Inefficiency of Specific Performance as a Contractual Remedy in Chinese Courts: An Empirical and Normative Analysis

Chen, Lei,DiMatteo, Larry A. | May 1, 2020

This article investigates the values and latent policies in the area of the availability of specific performance (SP) as a contractual remedy, which have shaped the development of Chinese law. The National People’s Congress (Legislature) and Supreme People’s Court in China have addressed the remedial structure of Chinese contract law, namely, the availability of the remedy of SP as opposed to the awarding of damages only. The law is clear that the remedies of SP and damages are ordinary remedies that a claimant is free to choose between. The question that this article confronts is whether in practice the equality of SP and damages as remedies are applied in a neutral, unbiased way by the Chinese courts. Simply put, how often do Chinese courts use SP as a remedy for contract breaches? If SP is seldom awarded, the question then becomes: what are the underlying reasons or rationales given for its underutilization? This article employs an empirical study based on data collected by surveys and follow-up interviews with hundreds of Mainland Chinese judges at various levels of the Chinese court system (related to civil and commercial disputes). Based on the statistical findings of the empirical study, a theoretical inquiry is offered to better understand the relative use or non-use of specific performance as a contractual remedy. The findings show that damages are often favored over SP; additionally, judges in the Mainland Chinese court system take a far more proactive role in the preliminary stages of trials and will actively persuade parties to claim damages over specific performance where expedient. The study also shows that, despite popular belief, the higher supervision costs associated with specific performance are not a determinative factor in the decision not to award SP.