Adjudicating the regulatory penalties against nonprofessional taxi services in China and the European Union

• Author: Xiong Bingwan
• Pages: 80-101

FRONTIERS OF LAW IN CHINA

VOL. 13 SEPTEMBER 2018 NO. 3

DOI 10.3868/s050-007-018-0030-0

SPECIAL ISSUE

PARADIGMS OF INTERNET REGULATION IN THE EUROPEAN UNION AND CHINA

ADJUDICATING THE REGULATORY PENALTIES AGAINST NONPROFESSIONAL TAXI

SERVICES IN CHINA AND THE EUROPEAN UNION

XIONG Bingwan∗

Abstract This paper provides an overview of judicial decisions on lawsuits against

regulatory penalties imposed on nonprofessional taxi drivers and ride-hailing platform

operators in China and the European Union (especially Germany). Despite strikingly

different facts in these cases, courts in both China and the EU are frequently called upon

to rule on similar legal issues, including the applicability of old regulatory rules to new

forms of transport services, the regulatory bar for the operation of emerging transport

models, and the proper intensity of competition in taxi markets. The comparison of such

cases suggests that for deciding the regulatory schemes of the innovative economy of

transport services, the judicial system is not better suited than the regulatory system,

especially the regulatory authority of the central government. Moreover, an experimental

regulatory approach with minimum standards is arguably a feasible option that can fit

with the emerging nature of innovative businesses.

Keywords nonprofessional taxi services, regulatory penalty, DiDi, Uber

INTRODUCTION .................................................................................................................... 391

I. ADJUDICATING THE REGULATORY PENALTIES IN CHINA......................................... 392

A. Ruling of the Jinan Case ...................................................................................393

B. Ruling of the Guangzhou Case.......................................................................... 395

C. Ruling of the Beijing Case ................................................................................396

D. Comment........................................................................................................... 397

II. ADJUDICATING THE REGULATORY PENALTIES IN EUROPE...................................... 397

A. Applicability of PBefG to the New Form of Transport Services........................ 399

∗ (󰹟) Ph.D. in Law, School of Law, Renmin University of China, Beijing, China; LL.M., Harvard

Law School, Cambridge, USA; Senior Research Fellow, Renmin Law and Technology Institute, Beijing,

China; Assistant Professor, School of Law, Renmin University of China, Beijing 100872, China. Contact:

bxiong@ruc.edu.cn

I thank TIAN Wei, ZHANG Dongyang, MIU Yu, and LU Siye, who helped me overcome the linguistic

barrier in collecting and understanding German literature related to this paper. I am also grateful to Bing

Translator, a powerful translating software (http://www.bing.com/Translator) that converts court decisions in

German into clear English versions and proves the greatness of technological innovation.

2018] ADJUDICATING THE REGULATORY PENALTIES AGAINST NONPROFESSIONAL TAXI SERVICES 391

B. Legality and Legitimacy of Uber-Pop and Uber-Black.....................................401

1. Formal Violation............................................................................................ 402

2. Lack of State Control and Risk of Unsafe and Unfair Rides......................... 402

3. Distorted Competition and Threat to the Paramount Interests of the

Public............................................................................................................. 403

C. Legal Nature of Ride-Hailing Platform Companies..........................................403

III. UNDERSTANDING THE DIVERGENCES OF ADJUDICATIONS IN CHINA AND THE

EU ........................................................................................................................ 405

A. Decision-Making Capacity of the Judiciary...................................................... 405

B. Regulatory Capacity of Old Law over the Digital Economy............................. 408

C. Competition between Incumbent and New Entrants......................................... 409

CONCLUSION........................................................................................................................ 411

INTRODUCTION

The introduction of nonprofessional taxi services facilitated by digital ride-hailing

platforms, such as DiDi in China and Uber in the US and Europe,1 into the ride service

market has imposed serious challenges to the regulatory frameworks of passenger

transport services around the world. The regulatory scheme of the innovative form of ride

service varies greatly from one jurisdiction to another. Many transport regulatory

authorities tend to regulate nonprofessional taxi services with old regulatory regimes that

were enacted when digital-platform technology was an inconceivable concept, whereas

many other jurisdictions have been struggling to establish special regulatory schemes for

the operation of nonprofessional taxi services.

Meanwhile, the judiciary has been playing a significant role in shaping regulatory

schemes in this area. Judges in administrative courts must assess the legality of the

regulatory penalties imposed on nonprofessional taxi drivers when such drivers file

lawsuits against penalties. Their rulings are also driving forces in bringing the

development of such regulatory schemes for nonprofessional taxis forward or pushing it

backward. They have the competence to check or reinforce regulatory decisions. Hence,

careful analysis of such jurisprudential decisions may provide implications for

prospective lawsuits and, more importantly, regulatory policy making concerning the

sector of nonprofessional taxi services (and the entire digital economy in general).

For this purpose, in the remainder of this paper, I will portray the judicial rulings on

several high-profile lawsuits in China and Europe (especially in Germany) in Part I and

Part II. In Part III, I first evaluate the different approaches courts have taken to address

the regulatory disputes brought before them and then compare the court’s attitudes

regarding these two essential regulatory issues — namely, the applicability of old

1 DiDi and Uber were introduced to China’s transport market at approximately the same time. Uber’s

business in China was merged into DiDi in 2016.