligation has already been performed. These other issues relating to contract performance are not discussed further here.
88.
See supra, section “Contract Law and Other General Provisions About Civil Juristic Acts” in Chap. 3.
89.
See above Scenario (2) in supra, section “Void/Revoked Contracts” in Chap. 4.
90.
For the details of this ‘gap scenario’, see Scenario (1) in supra, sections “Benefits Transferred in Reliance upon the Expectation of Future Contracts” and 4.4.4 in Chap. 4.
91.
Virgo (2015), pp. 343–344. In Benedetti v Sawiris, the claimant had provided services for the defendant in anticipation that a contract would be concluded and he would be paid under the contract. However, the contract failed to be finalized. In the judgment, Lord Reed recognized that where services had been provided on a basis which had not be fulfilled, the defendant should be under a liability to make restitution to correct ‘the injustice arising from the defendant’s receipt of the claimant’s services on a basis which was not fulfilled’. Benedetti v Sawiris & Ors [2013] UKSC 50 [99].
92.
Virgo (2015), p. 344.
93.
Ibid 36; see Owen v Tate [1976] QB 402.
94.
The elements of an unjust enrichment claim are: (1) the defendant has been enriched; (2) the enrichment is at the expense of the plaintiff; (3) the enrichment arises as a result of an unjust factor; (4) the defendant has no successful defence to the claim. See supra, Sect. 5.5 in Chap. 5.
95.
For an inclusive survey of this issue, see McKendrick (1998), ch 11; Virgo (2015), p. 344.
96.
Supra, section “Benefits Transferred in Reliance upon the Expectation of Future Contracts” in Chap. 4.
97.
Chinese Civil Code, art 500.
98.
Chinese property law is a causal transfer system requiring that a valid transfer of property must be supported by a valid legal reason. See supra, Sect. 3.3.4 in Chap. 3.
99.
See supra, Sect. 6.3.2.3 in this chapter.
100.
Ibid.
101.
See supra, the section “The Extension of the Bona Fide Acquisition Rules” in this chapter.
102.
See supra, Sect. 6.3.3.3 in this chapter.
103.
See supra, Sects. 6.3.3.2 and 6.3.3.3 in this chapter.
104.
See supra, Sect. 6.3.3.3 in this chapter.
105.
For the details of this ‘gap scenario’, see Scenario (1) in supra, sections “Unauthorized Use or Consumption of Another’s Property” and 4.4.5 in Chap. 4.
106.
Ibid.
107.
Supra, Sect. 4.4.5 in Chap. 4.
108.
See supra, Sect. 5.5.4.7 in Chap. 5.
109.
Supra, Sect. 5.6.2.3 in Chap. 5.
110.
Stoke-on-Trent City Council v W and J Wass Ltd [1988] 1 WLR 1406, 1416 (Nicholls LJ); discussed in Virgo (2015), p. 459.
111.
Virgo (2015), pp. 460–461.
112.
[1952] 2 QB 246.
113.
The claimant should sue for the tort of conversion today. For the detail of conversion, see supra, Sect. 5.3.4.2 in Chap. 5.
114.
See Severn Trent Water Ltd v Barnes [2004] EWCA Civ 570; discussed in Virgo (2015), p. 459.
115.
Zhonghua Renmin Gongheguo Qinquan Zeren Fa (中华人民共和国侵权责任法) [Tort Liability Law of the People’s Republic of China] (promulgated by the Standing Committee of the National People’s Congress (‘NPCSC’) on 26 December 2009, effective since 1 July 2010, expired on 1 January 2021).
116.
E.g., Chinese Civil Code, art 1207. Under this provision, if a manufacturer or seller causes death or serious injury to another person as a consequence of knowingly producing or selling a defective product, the victim is entitled to claim corresponding punitive damages.
117.
Chinese Civil Code, art 1182. Under this provision, where a tort causing harm to a personal right or interest of another results in any property loss to the tort victim, the compensation should be determined by the benefit the defendant obtained if the loss is difficult to ascertain. For a detailed discussion, see supra, section “Tort Law” in Chap. 3.
118.
Chinese Civil Code, art 1165.
119.
Chinese Civil Code, art 1166.
120.
Cane (1997), p. 75.
121.
Previously, Article 1 of the Chinese Property Law states that this piece of legislation is enacted to protect real rights of right holders. Although this provision is not embraced by the Chinese Civil Code, Chapter I of Book II Real Rights of the Chinese Civil Code also emphazies the protection of real rights and one chapter of Book II Real Rights is devoted to the protection of real rights.
122.
See supra, section “Property Law” in Chap. 3.

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Faculty of Law, The Chinese University of Hong Kong, Hong Kong SAR, Hong Kong
Siyi Lin

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Lin, S. (2022). Proposals for the Future of the Chinese Law of Unjust Enrichment. In: The Law of Unjust Enrichment in China: Necessary or Not?. China-EU Law Series, vol 8. Springer, Cham. https://doi.org/10.1007/978-3-031-06178-3_6

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DOI: https://doi.org/10.1007/978-3-031-06178-3_6
Published: 31 August 2022
Publisher Name: Springer, Cham
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