On December 29, 2020, the Supreme People’s Court issued the Several Provisions on the Application of Retroactivity in the Civil Code of the People’s Republic of China (the “Provisions”), which came into effect on January 1, 2021. The Provisions provide for the general application, retroactive application, coordinated application, etc., of the Civil Code, which will be briefly introduced in this article.
The Provisions follow the standard of basing the applicable law on the time the legal fact occurred, which means that if the relevant legal facts occur before the Civil Code entered into effect, the law effective at the time should apply, but if those facts continue after the effective date of the Civil Code, the Civil Code shall apply. In addition, in order to unify judicial practice, the Provisions also stipulate that in civil disputes arising from legal facts before the effective date of the Civil Code, the Civil Code shall apply if there is no law or judicial interpretation on point at that time but the Civil Code does, unless the application of the Civil Code would clearly impair the rights and interests of the parties, increase the legal obligations of the parties or otherwise deviate from the reasonable expectations of the parties.
The second part of the Provisions details the retroactive application of the Civil Code, including civil disputes involving the infringement of the name, reputation and others of heroes and martyrs, the validity of mortgage transfer clauses, the provisions concerning the invalidation of contracts, the validity of the standard boilerplate terms, the termination of the contract through the filing of a complaint, the breaching party requesting the termination of joint rights and obligations, factoring contracts, heir’s loss of inheritance rights, a legatee’s loss of legacy, etc. Even if the facts take place before the effective date of the Civil Code, the relevant provisions of the Civil Code can be applied retroactively.
In addition, the Provisions specifically provide for the coordinated application of the Civil Code for circumstances that straddle the effective date of the Civil Code. If the performance of a contract continues after the effective date of the Civil Code, a dispute that arose before the Civil Code shall apply the law and judicial interpretations that were in effect at that time; if the dispute happened after the Civil Code came into effect, then the relevant provisions of Chapter 4 and Chapter 5 of Part III of the Civil Code shall apply. For example, if the performance of a lease contract continues after the effective date of the Civil Code, the lessee may claim its preemptive right pursuant to the Civil Code, or in the case of a guarantee contract established before the effective date of the Civil Code, if the performance of the primary debt expires less than two years from the effective date of the Civil Code and the parties fail to stipulate the duration of the guarantee period, the term of the original guarantee shall still be applicable for two years after the expiration date of the performance of the primary debt.