On Judgment Basis Of Validity To Applicable Foreign Laws Agreed By Both Parties Of Foreign-Related Contract Of Guarantee

Foreign-related contract of guarantee refers to the contract of guarantee with foreign elements. The law in Chinese mainland does not give distinct definition of foreign guaranty, with only the definition about external guaranty in relative department regulations. According to the definition of external guaranty, we can get that external guaranty belongs to a kind of foreign guaranty in narrow sense. What’s more, external guaranty may form foreign debt. In judicial practices, when the people’s court in Chinese mainland accepts cases which are concerned with foreign-related contract of guarantee, it usually defines in line with the concept of foreign-related contract of guarantee, and not only limited to external guaranty. The author maintains that foreign-related contract of guarantee being studied in this paper is also foreign-related contract of guarantee in broad sense, which is not only limited to external guaranty.Foreign-related contract of guarantee involves management of foreign debt and foreign exchange control system in Chinese mainland, which may form foreign debt. Therefore, Chinese mainland also conducts strict management on foreign-related contract of guarantee. These are many normative legal documents concerned with foreign-related contract of guarantee, such as "Guarantee law of the People’s Republic of China ","Interpretation of the Supreme People’s Court on Some Issues Concerning the Application of the Guarantee law of the People’s Republic of China","Administration of Provision of External guaranty by Domestic Institutions Procedures","Administration of Provision of External guaranty by Domestic Institutions Procedures Implementing Rules" and "Interim Measures on the Management of Foreign Debts". These are compulsory legal regulations about foreign-related guarantee in Chinese mainland. For instance, Article Six in the "Interpretation of the Supreme People’s Court on Some Issues Concerning the Application of the Guarantee law of the People’s Republic of China" stipulates these invalid situations of foreign-related contract of guarantee."Administration of Provision of External guaranty by Domestic Institutions Procedures","Administration of Provision of External guaranty by Domestic Institutions Procedures Implementing Rules" and "Interim Measures on the Management of Foreign Debts" stipulate foreign-related guarantee also must be applied. It is one of the compulsory regulations that foreign-related contract of guarantee must be examined and approved or registered.Both parties of the foreign-related contract of guarantee have rights to select the applicable law to handle disputes about it. When both parties of this kind of contract agree on selecting the foreign law as the criterion to handle the foreign-related contract of guarantee, while this foreign-related contract of guarantee is not examined or approved or registered, the party autonomy shall conflict with the compulsory regulation about foreign-related guarantee in Chinese mainland..However, at present, foreign-related contract of guarantee is maintained as invalid without being examined, approved, or registered, it shall receive no dissention in judicial practices. Moreover, in judgment practices, when this situation happens and undergoes legal action in the people’s court, the court usually excludes the application of the foreign law agreed by both parties of the foreign-related contract of guarantee, and adopts the law in Chinese mainland.However, as regard to these reasons of excluding the law agreed by both parties of the foreign-related contract of guarantee, there is much controversy in both circles of theories and practices. Through studying on a series of verdicts of foreign-related contract of guarantee, we can find that in the judicial practice of Chinese mainland, it presents chaos state in recognizing the basis for effectiveness of foreign laws for foreign-related contract of guarantee.The people’s court excludes the application of the foreign law chosen by both parties of foreign-related contract of guarantee by the theory of the evasion of law in verdicts of some cases; the people’s court also excludes the application of the foreign law chosen by both parties of the contract by the theory of reservation of public order in verdicts of some cases; or both by the theory of evasion of law and the theory of reservation of public order in verdicts of some cases; or some people’s courts even directly applies the law of Chinese mainland without giving any reasons to both parties of many foreign-related contracts of guarantee.By conducting theoretical research on the theory of evasion of law and the theory of reservation of public order, this paper gets the following conclusions by combining the analysis of typical cases in practice: under the conditions that the foreign-related contract of guarantee did not perform the compulsory regulation, while both parties of the foreign-related contract of guarantee agreed to apply the foreign law, the theory of evasion of law or the theory of reservation of public order shall not be the valid basis to apply the applicable foreign law; meanwhile, it is also inappropriate to exclude the applicable foreign law agreed by both parties by making use of the theory of evasion of law and the theory of reservation of public order. The theory of directly applicable law provides new basis to the validity judgment of applying the applicable foreign law which is agreed by both parties of the foreign-related contract of guarantee. The theory of directly applicable law features special historical background, and it is a new theory in terms of the theory of law of evasion and the theory of reservation of public order. It only focuses on the standard application of the entity, and does not interfere the content of the contract apart from the range of adjustment. It ensures that these compulsory legal regulations of foreign-related guarantee in Chinese mainland can be applied at the same time, and also protects the rule of autonomy of the will for both parties of foreign-related contract of guarantee. It is the superiority of the theory of directly applicable law. Today, as the state further strengthens the intervention on social economy, except improving its status in the field about foreign-related contract of guarantee, the theory of directly applicable law is being applied in more and more foreign-related cases. What is gratifying is that the "Law of the Application of Law for Foreign-Related Civil Relations of the People’s Republic of China" adopted at the17th session of Standing Committee of the National People’s Congress in2010confirmed it, thus featuring great significance in developing this new theory, applying this theory to practical judgments and cases, as well as enhancing the judicial level of the people’s court.