A Study On Commercial Lien System In China

Commercial lien is essentially the application of the lien system in the commercial sector.Unlike civil lien,it is a commercial system supply that is designed due to the peculiarity of commercial subjects and commercial transactions.Under the integration system of civil and commercial laws,this peculiarity in the commercial system should be fully considered in the formulation and revision of the Civil Code and calls for an appropriate method to deal with the special commercial system technically to gradually incorporate it into the Civil Code.The study of commercial liens undoubtedly will provide an excellent model and perspective.Specifically,the dissertation focuses the following issues.Whether the inter-enterprise lien under the Property Law and the Civil Code constitutes the commercial lien system? What sets the legislation of commercial lien aside from those of civil lien and extraterritorial commercial lien? What are the reasons and rationalities behind this peculiarity? What are the differences or confusions in judicial practices of and theoretical research on commercial lien? How should the system be revised from the perspectives of value concept,system function,scope of applicable subject and object,and acquired requirements? These issues will be discussed and approached in the dissertation.By elaborating on the premise that the legislation of inter-enterprise lien serves as the prototype of the commercial lien system,the article focuses on such issues as the institutional changes,empirical investigations,conceptual reshaping,functional division,scope of subject and object,and acquired requirements of the commercial lien.The dissertation consists of six chapters along with Introduction and Conclusion:The introductory part sets out the rationale for the research on the commercial lien system.Previous studies on the lien system have unanimously made a distinction between civil lien and commercial lien,and it is generally believed that the lien systems across countries can trace their origins in the commercial lien.Current legislation in China has not designated a clear definition or a systematic system of commercial lien,but the importance of the research on the commercial lien system can never be underestimated.The proviso "unless the lienholder and the debtor are both enterprises" under the Article 231 of the Property Law and Article 448 of the Civil Code marks the rudimentary form of the commercial lien system,and although this provision bears an original nature,it has huge and increasingly complicated application differences in judicial practice.For this reason,it is necessary to explore how to place the special commercial system under the civil and commercial integration system.In addition,this part reviews the research status of commercial liens at home and abroad,as well as the research methods and research innovations of this dissertation.Chapter One explores the development of the commercial lien system.The first part traces the origins of the commercial lien,which started from the right to refuse payment in the Roman law and acted as a procedural defense at its initial stage.The commercial lien has its origins in the customary law of Italian merchants in the Middle Ages.The second part goes on to tackle the evolution of the commercial lien system.In extraterritorial legislations,the commercial lien system has mainly been granted a claim-related lien and rarely a priority of compensation.However,the extraterritorial legislations have system supplies similar to the priority of compensation function designated in China's lien,and they take multiple forms,including the priority of special movable property in France,the legal pledge in Germany,and the pre-emptive right in Japan,the pledge of movable property in Switzerland,and even the lien in China's Taiwan province,but the priority of compensation function is all designed to protect the beneficial labor claims due to the preservation and appreciation of the retained property.The third part discusses the development of the commercial lien system in China,from the introduction of the lien and the commercial lien in China's legislation,the gradual expansion of a series of special lien settings,to the iterative processes of "implicated relations" and "same legal relationship" unified legislation.The lien was primarily incorporated in the legislation to favorably protect labor claims,but it presents a conceptual confusion between the lien right and the lien.In the application of law,the two sets of legislative systems are parallel and the legislation is based on the subject practice.Chapter Two conducts an empirical investigation into China's commercial lien system.The first part discusses the special institutional settings of the commercial lien in China,including the subject confined to enterprises,the dual nature of lien and priority of compensation,a priority of compensation that is stronger than pledge and mortgage,and the retained property and the claim that are not restricted by the “same legal relationship”.The second part summarizes the different judicial practices of the commercial lien in China.There are disagreements and even diametrically opposite determinations in the judicial judgments in the following cases: the application scope of the commercial lien,the applicability in the lease relationship,the determination of lawful possession,the overlapping application of the lien and the lien on vessel,and the determination of enterprise bankruptcy cases.The third part reflects on the huge differences in the judicial practices of the special settings of the commercial lien in China.For one thing,the special settings of China's commercial lien violate the equity principle in legal interest value and fail to impose reasonable restrictions on the priority of compensation.This can lead to an unreasonable expansion of the scope of priority right of compensation,which violates the equity principle and lacks the legal basis,and fails to achieve equal protection not only between lienholders,or between lienholders and debtors and third parties,but even between lienholders,mortgages and pledgers,which may induce moral hazard.For another,the special settings of China's commercial lien are not scientific in technical legislation.The legislative model defining enterprises as the subject,the legislative structure of the proviso clause,and the setting of lawful possession are all unreasonable and should be adjusted.Chapter Three discusses the conceptual reshaping of the commercial lien system in China.The first part summarizes the concept of the commercial legal system,which refers to a balanced choice between commercial transaction benefits,transaction security and transaction fairness.By ranking the three indicators in different levels of importance in different eras according to the social and economic transformations,value concepts and temperament forms are assigned to different eras and materialize into different institutional features.The second part argues for how the special settings of the commercial lien system reflect the concept of priority of benefits.In fact,the rationality for the special settings lies in considering the value concepts of transaction safety and transaction fairness while fully demonstrating the priority of commercial transaction benefits.The third part introduces the concept of the commercial legal system in the new era.According to China's social and economic advancements and judicial practice,the construction of the commercial legal system in the new era should place emphasis on transaction fairness and transaction security while achieving a dynamic balance between transaction benefits,transaction fairness,and transaction security.The fourth part elaborates on the reconstruction of the function of commercial lien under the new concept.The source of the chaotic judicial practices of the commercial lien in China lies in the confusion of its three functions: the equity-based lien function on the creditor's property,the practicality-based treatment function of the retained property and the priority of compensation function based on the recognition of the value preservation and appreciation.The confusion between the lien right and lien function has led to the failure and reasonably restricted the scope of legal application of commercial lien with priority of compensation.Under the design concept in the new era,the commercial lien should make a distinction between the priority of compensation right and the treatment function.The legislative value basis for the priority of compensation function lies in priority protection for the beneficial labor claims for the value preservation and appreciation of the retained property.It can only be based on the particularity of commercial subjects or commercial transactions,and make certain special treatment for the involvement between the retained property and the claim in the commercial lien.Chapter Four is concerned with the body system of China's commercial lien system.The first part shows that the use of "enterprises" instead of "merchants" in China's legislation is due to the linguistic habits of Chinese legislators,alignment with the trends of domestic and foreign legislations and research,and most importantly,the influence of China's unique social culture and era.However,"enterprises" is merely an economic concept and not a rigorous legal concept,and China does not have the definitions of the merchant class and the concept of "merchants".For this reason,the dissertation,based on the revisions of the Civil Code,advises to adopt as the subject of commercial lien the concept of "for-profit legal persons" designated in the Civil Code to realize the legislative transformation of from "enterprises" to "for-profit legal persons" in the era of the Civil Code.The second part discusses the subject qualifications of individual industrial and commercial households.The dissertation demonstrates that individual industrial and commercial households should be identified as eligible subjects for the commercial lien in China for the twin reasons:they are not significantly different from sole proprietorship companies and enterprises due to their nature and rapid advancements;and it suits the design logic in the legal provisions of the Property Law and even the Civil Code.The third part deals with the subject qualification of rural usufructuary households rural contracted business households.Rural contracted business households should be identified as eligible subjects for commercial liens in China for three reasons: the original legislative intent of the rural contracting business household system;the objective laws and facts of the development of rural contracting business households;and the design logic in the legal provisions of the Property Law and even the Civil Code.Chapter Five discusses the object scope of China's commercial lien system.The chapter starts with the legislative expression of "debtor's movable property" and whether the object of commercial lien is confined to movable property over which the debtor has ownership.The first part argues that marketable securities are the object of commercial lien and that their role as the object of commercial lien cannot be denied even though it carries limited practical significance.No distinction should be made between registered securities and unregistered securities in this respect.The second part corroborates that immovable property should be the object of commercial lien.Theoretically,the identification of immovable property as the object of commercial lien does not compromise the legal logic and it is in line with the development of China's lien system and the extraterritorial legislative practices.In practice,the role of immovable property as the object of commercial lien has already been recognized in China's legislation,or the priority of compensation for the construction contractors(hereinafter referred to as "the priority for construction").Based on the value-added theory,the priority for construction provides special protection for labor claims involved in construction projects and it is essentially a commercial lien with immovable property as the object.The third part discusses how third-party property falls outside of the object of commercial lien.Excluding non-debtor's ownership of property from the commercial lien is not only in line with the requirements of literal interpretation,but aligns with the purpose of system function design and balance of overall interests.For this reason,subsequent legislation adjustments should clearly define the object of the commercial lien from the "debtor's movable property" to "the property of the other party".Chapter Six focuses on the acquired requirements for the commercial lien and the issue of bona fide acquisition in China.The first part discusses the choice of positive acquired requirements or "implicated relationships" for the commercial lien.No distinction has been made between the lien right and the priority of compensation function in China's legislation,which ignores the varying degrees of involvement between the two and leads to confusion over the application scope.Whether it is“implicated relationship” or “same legal relationship”,the lien right has a patently narrow application scope and the priority of compensation function is given excessively wide application.By distinguishing the lien right from the priority of compensation function,Article 231 of the Property Law and Article 448 of the Civil Code both establish the lien right,and the "same legal relationship" is only a necessary but not sufficient condition for the exercise of the lien right.However,it should be noted that certain restrictions should be imposed on the exercise of the commercial lien right and that the movable property and the claims held by the commercial lien should be defined positively as a result of the business activities of for-profit legal persons.This will help transform the subject determination model of commercial lien to the dual subject definition model of subject and commercial behavior.The second part discusses the choice of negative acquired requirements or“unlawful possession exclusion" for the commercial lien.For the purposes of clearly defining the concept,rationally assigning the burden of proof and highlighting the legal value concept,it is advisable to avoid defining lawful possession and transform the components of the commercial lien from "lawful possession" to "excluding possession due to infringement or other unlawful reasons." The third part deals with the application of the bona fide acquisition in China's commercial lien.Recognizing the applicability of bona fide acquisition in the commercial lien is a prerequisite for balanced interests of all parties under the transaction security principle.The legislative foundation for the priority of compensation in the commercial lien is to protect the labor claims for the value preservation and appreciation of the retained property.For this reason,the application of the bona fide acquisition does not harm the interests of the original right holders in essence.Whether it is from the basic value orientation of encouraging transactions,matching the objective requirements of the disclosure principle of movable property,or the development of extraterritorial and China's legislations,the bona fide acquisition should be applied to the commercial lien system and should be recognized by legislation.