Legal Persons

Like a natural person,a legal person must have both civil rights capacity and civil conduct capacity before it can be the actors of civil and commercial relations.Nevertheless,there are essential differences between natural persons and legal persons in this respect.In the first place,the civil rights capacity of a natural person is complete and universal; differently expressed,the civil rights capacities enjoyed by all natural persons are identical in content and common in nature.In contrast,legal persons are established for particular purposes whose civil rights capacities are limited by its charter or by the legislation of the relevant states;32 that is to say,civil rights capacities enjoyed by the legal persons are different in content and special in nature.Second,for a natural person,civil rights capacity and civil conduct capacity are different,as noted above,a person is entitled to civil rights capacity once he is born; yet he does not possess full civil conduct capacity until certain requirements are satisfied; the case is quite different with regard to legal persons,insofar as civil rights capacity and civil conduct capacity enjoyed by a legal person are identical both of which accompany it from birth to death.For this reason,most private international law books,including this book,discuss the two capacities of legal persons together instead of separately.

The laws of different countries are different as to the capacities of legal persons.For instance,French law grants capacities to any civil and commercial partnership,Italian law at least to commercial partnership,while English,German,Swiss,and Anglo-American law refuse to treat partnerships as legal persons.33 Another example,under German law registration is necessary to create a legal person,while under Japanese law registration is but a necessary element for a legal person to defend itself against a third party.Therefore,it is not infrequent that the conflict of laws on the capacities of legal person occurs.

In principle,the capacities of a legal person are determined by its personal law,i.e.,by either the law of its nationality or of its domicile.However,as discussed in Chapter Two of Part III,the question as to which is the nationality or the domicile of a legal person has been answered by legislators and judges in various countries in very different ways,therefore,there is no uniform approach to determining the personal law of a legal person.

In practice,before a foreign legal person carries out activities in the forum country,it usually has to obtain recognition from the authorities of the forum country,which means that its capacities in the forum country have to be in conformity with not only its personal law but also the lex fori.Therefore,it is an international practice that the capacities of a foreign legal person are subject to both its personal law and the domestic law.(https://www.daowen.com)

Basically speaking,Chinese law follows the international practice,which provides that the civil conduct capacity of a legal person is governed by its personal law in principle,and foreign legal persons which carry out activities in China should also abide by Chinese domestic law,as Article 184 of the Judicial Interpretation on the General Principle of Civil Law offered by the Supreme People’s Court provides as follows:

The law of the registered place of the foreign legal person is its national law.

The civil activity of the foreign legal person within the territory of this country shall conform to the law of this state.

However,the Conflicts Act of 2010 adopts the “registration/incorporation theory” by providing that civil rights capacity,civil conduct capacity,institutional structure,the liability of the shareholders of a legal person as well as its branches shall be governed by the law of the place of registration.Given that it is often the case that the principal place of business of a legal person is different from its place of registration,Article 14(2) provides an alternative conflicts rule which stipulates that the law of its principal place of business may apply in such situation.One problem,however,naturally arises out of the alternative reference rule in the second paragraph: in the latter case,as there is no guiding principle for the selection between the law of the place of registration and that of principal place of business,judges,therefore,are left with considerable discretion in deciding which law shall apply.