China Sex, Mistresses and Improper Payments, and What They Mean for Your China Business Litigation

Fascinating post on CNReviews, entitled, Husband and wife sue mistress for 330,000 yuan in “lover’s fees.” [link no longer exists]

The gist of the lawsuit is that a married couple sued the husband’s former mistress to require she return 330,000 RMB the husband had given her during the course of their affair. The court ruled in favor of the married couple.

I will leave the moral lessons for others to analyze, but I love this case for all it can teach about how China’s courts (and arbitrators) tend to make their decisions. And though I am relying entirely on CN Reviews for the case analysis, that is fine because the point I will be making is only that Chinese courts rely far more on equity than do Western courts.

Chinese courts tend to give large account to what is “fair,” not just to what the law says. This means if a Chinese company is late on a contract because its own supplier was late in delivering it a necessary component part, the Chinese court may very well excuse the delay. This means that if the price of a necessary component part jumps precipitously, a Chinese court might very well excuse the Chinese supplier for substituting in a cheaper part. Many times, Westerners ascribe Chinese court rulings to corruption, when they might have been due to equity.

Bottom Line: If you have a dispute that may be heading to a Chinese court or a Chinese arbitrator, think long and hard about the equities involved, not just the law.