Evasion of Law
A person who by compulsory legal rule is prevented from achieving his aims often tries to evade it by establishing in an abnormal way a set of facts to which the legal rule does not apply.Such fraus legis facta may occur either within or without the boundaries of the internal law.If it is the latter case,an evasion of law in private international law may occur.As a matter of fact,in the area of private international law,such evasions are by no means infrequent.The parties who wish to produce a certain legal effect forbidden by the law of country A establish in an artificial and unusual way a point of contact in country B where the law is favorable for their purpose.The following are some illustrations:
(1) A company which intends to carry on business solely in Chinese mainland is incorporated in Hong Kong SAR where the rules are less stringent or income tax is lower than in the Mainland.
(2) A married Chinese couple wishes to have their third child,though Chinese family planing policy renders it impossible.They therefore transfer their domicile to anther country or even adopt a new nationality.
(3) In making a contract,the parties subject it to a legal system which considers as valid certain clauses that under the normally applicable law would be void.
(4) A Frenchman residing at Evian-les-Bains on the French shore of the lake of Geneva desires to promise a gift.As French law requires a deed attested by a notary public,and Swiss law declares a written document to be sufficient,he crossed the lake and makes his promise in Switzerland in order to save the notary fee.
2.1 Evasion of Law: A Comparative Survey
All the above examples constitute the evasion of law in private international law whose common thread is that when a party breaks off the existing connection between a fact in issue and the governing jurisdiction,and creates a new connecting factor (e.g.,by changing domicile or nationality) leading to a different governing law or jurisdiction.The purpose of changing the connecting factor is to avoid the law that would otherwise have been applicable.(https://www.daowen.com)
The positions on evasion of law are quite different between civil law and common law systems.Typical civil law doctrine usually assumes a hostile attitude toward evasion of law whereby the court can reject a connection established for the purpose of evading the laws of a particular jurisdiction.For example,French law has developed an all-embracing doctrine to reject evasion of law by fraudulent change of contact of point on the basis of an old adage “fraus omnia corrumpit.” Any “fraudulent” exclusion of a legal rule by establishing a foreign point of contact is regarded in France as invalid,and therefore the excluded rule applies as if it had not been excluded.16 An act is considered as fraudulent if it suffers from a “défaut de sincérité”—a rather vague formula.The same view has been taken by Italian courts.
This is in contrast to the common law,which does not attach significance under its conflicts analysis to fraudulent evasions.Professor Fawcett notes that English law has never developed a general doctrine of evasion of the law,like the French one of fraude a la loi,and an American scholar has said that parties are free to choose for an intended marriage a place anywhere in the world and thus avoid the formalities prescribed in their own country.17
2.2 Chinese Approach
As far as China is concerned,though formal legislation does not touch this issue,there is a provision in “Guidelines of the Supreme People’s Court on Implementing the GPCL” as Article 194 stipulates that:“[T]he litigant’s act to evade the compulsory or prohibitory legal norm of this country shall not take effect to apply to the foreign laws.”18
Under this provision,if new connecting factors are created for the sole purpose of evading the application of a compulsory domestic Chinese law,then a transaction which may otherwise be valid under the normal Chinese conflict rule,will be deemed void under this provision.
The Conflicts Act of 2010 does not contain an article on evasion of law; therefore,the SPC holds it necessary to reaffirm its position.Thus,Article 11 of the Interpretation (I) stipulates that the People’s Court shall not recognise the effect to apply the foreign laws where a party to a foreign-related relationship evades the mandatory rules contained in laws or administrative regulations of the PRC by deliberately establishing a connecting factor.Under this provision,if a new connecting factor is created for the sole purpose of evading the application of a mandatory rule contained in Chinese law,then a civil relationship,which may otherwise be valid under the normal Chinese conflict rule,will be deemed void.
However,this article fails to touch the issue of evasion of foreign law.Chinese scholars are of the opinion that if the purpose of the evasion is to escape the application of a foreign law,then the validity of the evaded law to govern the event will depend on the appropriateness of that foreign law from the Chinese perspective.Thus if a couple leaves one country to avoid a prohibition against interracial marriage,and marries in a third country,the marriage will be recognized in China.This is because racial equality is guaranteed by the Chinese Constitution as a fundamental right.19 By contrast,the evasion of a foreign law which China considered appropriate will lead to China’s upholding of that law.