Preface

The purpose of the book is to investigate the challenges faced by existing civil and commercial law in dealing with modern financial transactions against the background of the 2008 financial tsunami. The author proposes that attention be paid to private law issues in financial innovation, in addition to financial regulatory laws. The research from private law perspective is particularly meaningful in China, given that civil and commercial law is still developing in the country. The foundation of financial transactions is the contracts on capitalraising-and-circulation. The civil and commercial laws play important roles in shaping such contract relationship. The author finds that disputes arising out of those contracts increased extensively around financial crises. The causes to those disputes, in addition to regulatory failures, are gaps between the economic logics of those contracts and the existing private law rules, including rules of property law, contract law, trust law and guarantee law, etc.

During the periods from the 1968 Wall Street “paper crunch” to the 2008 global financial tsunami, the financial markets experienced many round of reforms and financial innovations, such as the demobilization (or dematerialization) of securities, ABS and other financial derivatives, etc. All those are raising a full range of challenge to many fields of traditional civil and commercial law, including but not limited to business organization law, property law, contract law, trust law, guarantee law, bankruptcy law. The book covers major financial transactions, relevant institutional arrangements and high-profile cases, in an attempt to demonstrate their impacts on existing law and implications for the reform.

The author argues that financial crisis on the one hand marks the bust of financial innovation and financial market, financial regulatory failure, on the other hand denotes necessities for private law reforms-revising existing law or making new law at both domestic and/or international level, including both hard law and/or soft law. In addition, the judicial judgments or arbitration awards, and the way judges or arbitrators understand the financial market and financial transactions also constitute an indispensable part of the reform in private law. Under the background of financial globalization, attentions shall also be paid to private law rules in those dominant jurisdictions (such as New York, England and Wales, etc.). It might be safe for the author to conclude that economic logics of financial transactions shall be reflected in civil and commercial law, and shall be respected by financial regulators.

The author has no intention to construct a grand and complete commercial law system on the basis of financial transactions, nor does the author believe that private law rules governing financial transactions shall be dominant in financial law studies. It is the author’s hope, however, that this small book could be supplementary, at least to some extent, to the existing literature on both financial law and civil and commercial law.