Journal of International Commercial Law and Technology Vol.4,Issue 1 (2009) objective and approach of perusing this right.There are also unique characters of the Chinese approach in contract issues.This paper summarises them as below: Difference 1:The consequence of using this right of subrogation.Provisions in UCL and its related consequent Judicial Interpretation (1999)28,show that the method of perusing the right of subrogation is(in China)for the"semi-creditor/3rd party29"to claim a debt to a contracting party in a direct way.This"semi-creditor/3rd party",in the situation with a successful claim,enjoys the result directly before return the access amount to the creditor (if there is access amount).Whereas in the Civil Law tradition,the "semi-creditor/3rd party"can only claim the debt on behalf of the real creditor-the real creditor is normally the contracting party.With the successful claim,the real creditor will enjoy the result and will need to pay the payable debt plus any relevant costs to the "semi-creditor/3rd party",which is similar with the agency relationship. Difference 2:The method of using this right.UCL and its related consequent Judicial Interpretation(1999)specify that the right of subrogation can only be conducted with court order. Whereas in the Civil law tradition,it can be done privately for the due debts. Thus,to provide a better understanding for people who are not familiar with the subrogation principle,it is worthwhile to summarize and compare the advantages and disadvantages of this notion in the PRC's contract rules Advantages:There are advantages of having this provision in the contract law.First of all,this principle can be of incentive for semi-creditor to claim his or her due debt.Secondly,Chinese believe that this principle breaks a judicial black point where an enforcement is not possible for 3rd party(Y.J.Chen,2000).It enables the 3rd party to make a claim by using his or her own name,which further enables the People's Court to possibly freeze the account or withdraw the fund from the party at fault.Lastly,adopting of this principle leads to cost saving in transactions.The fact that the 3rd party enjoys the successful claim before the real creditor makes the transaction easier,comparing with the traditional approach where the 3rd party claims,creditor enjoys and pays 3rd party. Disadvantages:China might be the only jurisdiction where the 3rd party can enjoy the claim before the real creditor,which can cause problems.Thinking of situation where there are more than one semi-creditors/3rd parties to one real creditor(the contracting party),if all the semi-creditors/3rd parties peruse their subrogation right,there will be major priority issue and fairness issue.In addition,there is only silence when the contract laws touch upon the situation of sharing of the successful claim among all the semi-creditors/3rd parties.Moreover,there has been no judicial interpretation regarding this issue(sharing the successful claim)yet.This paper therefore argues that the disadvantage overweight the advantages of this Chinese subrogation principle with the fact that there are not enough jurisprudence and authorities from domestic laws and overseas authorities in this point. In conclusion,the notion of subrogation in UCL is an area to confuse the practitioners from other jurisdictions including those from the jurisdiction with the similar notion of subrogation.Although this topic has became a controversial issue for sometime,there have been no sign of removing this provision in the PRC laws. 3.4 Judicial interpretation There is a common misunderstanding that in China,judicial interpretation does not have the legal binding authority.In fact,statutory interpretations made by the Supreme Court of PRC,the highest judicial body,does create binding authorities in practice(W.Wang,2007). In the area of contract law(after the UCL),there have been several judicial interpretations handed down from the Supreme Court or PRC.The most important one was the Interpretation of Issues relating to Contract Law of PRC 199930.It provided a more detailed instruction on understanding of the UCL. The judicial interpretation in China comes in a similar format as the real legislation with numbered articles and provisions.For instance,the Interpretation of Issues relating to Contract Law of PRC 1999 comes with 7 chapters and 30 articles.Another example of judicial interpretation in the recent year was the Interpretation of Issues relating to the Construction Contract31,which comes with 28 articles and becomes effective from Ist Jan 2005. However,the weight of judicial interpretation in China has traditionally been an unsettled issue.On the one hand,it is clearly stated in Article 4 of the Rules of the Supreme People's Court on the Work of Judicial The 1999 judicial interpretation will be discussed in detail in the later part of this paper. Here the'semi-creditor/3 party'is the party who is not in the contract. http://www.law-lib.com/law/law view.asp?id-486 http://www.chinacourt.ore/flwk/showl.php?file_id=97038 19Journal of International Commercial Law and Technology Vol. 4, Issue 1 (2009) 19 objective and approach of perusing this right. There are also unique characters of the Chinese approach in contract issues. This paper summarises them as below: • Difference 1: The consequence of using this right of subrogation. Provisions in UCL and its related consequent Judicial Interpretation (1999)28, show that the method of perusing the right of subrogation is (in China) for the “semi-creditor/3rd party29” to claim a debt to a contracting party in a direct way. This “semi-creditor/3rd party”, in the situation with a successful claim, enjoys the result directly before return the access amount to the creditor (if there is access amount). Whereas in the Civil Law tradition, the “semi-creditor/3rd party” can only claim the debt on behalf of the real creditor – the real creditor is normally the contracting party. With the successful claim, the real creditor will enjoy the result and will need to pay the payable debt plus any relevant costs to the “semi-creditor/3rd party”, which is similar with the agency relationship. • Difference 2: The method of using this right. UCL and its related consequent Judicial Interpretation (1999) specify that the right of subrogation can only be conducted with court order. Whereas in the Civil law tradition, it can be done privately for the due debts. Thus, to provide a better understanding for people who are not familiar with the subrogation principle, it is worthwhile to summarize and compare the advantages and disadvantages of this notion in the PRC’s contract rules. Advantages: There are advantages of having this provision in the contract law. First of all, this principle can be of incentive for semi-creditor to claim his or her due debt. Secondly, Chinese believe that this principle breaks a judicial black point where an enforcement is not possible for 3rd party (Y. J. Chen, 2000). It enables the 3rd party to make a claim by using his or her own name, which further enables the People’s Court to possibly freeze the account or withdraw the fund from the party at fault. Lastly, adopting of this principle leads to cost saving in transactions. The fact that the 3rd party enjoys the successful claim before the real creditor makes the transaction easier, comparing with the traditional approach where the 3rd party claims, creditor enjoys and pays 3rd party. Disadvantages: China might be the only jurisdiction where the 3rd party can enjoy the claim before the real creditor, which can cause problems. Thinking of situation where there are more than one semi-creditors/3rd parties to one real creditor (the contracting party), if all the semi-creditors/3rd parties peruse their subrogation right, there will be major priority issue and fairness issue. In addition, there is only silence when the contract laws touch upon the situation of sharing of the successful claim among all the semi-creditors/3rd parties. Moreover, there has been no judicial interpretation regarding this issue (sharing the successful claim) yet. This paper therefore argues that the disadvantage overweight the advantages of this Chinese subrogation principle with the fact that there are not enough jurisprudence and authorities from domestic laws and overseas authorities in this point. In conclusion, the notion of subrogation in UCL is an area to confuse the practitioners from other jurisdictions including those from the jurisdiction with the similar notion of subrogation. Although this topic has became a controversial issue for sometime, there have been no sign of removing this provision in the PRC laws. 3.4 Judicial interpretation There is a common misunderstanding that in China, judicial interpretation does not have the legal binding authority. In fact, statutory interpretations made by the Supreme Court of PRC, the highest judicial body, does create binding authorities in practice (W. Wang, 2007). In the area of contract law (after the UCL), there have been several judicial interpretations handed down from the Supreme Court or PRC. The most important one was the Interpretation of Issues relating to Contract Law of PRC 199930. It provided a more detailed instruction on understanding of the UCL. The judicial interpretation in China comes in a similar format as the real legislation with numbered articles and provisions. For instance, the Interpretation of Issues relating to Contract Law of PRC 1999 comes with 7 chapters and 30 articles. Another example of judicial interpretation in the recent year was the Interpretation of Issues relating to the Construction Contract31, which comes with 28 articles and becomes effective from 1st Jan 2005. However, the weight of judicial interpretation in China has traditionally been an unsettled issue. On the one hand, it is clearly stated in Article 4 of the Rules of the Supreme People's Court on the Work of Judicial 28 The 1999 judicial interpretation will be discussed in detail in the later part of this paper. 29 Here the ‘semi-creditor/3rd party’ is the party who is not in the contract. 30 http://www.law-lib.com/law/law_view.asp?id=486 31 http://www.chinacourt.org/flwk/show1.php?file_id=97038