Corporate crime and its composition in Chinese criminal law
The article is devoted to the issues of criminal liability of legal entities (organizations) provided for by the Criminal Code of the People's Republic of China (Criminal Code of the People's Republic of China) for corporate crimes. The provisions of the Criminal Code of the People's Republic of China concerning the definition of a corporate crime and its composition are considered. It is noted that the subject of a corporate crime are legal organizations that have the status of a legal entity and do not have it; special subjects of corporate crimes are identified; objective and subjective signs of the composition of a corporate crime are determined.
Keywords: Chinese criminal law, Criminal Code of the People's Republic of China (Criminal Code of the People's Republic of China), corporate crimes, criminal liability, subjects of corporate crimes, organizations, legal entities, objective and subjective signs of the composition of a corporate crime.
This article continues the review of the legislation of the People's Republic of China (hereinafter referred to as the People's Republic of China, China) on criminal liability of legal entities (organizations) started in the previous issue of the Russian Investigator magazine <1>.
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<1> Fedorov A.V. Criminal liability of legal entities - a new direction in the development of Chinese legislation // A Russian investigator. 2022. N 8. pp. 75-80.
A feature of Chinese criminal law is that it provides for the criminal liability of organizations. Although many studies on the criminal liability of organizations in China refer to the criminal liability of legal entities, it should be borne in mind that in such studies the concept of "criminal liability of legal entities" is used in its broad sense, covering the responsibility of organizations that are both legal entities and non-legal entities.
Currently, criminal liability of legal entities (organizations) is provided for by the Criminal Code of the People's Republic of China (hereinafter referred to as the Criminal Code of the People's Republic of China) of 1997 <2> with subsequent amendments <3>.
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<2> Criminal Code of the People's Republic of China / Ed. and with a preface by A.I. Korobeev; Translated from the kit by D.V. Vichikov. Vladivostok, 1999.
<3> This article uses a translation of the Criminal Code of the People's Republic of China into Russian, taking into account all currently available amendments. See: The Criminal Code of China / Ed. by A.I. Korobeev and A.I. Chuchaev; Trans. from kit. Huang Daoxiu. 2nd ed. Moscow, 2021.
The norms on criminal liability of organizations are enshrined in the articles of the General and Special Parts of the Criminal Code of the People's Republic of China.
1. The concept of corporate crime (crimes of an organization)
Chapter 2 "On crime" of the General Part of the Criminal Code of the People's Republic of China includes § 4, consisting of two articles (30 and 31) providing for liability for corporate crimes.
Attention is drawn to the difference in the translations of the titles of this paragraph: "Crimes committed by organizations or institutions" <4>, "Corporate crimes" <5>, "Crime committed by an organization" <6>, and the last two translations were made by the same translator.
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<4> Criminal Code of the People's Republic of China / Ed. and with a preface by A.I. Korobeev; Translated from the kit by D.V. Vichikov. Vladivostok, 1999. p. 16.
<5> Criminal Code of the People's Republic of China / Ed. and with a preface by A.I. Korobeev; Trans. from kit. Huang Daoxu. St. Petersburg, 2014. p. 71.
<6> The Criminal Code of China / Edited by A.I. Korobeev and A.I. Chuchaev; Trans. from kit. Huang Daoxiu. 2nd ed. M., 2021. p. 45.
The explanation for this is the difficulty with the terminological definition in Russian of the subject of corporate crimes in the Criminal Code of the People's Republic of China. In recent years, in relation to Chinese criminal law, the most common name in Russian studies is the name of the subject of corporate crimes as an organization. This approach to the definition of the subject of corporate crime is used further in this work, and the concepts of "crimes committed by an organization" and "corporate crimes" are used as identical.
The Criminal Code of the People's Republic of China does not contain a definition of corporate crime. There was such a definition in the draft of the new edition of the Criminal Code of the People's Republic of China in 1997. It stated that "a socially dangerous act of a company, enterprise, institution, body, public organization committed by the decision of the collective of the organization or its leaders for the illegal satisfaction of certain interests is recognized as a corporate crime." However, during the consideration of the draft at the session of the National People's Congress, it was suggested that this definition could not cover all corporate crimes provided for in the Special Part of the Criminal Code, and therefore it was not consolidated in the General Part of the Criminal Code of the People's Republic of China <7>.
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<7> For more information, see: Pan Dongmei. Corporate crime in Chinese criminal law // Lex russica. 2015. N 7 (volume CIV). pp. 64-65.
The concept of crime common to individuals and organizations is enshrined in art. 13 of the Criminal Code of the People's Republic of China, according to which "all acts that harm the state sovereignty, territorial integrity and security of the state, aimed at splitting the state, undermining the power of the people's democratic dictatorship, overthrowing the socialist system, violating social and economic order, encroaching on the state or collective property of the working masses, on the personal property of citizens, their personal, democratic and other rights, as well as other acts harmful to society, for which the law provides for criminal punishment, are crimes. However, clearly insignificant acts of minor danger are not recognized as a crime."
In the Chinese criminal law theory, Professor He Binsong, taking into account the specified general definition of crime, formulated the concept of a corporate crime as an act harmful to society and punishable by criminal law (action or omission) committed intentionally or negligently by a responsible person or responsible persons directly responsible or other employees of the organization at the will of the organization, on its behalf and in her interests <8>.
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<8> For more information, see: Pan Dongmei. Crimes of legal entities and criminal liability for them in Chinese criminal law // Law and society in the era of socio-economic transformations of the XXI century: the experience of Russia, the EU, the USA and China: A collective monograph / Under the general editorship of V.V. Blazheev, M.A. Egorova. M., 2021. p. 526.
Other scientists, based on the norms of the Special Part of the Criminal Code of the People's Republic of China, providing for responsibility for specific corporate crimes, have developed a broader concept of corporate crime as a socially dangerous act provided for in criminal law, committed by the decision of the management in the field of activity of the organization or committed by employees of the organization in the process of fulfilling their official duties due to insufficient control by management or because of the imperfection of the organization's management mechanism <9>. In fact, it is a well-known extended identification model of liability of legal entities abroad.
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<9> For more information, see: Pan Dongmei. Corporate crime in Chinese criminal law // Ibid., p. 65.
Based on this definition, two forms of corporate crimes are distinguished: 1) crimes committed by the decision of the organization's staff or its management, and 2) crimes committed by employees of the organization in the course of performing their official duties due to insufficient control by the organization.
2. The composition of a corporate crime
In modern China, as in Russia, the most common in the theory of criminal law is the four-element structure of the corpus delicti, including: the subject of the crime, the object of the crime, the subjective side of the crime and the objective side of the crime (Professor He Binsong gives the elements of the composition in this sequence). Of these, perhaps only the object of the crime is disclosed in the same way for both corporate crimes and crimes that do not relate to corporate ones.
2.1. The organization is the subject of a corporate crime
According to Article 30 of the Criminal Code of the People's Republic of China, criminal liability must occur for an act committed by a company, enterprise, institution, body, public organization (collective) and considered by law as a crime committed by an organization (corporate crime).
As noted by Chinese experts, according to the provisions of the Criminal Code of the People's Republic of China, the subject of a crime is a person who has committed a socially dangerous act and is subject to criminal liability in accordance with criminal law. The subject of the crime is characterized by the following signs:
1) the subject of the crime is a person - both an individual (person) and an organization (corporation);
2) the subject of the crime is the person who committed the crime;
3) the subject of a crime is a person who, in accordance with the criminal law, bears criminal responsibility for his culpably committed acts <10>.
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<10> The doctrine of the composition of a crime in the criminal law of Russia and China: Comparative legal research / Edited by V.S. Komissarov, A.I. Korobeev, He Binsun. St. Petersburg, 2009. p. 309.
Article 30 of the Criminal Code of the People's Republic of China lists the types of organizations that can be subjects of corporate crimes: a company, enterprise, institution, body, public organization.
If there are no special problems with defining an individual as a subject of crimes in the law and theory of Chinese criminal law, then until recently certain difficulties arose with recognizing a particular organization as a subject of a corporate crime due to the fact that the types of organizations specified in Article 30 of the Criminal Code of the People's Republic of China could be understood differently.
With the adoption on May 28, 2020 at the 3rd session of the National People's Congress of the thirteenth convocation of the first Civil Code in the history of modern China <11> (hereinafter referred to as the Civil Code of the People's Republic of China), which entered into force on January 1, 2021 <12>, these difficulties, it seems, should remain in the past.
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<11> The Civil Code of the People's Republic of China / Ed. P.V. Troshchinsky, M., 2020.
<12> Before the entry into force of the Civil Code of the People's Republic of China, civil legislation consisted of more than 30 laws and a significant number of subordinate normative legal acts. See: Comparative Jurisprudence: national legal systems. Vol. 3: Legal Systems of Asia / Edited by V.I. Lafitskiy. M., 2013. p. 159.
The PRC Civil Code provides for the existence of two types of organizations: 1) organizations that are legal entities and 2) organizations without the formation of a legal entity.
2.1.1. Organizations - legal entities
Article 57 of the Civil Code of the People's Republic of China establishes that an organization that has civil legal capacity and civil legal capacity and, in accordance with the law, independently possesses civil rights and bears civil responsibility is recognized as a legal entity. According to Article 58 of the Civil Code of the People's Republic of China, a legal entity must be established in accordance with the law, have its own name, organizational structure, location, property or funds. The conditions and procedure for the establishment of a legal entity are established by legislation and by-laws. The PRC Civil Code provides for three types of legal entities:
1. Commercial legal entities. Article 76 of the Civil Code of the People's Republic of China defines that a commercial legal entity is a legal entity established for the purpose of extracting profit and distributing it among shareholders and other persons participating in it with their capitals. Commercial legal entities include limited liability companies, joint-stock limited liability companies and other legal entities.
2. Non-commercial legal entities. According to Article 87 of the Civil Code of the People's Republic of China, a non-profit legal entity is a legal entity created for socially useful or other non-commercial purposes that does not distribute the profits received among its investors, founders or participants. Non-profit legal entities include budgetary institutions, public associations, foundations, and social service organizations.
3. Special types of legal entities. Article 96 of the Civil Code of the People's Republic of China includes state bodies - legal entities, rural collective economic cooperative organizations - legal entities, as well as primary (grassroots) mass self-government organizations - legal entities.
2.1.2. Organizations without the formation of a legal entity
Article 102 of the Civil Code of the People's Republic of China defines that organizations without the formation of a legal entity do not have the status of a legal entity, but may, in accordance with the law, carry out transactions on their behalf. Organizations without the formation of a legal entity include individual private enterprises, partnerships, organizations without the formation of a legal entity of professional service providers and a number of other organizations. Organizations without the formation of a legal entity are subject to state registration in accordance with the law.
The adoption of the Civil Code of the People's Republic of China has made the understanding of the range of subjects of corporate crimes (crimes of organizations) more definite. In particular, from the interpretation of the norms of the Criminal Code of the People's Republic of China and the Civil Code of the People's Republic of China in their relationship, it follows that a corporate crime can be committed exclusively by a legal organization (as already noted, organizations with the status of a legal entity and organizations without the formation of a legal entity are subject to state registration in accordance with the law). If an organization is created in violation of the law, it cannot be the subject of a corporate crime <13>.
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<13> For this, for example, see: Korobeev A.I., Chanhai Lung. The composition of a crime in the doctrine of criminal law in China and Russia: a comparative study: Monograph. M., 2013. p. 118.
2.1.3. The organization as a special subject of corporate crime
Individuals and organizations as subjects of crimes are divided into general and special. Such a classification in relation to an individual is traditional in criminal law, when a special subject is recognized as an individual who, in addition to the general characteristics of the subject, also has special characteristics provided for in articles of the criminal law establishing responsibility for specific types of crimes.
The same approach is also implemented when defining a legal entity as a special subject of crimes provided for by the Criminal Code of the People's Republic of China, when the subject of the crime may not be any organization, but only an organization specifically defined in the articles of the Special Part of the Criminal Code of the People's Republic of China, for example:
- an organization that has the right to manufacture and sell small arms in accordance with the law (Article 126 "Illegal manufacture and sale of small arms");
- a company operating in accordance with the Law on Companies (Article 159 "False declaration or withdrawal of investments");
- open joint stock companies (art. 169-1 "Causing significant harm to the company's shareholders");
- companies and enterprises issuing shares or bonds (Article 179 "Unauthorized issue of shares or bonds");
- commercial banks, stock exchanges, futures exchanges, stock companies, dealers of futures companies, insurance companies or other financial structures (Part 1 of Article 185-1 "Unauthorized use of trusted (trust) assets, use of funds in violation of the law");
- the public security fund, the public housing monetary fund and other public funds, as well as insurance companies that manage insurance funds of companies and companies that manage stock investments (Part 2 of Article 185-1 "Unauthorized use of trusted (trust) assets, use of funds in violation of the law");
- banks and other financial authorities (art. 186 "Illegal issuance of loans", art. 187 "Attracting customer funds and not crediting them to the account", art. 188 "Illegal issuance of financial documents", art. 189 "Acceptance of illegal bills, payment or issuance of guarantees on them");
- organizations authorized by the competent state authorities to collect and supply blood or to manufacture and supply blood products (Part 2 of Article 334 "Incident in the collection, supply of blood or in the manufacture and supply of blood products");
- state bodies, state-owned companies, enterprises, institutions, people's associations (Article 387 "Receiving a bribe by an organization").
Given that the issues of criminal liability of organizations are regulated in the General Part of the Criminal Code of the People's Republic of China by only two brief articles, many questions arose related to their understanding and application.
Thus, the authors of a number of studies indicate that the concept of an organization as a subject of crime incorrectly applies to state bodies. For example, there was a conviction of a local court as an "organization" for accepting a bribe by a judge. In addition, as already noted, not all organizations - subjects of crime have the status of a legal entity, which, as practice has shown, created difficulties in recognizing organizations such as agricultural collectives and their councils as subjects of crimes <14>. In this regard, clarifications were required on a number of issues related to the application of Articles 30 and 31 of the Criminal Code of the People's Republic of China. There are two types of such explanations - documentary and doctrinal.
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<14> About this, see: Jiang Huilin. Criminal legislation of China on the responsibility of legal entities for corruption and terrorism // Interaction of international and comparative criminal law / Scientific ed. N.F. Kuznetsova, V.S. Komissarov. M., 2009. p. 254.
The first include explanatory documents, in particular: "Explanations of the Supreme People's Court on some issues of specific application of the law in cases of crimes committed by an organization" dated July 3, 1999, "Response of the Research Bureau for Legal Policy of the Supreme People's Court on the application of the law on crimes committed by foreign companies, enterprises, production units" dated October 15, 2003 <15>.
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<15> Troshchinsky P.V. Legal responsibility in the law of the People's Republic of China. M., 2011. pp. 112 - 113.
The second, no less important, are doctrinal clarifications, which not only reveal the content of the relevant articles of the Criminal Code of the People's Republic of China, but also theoretically substantiate them.
An analysis of the articles of the General and Special Parts of the Criminal Code of the People's Republic of China in conjunction with other Chinese laws (primarily the Civil Code of the People's Republic of China) and the available explanations allows in each case to determine the subject of a specific corporate crime.
At the same time, recognition of an organization as a subject of a corporate crime is possible only if there are all signs of a corporate crime.
The definition of a crime committed by an individual is quite traditional and is well-established both in the science of criminal law and in law enforcement. In order for a crime committed by an individual to be recognized as a corporate crime, that is, a crime of which the organization is the subject, it must have additional objective and subjective signs.
2.2. Objective signs of the composition of a corporate crime
Based on the analysis of the provisions of the articles of the General Part of the Criminal Code of the People's Republic of China, the objective side of a corporate crime includes two signs that make it possible to recognize an organization as a subject of a corporate crime. In the available scientific studies, these signs are defined as follows.
Firstly, the criminal act constituting such a crime can be committed solely by decision of the collective body of the relevant organization or its direct head.
A collective decision implies that, after discussion, it is made on behalf of the organization in the form of a directive.
The decision of the direct head means that the head, authorized by law or by the charter, can make a personal decision on behalf of the organization. The decision of such a head is considered as a decision of the organization (corporation) insofar as it is made not only on behalf of the organization, but also in the interests of the organization.
Secondly, this is a crime committed by members of the organization, i.e. its specific representatives. If there were no specific representatives of the organization, then it could not have done anything <16>.
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<16> For objective signs of the composition of a corporate crime, see: Korobeev A.I., Chanhai Lung. The composition of a crime in the doctrine of criminal law in China and Russia: a comparative study: Monograph. M., 2013. pp. 116 - 117.
In addition, taking into account the provisions of the articles of the Special Part of the Criminal Code of the People's Republic of China, as already noted, a crime committed by an employee of an organization in the course of performing his official duties due to insufficient control by management or due to imperfection of the organization's management mechanism may be recognized as corporate.
In this case, objective signs of the composition of a corporate crime will be expressed in the absence of control by management and in the imperfection of the organization's management mechanism.
2.3. Subjective signs of the composition of a corporate crime
The concept of a crime, enshrined in Article 13 of the Criminal Code of the People's Republic of China, does not contain an indication that the crime is a guilty act. This is indicated in Article 16 of the Criminal Code of the People's Republic of China, which provides that acts that objectively, although they led to harmful consequences, are not the result of intentional or careless guilt, but are caused by force majeure or the inability to foresee them, are not recognized as a crime.
According to the Criminal Code of the People's Republic of China, a crime is recognized as committed intentionally if a person was aware of the socially dangerous nature of his actions or inaction and their consequences, desired or deliberately allowed them to occur (Article 14 of the Criminal Code of the People's Republic of China). A crime is recognized as committed by negligence if the person who committed the act should have foreseen its socially dangerous consequences, but did not foresee them due to negligence or foresaw them, but frivolously hoped to prevent them, but the consequences occurred (Article 15 of the Criminal Code of the People's Republic of China).
The issue of determining the guilt of an organization has been resolved in the theory of criminal law. According to Chinese criminal law doctrine, the guilt of an organization that has committed a crime is determined through the guilt of an individual.
Each organization consists of individuals. Thus, if a member of an organization, in particular its immediate supervisor, is aware of the public danger of an act, then this act, expressed through the organ of the organization or its head, becomes the "consciousness" of the organization. At the same time, the members of the organization express the will of the organization as a collective entity through the relevant bodies of the organization. In fact, the organization - the subject of a corporate crime is attributed to the guilt of an individual - the subject of the crime <17>.
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<17> On the subjective side of the composition of a corporate crime, see: Korobeev A.I., Chanhai Lung. The composition of a crime in the doctrine of criminal law in China and Russia: a comparative study: Monograph. M., 2013. pp. 115-116.
From all the available theories and from the content of the dispositions of the articles of the Special Part of the Criminal Code of the People's Republic of China, it follows that corporate crimes (crimes of organizations) can be intentional and careless.
Most of the corporate crimes (crimes of organizations) are intentional crimes, for example: smuggling (Article 151 of the Criminal Code of the People's Republic of China), illegal attraction of public deposits (Article 176 of the Criminal Code of the People's Republic of China), bribery by an organization (Article 393 of the Criminal Code of the People's Republic of China).
The possibility of committing corporate crimes by negligence is provided in rare cases. For example, a corporation (organization) may be criminally liable for violations of epidemiological regulations or quarantine supervision of animals and plants (Article 337 of the Criminal Code of the People's Republic of China), which may be committed either intentionally or negligently.
Corporate crime, as noted in the available studies of Chinese law, is always committed in the interests of the organization. If a crime (criminal act) is committed not in the interests of the organization, it is only a crime of an individual, but not a corporate crime, and only an individual can be criminally liable for it <18>.
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<18> Golovanova N.A., Lafitskiy V.I., Tsirina M.A. Criminal liability of legal entities in international and national law (comparative legal research) / Ed. V.I. Lafitskiy. M., 2013. p. 190.
But what about crimes committed by negligence, because only intentional crimes can be committed in the interests of the organization?
The answer to this question is given by Article 31 of the Criminal Code of the People's Republic of China, which provides that if a crime falls under the provisions of a Special part of the Criminal Code of the People's Republic of China or other laws, then the Special Part and these laws should prevail. The articles of the Special Part of the Criminal Code of the People's Republic of China indicate which reckless crimes are recognized as corporate. At the same time, theoretical works indicate that if a careless crime is committed within the framework of an organization's activities, then such a crime can be considered as committed in the interests of the organization.
The objective and subjective sides of corporate crime are dual in nature. On the one hand, they represent the guilt and act of a corporation as elements of a corporate crime, on the other hand, they are the embodiment of the guilt and acts of specific individuals who occupy a leading position in this corporation (organization). This circumstance serves to single out two entities in one (corporate) crime - a corporation (organization) and individuals <19>.
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<19> The doctrine of the composition of a crime in the criminal law of Russia and China: comparative legal research / Edited by V.S. Komissarov, A.I. Korobeev, He Binsun. St. Petersburg, 2009. p. 315.
About the crimes provided for in the Special Part of the Criminal Code of the People's Republic of China, establishing the responsibility of organizations, and punishments for corporate crimes under the Criminal Code of the People's Republic of China - in the following article.