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Marriage Transmitted Debt in the Chinese Civil Code: The Beginning of a Solution Rather than the End

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Abstract

This paper is the first to critically analyse how the newly enacted Chinese Civil Code addresses gender equality in the intersection of family and commercial contracting. It proposes ‘marriage transmitted debt’ (MTD) in China as a new concept as opposed to ‘sexually transmitted debt’ (STD) documented in English and Australian jurisprudence. MTD refers to the debt incurred by one spouse but transmitted to the other spouse due to the status of the marriage. Supported by empirical statistics, it shows that while the statutory language of MTD regulation in China is neutral, wives are still disadvantaged. Although this has been partly addressed by shifting the onus of proof to creditors, the meaning of debt incurred for the daily life of a family or the joint life of the couple in the Code needs further judicial development. The Code is the beginning of a solution rather than the end to achieving gender equality in China.

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Notes

  1. Interpretation of the Supreme People's Court about Several Problems Concerning the Application of the Marriage Law of the People's Republic of China (II), issued on 26 December 2003 and effective on 1 April 2004.

  2. Interpretation on Issues Concerning the Application of Law in the Trial of Cases Involving Disputes of Marital Debt, adopted at the 1731st meeting of the Judicial Committee of the Supreme People's Court on 8 January 2018 and effective on 18 January 2018.

  3. The Chinese Civil Code was enacted by the Third Meeting of the Thirteenth National People’s Congress on 28 May 2020 and took effect on 1 January 2021. The official English version is available at http://www.npc.gov.cn/englishnpc/c23934/202107/7c7f9fc3765947a89627ef67e89e8b84/files/da0d8a6da39a478ab93639efd815b685.pdfhttp://www.npc.gov.cn/englishnpc/c23934/202107/7c7f9fc3765947a89627ef67e89e8b84/files/da0d8a6da39a478ab93639efd815b6. Accessed 26 August 2021.

  4. See Section II.A below.

  5. Arts. 1055, 1062 and 1065 of the Chinese Civil Code.

  6. MTD should be distinguished from ‘emotionally transmitted debt’ where a person assumes liability for the debts of relatives and friends, other than for sexual partners. MTD is also distinct from ‘relationship transmitted debts (RTDs),’ which describes debts transferred from a child to parents, between friends and relations, and from spiritual adviser to devotees (Howell, 1995).

  7. See the discussion in Section III.C below.

  8. Art. 1 of the 2018 Judicial Interpretation and Art. 1064 of the Code.

  9. Arts. 2 and 3 the 2018 Judicial Interpretation and Arts. 1060 and 1064 of the Code.

  10. Reply on Determining the Nature of a Debt Incurred by One Spouse in His or Her Name during the Existence of a Marital Relationship; issued and effective on 12 July 2014, No. 10 [2014] of the Civil Division I of the Supreme People's Court.

  11. Ibid.

  12. Ibid.

  13. The focus of this paper is the external relationship, i.e., the creditor’s claim against the non-borrowing spouse, and not property division between spouses.

  14. See discussion at Section II.B below. Although there are academic disputes whether same-sex marriage should be recognised, currently in China a legally recognised marriage is between a male (husband) and a female (wife).

  15. SPC Interpretation about Several Problems Concerning the Application of the Marriage Law of the People's Republic of China (II), issued on 26 December 2003 and effective on 1 April 2004.

  16. Ibid. Art. 36 of the SPC Judicial Interpretation of the Civil Code (Marriage and Family Law Section).

  17. SPC Reply on ‘The Suggestion to Abolish Article 24 of the 2003 Judicial Interpretation’, issued and effective on 17 March 2016.

  18. Ibid.

  19. Ibid.

  20. Art. 1062 of the Code (which lists properties obtained during the marriage that are deemed joint property of the couple: (i) wages and bonuses; (ii) proceeds of production and business operation; (iii) income from intellectual property rights; (iv) property acquired from inheritance or presentation, with the exception of property stipulated in the third item of Art. 1063 of this Law; and (v) other property which should be in their joint possession). See also Arts. 24–26 of the SPC Judicial Interpretation of the Civil Code (Marriage and Family Law Section), issued and effective on 30 December 2020.

  21. For example, the borrowing spouse fabricates facts to prove that the debt is only for his or her personal expenses in order to protect the joint marital property.

  22. E.g., the Reply on the Suggestion to Abolish Article 24 of the 2003 Judicial Interpretation, issued by the SPC and effective on 17 March 2016 and fn 24, 25, 26.

  23. In China, judicial interpretations (including replies and notices) are less authoritative than legislation and they aim to limit the discretion of judges in lower-level courts and guide them in their application of statutes.

  24. Art. 24 of the 2003 Judicial Interpretation.

  25. Art. 19.3 of the 2001 Chinese Family Law.

  26. Reply on Determining the Nature of a Debt Incurred by One Spouse in His or Her Name during the Existence of a Marital Relationship, issued and effective on 12 July 2014, No. 10 [2014] of the Civil Division I of the Supreme People's Court. See, for example, Determination of a Couple’s Common Debt when a Spouse Raises Debts in an Individual’s Name–Zhejiang Yinzhou Intermediate People’s Court Judgment of Gong Wenjuan v. Yan Lijuan et al., People’s Court Daily, 21 July 2011 at p 006 (in this case, the second instance court held that the debt was not the marital debt of the couple because it was borrowed half a month before the divorce and there was no evidence to show that the debt was used for the joint life of the couple).

  27. Article 24 of Amendment to the Interpretations of the Supreme People's Court on Several Issues Concerning the Application of the Marriage Law of the People's Republic of China (II); adopted on 4 December 2003 at the 1299th meeting of the Supreme People’s Court Judicial Committee; revised on 20 February 2017 at the 1710th meeting of the SPC Judicial Committee.

  28. Supreme People’s Court Notification on How to Properly Resolve Disputes on Marital Debts according to Law, issued and effective on 28 February 2017, Fa [2017] No. 48.

  29. Interpretation on Issues concerning the Application of Law in the Trial of Cases Involving Disputes of Marital Debt, adopted at the 1731st meeting of the Judicial Committee of the Supreme People's Court on 8 January 2018 and effective on 18 January 2018.

  30. Art. 1064 of the Code.

  31. Ibid., Art. 1060 of the Code.

  32. The theoretical foundation of situation (iii) is the equal right of spouses to dispose joint property gained from their joint life or joint production, see Art. 1062 of the Code. See also art. 43 of the SPC Opinions on Several Questions to Implement the General Principles of Civil Law (providing that, during the marriage, if one spouse engages in self-employed or contracted business, the income shall be the joint property of the couple, and the debt shall also be paid off with the joint property of the couple), issued and effective on 2 April 1998 and abolished with the coming into effect of the Code.

  33. We sourced the judgments from the official Chinese judgment website: https://wenshu.court.gov.cn/. We first used the search function on the website to find judgments invoking art. 24 of the 2003 Judicial Interpretation or the 2018 Judicial Interpretation. We then read each judgment to determine whether the other three criteria were satisfied. We comprehensively reviewed thousands of judgments and finally identified the 188 judgments. We ensured that the selected judgments covered as many Chinese provinces as possible and were issued by different levels of Chinese courts so as to provide a balanced jurisdictional coverage. The yearly distribution of the judgments and the levels and geographic distribution of the relevant courts are included in the annexures.

  34. MTD is debt transmitted by marriage, so it only occurs during a couple’s marriage. However, a creditor can bring an MTD claim against either or both a borrowing spouse and a non-borrowing spouse during their marriage or after their divorce, subject to the statute of limitations. We consider that if a MTD claim is brought during marriage, there are more possibilities of family collusion where the borrowing spouse may argue that the debt is borrowed only for his or her personal need so that the joint marital property will not be used to pay for the debt. Although we think that excluding these possibilities completely is not realistic, we consider that collusion between the borrowing and the non-borrowing spouses may occur less often when an MTD claim is brought against a couple who are divorced or when a borrowing spouse’s whereabouts are unknown.

  35. Ibid.

  36. If the full-scale survey focused on the same period as the preliminary survey (2012–2017), it would have included judgments issued, for example, in 2012 and 2013, which thus could not have considered the 2014 and 2016 Replies and the 2017 Judicial Interpretation. Judgments issued in 2014 could not have considered the 2016 Reply and the 2017 Judicial Interpretation.

  37. Although the Code and the 2018 Judicial Interpretation do not specify which party should prove that the debt is used for the daily life of a family, the judgments surveyed support a strong implication that the onus is on the creditors. The Code and the 2018 Judicial Interpretation explicitly require the creditor to prove the debt is used for the joint life or joint production of the couple or based on their joint consent.

  38. The search key word is ‘《最高人民法院关于适用〈中华人民共和国婚姻法〉若干问题的解释 (二) 》第二十四条’ (Zuigao Renmin Fayuan Guanyu Shiyong < Zhonghua Renmin Gongheguo Hunyinfa > Ruogan Wenti de Jieshi (er)’ di Ershishi Tiao) [Art. 24 of the 2003 Judicial Interpretation]. The search was conducted on the official Chinese judgments website (https://wenshu.court.gov.cn/), accessed on 17 July 2021. We selected cases up to 2017 because art. 24 of the 2003 Judicial Interpretation was abolished in 2018.

  39. There might be another potential reason to explain why the number of MTD judgments before 2013 is small, namely that those judgments were not published at all. China only recently began to publish a large number of judgments online and made them accessible to the public. We speculate that many judgments rendered between 2003 and 2012 were not published online, which explains why we could not find MTD cases. Further, most judgments invoking art. 24 of the 2003 Judicial Interpretation were rendered by lower-level People’s Courts, and we speculate that their judgments were not generally available to the public.

  40. World Economic Forum. 2019. Global Gender Gap Report 2020. https://www.weforum.org/reports/gender-gap-2020-report-100-years-pay-equality. Accessed 8 August 2021.

  41. International Labour Organisation. 2021. Labor force participation rate, female (% of female population ages 15+) (modelled ILO estimate)-China, https://data.worldbank.org/indicator/SL.TLF.CACT.FE.ZS?end=2020&locations=CN&start=1990. Accessed 8 August 2021.

  42. International Labour Organisation. 2021. Labour force participation rate, male (% of female population ages 15+) (modelled ILO estimate)-China, https://data.worldbank.org/indicator/SL.TLF.CACT.MA.ZS?end=2020&locations=CN&start=1990. Accessed 8 August 2021.

  43. Quan Nv. 2020. The latest gender data of the National Bureau of Statistics is released: what is the current status of gender equality in China. Huxiu, 24 August 2020,

    https://www.huxiu.com/article/377564.html. Accessed 8 August 2021.

  44. Private lending dispute between Huang Shurong and Ren Liuquan and Nie Qingyun, Chongqing Third Intermediate People's Court, (2018) Yu 03 Min Zhong No. 648 Hao.

  45. L’ Esrange v Graucob [1934] 2 KB 394, 403.

  46. Arts. 490 and 493 of the Code.

  47. Although the Australian study included a range of guarantors, two thirds of them were women.

  48. Unreported, HCMP 3324/2002, 15 October 2003 (discussed in Ho 2011, 71–72).

  49. Unreported, HCMP 3324/2002, paras 23–24.

  50. Lord Scarman in Westminster Bank v Morgan [1985] AC 686, 703.

  51. Lord Brown-Wilkinson noted that “in practice many wives are still subjected to, and yield to undue influence by their husbands.”.“in practice many wives are still subjected to, and yield to undue influence by their husbands.” Barclays Bank v O’Brien [1994] 1 AC 180, 188.

  52. [1994] 1 AC 180 (House of Lords).

  53. [2002] 2 AC 773 (House of Lords).

  54. (1940) 63 CLR 649.

  55. Yerkey v Jones (1940) 63 CLR 649, 683 (High Court of Australia).

  56. (1998) 194 CLR 395, 403 (High Court of Australia).

  57. Ibid at 404.

  58. Ibid at 408–409.

  59. Crucially, by the New South Wales Court of Appeal, see Akins v National Australia Bank (1994) 34 NSWLR 155; National Australia Bank Ltd v Garcia (1996) 39 NSWLR 577; Teachers Health Investments Pty Ltd v Wynne (1996) ASC 56–356.

  60. Garcia, at 422.

  61. Gender equality in arts. 2, 4, 113 of the Code.

  62. Arts. 23 and 24 of Chinese 1950 Marriage Law, adopted at the 7th Meeting of the Committee of the Central People’s Government on 13 April 1950.

  63. The 1980 Marriage Law was adopted at the Third Session of the Fifth National People's Congress, promulgated by Order No. 9 of the Chairman of the Standing Committee of the National People's Congress on 10 September 1980, and became effective on 1 January 1981.

  64. Huiqing Sun v. Guohui Zhan and Shuhua Zhang, Civil Judgment of Supreme People’s Court, (2019) Zuigaofa Min Zhong 197 Hao.

  65. Notably, art. 33 of the SPC Judicial Interpretation of the Civil Code (Marriage and Family Law Section) uses the concept of ‘the joint life of a family’ without defining it (art. 33 provides that ‘[w]here a creditor requests a debtor's spouse to pay for a debt incurred by the debtor before marriage, the People's Court shall not support the creditor's claim, unless the creditor can prove that the debt is used for the joint life of the family.) It is unclear how the meaning of ‘the joint life of a family’ differs from ‘the daily expense of a family’ and ‘the joint life of a couple’.

  66. See Section 2.B above.

  67. The 2001 Judicial Interpretation on Several Issues Concerning the Application of the Marriage Law, enacted at the 1202nd Meeting of the Judicial Committee of the SPC on 24 December 2001 and effective on 27 December 2001, Fashi [2001] No. 30.

  68. Retrial Judgment of Jia Xing City XX Limited Company v. Jia Xing City XX Zhong XX Clothing Limited Company, the High Court of Zhejiang Province, (2011) Zhe Min Zai Zi No. 96.

  69. In 2019, housing was the second largest expense for Chinese residents, accounting for 23.4% of annual incomes. Food was the largest expense, accounting for 28.2% of annual income. See China National Bureau of Statistics. 2020. Residents’ Income and Expenses in 2019. China National Bureau of Statistics, 17 January 2020,China National Bureau of Statistics, 17 January 2020. http://www.stats.gov.cn/tjsj/zxfb/202001/t20200117_1723396.html. Accessed 8 August 2021.

  70. About 70% of women interviewed said that housing, stable income and some savings were their main requirements for marriage. From the report, we can conclude that housing is the most important of these factors. Even the few ‘feminine extremists’ believed that an apartment was a good way to judge whether a male would be responsible and provide for his family (Huang 2010).

  71. Chapter 16 of the Chinese Civil Procedure Law, adopted at the 4th Session of the Seventh National People’s Congress on 9 April 1991 and amended at the 28th Session of the Standing Committee of the Twelfth National People’s Congress on 27 June 2017.

  72. This excludes the special administrative regions of Hong Kong and Macau.

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Acknowledgements

The authors wish to thank the insightful comments from the two anonymous reviewers and from Professors Kwai Hang Ng, He Xin and Prue Vines on earlier versions of the paper. Thanks are also due, in this four-year project, to the dedicated research assistance of, Mengting Gui, Zidi Huang, Yuxiao Qu, Weixie Peng and Wanling Zhou who helped to conduct the three surveys, and Lesley Adukonu and Kate Freedman from Australian Catholic University for library assistance. This paper is for our daughters.

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Appendices

Appendices

A. Preliminary survey

See Table 5.

Table 5 Distribution of the judgments per year in the preliminary survey

In China, the first trial of MTD cases begins at the Basic People’s Courts. A losing party may appeal the judgment of a Basic People’s Court to an Intermediate People’s Court. The judgments issued by the Intermediate People’s Court are final. Therefore, the fact that a high percentage of the final judgments were rendered by the Intermediate People’s Courts demonstrates a high rate of appeal in MTD cases. In rare circumstances, Chinese Civil Procedure Law allows retrials of cases under the trial supervision procedures, which may be conducted by the Higher People’s Courts.Footnote 71 The survey also shows that 12% of the judgments were retrials by the Higher People’s Courts, which further demonstrates the controversies surrounding MTD cases (see Table 6).

Table 6 Level of court in the preliminary survey

Mainland China has 32 provincial administrative districts.Footnote 72 We found that the judgments covered 24 provincial administrative districts, which are economically developed areas where spouses as a family unit may more often conduct economic activities (see Table 7).

Table 7 Geographic distribution of the judgments in the preliminary survey

B. The 2017 survey

See Tables 8 and 9.

Table 8 Level of court
Table 9 Geographic distribution of the judgments

C. The 2018 survey

See Tables 10 and 11.

Table 10 Level of court
Table 11 Geographic distribution of the judgments

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Huang, J., Cheong, M.F. Marriage Transmitted Debt in the Chinese Civil Code: The Beginning of a Solution Rather than the End. Fem Leg Stud 30, 1–27 (2022). https://doi.org/10.1007/s10691-021-09472-4

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