Editor’s Note: The Fourth Seminar of the International Commercial Expert Committee of the Supreme People’s Court and Reappointment (New appointment) Ceremony of Expert Members was held successfully on September 25, 2024. Over 40 experts from more than 20 countries and regions focused on the theme of the “Collaborative Dialogue, Diverse Integration, Peaceful Development” during the seminar. Extensive and in-depth discussions were held within the framework of four specific issues. The texts of speeches delivered by the members of expert committee and distinguished guests during the discussion session on Topic Two International commercial transactions from a comparative law perspective: navigating legal intersections of international and domestic law would be posted on the CICC’s website.

Business Transactions Across Borders from a Comparative Law Perspective: Interaction Between Public and Private Law

SHEN Sibao

Director of the Institute of International Commercial Law in the University of International Business and Economics

Chairman of the China International Economic and Trade Law Association

I. The Role of Public Law, Private Law, and International Commercial Law in Business transactions across borders

Business transactions across borders involve more than two legal jurisdictions, which means they encompass different legal systems and frameworks. These transactions inevitably involve traditional public law, private law, and a fusion of the two, as well as close connections with international economic law and international commercial law.

Public law, private law, and their integration are closely tied to the world’s two major legal systems: the civil law system, exemplified by France and Germany, and the common law system, led by the UK and the United States, along with other Commonwealth countries. The distinction between these systems is significant. A fundamental difference is that civil law countries divide their legal frameworks into two broad categories: public law and private law. Civil law countries emphasize the role of codified law, with a focus on systematization, classification, codification, and logical structure. By contrast, common law countries primarily rely on case law as the main source of legal authority, with codified law occupying a secondary role.

Public law refers to the body of legal norms governing the relationship between the state and its citizens, as well as the relationships between various governmental bodies. The key characteristics of public law include: (1) it centers on national interests, pursuing fairness and justice and emphasizing state governance; (2) it possesses a unique coercive power, enforced directly by the state; and (3) it ensures the overall stability of society, economic order, and normal societal functions on a macro level.

Private law governs property and personal relations between equal subjects. The defining features of private law include: (1) it prioritizes individual or private interests; and (2) it emphasizes the autonomy of commercial entities, promoting freedom of contract and equality.

As the Roman Domitius Ulpianus once said, “Public law pertains to the affairs of the Roman state, while private law pertains to the interests of individuals.”

While commerce and society have progressed, the fundamental concepts of public and private law have retained their distinct characteristics. In common law countries, public law, such as constitutional law, exists but is not as systematically codified as in civil law systems, where comprehensive public law frameworks are in place. Private law in common law countries is largely based on case law. Although some countries have codified laws, such as corporate law, the strict division between public and private law is not as pronounced. In highly developed common law countries, in response to the demands of fast-moving market economies, an increasing number of regulations and rules have emerged that blend public and private law, accommodating the needs of globalization. The fusion of public and private law is gradually becoming a legislative, enforcement, and judicial norm.

Furthermore, international conventions, bilateral and multilateral treaties, and global trade practices are considered part of the realm of public law. These agreements serve as the legal basis for the rights and obligations between states in specific commercial fields. While they primarily reflect national interests, their implementation affects commercial entities in the relevant countries.

In summary, businesses engaged in cross-border commercial transactions must understand the significant influence of public law, private law, and their fusion, as well as the impact of international treaties and practices in such transactions.

II. The Interaction Between Public and Private Law and the Integration of International and Domestic Law in Cross-Border Commercial Transactions

Effectively handling cross-border commercial transactions requires an accurate understanding of the interaction between public and private law, as well as the integration of domestic and international law. Public law provides the legal framework and ensures the proper exercise of state power and the realization of public interests in transactions. Private law focuses on securing the commercial rights and obligations of the parties involved, emphasizing autonomy, equality, and contractual interests. Public and private law are interdependent—public law provides the legal guarantees for private law, while private law operates within the boundaries set by public law.

In cross-border commercial transactions, public law primarily concerns the regulation of international trade and investment between states, involving customs, foreign exchange, commercial inspection, taxation, and other aspects to ensure national economic security and the maintenance of trade order. In governing the contractual relationships between commercial entities in cross-border transactions, international treaties and practices also play a role in coordinating the interaction between public and private law, facilitating the smooth conduct of cross-border commercial transactions and resolving disputes that may arise.

Thus, for commercial entities involved in cross-border transactions, it is essential to understand the respective roles and concepts of public and private law, grasp their interaction and integration, and fully comprehend the fusion of international and domestic legal frameworks. This knowledge is indispensable for managing cross-border commercial transactions.

*The original text is Chinese and has been translated into English for reference only. If there is any inconsistency or ambiguity between the Chinese version and the English version, the Chinese version shall prevail.