Seven lawyers, including Changming He from Hangzhou Tianxin Law Firm, jointly submitted a legislative proposal to the Legislative Affairs Commission of the National People's Congress Standing Committee regarding the legislation on marital joint debt.

Recently, the "Civil Code Marriage and Family Chapter (Draft of the Third Review)" was published online and publicly solicited opinions from the public. Seven lawyers, including He Changming from Hangtianxin Law Firm, jointly submitted legislative proposals to the Legislative Affairs Commission of the Standing Committee of the National People's Congress concerning the legislation on marital joint debts in the draft, and related articles were published on China Law Net.

The rule of law capacity is a core indicator of the modernization of national governance capacity.

The purpose of legislation and amendment is to maintain the advancement of the legal system, to better guide the role of legal norms, and to facilitate various civil and commercial entities to make civil legal acts beneficial to themselves and society according to legal guidance.

The amendment of the "Civil Code Marriage and Family Chapter" is a crucial and important part of building a country ruled by law, and should be considered comprehensively from the perspective of improving national governance capacity. First, under the premise of attaching great importance, efforts must be made to make the work solid, and the revision of the "draft" should be "fine rather than rough", and cannot be "putting a cat in a cow pen"; the space for interpretation disputes should be reduced as much as possible. Second, all legal articles must start from reality and cannot be separated from current judicial practice. Finally, in order to achieve advancement, comprehensiveness, and pre-normative regulation, the original legal articles and judicial interpretations should be used by adopting the method of selecting the best and discarding the inferior, absorbing the advanced and discarding the backward. At the same time, there should be innovative content of reformative and pioneering legal systems.

The current legislation on "marital joint debts" has obvious backwardness and limitations.

The 14th meeting of the Standing Committee of the 13th National People's Congress was held from October 21 to 26, 2019, and the Marriage and Family Chapter of the Civil Code ushered in its third review. Among them, the issue of "marital joint debts" remains one of the focuses. During the group deliberation, Vice Chairman Cao Jianming also clearly stated, "It is suggested to further consider and improve the system of jointly owned property of husband and wife."

Recently, the "Civil Code Marriage and Family Chapter (Draft of the Third Review)" was published online. Judging from the content of the "marital joint debts" section, there are still many points worthy of discussion. Article 840 of the draft states: "Debts incurred by the joint expression of intent, such as joint signatures by both spouses or subsequent ratification by one spouse, and debts incurred by one spouse in their personal name for the needs of daily family life during the subsistence of the marriage relationship, are joint debts of the spouses. Debts incurred by one spouse in their personal name during the subsistence of the marriage relationship that exceed the needs of daily family life do not belong to joint debts of the spouses; however, this excludes cases where the creditor can prove that the debt was used for the joint life, joint production and operation of the spouses, or was based on the joint expression of intent by both spouses." It now appears that this part of the content still has great limitations and backwardness, and is also in great contradiction and conflict with the Company Law, Contract Law, and Guarantee Law, and should be significantly amended.

Article 3 of the 2018 "Interpretation of the Supreme People's Court on the Application of Relevant Legal Issues in the Trial of Cases Involving Marital Debt Disputes" states: "For debts incurred by one spouse in their personal name that exceed the needs of daily family life during the subsistence of the marriage relationship, if the creditor claims rights on the grounds that it is a joint debt of the spouses, the people's court will not support it, except where the creditor can prove that the debt was used for the joint life, joint production and operation of the spouses, or was based on the joint expression of intent by both spouses." This content was directly incorporated into the draft clause. While this form of directly incorporating clauses absorbs the advancement and comprehensiveness of the original judicial interpretation, it also retains the inherent limitations and backwardness of the original judicial interpretation.

Suggestions for Amendment of the "Civil Code Marriage and Family Chapter (Draft) Third Review Draft"

Based on the specific content of the recently published "Civil Code Marriage and Family Chapter (Draft) Third Review Draft", combined with my many years of legal practice and thinking, I suggest the following seven amendments to the relevant clauses on "joint property responsibility of husband and wife" in the review draft:

1. Completely abandon the presumption of joint debt for joint production and operation and the determination of joint debt through subsequent ratification.

2. Set a limit on the amount of debt incurred unilaterally by one spouse for daily family life.

3. Drawing on the advantages of the limited partnership system in the Partnership Enterprise Law, establish a limited liability model for joint marital debts. That is, one spouse can bear limited liability within the scope of the joint property for joint marital debts, as distinct from unlimited liability for joint marital debts. Unlimited liability for joint marital debts requires an explicit written agreement; only signing without an explicit agreement to bear unlimited liability constitutes limited liability within the scope of joint marital property. If both spouses or one spouse, in accordance with Articles 839, 840, and 841 of the Civil Code, agree with the creditor to restrict the scope of property for unlimited or limited liability, the agreement shall be followed.

4. Establish a statutory system for the cooperation in the division of joint marital property when one spouse repays the personal debts of the other spouse under the system of jointly owned property of husband and wife.

5. Stipulate that debts incurred unilaterally for medical treatment, emergency rescue, statutory support, and maintenance needs are considered joint debts.

6. Clarify that the right of recourse of the tort victim takes precedence over the right to divide marital property.

7. Clarify that criminal property punishment liability is a personal debt.

Specific Amendment Suggestions and Reasons

Article 840 of the "Civil Code Marriage and Family Chapter (Draft) Third Review Draft" states: "Debts incurred by the joint expression of intent, such as joint signatures by both spouses or subsequent ratification by one spouse, and debts incurred by one spouse in their personal name for the needs of daily family life during the subsistence of the marriage relationship, are joint debts of the spouses. Debts incurred by one spouse in their personal name during the subsistence of the marriage relationship that exceed the needs of daily family life do not belong to joint debts of the spouses; however, this excludes cases where the creditor can prove that the debt was used for the joint life, joint production and operation of the spouses, or was based on the joint expression of intent by both spouses."

It is suggested that it be amended to: "Debts incurred by the joint expression of intent, such as joint signatures by both spouses, and debts incurred by one spouse in their personal name for relatively small amounts for the needs of daily family life during the subsistence of the marriage relationship, are joint debts of the spouses. Debts incurred by one spouse in their personal name during the subsistence of the marriage relationship that exceed the needs of daily family life do not belong to joint debts of the spouses; however, debts incurred for the treatment of serious illnesses or accidental injuries of one spouse, the other spouse, or their children or parents are considered joint debts."

Reasons for Amendment:

(1) Clearly define the boundary between joint marital debt and personal debt. For large-scale transactions, both spouses are required to sign and acknowledge the debt before it can become a joint debt. This is significant for the division of marital debt responsibilities in social life and judicial practice, and avoids one spouse bearing unlimited joint and several liability due to the malicious debt of the other spouse.

(2) The subsequent ratification by one spouse should not be considered a form of joint expression of intent. In judicial practice, such situations are very complex. Indeed, there are cases where one spouse intentionally avoids debt and separates it from the joint property of the couple. However, simply determining joint debt based on the signature of one party can easily lead to oversimplification of complex issues. "In practice, there are often cases where one spouse, either individually or through their own business, incurs debt and then intentionally or forcibly shifts the debt to the other spouse. There are also cases of forced ratification. For example, if one spouse is subject to coercive measures or impending enforcement due to personal debt, the relevant authorities or creditors may request their spouse to ratify it as a joint debt, explicitly or implicitly suggesting more serious consequences for not signing. To avoid coercive measures or enforcement for themselves or both parties, the spouse may reluctantly sign a ratification afterwards."

This subsequent ratification ultimately leads the other spouse to bear unlimited liability, even if the marriage relationship terminates, is revoked, or is declared invalid. This violates the true expression of intent of the parties involved when the debt was incurred. In reality, this has caused hundreds of thousands of individuals to remain untrustworthy and face extreme hardship after the termination of their marriage relationship.

If a couple voluntarily agrees to bear the responsibility of joint repayment afterwards, it can be handled and resolved based on the relevant principles of "debt accession" and "debt assumption," without the need for special provisions in the marriage and family law.

For the problem of difficulty in enforcement caused by the non-cooperation of the other spouse during enforcement, it is suggested that this legislation establish the responsibility of the other spouse to cooperate in the division of the couple's joint property to resolve this issue, see Articles 840-2 and 840-3.

(3) It is conducive to regulating the behavior of creditors in setting up claims according to the "principle of contract relativity" and is more conducive to protecting the interests of bona fide creditors, preventing malicious creditors or creditors with gross negligence from transferring their credit risks to the other spouse.

(4) Spouses and parents have statutory obligations to assist each other and their children, while spouses have a statutory obligation to support each other's parents. To treat illnesses or handle emergencies, one party should be allowed to incur debts for the treatment of themselves, the other party, or their parents and children as joint debts, regardless of the amount.

(5) The concept of "joint production and operation" is too broad, as the modes of production and operation are diverse, including but not limited to individual businesses, sole proprietorships, partnerships, limited partnerships, general partnerships, limited liability companies, stock trading, and real estate speculation. For debts incurred from "production and operation," the behavior of creditors should be regulated, otherwise it is easily in conflict with the legislative purpose and effectiveness of corporate laws such as the Company Law. Most importantly, this will infinitely expand the scope of presumed joint debts of couples, creating opportunities for malicious creditors or creditors with gross negligence to transfer their credit risks to the other spouse, increasing the difficulty of court judgments, harming public interests, and greatly undermining the stability of the social structure based on the family unit.

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