General Differences and Similarities Between Laws’ Applications in Australia and Mainland China for the Business World
Albert Mu
Although common-law legal system (like Australia’s) and civil-law legal system (like mainland China’s) has been categorised differently academically, the actual differences and similarities between the two jurisdictions in the commercial/business world are more nuanced than many people may think.
Looking at legislations’ roles, there are a number of Australian statutes that are key to doing businesses in Victoria – they include the Corporations Act 2001 (Cth); the Competition and Consumer Act 2010 (Cth); Goods Act 1958 (Vic); and Retail Leases Act 2003 (Vic). In mainland China, a Civil Code covering a wide range of civil issues (mainly regulating contracts and torts but also includes laws in relation to marriage and inheritance) has been effective from the beginning of 2021. Other legislations such as the Company Law of the People’s Republic of China (updated in 2023) remains critically important. And when it comes to applying laws, legal practitioners in China also needs to consider other important materials which provides general guidance, such as the judicial interpretation guides for the Civil Code that have been published by the Supreme People’s Court of the PRC.
As Australia has a common-law legal system, the existence of the foundational legal doctrine “stare decisis” means case laws, or precedents, need to be followed by certain courts in the future. For example, decisions made by the Supreme Court of Victoria for a certain case will bind lower Victorian courts when making decisions in similar cases. In mainland China, which adopts a civil-law legal system, case laws do not generally have directly binding effects. But this doesn’t mean cases already decided by Chinese courts are not important for legal practitioners – lawyers practicing in China do frequently search for and check precedents to polish their legal arguments too. Both the Supreme People’s Procuratorate of the PRC and the Supreme People’s Court of the PRC also publish “guiding cases” (“指导性案件“), which are very helpful to legal practitioners.
Other important nuances include the fact that in Victoria, torts are still an area which is largely uncodified, despite the existence of the Wrongs Act 1958 (Vic). The Chinese Civil Code, as previously mentioned, does cover torts. It outlines more abstract legal principles like unjust enrichment as well. However, not all legal terms or concepts frequently used in Victoria currently have their clearly dedicated and fully overlapping counterparts in the context of legal practice in mainland China. For example, in contract drafting, “indemnity clauses” are commonly used in Victoria. But to achieve the same effect intended to be ensured by giving “indemnities”, a contract drafted to be used in mainland China usually needs to invoke the more general concept of compensation. In an interesting contrast, the concept of “guarantee” — which is close to the concept of indemnity (in common law) but not fully overlapping because the two concepts still have important differences — is equally broadly used in the business world in Victoria and mainland China.
In the future, the complexity of both Australian laws and Chinese laws may further evolve. Even if most of the concepts or elements in either jurisdiction may eventually be found to have their largely corresponding counterparts in the other jurisdiction, how to correctly locate and apply those concepts or elements in their own jurisdictions is likely to remain fundamentally different expertise.
Albert Mu
March 26
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