Enforcing Fiduciary Duties as Tort Liability in Chinese Courts

Research output: Chapters, Conference Papers, Creative and Literary Works (RGC: 12, 32, 41, 45)12_Chapter in an edited book (Author)peer-review

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Original languageEnglish
Subtitle of host publicationChina and the World
PublisherCambridge University Press
ISBN (Electronic)9781316691397
ISBN (Print)9781107164994
Publication statusPublished - 2017
Externally publishedYes


Introduction: Attempted Transplant of Fiduciary Duties in Civil Law Countries

The directors and officers of a company or corporation in common law jurisdictions are subject to a set of legal obligations which can generally be referred to as fiduciary duties. Specifically, under American corporate law, the duties of these corporate insiders include, among others, the duty of care and duty of loyalty. For the duty of care, ‘a director or officer has a duty to the corporation to perform the director's or officer's functions in good faith, in a manner that he or she reasonably believes to be in the best interest of the corporation, and with the care that an ordinarily prudent person would reasonably be expected to exercise in a like position and under similar circumstances’. On the other hand, the fiduciary duty of loyalty prohibits the directors and officers ‘from taking advantage of their beneficiaries by means of fraudulent or unfair transactions’. In English law, fiduciary duties of the directors require the directors to act within powers which have been conferred upon them, to act in good faith to promote the success of the company, and to exercise independent judgment. In addition, they should avoid conflicts of interest involving self-dealing transactions with the company, personal exploitation of the company's property, information or opportunities, or conflicts ‘out of the receipt from a third party of a benefit for exercising their directorial functions in a particular way’. 
Once a core concept in Anglo-American corporate law, fiduciary duties have now been borrowed by many civil law countries, China being one of them. Needless to say, when the rules and standards of fiduciary duties are transferred to these jurisdictions, they have to appear in the form of legislations, most likely as provisions in the company law act or statute. It is however fundamentally important to stress that the laws of fiduciary duties in common law countries have been mainly developed by judges through case law rather than by the lawmakers through written laws. As noted by the American Law Institute, ‘[h]istorically, courts rather than legislatures have played the central role in shaping the law regarding the duty of care of corporate directors and officers’.

Citation Format(s)

Enforcing Fiduciary Duties as Tort Liability in Chinese Courts. / WANG, Jiangyu.

ENFORCEMENT OF CORPORATE AND SECURITIES LAW: China and the World. ed. / ROBIN HUI HUANG; NICHOLAS CALCINA HOWSON. Cambridge University Press, 2017. p. 185-206.

Research output: Chapters, Conference Papers, Creative and Literary Works (RGC: 12, 32, 41, 45)12_Chapter in an edited book (Author)peer-review