Natural law, basic goods, and fiduciary altruism

• Author: Wu Zhicheng
• Position: WU Zhicheng (???), D. Phil. in Law, Faculty of Law, University of Oxford, Oxford, UK; Assistant Professor, School of Law, Renmin University of China, Beijing 100872, China. Contact: wu.zhicheng@ruc.edu.cn.
• Pages: 431-451

FRONTIERS OF LAW IN CHINA

VOL. 15 DECEMBER 2020 NO. 4

DOI 10.3868/s050-009-020-0025-3

FOCUS

NATURAL LAW IN A CHANGING WORLD

NATURAL LAW, BASIC GOODS, AND FIDUCIARY ALTRU IS M

WU Zhicheng*

Abstract Even though fiduciary duties take the highest position in the spectrum of

legal altruism, and legal fiduciary altruism sometimes differs from moral fiduciary

altruism, natural law morality is not necessarily useless in helping to explain, determine,

and justify concrete rules in fiduciary law. Five specific inspirations, in addition to

divergences, can be drawn by a closer look at the seven basic goods of John Finnis’

natural law theory. First, the basic good of life may help to determine the boundary of

the best interest test under the duty of loyalty. Second, the basic good of play, in

particular the distinction between business community and play community may help to

justify the separate treatment between civil agency and commercial agency regarding the

unconditional power of immediate termination. Third, practical reasonableness may help

to explain the rule against set-off under the duty of no conflict. Fourth, different cultural

notions of sociability may lead to distinct understandings with regard to the no-profit

rule. Fifth, different attitudes towards knowledge in various religious beliefs may create

distinct understandings about the burden of informed consent.

Keywords natural law, basic goods, fiduciary duties, altruism

INTRODUCTION .................................................................................................................... 432

I. LAW AND MORALITY IN FIDUCIARY ALT RUI SM ....................................................... 433

A. Altruism in Fiduciary Law ................................................................................433

B. Law vs. Morality in Understanding Altruism.................................................... 435

II. INSPIRATIONS FROM BASIC GOODS ........................................................................ 438

A. Life, Sacrifice, and Duty of Loyalty................................................................... 439

B. Play, Business, and Termination of Fiduciary Relationship ..............................441

* WU Zhicheng (吴至诚), D. Phil. in Law, Faculty of Law, University of Oxford, Oxford, UK; Assistant

Professor, School of Law, Renmin University of China, Beijing 100872, China. Contact: wu.zhicheng@ruc.

edu.cn.

This article is supported by the Fundamental Research Funds for the Central Universities, and the

Research Funds of Renmin University of China (20XNF003). I wish to thank Professor John Finnis and

Associate Professor Guo Rui for helpful comments on the ideas of this paper. Any errors are my own.

432 FRONTIERS OF LAW IN CHINA [Vol. 15: 431

C. Practical Reasonableness and No Conflict of Interest......................................445

III. DIVERGENCE IN BASIC GOODS ............................................................................. 446

A. Sociability, Friendship, and No Profit............................................................... 446

B. Religion, Knowledge, and Informed Consent.................................................... 449

CONCLUSION........................................................................................................................ 450

INTRODUCTION

The concept of “fiduciary duties” has long been recognized in common law

jurisdictions and has gradually become a popular concept in China’s civilian jurisdictions.

While the understanding of the scope and content of fiduciary varies in common law

jurisdictions,1 there is a commonly recognized core. Specifically, fiduciary duties are a

set of duties owed by the fiduciary to the beneficiary, according to which the fiduciary

shall act in the best interest of the beneficiary in good faith, the fiduciary cannot incur a

conflict of interest between him/herself and the beneficiary or among beneficiaries, and

the fiduciary cannot obtain profits from his/her position as a fiduciary without the

informed consent of the beneficiary.

Chinese commercial law generally and functionally recognizes fiduciary duties,

though not yet in a notional way. Specifically, in company law, directors owe fiduciary

duties to the company,2 though it is difficult to find a similar authority confirming that

promoters owe fiduciary duties to the company at its incorporating stage similar to the

way directors owe fiduciary duties to the company having finished its incorporation

process.3 In trust law, a trustee owes duties of loyalty, no conflict, and no profit to

beneficiaries.4 In partnership law, duties of no conflict and no profit are provided, but

there is no such duty of loyalty.5 In agency law, such types of provisions cannot be found

in contract law for generally mandating regulating agents, but they can be found in

specialized laws for, say, practicing lawyers.6 Overall, fiduciary rules in Chinese law are

still in the process of being detailed in the sense that fiduciary rules are currently written

in an abstract way without many cases for reference to conduct context-based analyses.

On the one hand, these factors do cause lacuna, adding difficulties in applying such rules.

1 See for example Paul Finn, Fiduciary Obligations: 40th Anniversary Republication with Additional

Essays, The Federation Press (Sydney), at 308–311 (2016); Jennifer G. Hill & Matthew Conaglen, Directors’

Duties and Legal Safe Harbours: A Comparative Analysis, in D. Gordon Smith & Andrew S. Gold eds.

Research Handbook on Fiduciary Law, Edward Elgar Publishing (Cheltenham), at 305–309 (2018).

2 中华人民共和国公司法 (2018 修正) (Company Law of the People’s Republic of China [2018

Amendment]), Art. 148.

3 Id., Art. 94.

4 中华人民共和国信托法 (2001) (Trust Law of the People’s Republic of China [2001]), Arts. 25–28.

5 中华人民共和国合伙企业法 (2006 修正) (Partnership Enterprise Law of the People’s Republic of China

[2006 Revision]), Arts. 32, 96.

6 中华人民共和国律师法 (2017 修正) (Lawyers Law of the People’s Republic of China [2017 Amendment]),

Art. 39; Code of Practice for Lawyers [2017 Amendment], Art. 39.