Mapping out the contract laws of Asia, by Stefan Vogenauer

The research project Studies in the Contract Laws of Asia provides the first comprehensive overview of the laws of contract in 14 jurisdictions stretching from India in the West to Japan in the East. In their entirety, these account for nearly half of the world’s population and much of its economic power. Coordinated by the University of Oxford and the MPI for Legal History and Legal Theory, the project involves some 150 legal scholars from all over Asia and is thus one of the most comprehensive contemporary projects in comparative law.  

The ‘Age of Asia’, world trade and the law of contract

The ‘Age of Asia’ is right here. Its imminence has been talked about for decades. Yet, 2020 was supposed to be the year in which Asian economies have become larger than the rest of the world combined. In the 1950s, the continent accounted for less than 20 per cent of world output. Today, China is a bigger economy than the United States. India, with a GDP about double the size of Germany or Japan, has become the world’s third-largest economy. Japan is ranked fourth, Indonesia seventh. Between 2000 and 2023 Vietnam will have overtaken 17 countries in the world ranking of economies; Myanmar even 24. Admittedly, growth has been from a low base, and Asian societies are still, overall, poorer than Western ones. However, this gap is narrowing, too. Like it or not, the continent is now at the centre of global economic activity, and it is set to remain there for the foreseeable future.

Much of this growth has been driven by Asia’s increasing integration in the world economy, facilitated by global trade agreements. Regional trade pacts, such as APEC, ASEAN and the recent Regional Comprehensive Economic Partnership (RCEP), have stimulated intra-Asian trade. From a legal perspective, the transactions at the heart of this stunning flow of goods and services are often complex and sophisticated. In the end, however, they all boil down to simple contracts between sellers and buyers, service providers and service users, etc.

Asian contract laws compared

The steep rise in cross-border contracts between Asian businesses and businesses based in other countries has led to an increased interest in the contract laws of Asian jurisdictions. Yet there is virtually no information available in the Western languages. If at all, it tends to be fragmentary and limited to individual legal systems. Most importantly, the relevant contract laws are deeply embedded in the legal and extra-legal cultures of the relevant jurisdictions, and there is hardly any comparative literature that sets them into perspective, so as to make them fully accessible to a Western audience. As a result, non-Asian businesses have difficulties to navigate this legal environment, and practitioners find it hard to advise them.

The project Studies in the Contract Laws of Asia addresses this need for in-depth information. Headed by Professors Mindy Chen-Wishart (University of Oxford) and Stefan Vogenauer (MPI for Legal History and Legal Theory, Frankfurt), it involves some 150 legal scholars from 14 Asian jurisdictions, stretching from India in the West to Japan in the East and accounting for nearly half of the world’s population. Apart from China, these include the original Four Asian Tigers (South Korea, Taiwan, Singapore and Hong Kong), the so-called ‘Tiger Club Economies’ (Indonesia, Malaysia, the Philippines, Thailand and Vietnam) and the up-and coming economies of Cambodia and Myanmar.

The findings are made available in a six-volume series published by Oxford University Press. All volumes pursue three objectives. First, they intend to gather reliable information on the contract laws of the jurisdictions concerned. They feature in-depth essays by leading scholars and commentators from the relevant jurisdictions that deal with specific areas of contract law, including remedies, formation, content, parties, defects of consent, change of circumstances, illegality and public policy. Secondly, they attempt a first tentative comparison of these contract laws. Each volume includes a comprehensive concluding chapter with an extensive comparative discussion of the similarities and dissimilarities observed across Asia. Thirdly, they wish to shed light on the relationship between the Asian laws involved and their respective European source jurisdictions.

Path dependencies and legal transfers

The third of these objectives adds a strongly historical dimension to the comparative exercise. It requires a nuanced study of the legal transfers from English, French and German law that can be observed to various degrees in all the Asian jurisdictions covered in the series. To an astonishing extent, the Asian contract laws are still based on European legal thinking, be it with regard to their legal terminology, their doctrinal categorisations and the solutions achieved in comparable factual scenarios.

The common law jurisdictions (Hong Kong, India, Malaysia, Myanmar, Singapore) continue to adhere to the English model. Other legal systems (China, Japan, Korea, Taiwan, Thailand) have been strongly influenced by German law. The vagaries of colonial history ensured that French law became an important source of inspiration for the contract laws of Cambodia, Indonesia, the Philippines and Vietnam. At the same time, the Asian systems modified many of the legal rules, principles and doctrines to make them ‘fit’ the local circumstances. As a result, the Asian jurisdictions remain a fascinating laboratory for the observation of how legal transfers develop a life of their own in the process of borrowing and thereafter.

Areas mapped out: what, when and how?

The fourth volume of the project, dealing with issues affecting the validity of contracts (mistake, misrepresentation, fraud, undue influence etc.), has just been published. Previous volumes covered remedies for breach of contract (2016), formation and third party beneficiaries (2018) and contents of contracts, including contractual interpretation and policing unfair terms (2020). Summaries of the findings of volume III and volume IV are freely available on SSRN. Volume V, on ending and adapting contracts in light of unforeseen circumstances, is in preparation for 2023/24. Volume VI will consider issues of public policy and illegality.

Each volume published so far offers a complex and insightful overview of a rich and varied territory that comparative lawyers have not charted before. Granted, its methodological approach is relatively traditional, with country reports and common core elements. There is so little basic information available in the English language that we did not feel that we could benefit from the past two decades of comparative scholarship, which been particularly fruitful in terms of theoretical reflection on the methodology of the discipline. However, maybe that is not such a bad thing: sometimes it seems as if writing about doing comparative law has come at the expense of actually doing comparative law, which is extremely hard work if taken seriously.       

Posted by Professor Stefan Vogenauer FBA (Director, Max Planck Institute for Legal History and Legal Theory – Frankfurt).