Mr. Sicheng Zhu currently is a pupil barrister at Parkside Chambers of Hong Kong. Prior to that, he obtained a BCL degree from Oxford University, a JD degree at The University of Hong Kong and an LLB degree at Xi’an Jiao Tong University in China. Mr. Zhu’s academic interests lie primarily in the studies of civil and commercial remedies, law of obligations and procedural rules from Mainland-Hong Kong comparative perspectives, and he is the an alumnus of the PCLL program of Chinese University of Hong Kong.
Pacta sunt servanda in the context of settlement agreements: comparative observations and critique
Abstract:
The concept pacta sunt servanda or protection of performance interests has been advocated widely. Along with this concept, it was argued by many that civil law, at least in principle, prefers specific performance to monetary award. This can be exemplified by Article 580 of Mainland Civil Code[1], which makes specific performance as the norm. In contrast, common law in Hong Kong is trite that specific performance should not be granted unless damages are not adequate, which makes damages the primary remedy. Does the difference in terms of the primary remedy makes performance interests better protected under Mainland civil law? The answer is “no, at least not in the cases of settlement agreements”. It is argued here that, in the cases of settlement agreements, performance interests are better protected by the common law regime in Hong Kong. This is because, Hong Kong regime not only includes the contract law’s protection of expectation interests and parties’ autonomy (moral perspective), but also incorporates powerful procedural tools such as Tomlin orders and undertakings to the court (instrumental perspective). Given the absence of such instrumental protection under Mainland civil procedural laws[2], this essay invites readers to take two reflections: first, the concept pacta sunt servanda or protection of performance interests is not an isolated matter in the contract law regimes; instead, torts, equity and civil procedural rules are also relevant. Second, from a comparative perspective, Hong Kong is still a good teacher for the legal reforms and modernization in Mainland, which are in the present continuous tense.
[1] Official name should be the Civil Code of the People’s Republic of China (2020), I use a colloquial expression here to entertain the 300 words limit imposed on the abstract
[2] Which includes Civil Procedural Codes, Judicial Interpretations on the Civil Procedural Codes and other rules