research paper 180

Do the “Haves” Come Out Ahead in Shanghai Courts?

Xin He(

School of Law

City University of Hong Kong

[email protected]

Yang Su

Department of Sociology

University of California, Irvine

[email protected]

Abstract

Drawing on 2,689 documents of adjudication decisions from Shanghai courts, this paper tests the Galanter thesis that the stronger party tends to prevail over the weaker party in litigation. We find that the stronger parties not only win more often, but also do so by a large margin. Overall, institutional litigants fare better than individual litigants. When the litigants are classified by their organizational and social status, government agencies or government-related companies are the biggest winners, enjoying an enormous advantage, and farmers are the most disadvantaged underdogs, with other individuals and companies in between. When controlling for legal representation, these winning gaps remain significant and sizable. The edge of the stronger parties recurs across categories of cases in different issue areas of the law. Echoing previous comparative studies, we cast doubt on the Party Capability Theory. We speculate that the causes of judicial inequality in China lie not only in resource gaps but also in the roots of the law and the nature of the court.

Do the “Haves” Come Out Ahead in Shanghai Courts?

The ideal court adjudicates impartially, while a real court often favors the rich and powerful. Rousseau deemed this to be “the universal spirit of the Law” (Rousseau 1762: 200, cf. Haynie 1994). A Chinese saying puts it this way: “The court gate opens as wide as ba (the Chinese character八), but enter not if one possesses only a righteous claim but no money.”

This truism thus known, the task for students of legal studies is to quantify its degree. Then, we can compare it across legal systems so as to gain insights into the nature of a legal system and its potential to bring about social change. Indeed, starting with Galanter’s path-breaking analysis (1974), this line of research has achieved canonical status and gained paradigmatic influence. Galanter proposed, and many have tested, the hypothesis that despite the institutional arrangements in place to guard against particularism, private power, and inequality, the haves still come out ahead in the US court system. Underneath vernacular terms such as “haves” and “have-nots” is a powerful research program which pierces the inner workings and contradictions of a court system by exploring the sociological predictors of winning and losing in litigation. Statistical analyses have been conducted to compare differences in the probability of winning for two opposing parties. A count suggests that by 2003 as many as 184 articles had been published in major journals such as Law & Society Review (Glenn 2003).

This research program has been extended to study court systems outside the U.S., including work on the English Court of Appeal (Atkins 1991) and the Supreme Court of Canada (McCormick 1993), as well systems markedly different from common law systems (Dotan 1999; Haynie 1994; Hendley et al. 1999). In these comparative studies, while Galanter’s hypothesis is supported by the findings from some countries, equally valuable insights have been gained when the hypothesis has been rejected in others. The fact that the litigation outcomes in the courts of some countries differ from their counterparts in America provides a unique vantage point for understanding these court systems. Party capability in litigation means very different things in different societies (Hendley et al. 1999). Also, insufficient insulation from politics may tilt a court toward certain special categories of litigants, for example, the poor and disadvantaged in the cases of Israel and the Philippines (Dotan 1999; Haynie 1994; Haynie et al. 2001).

Until very recently, efforts had rarely been made to empirically assess the role of the Chinese judicial system in achieving social justice (Clarke 2003). This situation has now been changed by a few scholars with training in the social sciences (Michelson 2007, 2008; Pei et al. 2010; Landry 2008; Balme 2010) and by lawyers assessing the system from a social science perspective (Suli 2000; Peerenboom 2001, 2006; Woo and Wang 2005; He 2007, 2009a, 2009b; Fu 2009). They have approached the question either by conducting surveys of average citizens or litigants (Michelson 2007, 2008; Landry 2008; Peerenboom 2001, 2006) or by interviewing judges or litigants (Liebman and Wu 2007; Balme 2010; He 2007, 2009a, 2009b; Gallagher 2006; Gechlik 2005). These studies in turn have begun to shed valuable light on the institutional logic and operational patterns of Chinese courts, as well as on the relationship between court decisions and extra-legal social forces. However, despite this recent progress, it is fair to say that the scholarship of empirical research on Chinese courts is still in its infancy. Although the two common approaches—public surveys and fieldwork interviews—are capable of providing insights, they work through the interpretative lens of public or legal professionals. The objectiveness of these studies would have been greatly augmented if they had been able to accessed court documents and archives, as researchers in the West often do.

To that end, a great opportunity has recently opened up. For roughly the last two years, many courts across China have begun to make their documents of adjudication decisions (裁判文书or “DADs”) available to the public. The earliest DADs available are those from the courts in Shanghai. The basis of this paper is research coding and analyzing 2,689 DADs of cases from Shanghai courts.

Galanter’s Thesis in the Comparative Perspective

Commonly labeled as the Party Capability Theory (Atkins 1991; Songer and Sheehan 1992) or the Resource Inequality Theory (Haynie 1994), Galanter’s (1974) seminal paper articulated the pivotal role played by litigation experience, financial might, and the strategic position of being repeat player; the haves win more often by possessing more of these things. To the extent that he considered factors beyond the differing strength of the parties, Galanter pointed to the defects in the court system that allow resources, as opposed to the merits of the case, to determine the winner. Chief among these flaws is case overload, which increases delays and trial costs; this is a common situation which the stronger party can exploit. Galanter also cited the fact that “rules,” even purported to be evenhanded, nonetheless give an edge to the stronger party either because of their tendency to protect the possessor or holder in guarding against precipitate action, or due to their complexity, which calls for the assistance of legal services. By and large, Galanter’s focus is unmistakably on party capability. Two of his insights have since inspired an influx of empirical research. One is his trademark distinction between the One Shotter and the Repeat Player, an easily observable pair of parties. Using these proxies as the haves and the have-nots makes many quantitative studies possible. In his other insight, he convincingly argued that even if ideal legal arrangements—such as judicial independence, due process, ethical and competent judges, and so on—are in place, the haves will still inevitably come out ahead because the advantages for the stronger party will not just go away.

Galanter clearly had the contemporary US legal system in mind. How far away the US system is from the legal ideals he did not say. Nor is it clear whether his theory is applicable to other systems in the world. A broader theory was proposed by Wheeler et al. (1987) in their empirical study on the US state supreme courts. They proposed three sets of reasons—relating to the law, the court (judges), and the characteristics of parties and their lawyers—to explain Galanter’s proposition that stronger parties win more often. For the purposes of a later discussion in this paper, we call these three propositions the Law Hypothesis, the Court (Judge) Hypothesis, and the Party Capability Hypothesis. The first of these hypotheses suggests that there may be a normative tilt of the law toward, or against, the stronger’s interests; the second proposes that the court itself, specifically the judges, may be biased toward, or against, the stronger’s interests; the third stipulates that the stronger party typically commands greater resources, has more experience, or has a better strategic position. Wheeler et al.’s evidence from their particular empirical data on litigations in the state supreme courts in the U.S. favors the party capability explanation over the other two. A few other studies on US and British courts have drawn similar conclusions (Atkin 1991; Songer and Sheehan 1992; Songer et al. 2000).

If one approaches the question from a comparative perspective, a country’s judicial inequality has to be understood not only in terms of party resources. In countries where the rule of law is only inspiration instead of a practice and the formal court system has a young history, the law, starting with the ideology behind it, may be tilted toward one group over the others. It may even be the norm rather than the exception that the court is vulnerable to penetration by outside influences and corruption. For this reason and many others, the rich and powerful may come out ahead by a clear margin in these systems. On the other hand, for political reasons such as social stability, there must also be reasons to believe that the weak may have the upper hand in certain areas of the law; for example, researchers have found that at least in the supreme courts of the Philippines and Israel, the weaker parties seem to be winning more cases than the stronger parties (Haynie 1994; Dotan 1999). A few other studies that have examined the litigation gap in developing countries have also raised questions about the Party Capability Theory. Heynie (1994) and Dotan (1999) both reasoned that a political ideology favoring the have-nots and a concern about the legitimacy of the state have injected into the judicial decision-making process. In these systems, the have-nots tend to win more as the law represents at least a symbolic attempt to narrow the gulf between the rich and poor” (Haynie 1994: 753-754).

Chinese Courts in Transition

More than three decades after China’s economic and legal reforms, China has developed a “thin” version of rule of law (Peerenboom 2002). The court system has been strengthened in many ways in order to deal with the dramatic increase in the number of disputes as a result of economic development and social changes. The number of judges is approaching 200,000; there are perhaps 140,000 lawyers and roughly 400 law schools. The courts now handle approximately eight million cases a year (Peerenboom and He 2009; Cohen 2006). However, the judicial system is far from well-established. Corruption and favoritism are rampant and judicial independence remains only on paper. Therefore, in the context of China’s judiciary and society, what are the various reasons why the haves might, or might not, enjoy greater success? In light of the three propositions (Wheeler et al. 1987) discussed above, we organize our discussion into the following three areas: the law, the courts, and party capability.

Why the Stronger Party Should Come Out Ahead in China

Is there a normative tilt in the law that favors the stronger party? This question can first be considered in terms of ideology. A tradition emerged during the early reform years as the country gave development precedence over all other priorities. Since economic development became the most important measurement of performance for government officials, foreign and domestic investments have been eagerly pursued. This tradition has the potential to favor the haves over the have-nots in order to facilitate economic development.

Is the law itself tilted toward the haves? This question can be considered in terms of law making. In a non-democratic society, the law is made to reflect the values and interests of the leaders and state officials more than those of ordinary citizens; for example, laws and rules in in relation to insurance, medical practice, and transportation are not only legislated by the relevant ministries, but are also subject to their interpretations. State-owned enterprises or state-related companies in these areas are naturally protected by these laws and rules because, according to the ideology of socialism, they represent the interests of the state. These enterprises and companies, especially the gigantic monopolies, are also far more influential than the public in affecting the law making and law amending processes. Similar situations exist in the field of administrative law, where government agencies are invariably placed in an advantageous position.

When the detailed rules governing the relationship between patients and state-own hospitals are issued by the Ministry of Health, what would one expect the outcome of a law suit between a patient and a state-owned hospital to be? In the non-governmental sectors, since businesses exert a much bigger influence on the government than individual citizens, individual litigants are conceivably disadvantaged, in terms of the nature of the law, even before their cases appear before the courts.

With regard to the courts (judges), the inequities of Chinese courts may differ from the US systems not in degree, but in nature. In the U.S., careful institutional constraints have been put in place to prevent obvious extra-legal intervention or corruption from affecting court decisions (Epstein 1990: 827, 838; Sisk et al. 1998: 1498; Cohen 1991: 187, 192, 193). In contrast, the legal system in China is inadequate, inconsistent, and constantly undergoing change. The courts in China are not independent for three reasons. First, officials of the courts are appointed by local government and the judges’ career development is significantly controlled by these court officials. As a result, judges are accountable less to the law and ethics than to the bureaucratic and political hierarchies. Second, like other branches of the government, the courts are far from being immune to corruption (Li 2010). Not only is government power easily translated into influence in a court, but businesses and the wealthy can work through government officials to affect the outcome of a case. Third, professionalism among Chinese judges, including professional ethics, has barely been developed, and they are thus are more susceptible to extra-legal influences. Since the passage of the Judges’ Law, which requires entry-level judges to have a bar qualification, China has effectively replaced many army veterans with college graduates. While an increasing number of judges are receiving formal legal training, a high proportion of them are fresh out of law school and inexperienced in both the law and life (Cohen 2006).

The decision-making structure of the courts also paves the way for such influences. The “adjudication committee,” which is usually composed of its administrative leaders rather than the three judges who hear the cases, remains the highest decision-making body in the court system. It continues to decide significant or complex cases behind closed doors. Through this channel, the government, the party and upper-level courts, and other extra-legal forces frequently influence rulings behind the scenes (Wu 2006). With only a fragile system to supervise the behavior of judges, judicial decisions may be influenced by the resources of litigation parties with certain Chinese characteristics, namely state connections, wealth, and moral recklessness (willingness to corrupt the courts).

With regard to party capability, the gap between the haves and the have-nots in terms of legal representation is large. While the number of lawyers has increased rapidly, the overall supply remains inadequate. The legal service is therefore still expensive. Largely due to a lack of professional ethics, many lawyers screen cases brought by the have-nots beforehand, taking on only those that are profitable and leaving the others unrepresented (Michelson 2006). Moreover, local lawyers avoid cases filed by poor individuals to challenge illegitimate taxation, police bullying, uncompensated land confiscation, and wrongfully withheld wages (Cohen 2006). Moreover, the legal aid system remains underdeveloped (Fu 2009).

Why the Weaker Party Should Come Out Ahead in China

It is, however, possible to frame alternative hypotheses that argue that the weaker party should enjoy greater success. In recent years, given that the country’s economy has taken off, the ruling party has placed more emphasis on social stability than on economic development. The normative tilt of the law could be affected by this recent development. Beginning in the late 1990s, the regime has tried to bring “harmony” or “stability” to a society whose recent prosperity has exacerbated tensions between the haves and the have-nots. Protecting the weak groups in society has become the new slogan of the Chinese state-controlled media. Many developments in the legal system reflect this change. The 2007 litigation fees regulation, for example, significantly lowered the threshold for accessing the courts and has thus allowed more have-nots to seek justice there (State Council 2006). The 2008 Labor Contract Law, emulating the equivalent legislation in many industrial countries, is weighted toward the interests of labor rights. A lot of effort has been made to strengthen the administrative laws, and hence the parties affected by government actions may have more opportunities to use litigation to protect their interests (State Council 1999, 2004).

From the perspective of the courts, there are also reasons why, in certain areas of the law, court decisions may favor the weaker party. First, the performance of Chinese judges is subject to quantifiable criteria such as the number of cases handled, completion rates, appeal rates, and complaint rates (Ai 2008; He 2009b). These considerations may affect judges’ decisions not just on the merits of cases, but also on their bureaucratic implications; their decisions may even, at times, be affected by the fear of disgruntled litigants “making trouble” following an unfavorable verdict. Empirically, we expect that in cases related to “trouble-prone” issues such as medical malpractice, judges will make a ruling in the hope of an expedient closure at the expense of a case’s merits. Typically, judges may give partial awards to alleged malpractice victims, an obvious weaker party in such litigation. Also, as documented in an earlier study based on fieldwork data, judges themselves may benefit from such practice: not only do they resolve the dispute, but they also protect themselves against high appeal rates or other potential liabilities (He 2009b). Second, the courts as an institution must take the concerns of the Party/state into account, especially in cases of significant consequence such as those related to public order (He 2007; Fu and Peerenboom 2010), and, as result, this may benefit the weaker party; for example, when social stability becomes local government’s foremost concern, the courts must toe the government’s line in handling collective labor conflicts (Su and He 2010). In other words, Chinese courts are prone to being politicized. The result of this tendency may affect the decision to give more weight to the interests of potential protesters for the sake of diffusing grievances and pacifying conflicts. That is to say, the have-nots may even come out ahead of the haves in areas of litigation with rich political implications, such as cases involving collective labor disputes.

Studying Chinese Courts using Documents of Adjudication Decisions

Data Source

As noted above, for the last few years, many courts across China have begun to make their documents of adjudication decisions (裁判文书or “DADs”) available to the public. In an effort to improve the transparency of the judicial process, resonating with the newly revitalized slogan “judiciary for the people,” the Supreme People’s Court made clear in its Three Five-Year Reform Outlines that it would attempt to put DADs on to the Web.

Many high courts at the provincial level, such as those in Beijing, Shanghai, Yunnan, and Anhui, have pioneered this effort, while others are following suit. The Henan High Court, for example, claimed that all of the DADs for all three levels of court in the province would be on the Web by the end of 2009; as of September 2009, 25,167 pieces of DADs had been put on (China Youth Online 2009). According to the High Court, “all” documents means everything other than those documents involving state secrets, business secrets, privacy issues, and adolescent criminals. If one of the litigation parties involved opposes publication, then publication must be approved by the court director. As early as 2004, the Shanghai High Court had already started to put its DADs on to the Web (Xinhua Net 2009); as of 2009, more than 10,000 pieces of documents had been made available on the Internet. The Shanghai courts have been more cautious than the Henan High Court. A relevant regulation issued by the Shanghai High Court states that the judge or the collegial tribunal (合议庭) in charge will determine whether a document should be made public.

Adjudication and mediation decisions are directly relevant to this project since only these two types of documents contain meaningful information on the issues, information on the parties, and case outcomes. A typical adjudication decision will list the litigation parties, any representatives (legal or not) of the parties, the institutions with which the individual litigants are affiliated, the disputes at issue, the parties’ arguments, the court’s position on the disputes, and the case outcome. Depending on the complexity of the case, the adjudication may be rendered by a collegial tribunal under the normal procedure (普通程序) or a single judge under the summary procedure (简易程序). All of this information allows us to collect data on the relationship between the nature of the litigants, the nature of the disputes, and the case outcomes.

These judgments not only record how the case is decided, but also provide information on the form and amount of the remedy, whether the litigating parties are organizations or individuals, the legal representation of the parties, the occupational background of individuals, the types of organization, and so forth. All of this additional information provides a basis for developing independent variables to predict the win rates of the parties.

The basis of this paper is our data collection project, which involved coding and analyzing DADs from Shanghai courts. As the industrial, financial, and commercial hub of China, Shanghai hosts a concentration of manufacturing activity in the key industries of automotive, electronics, telecommunications, machinery, textiles, iron and steel, and petrochemicals. With one percent of China’s population (16 million, excluding 4 million internal migrants), the Shanghai region’s GDP was nearly US$ 375 billion in 2003, accounting for roughly 25 percent of China’s total GDP. The GDP of the city of Shanghai alone grew 11.6 percent to nearly US$ 73 billion in 2003, reaching a GDP per capita of US$ 4,500 and accounting for over five percent of China’s total output.

All of these external socioeconomic factors have had a huge impact on the effectiveness of judicial reforms inside the court system (He 2009a, 2009b). With the abundant financial resources extracted from a strong and diversified local economy, the courts can afford to offer a higher salary (double the average GDP per capita) to attract law graduates. Compared to other regions of the country, the level of professionalism in the courts is relatively high. The institution building of the courts has, with the support of adequate resources, had more positive consequences than in less resourced areas. According to one hypothesis, the corruption in Shanghai courts seems to be less visible (Gechlik 2006). As a showcase of China’s reforms and development, the Shanghai courts have been pioneers of judicial transparency. This explains why Shanghai was one of the first regions to put its DADs on to the Web. Also, an empirical survey has suggested that the effectiveness of Shanghai courts in terms of enforcing contracts and the litigants’ impressions of the courts and the judges is quite positive (Pei et al. 2010). All of these findings suggest that Shanghai courts are atypical of China’s overall situation in that they are in a better position than courts elsewhere. Therefore, there is no attempt in this study to use the Shanghai courts to represent the courts in the entire country. On the contrary, we consider the Shanghai courts to be at the forefront of legal developments in transitional China. It is our hope that this study will foreshadow an era in which it will be possible to access nationally representative samples of Chinese court decisions.

The Sample

The Shanghai High Court has posted its first wave of DADs from all three levels of its courts. The 100,000 DADs which had been posted by the end of our data collection period cover the time period from 2004 to 2009 and include issue areas such as labor, insurance, housing management, housing demolition, sale of apartments, traffic accidents, medical malpractice, and administrative cases. We selected a sample of 3,000 cases from the basic court level for our study. We first identified 13 issue areas that we were interested in and used keywords to search all of the available DADs. We then randomly sampled from the identified DADS. In order to obtain a sufficient number of sub-sample cases in each issue area, we used different ratios in our sampling; for example, we under-sampled cases of contractual debt disputes, but oversampled, to differing degrees, cases of medical malpractice, labor disputes, housing, administrative disputes, and so on.

The resulting data set contained 2,908 cases, from which we dropped four cases because they lacked the information to enable us to determine whether a party in the case was an individual or organization litigant. We dropped a further 215 cases whose DADs did not provide information on who won the case (i.e., plaintiff, defendant, or a partial win for both sides). The final number of cases for our analysis was 2,689 (see Table 1).

It is clear that our sample is not representative of cases from Shanghai courts. The courts will not make some cases public (e.g., politically sensitive cases), despite their rhetoric on judicial transparency. In other words, there is no way of obtaining a genuinely representative sample using open sources. Moreover, early research has indicated that the percentage of politically or otherwise sensitive cases is very small among the large amount of mundane cases processed by the basic level courts (He 2011 forthcoming). Given the large size of our sample, the selection bias of the DADs seems rather trivial in relation to our purpose of measuring the possibility of winning between stronger and weaker parties.

Deciding on Winning and Losing

There are two pieces of information in a typical DAD from which we can judge who wins a case: the percentage of the legal fees that the judge decides the plaintiff should be responsible for (Litigation Fee Share, or LFS), and the percentage of the monetary amount awarded to the plaintiff, compared to the amount of the plaintiff’s petition (Winning Amount, or WA). Ideally, the winning party will have a zero-percent LFS and a 100-percent WA. However, since many plaintiffs may make the strategic choice to ask for a larger amount than is reasonable in their petition, the LFS standard is a better measure for judging winning and losing in a legal case. Moreover, while the percentage to award a winning party is well within the judges’ discretion, their discretion in relation to litigation fee distribution is more limited, for any miscalculation will automatically lead to a reversal if the judgment is appealed; judges are therefore extremely cautious in deciding on this distribution. Our report is based on a dependent measure based on LFS, but we confirmed our result by repeating the same analysis using WA.

We allocated each case to one of three categories: (1) “plaintiff wins,” if the defendant was asked to pay 100% of the litigation fees; “defendant wins,” if plaintiff was asked to pay 100% of the litigation fees; and (3) “partial win for both sides,” if both sides shared the payment of the fees.

Measuring the Strength of the Litigation Parties

It would have been ideal if we had had information on the social and economic status of individual litigants and the financial might or political power of organization litigants. However, the DADs do not furnish such information. Fortunately, we had some proxies that helped us to differentiate the strong from the relatively weak. Guided by insights from earlier studies (Galanter 1974; Wheeler et al. 1987), we gleaned three sets of information that were useful. First, we were able to decide whether a party was an individual (the so-called one-shotter or OS) or an organization (the so-called repeat player or RP). Second, based on information of the individual litigants’ occupations, we were further able to distinguish the stronger from the weaker among the OSs. In the tables, we present four classes of OSs: unknown individuals whose occupations we cannot determine (UKI), farmers, city workers, and white collar workers. In a setting such as Shanghai, farmers are, in fact, most likely to be migrant workers from the countryside, although some may be suburban peasants. In the logistic models, we classified OSs into only two groups: farmers and other individuals. Third, we also classified RPs, distinguishing between non-government companies, state-owned enterprises (SOEs), and government agencies.

Other Measures

The DADs provide information on whether a contending party has hired a lawyer from a professional law firm. In the case of organizational players, we also counted their in-house counsels. We hence distinguished litigants with counsels from those without.

As mentioned above, the current sample in fact consisted of the subsamples from 12 issue areas of the law, including contractual debt, personal injury, and labor disputes. We first conducted an analysis on the aggregate sample. Since the legal processes and dynamics differ greatly across issue areas, we also examined the win rates among the cases within each individual issue area.

Do The “Haves” Come Out Ahead?

Before we report our findings on whether or not, and to what extent, stronger parties prevail, we first need to know whether the win rate differed between the plaintiffs and the defendants. The first row of Table 1 reports the relevant results. Among the 2,689 valid cases in our sample, the plaintiffs had a 45.67% chance of winning outright, while the defendants’ chance was 31.83%. In other words, party position matters, with the plaintiffs being more likely to win by a margin of 13%. Given that these were initial filing cases, the advantage of the plaintiff shown here is not surprising. The plaintiff chooses to file a law suit, usually as a last resort after trying all other alternatives (Felstiner et al. 1980-1981), and hence he or she is in a position to deliberate the merits of filing a suit beforehand; by contrast, the defendant is passively dragged into the foray and cannot evade the law suit even if the chances of winning look bleak. For example, as presented in the latter sections of this article, one becomes a plaintiff in a contractual debt case only when the other party owes its money. In other words, the merit of such cases is usually beyond reproach. It is no wonder that, as existing empirical studies have shown, in most debt collection cases, the plaintiff usually wins (He 2009a). However, there are exceptions to this rule of plaintiff advantage, such as administrative cases in which the government is the defendant (China Law Books: Various Years; cf. Zhu 2007). These findings suggest that when we talk about win rates, we must consider whether the party involved is a plaintiff or a defendant.

A second preliminary point to note is that in a significant of portion of the cases in our sample, neither party fully won the case. Instead, both sides partially won (or partially lost, to put it another way) in 22.5% of cases. However, in other countries, most cases are straightforwardly classified as either lose or win. Many of these partial win cases are settled in court, largely because judges, thinking about how their own performance will be judged, want to avoid enforcement, appeals, or complaints. This group of cases also includes those cases in which judges grant a partial victory to both sides due to the complexity of the case, or to extend a token of condolence for certain groups of litigants who have endured a severe loss, or to pacify potentially disgruntled losers.

[Table 1 about here.]

“Haves” Do Come Out Ahead by Large Margins

In the rest of Table 1, we offer a first glance on the success disparity between individual litigants (OSs) and organization litigants (RPs). Comparisons across the four types of cases—OS vs. OS, OS vs. RP, RP vs. OS, and RP vs. RP—show a clear and consistent pattern: repeat players edged out one-shotters. The position advantage of an OS as a plaintiff was not enough to compensate for his or her disadvantages in a case against a RP. Seen from the plaintiff’s point of view, when his or her opponent was also an OS, an OS would achieve a complete victory 43.06 times out of a 100, but such a win rate went down to 28.65 times out of a 100 when his or her opponent was an RP. Seen from the defendant’s perspective, the win rate for an OS over another OS was 28.47%, but this rate reduced to 26.64% when the defendant’s opponent was an RP. If such comparisons fall short of being ideal to compute “net advantage” (Wheeler et al. 1987; Songer and Sheehan 1992), let us looked closely at the numbers that enable us to compare OS vs. RP cases with RP vs. OS cases. As a plaintiff, an OS’s win rate was 28.65% against an RP, whereas when an OS was the defendant, an RP plaintiff’s win rate was 60.04%; thus, RPs had a 31.39 point net advantage over OSs. As a defendant, an OS’s win rate was 26.64% against an RP, while when an OS becomes a plaintiff, an RP defendant’s win rate was 49.21%; therefore, RPs had a 22.57 point net advantage over OSs.

If the above documented disparities in win rates were unmistakably substantial, the gaps became extraordinary when we further specified the social economic status of individual litigants and the types of organization litigants. For about one third of the OSs, we were able to glean information to make decisions on occupational status; these individuals were classified either as a farmer, a worker with city origins, or a white collar worker. We labeled the remaining individuals as “unknown individuals.” We classified most of the RPs either as a private company (firm), a state-owned enterprise (SOE), or a government agency. Table 2 reports more pair comparisons between the detailed categories of OSs and RPs. We report on the pairs that afforded enough cases to compute a meaningful percentage. To summarize, four messages clearly stand out from the numbers in the table.

[Table 2 about here.]

First, the biggest losers are the farmers. Although we were not able to compute the net advantage the other parties had over the farmers, the available numbers clearly point to farmers (including migrant workers) being in the weakest underdog position. In our sample, their chances of winning against a firm was 16.67%; their fighting chance against a government agency was as low as 3.57%. In comparison, the chances of a city worker or a white collar worker winning against a firm defendant were 48.31% and 45.28% respectively.

Second, the biggest winners are government agencies or government-owned firms. In our sample of cases, the chance of a government agency or a government-owned firm winning a case was 86% or above. For example, the win rates of government agencies over farmers, unknown individuals, and companies were 96.43%, 87.14%, and 95.83%, respectively. Similarly, the win rates of government-owned companies over unknown individuals and companies were 86.21% and 92.73%, respectively. This left their opponents, whether a private company or an individual, with a next to zero chance of winning any case.

Third, we found that firms have the upper hand over individuals, but when they face government-backed opponents, their winning chances are miniscule. Comparing the cases of “firm vs. unknown individual” and the cases of “unknown individual vs. firm,” the net advantage of companies as plaintiffs was 30.35% and as defendants was 20.44%. Once again, this shows that firms, or the haves by our definition, enjoy more success than individuals, or the have-nots. However, when a company faces a government agency or a government-owned company, its chance of winning can be as low as 10% or less, as discussed in the second point above.

Legal Representation Gap and Its Effect

It is suggested that one of the main reasons for the disparities in winning is the fact that the stronger party can deploy more resources and experience in the litigation process. The availability of legal representation may be the most significant aspect of such an imbalance. Our data show that the majority of individual litigants do not have professional attorneys. In our study, the percentage of cases where the plaintiff had an attorney ranged between 24% and 39%; the corresponding figure for defendants was below 20% and could have been as low as around 9% (Table 3). By contrast, the rate of legal representation was much higher for organization litigants who used in-house lawyers or attorneys from outside law firms. In our sample, as shown in the lower half of Table 3, the likelihood of a typical company having a professional attorney was 73.33% when it was the plaintiff and 67.19% when it was the defendant. Government-related RPs are even more likely to be professionally represented: for a government agency, the rates were 85.71% (as a plaintiff) and 57.21% (as a defendant); the rates for a government-owned company were 93.85% (as a plaintiff) and 72.50% (as a defendant). The numbers shown in Table 3 classify litigants into three groups in terms of legal representation from the lowest level to the highest level: individuals, companies, and government-related enterprises or agencies.

[Table 3 and Table 4 about here.]

As shown by the clear contrasts in Table 4, legal representation consistently contributed to a party’s chances of winning. The numbers in this table represented the win rate on the plaintiff’s side, and the four columns provided information to compare the effect of legal representation. A plaintiff’s counsel has increased the chances of winning, while an opponent’s counsel has decreased the chances of winning, and this was mostly the case when we examined all of the numbers in the table. For example, with all of the cases included (row 1), the “with vs. without” combination won the case 59.27 times out of a 100, whereas the “without vs. with” combination only won the case 28.61 times out of a 100. This pattern, by and large, held up when the cases were divided into the four categories.

The gaps in legal representation, however, did not seem to be the main cause of the disparities in winning between OSs and RPs. In statistical terms, when legal representation was controlled for, the winning gaps between OSs and RPs shrank but still remained. For example, as previously stated, Table 1 shows that the net advantage of RPs (as plaintiffs) in our sample was 31.39%. In comparison, contrasting the numbers in the two middle rows of Table 4, the net advantage of RPs (as plaintiffs) was 26.79% for cases in which neither side had an attorney, 14.72% for those cases in which the plaintiff was represented but the defendant was not, and 19.03% for the cases in which both sides were represented (The net advantage for cases “without vs. with” cannot be obtained due to there being insufficient cases to include in one of the cells in the table.). In short, controlling for legal representation significantly reduced the winning gaps, thus attesting to the resource-inequality thesis. In the meantime, the remaining gaps were by no means small after the control, which suggests that there had to be reasons other than legal representation for the winning gap between the haves and the have-nots.

Parties in Specific Issue Areas

[Table 5 about here.]

The results from the different categories of legal relationship varied greatly. There is thus a need to look at the specific structure of the legal relationship and the law itself separately in each area. Within a typical issue area, we were able to discern a prototypical role-relation; for example, the two contending parties of a divorce are obviously two individuals, labor cases involve the employee versus the employer, and administrative law cases involve the government as the defendant. Generally, we felt fairly safe in designating the employers, the insurers, the clinics, the developers, and the managements of residential communities as the haves. With this information in mind, the winning rates reported in Table 5 are useful as a further basis for discussing which kind of player (individual, company, or government) wins more often.

Do the haves come out ahead in separate issue areas? Information relevant to this question can be obtained by examining the plaintiffs’ and defendants’ win rates, because the legal relationship is clear in each area. In the contractual debt cases, the plaintiffs had a very high rate of success, as shown in Table 5. This finding is consistent with some existing empirical studies which attribute high success rates to the merits of the case and the functioning operation of the courts (He 2009b, 2011 forthcoming). Usually, in order to avoid disturbing an on-going legal relationship, plaintiffs will not file a lawsuit in cases of debt collection, which usually occur between business organizations, unless they have no other choice (Macaulay 1963). Also, as shown in Table 5, an extraordinary high rate of winning by defendants was found among the administrative cases, which adds texture to previous findings that government agencies maintain a huge advantage over the parties affected by government behavior. In the labor cases in our sample, the chances of the plaintiff winning were not very high, compared to some statistics found elsewhere (Li and Zhang 2009). However, it is interesting that medical cases had a relatively high partial win rate, while the win rate for the plaintiffs was quite low. The divorce cases, a typical situation between individuals, had the second lowest win rate for the plaintiffs (10.26%). This is consistent with our previous study on this topic (He 2009b). According to that previous study, the courts usually turn down a request for divorce when the petition is filed for the first time.

The size of the gap between the haves and haves-nots varied greatly. For example, among the cases of administrative law, the chance of the plaintiff winning was next to zero, indicating that the government, or the defendant, is overwhelmingly dominant in such cases. Also showing the advantage of the stronger party, the defendants in the insurance cases in our sample, which are most likely to be companies, registered a much higher win rate (53.64%) than the plaintiffs, who were most likely to be individuals. We expected to find a very high win rate for the traffic accident cases, but as it turned out, the number was moderate. It is worth noting that in the personal injury, traffic accident, and medical malpractice cases, the partial win rates were very high (all more than 40%). In contrast, in the administrative, labor, and housing demolition cases, we found that the partial win rates were very low (all less than 10%). It is interesting to note that in the group with the lowest partial win rates, the haves seemed to be much stronger than the have-nots. The government agencies in the administrative cases, for example, were far more powerful and resourceful than the parties affected by the government’s behavior. Accordingly, the win rates of the haves were also much higher in these categories (all more than 60%). Correspondingly, in the group with the highest partial win rates, the difference between the plaintiffs and defendants in terms of power and resource was more modest.

Multivariate Analysis

[Table 6 about here.]

In order to test if the above empirical patterns held up in the multivariate context, we ran a series of logistic models, as presented in Table 6. We obtained the dependent variable from coding a full win as 1 and a partial win or a loss as 0. We classified the independent variables into three groups: party background measures, legal representation measures, and issue area measures. We classified litigants into four categories—Farmer, Other Individual, Government-related Organization, and Non-government Company. Taking account of both the plaintiff and the defendant, we classified eight types of cases in terms of party background, from which we create six dummy variables (“Plaintiff Other Individual” and “Defendant Other Individual” being the reference group). For the legal representation measures, we had a dummy variable to indicate whether the plaintiff was represented and another to indicate whether the defendant was represented. In the meantime, we also introduced the interaction of these two measures, so as to specify all four types of cases in terms of legal representation. Finally, using Personal Injury as a reference group, we have 11 dummy measures to specify 12 issue areas.

The odds ratios reported in Table 6 demonstrate the unequal chances of winning in stark terms. Among the four categories of litigation players, the biggest loser was the farmer and the government-related player was the biggest winner. In reference to the other individual players, a farmer plaintiff was 3 times less likely to win (odds ratio=.33, model 1), while a government-related plaintiff was 14.42 times more likely to win. The disadvantage of being a farmer and the advantage of being a government-related player are also clearly shown when the farmer or the government-related player is the defendant: in our sample, a farmer defendant increased the plaintiffs’ win rate by 2 times (odds ratio=1.97), while a government player defendant reduced it by 5.5 times (odds ratio=.18). Also evident in model 1 is the edge that a non-government company has over other individuals (odds ratio=1.99 on the plaintiff side) and that a government player has over a non-government company (odd ratios=14.72/1.99 on the plaintiff side).

These patterns remained almost intact when legal representation was controlled for (model 2). The model also shows that legal representation itself does not have large effect on the plaintiffs’ win rate. Among the three measures, only the defendant’s counsel made a significant but moderate impact: it diminished the plaintiff’s chances of winning by a factor of less than 2 times (odds ratio=.58).

In the last model in the table, we introduced issue areas as a control factor. The differences in terms of winning across the issue areas echo our findings reported earlier in Table 5. When issue areas were controlled for, the effect of being a farmer and of being a government-related player were still significant and sizable. For example, the plaintiff being a farmer reduced the chances of winning by about 4 times (odds ratio=.26 in model 3), and the plaintiff being a government-related player increased it by more than 5 times (odd ratio=5.20 in model 3).

There are five messages to take away from the multivariate analysis, all of which are consistent with the findings we reported in the earlier tables: a) in terms of winning, there are large gaps between the haves and the have-nots; b) an enormous advantage is enjoyed by government-related RPs (government agencies or government-related companies); c) farmers have a huge disadvantage; d) non-government companies edge out individual one-shotters, although their advantage is far smaller than that of government-related RPs; and e) when controlling for legal representation, these winning gaps remain significant and sizable.

Beyond The Party Capability Theory

In an early study, Wheeler et al. (1987) (see also Songer and Sheehan 1992) initially hypothesized that the stronger party’s advantage in winning a case may be explained by three possible sets of factors: the law, the courts, and the party’s resources. They rejected the first two hypotheses following an analysis that compared bigger businesses with small businesses and large government organizations with small government organizations. They reasoned that if there had been a normative tilt inherent in the law or a biased attitude among the judges, then they would not found the differences that they did in these comparisons.

Our data from Chinese courts do not allow us to reject any of the three hypotheses. Rather, the circumstantial evidence documented here in this study suggests that we should entertain all three of them. Given our data, one might still argue that resources still make a difference. That is to say, the Party Capability thesis remains intact, if not sufficient, to explain away the winning gap between the haves and the have-nots. There are big gaps between the haves and have-nots in terms of the availability of legal counsel. The numbers in Table 3 show that only 11.1% of farmer defendants in our sample had a counsel, while the corresponding figure for organization defendants was more than 60% and the counsel availability rate for government plaintiffs was as high as 93.85%. One can also argue that legal representation makes a difference. Generally speaking, across all of the litigation categories, the difference in winning rate between those who had legal representation and those who did not was not insignificant. But in Chinese litigations, the impact of party resources deployable in the courtroom may only be the tip of the iceberg. Indeed, after controlling for legal representation, the difference in winning rates across the classes of the parties remained significant and large. There must be much more to this than meets the eye.

In the Party Capability Theory, particularly in Galanter’s original formulation, there is a healthy amount of optimism that the courts are more or less insulated from outside influences. One party wins over the other mostly on the basis of the strength of experiences or resources that are useful to ensuring fair-play within the boundaries of existing rules. However, when empirical studies have been expanded to jurisdictions outside the U.S and especially to the developing countries, this assumption becomes extremely problematic (Haynie 1993; Haynie et al. 2001; Kritzer 2003). Our study of Shanghai courts, echoing with previous studies, confirms that there is a need to go beyond the Party Capability Theory.

One of our most striking findings is that when a party in a case is a government or government related, it leaves little chance for the opponent to win. In our study, the lowest win rate for government agencies or government-related firms, regardless of whether their opponent was an OS or a RP, was as high as 86.21% (government-owned firm vs. unknown individual). This exceedingly high win rate is difficult to explain without appreciating the fact that Chinese courts operate under the shadow of the government. Scholarship has pointed out the obvious absence of judicial independence (Peerenboom 2010), and journalists and folk in the streets all know about the penetrable courts. This penetration of the courts comes through two main channels, one institutional, the other social. Institutionally, the courts are beholden to the government as the whole. As noted, the judges still depend on local governments for appointments, promotions, and, until very recently, funding and material security (Sichuan Online 2008). Hence, it seems difficult, if not completely impossible, for the courts not to favor the interests of the government in any type of litigation. One telling piece of evidence is that in the administrative litigation in our sample, the defendants won 92.91% of the cases completely and 7.09% partially; thus, the percentage of wins for the plaintiffs among the 127 cases in the data was zero, which is consistent with most existing findings in this area (Zhu 2007). The government-owned firms also seem to be in a similar position since a close connection exists between these firms and the government and they can exert a similar influence on the courts. This suggests that the government is not just a specific type of RP. More fundamentally, it indicates that the courts are penetrable from the outside. The differences in the chances of winning between governmental litigants and non-government litigants are in the order of 90%. Such differences cannot be comprehended in terms of resource disparity; rather, they should be understood in terms of institutional arrangements. Echoing our findings of the large advantage enjoyed by the government, a few previous studies on various countries have documented a dominant pattern that is not advantageous to the haves but is advantageous to the government (cf. Kritzer 2003). Kritzer argues that this pattern is not merely a matter of resources; rather, it is due to the fact that the courts are part of the government. He writes: “Despite norms of judicial independence, courts and judges are not independent of government, but part of government. Courts are agencies of the state. One possible impact of this is that judges feel some loyalty toward the government or regime of which they are a part” (2003: 343).

Institutional penetration in order to influence the courts may also take the form of constraints on the behavior of the judges. In the above, we posit that the judges’ consideration of their own career and the larger political implications may have an impact on the litigation outcomes. The data, however, did not allow us to single out politically sensitive cases and measure their outcomes. However, there was evidence to suggest that in the medical cases, the judges may have favored the have-nots, even though such favoritism in no way turned around the overall underdog position of the have-nots. In the medical cases, the partial win rates were the highest, even though the win rate for the plaintiffs was quite low. Medical malpractice victims try to get some compensation through the courts, but usually they are unable to pass the burden of proof test in proving the negligence of the clinics. As the clinics control all of the medical records and the appraisal institutions are well-connected with the clinics, malpractice victims have tremendous difficulty in proving the negligence of doctors or clinics. However, it is in this category that plaintiffs are prone to complain. The victims, who have usually lost loved ones or part of their bodies, tend to be very disgruntled as they have suffered so much in the process. They tend to be suicidal or homicidal at worst, or, at best, are likely to appeal or complain against the verdict. To avoid such appeals or complaints, which could adversely affect their performance appraisal, judges simply find some minor problems about the clinics and offer partial or spiritual compensation to the victims. As clinics often have more resources, they are less likely to complain even if they are asked to give partial compensation (He 2009b).

Socially speaking, the penetration of the courts can take the form of personal deals behind the scenes. A party’s resources are not deployed in the open before the court, but through powerful connections. In a society where the ethical codes of conduct for judges are not rigorously enforced or even nonexistent, a party’s capability plays a large role in a penetrable court. In this sense, to the extent that we still use party capability to account for winning gaps, we cannot do so without also bringing in the hypothesis of the penetrable court. In a way, this finding distinguishes this study from the findings in the existing literature. The existing empirical studies suggest that resource difference is one of the foremost reasons why the haves come out ahead (Wheeler et al. 1987; Songer and Sheehan 1992; Songer et al. 1999). But when the courts are susceptible to external influences, this could overshadow any other reasons, including litigation capacity. Even when a correlation exists between more resources and higher possibility of winning, it is difficult to disentangle two reasons: whether the haves come out ahead because they have more experience, specialized expertise, and better counsel to play the formal legal battle or simply because they have more effective or direct ways of affecting the court’s decisions using their resources and connections. A lack of judicial independence and outright corruption seem to enlarge the success gap between the haves and the have-nots.

In light of the Law Hypothesis, the large gap between the haves and have-nots may also stem from a strain in laws governing some specific arenas. Our data indicate that in insurance, medical malpractice, housing demolitions, and labor cases, the defendants, which are usually the stronger parties, fare much better than the weaker parties. This may stem from different sources of laws and regulations. The laws governing the business of insurance, medical services, housing demolition, and the labor market are usually drafted by the respective ministries of the central government in China. These ministries are also entrusted to legislate on the implementation rules of the laws, and they are also the authorities in interpreting the laws and regulations when they become controversial. Since the ministries are closely related to the business sectors, among which are many state-owned or government-related organizations, the laws thus legislated will clearly be tilted toward the interests of business. As a result, with the weaker parties usually placed in the position of being the plaintiffs, the defendants have a consistently higher win rates in these cases, and this occurs despite the general advantage enjoyed by the plaintiffs.

A similar interpretation applies to the much higher win rate in administrative cases. Most administrative laws, which are designated to regulate the behavior of the government, are legislated by the government itself. Other than a few laws issued by the National People’s Congress, there are few institutional constraints on the legislation process. Needless to say, it is unrealistic to rely solely on the self-conscientiousness of the government to provide an equal footing for both parties in administrative litigation. Hence, the plaintiffs may be significantly disadvantaged.

By contrast, in contractual, personal injury, and traffic accident cases, plaintiffs consistently enjoy a better chance of winning. While one may explain these win rates by the fact that the plaintiff and defendant in such cases are more or less equal (RP vs. RP or OS vs. OS), the contrast may also be related to the fact that the major laws governing these areas are legislated by the National People’s Congress and its standing committees. The legislators here have little interest in favoring either party in these disputes. The general advantage enjoyed by the plaintiffs is thus not offset in these categories. These patterns point to the usefulness of a possible tilt in the law in contributing to the winning gaps, which Kritzer summed up as follows: “First, the government makes the rules, which the courts in turn enforce” (2003: 343).

In this section, we have speculated about the validity of all of the three hypotheses proposed by Wheeler et al. (1989) and have suggested that we go beyond party resources and capability to explain the striking gaps in litigation success in countries like China. Our case thus appears to lend support to Haynie et al., who wrote in a study testing the Galanter thesis across six countries that “Litigant resources may not be the best explanation for the variation among the parties but rather the relationship between the governments and the courts could be the determining factor” (2001: 16).

Implications and Conclusion

Based on published adjudication documents, this study has assessed the performance of the courts in Shanghai. We find enormous gaps in terms of litigation outcome between the haves and the have-nots. Given that Shanghai is the richest city in China, if economic development improves court performance, it is conceivable that China’s other regions would not fare much better (Balme 2010; He 2009c; Peerenboom & He 2009; Zhu 2007; Chong 2000; Clague et al. 1997). Also worth noting is the fact that these gaps exist at a time when the Communist Party has been promoting a “harmonious society,” a catchphrase that seems to be in favor of the underdogs of society. In short, if Shanghai courts at the time of our study are somehow less than typical, the problems we have documented in this paper would be even more pronounced in other places or at other times in China.

Our analysis has provided some Chinese numbers, which have long been awaited by comparative scholars. Since Galanter’s seminal paper, quantitative analyses of litigation have commonly been used to study the legal systems in the U.S., Great Britain, Canada, and many developing countries. China has not been in this league and has thus fallen outside the purview of comparative studies on redistributive justice. The differentiation in win rates recorded from within the Chinese legal system, along with our tentative conclusions on the sources of judicial inequality, will have direct implications for legal developments in transitional China. One of the major debates can be characterized as a debate between “form” and “substance”: legal reform leads to an increasingly formalistic system, but does judicial equality increase in tandem with this process? Some scholars have questioned the merit of applying the international best practices of judicial independence to China. They argue that such practices fail to capture the complexities of local contexts and that China’s current structure may be doing no worse than any other system in delivering the substance, if not the form, of judicial justice (Zhu 2010; see generally, Peerenboom 2010). Showing the gaps in stark terms and pointing to the law and the courts as the culprits of the inequality, our discussion strongly suggests the need for further legal reform. In particular, judicial independence should be taken more seriously.

Looking at the political environment of the courts, the legislative processes are in need of reform. Despite the lip service given to supporting the weak in the socialist legacy or the current calls for a harmonious society, the making and the interpretation of rules, in fact, favor the strong. It is therefore necessary to transfer the legislative power from the administrative regulators to the relatively more neutral congresses and to empower the courts to interpret the rules.

The present study has also revealed the gap in legal representation between the haves and have-nots. The dismal chances of migrant workers from the countryside are sobering. Although they formed a small portion of our sample, they are the largest group in China’s population. One remedy of reform would be to transform OSs into RPs; that is, to set up more legal aid programs so to make legal services more accessible and to facilitate the functioning of NGOs, such as labor unions, consumers associations, and property owners associations, in representing the interests of various types of have-nots.

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Zhu, Suli (2010) “The Party and the Courts,” in R. Peerenboom ed., Judicial Independence in China, 52-68. New York: Cambridge University Press.

Statutes Cited:

Measures on Litigation Fees, issued by the State Council, effective on April 1, 2007.

The Labor Contract Law of the PRC, issued by the Standing Committee of the National People’s Congress, effective on January 1, 2008.