Law or equity?

Over the centuries lawyers, legislators, judges and many others have debated these questions: “what is law?” and “what are the essential attributes of law?” Many would agree that one of the most fundamental attributes of law is that it has universal application and that everyone is equal before the law. This is the inspiration behind the popular concept of “blind justice”, which is often represented by a statute of Justicia, the Roman goddess of justice, who is blindfolded to symbolise her impartiality and carries a set of scales to balance truth and fairness.

For any legal system, the task of balancing truth and fairness is not an easy one. If one accepts that law should have universal application and should treat everyone equally, it is inevitable that the strict application of law will sometimes lead to unfair or unjust results. This is particularly so in cases that fall outside the circumstances directly contemplated by the law (e.g. where the law does not make provision), or in cases that involve conduct that is morally, but not legally, wrong.

In English, the saying “hard cases make bad law” illustrates this point.

It is interesting to compare the different ways in which legal systems attempt to balance these sometimes competing objectives. Let’s compare the position in common law jurisdictions with the position in mainland China.

Common law jurisdictions

The use of the term “common law” can be misleading. On the one hand, it is often used to distinguish between those jurisdictions that belong to the “common law” world (i.e. those jurisdictions that inherited their legal system from English law) and those jurisdictions that belong to the “civil law” world (i.e. those jurisdictions that originated from Roman law and adopted either the French tradition or the German tradition).

On the other hand, the term “common law” is often used within common law jurisdictions themselves to distinguish between two separate bodies of law – namely “common law” and “equity”.

The body of law that we call “equity” has its origins in the Court of Chancery. This court was established in England in the 14th century and was headed by the lord chancellor. As one of the king’s senior ministers and representatives, the lord chancellor was granted power by the king to hear petitions from litigants who were dissatisfied with the decisions of the common law courts, and to dispense justice according to the “king’s conscience”. Initially, the decision to dispense justice was discretionary in nature and was based on purely arbitrary factors. During this period, it could not be said that equity constituted “law” as described above.

By the 17th century, however, the Court of Chancery was well established and equity had developed into a separate body of law with its own principles and precedents. This resulted in uniformity, consistency and predictability, all of which are essential features of a fair and transparent legal system.

A former partner of Linklaters Shanghai, Andrew Godwin teaches law at Melbourne Law School in Australia, where he is an associate director of its Asian Law Centre. Andrew’s new book is a compilation of China Business Law Journal’s popular Lexicon series, entitled China Lexicon: Defining and translating legal terms. The book is published by Vantage Asia and available at law.asia.