ON THE SOLUTION TO THE UNCERTAINTY OF JUDICIAL JUDGEMENT OF COMMERCIAL TRUST IN CHINA
Zhang Lili
Since the trust system was transplanted into China, there are many problems in the judicial practice of trust law, including facts the essence of trust system has not been generally recognized, the trust legislation is separated from trust practice, and the Trust Law lacks the supporting implementation mechanism. Especially, the judicial adjudication of commercial trust relationship is the most fundamental problems with significant cognitive differences. Therefore, this paper takes three typical cases as the starting point to explore the solutions to the uncertainty of commercial trust judicial judgment.Case 1: Z Trust and Investment Co., Ltd. v. N City State-owned Property Management (Shareholding) Co., Ltd. and W Factory (2007). From November 2002 to June 30, 2006, J Branch Banking Department of the Industrial and Commercial Bank of China Limited (hereinafter referred to as J Industrial and Commercial Bank) provided three loans continuously to W Factory, and N City State-owned Property Management (Shareholding) Ltd. (hereinafter referred to as N Co.), as the guarantor, promised to undertake joint guarantee liability. After the maturity of the above three loans, W Factory only returned 64.05 million yuan under the first loan, and still has the loan principal and interest outstanding for 79.45 million yuan. On July 25, 2005, J Industrial and Commercial Bank transferred the above-mentioned loan principal and interest to Nanjing Office of D Company (hereinafter referred to as D Co.). On June 2, 2006, Z Trust and Investment Co., Ltd. (hereinafter referred to as Z Co.) signed the property trust contract of Beijing, Tianjin and Nanjing with D Co., and became the trustee of the above-mentioned credit assets. Z Co. sued the debtors and guarantors of J Industrial and Commercial Bank, demanding the repayment of the loan principal of 79.45 million yuan and the interest of 13,812,393.23 yuan.Case 2: Anxin Trust and Investment Co., Ltd. v. Kunshan Chungao Investment and Development Co., Ltd (2010). In September 2009, Anxin Trust and Investment Co., Ltd. (hereinafter referred to as Anxin Trust) and Kunshan Chungao Investment and Development Co., Ltd. (hereinafter referred to as Kunshan Chungao) signed a property right trust contract of Kunshan federal international asset income right (hereinafter referred to as property right trust contract), established the property right trust, and separately signed the trust loan contract as the main contract for handling the mortgage registration of basic assets. One year after the establishment of the trust plan, Kunshan Chungao failed to fulfill its obligation of repayment of principal and interest as agreed. Anxin Trust filed a lawsuit to require Kunshan Chungao to return the loan principal of 128.4 million yuan and liquidated damages.Case 3: L's Son and Others v. F. In this case, L's father, mother and son had a dispute with F, who is L's wife due to inheritance. In 2004, a state-owned limited company transferred all its state-owned equity shares to seventeen natural persons including L after reform and recombination, and L account for 51 percent of the total equity shares with the payment of 42.75232 million yuan. On August 6, 2004, in order to pay for the equity interest, L signed a loan contract of 45 million yuan transfer with G Trust and Investment Co., Ltd. (hereinafter referred to as 'G Co.') on behalf of all these seventeen natural persons. The loan contract specified that the loan amount of L was 22.95 million yuan and the total amount of the contract shall be used to entrust G Co. to transfer 95 percent of the state-owned equity of the limited company. On the same day, L signed 'the equity investment fund trust contract' on behalf of seventeen natural persons as the client with G Co. who was as the trustee. The trustor delivered the trust fund of 79.636638 million yuan to the trustee, appointing that the management and application of the trust property should be managed and applied by the trustee according to the designated use of the trustor, and the trustee should exercise the shareholder's rights of the limited company by obtaining the written consent of the trustor. On October 27, 2009, the limited company applied to change its shareholders to L and other sixteen natural persons for the reason that the equity investment fund trust contract with G Co. was expired.From the details of the cases, although the specific circumstances are different, the focus of litigation is homogeneous, that is, the establishment and effectiveness of commercial trust relationship is an important part of litigation. In the dispute over contract of loan of Z Trust and Investment Co., Ltd. v. N City State-owned Property Management (Shareholding) Co., Ltd. and W Factory (2007), combining with the trust purpose, contract agreement and actual performance, as well as the impact of the contract on national interests, social public interests, third party interests, the court decided the commercial trust relationship between D Co. and Z Co. was established and effective based on the Trust Law. In the case of Anxin Trust and Investment Co., Ltd. v. Kunshan Chungao Investment and Development Co., Ltd, the court found the establishment of trust relationship on the ground that the trust contract was an expression of the true intention of both parties and did not violate any mandatory provisions of laws and regulation. In the case of L's Son and Others v. F, the court held that although 46 percent of the shares were registered in the name of G Co. when handling the business registration, according to the equity investment fund trust contract, as the trustee, G Co. could only passively accept the instructions of the trustor to manage or dispose of the property without its own independent will, so L and other sixteen natural persons and G Co. established a principal-agent relationship rather than a trust relationship.Obviously, there are no definite standards or rules in judicial judgment for the determination of commercial trust relationship, and the court makes the specific judgment in different cases, so it presents the situation of affirming or denying the same problem in similar situations. This is the uncertainty of the judicial judgment of commercial trust. The uncertainty of the judicial judgment is contrary to judicial justice. Therefore, it is necessary to explore the causes of the uncertainty of the judicial judgment of commercial trust and find the way to eliminate the uncertainty.II. THE REASONS FOR THE UNCERTAINTY OF THE JUDICIAL JUDGMENT OF COMMERCIAL TRUSTAs far as the commercial trust is concerned, there are two reasons for the uncertainty of the judicial judgment, that is, the uncertainty of the trust legislation itself and the uncertainty of the abstract trust legal norms' applying to the settlement of individual disputes. For the former, it is often manifested in the fuzzification, hysteresis and legal lacuna of relevant commercial trust legislation. For the latter, it is often manifested in the lack of commercial law thinking in the process of legal application.A. The Fuzzification of Legal Rules: The Unclear Extension of Trust PropertyThe fuzzification of legal rules is a result from the fuzzification of language itself, and it is more prominent in the case of the absence of legal interpretation. In the judicial judgment of commercial trust, the determination of trust property is directly related to the establishment of commercial trust relationship. However, according to articles 2 and 7 of the Trust Law of China, legal property and property right with the characteristics of certainty and independence can be trust property. But we cannot know whether anything with money value can be regarded as trust property. It shows the legislation on the scope of trust property is more principled and abstract, and there is no clear explanation on its extension and other related issues, so it is fuzzy.At present, not-unified understandings on this problem exist in academic and practice. In judicial practice, the scope of trust property is often measured according to the standards of certainty and independence. For example, in the dispute over contract of loan of Z Trust and Investment Co., Ltd. v. N City State-owned Property Management (Shareholding) Co., Ltd. and W Factory (2007), the court held that the creditor's right belonged to the lawful trust property, and the scope of the trust creditor's right in this case was determined, so it was determined that the trust property in this case had the characteristic of certainty, which was one of the valid reasons for the trust contract signed by Z Co. and D Co. However, with the development of trust industry practice, the types of property used for trust are increasing and diversified, due to the lack of legal recognition which is in an awkward position that are in lawmaking blank but widely used. In practice, the trust company has created a variety of trust forms, such as equity income right, accounts receivable income right, project income right, operation income right and bill income right. However, the system innovation in practice has not been recognized by the legislation. In addition, the legislation has not explained the standards of the certainty and independence of the trust property. So it is often difficult to decide definitely whether a certain type of property or right conforms to the constitutive requirements of the trust property in judicial practice, which is directly related to the legality and effectiveness of the trust. In the case of Anxin Trust and Investment Co., Ltd. v. Kunshan Chungao Investment and Development Co., Ltd, one of the focuses of the disputes between the two parties is the legality of assets income right as trust property. Although most scholars claim that the assets income right can be included in the scope of trust property, the court avoided the straight answer to this question in the judgment of this case.Thus it can be seen that the fuzziness of the legal rules on the scope of trust property, the disunity of theoretical research and the lack of clear guidance in judicial practice jointly lead to the uncertainty of the judicial judgment of commercial trust.B. The Hysteresis of Legal Rules: The Undetermined Ownership of Trust Property RightsThe Trust Law of China was promulgated in 2001, and has never been revised, so the relevant system design cannot fully meet the development needs of China's trust industry. This hysteresis also directly affects the judicial judgment of commercial trust in practice. Taking the ownership of rights in the trust relationship as an example, for the civil law countries, there is a problem of how to determine and demonstrate the attributes of trust property rights in order to integrate them into the concept system of civil law. Due to the conflict of legal tradition, when the civil law countries introduce the trust legal system, they either regard the ownership of trustee and beneficiary as special legal provisions, or avoid defining the nature of trust property rights. Article 2 of the Trust Law uses the expression that the trustor entrusts the property right to the trustee and the concept of entrustment. Therefore, in the practice of trust, the legal nature of trust, agency and commission agency is often blurred. And the term 'entrustment' is used for reference of the Contract Law, which cannot accurately express the legal relationship of trust. So it can be seen that the expressions of 'entrustment' and 'transfer' adopted in legislation have lagged behind the development of trust industry practice. In addition, in paragraphs 1 and 2 of article 14 of the Trust Law, what understanding should be made about 'acquired property'? Is the trustee's obtaining the property ownership or only the right of possession, use and disposal? The legislation is also unclear.On this issue, the academic circles generally think that after the establishment of the trust, the trustor loses the ownership of the trust property, while the trustee obtains the ownership, and the trustee's ownership should be limited. However, although there have been various trust products designed for various properties in trust practice, it is still difficult to answer such questions as how to establish and make public the ownership in trust law, which easily leads to the fallacy of commercial trust judicial judgment. In the case of L's Son and Others v. F, 46 percent of the equity of the limited company which L entrusted G Co. to hold and then return to L, is the personal property of L, or the joint property of the spouses. The court held that the equity was actually acquired by L before remarriage and should be his personal property. Such a judgment is obviously a misreading of the ownership of the trust property and the restrictive rights of the trustee in the trust duration. So the hysteresis of trust legislation on the ownership of trust property rights is an important reason for judicial judgment to go astray. C. The Legal Lacuna of Legal Rules: The Unsettled Trust Property Registration SystemThe legal lacuna of legal rules comes from the complexity of the objective world. In general, due to the complexity of social relations, legal rules cannot cover the all. Not to mention the lack of serious treatment of a problem in the theoretical circle and the lack of samples in the practical circle, legal rules cannot be taken into account. The legal lacuna of legal rules will directly lead to the uncertainty of judicial judgment.Taking the registration system of trust property as an example, it is generally believed that after the trust is effectively established, the trust property will become an independent property separated from the property owned by the trustor, trustee and beneficiary. Therefore, the trust property should be disclosed to the public or an unspecified third party in a certain way. Otherwise, for the latter, there may be unforeseen risks. Different from the common law countries which emphasize the protection of trust interests, the civil law countries emphasize the transaction security and the protection of interests of the third party, so their legislation generally stipulates the trust property registration and publicity system. The Trust Law of China also attaches importance to the trust property registration system. The content of the trust property registration system should be rich, including the scope, effect and procedure of the trust property registration. But apart from the provisions of article 10 of the Trust Law, there is no system design for the registration of trust property. The Administrative Measures for Trust Registration issued in August 2017 also avoids the problem of trust property registration, which actually makes the trust property registration system in China in an awkward situation.Some detours are usually adopted in practice in order to reduce the negative impact of the lack of trust property registration system. Firstly, the trustor and the trust company sign the trust documents and the property transfer contract at the same time. For example, in equity trust business, trust companies often sign two contracts with their clients at the same time including trust contracts and equity transfer contracts, and then clearly define the effectiveness of equity transfer contracts by means of agreements. In the case of L's Son and Others v. F, L and other sixteen natural persons adopt this method. Secondly, the trustor signs the trust contract with trust company and signs the mortgage contract and pledge contract to ensure the independence of the trust property which shall be terminated at the same time as the trust contract. In the case of Anxin Trust and Investment Co., Ltd. v. Kunshan Chungao Investment and Development Co., Ltd, both parties adopted this method. Thirdly, the trustor and the trust company only agree in the trust documents but do not actually perform the trust registration related matters. The above circuitous measures have the characteristics of limitation, stage and complexity, which cause the confusion of the legal relationship between lending and trust, investment and trust, and even the query of legitimacy, thus hindering the judicial judgment of commercial trust. D. The Uncertainty in the Law Application: The Lack of Commercial Law Thinking As far as the judicial judgment of commercial trust is concerned, the lack of commercial law thinking is one of the factors leading to the uncertainty of the application of law. In the current trial of commercial trust cases, due to the deep-rooted concept of civil law, the inherent characteristics of commercial law, merchants and commercial behavior are often despised, and the thinking of commercial law is obviously weak. Especially in the face of the conflict between the concept of civil law and the concept of commercial law, it is difficult for the judiciary to judge commercial cases accurately on the basis of measuring all kinds of interests with the thinking of commercial law. In the case of Anxin Trust and Investment Co., Ltd. v. Kunshan Chungao Investment and Development Co., Ltd, the court held that the trust relationship was established because the trust contract was the true intention of both parties and did not violate the mandatory provisions of laws and regulations. However, this case also involves the interests of investors outside the case. In the judgment, there is no protection of the interests of bona fide third party and transaction related parties based on the commercial law thinking paying attention to the importance of both efficiency and equality of commercial transactions.The thinking of commercial law also attaches importance to the protection of commercial contract freedom, so the parties' freedom of contract should be fully respected in the judicial practice, especially the agreement in the new contract, unless the agreement violates the mandatory provisions of laws and regulations. In the case of Anxin Trust and Investment Co., Ltd. v. Kunshan Chungao Investment and Development Co., Ltd, the judgment did not define the nature of assets income right. It failed to use commercial law thinking to directly determine the legitimacy of assets income right as trust property. In the case of L's Son and Others v. F, the judgment ignored that the equity investment fund trust contract signed by both parties was the true intention of them, and denied the trust relationship of both parties on the ground that the trustee did not have their own independent will, which obviously belonged to the commercial trial with civil law thinking instead of commercial law thinking.In summary, the uncertainty of commercial trust judicial judgment is mainly due to the uncertainty of legal rules and application of law, and has shown many negative effects in practice. For example, when the commercial trust cannot be clearly defined, the function orientation of the trust institution is vague, and cannot reflect the market orientation and unique function of the trust industry; the fund trust business of the trust institution is alienated into liability business, and so on. Therefore, the uncertainty of the judicial judgment of commercial trust is the important reason for the failure of the vigorous development of the trust industry in China.
III. THE LEGISLATIVE SOLUTION TO THE UNCERTAINTY OF THE JUDICIAL JUDGEMENT OF COMMERCIAL TRUST: THE CLARIFICATION OF THE RELATIONSHIP OF COMMERCIAL TRUST
Because the trust legal norms of our countries are vague, it is necessary to clarify the commercial trust relationship, determine the scope of the trust property, define the ownership of the trust property, and establish the trust registration system in order to solve the uncertainty of the judicial judgment of the commercial trust. A. Determining the Scope of the Trust PropertySince the trust system was transplanted to the civil law countries, there have been various theories trying to get rid of the theoretical dilemma of trust property ownership. Generally speaking, it can be explained from two aspects: the explanation within the framework of traditional property theory and the innovative explanation trying to break the framework of traditional property theory. Although the above views are investigation and analysis from different positions and multiple perspectives, they are still confined to the goal of the localization in the civil law system of the dual ownership of the common law system. In fact, there are fundamental differences in the ownership and utilization of property rights and legal thinking between the common law system and the civil law system. Therefore, if persisting in 'localization', we will inevitably go into an awkward situation that cannot be self-explanatory. In fact, the contradiction between the theory of trust property ownership in the common law system and the theory of real right in the civil law system also reflects the innovation demand of the traditional theory of real right in the context of the change and development of social economy. Based on the provisions of dual ownership of trust property in common law system, when the trustor transfers the trust property to the trustee, there are two different forms of ownership form: the trustee's ownership in common law and the beneficiary's ownership in equity. Based on the theory of 'one-object-one-right' in civil law countries, when the trustor transfers the trust property to the trustee, the property right will be transferred. And what kind of rights the trustee and beneficiary have formed after transferring is precisely what scholars are entangled with. But whether it is the decomposition or transfer of property rights, they are different forms of property rights movement. In fact, they are all legal tools to solve the practical problems of trust industry. B. Defining the Ownership of Trust PropertyThe determination of the property ownership of commercial trust should be based on the correct cognition of commercial trust. In the current trust market, capital trust, real estate trust and other commercial trusts occupy a dominant position, while civil trust products such as children's education trust, upbringing trust, heritage trust and other trust products are still in the initial stage. Compared with the traditional civil trust, the commercial trust has the organizational characteristics of the management mechanism. The transaction structure is manifested by a commercial activity that the trustor entrusts his property to the trust institution to establish the trust, and the trust institution is responsible for the management of the trust fund or the execution of the trust affairs, on the basis of the commercial system structure and the corresponding system design, so as to obtain the income for the trust beneficiary or realize the special purpose, and the trust beneficiary enjoys the similar investment income. This organizational feature makes the significant similarities between commercial trust and company in other aspects although they are different in the structure and rules of internal governance. Therefore, the commercial trust is independent existence different from the civil trust, but the design of traditional trust laws and regulations are aimed at the essential characteristics of civil trust, which does not meet the development needs of commercial trust. The commercial trust law in the real sense should be a legal norm with the nature of organic law, which straddles two fields of property law and contract law. So the analysis of the property ownership of commercial trust should also be combined with the current practice of commercial trust, rather than be constrained by the dual ownership of common law and the traditional property right theory of civil law, or even break through the existing legal theory and law system, in order to find a suitable location for the ownership of trust property. In fact, there are two levels of investment relations in commercial trust. The first level is that the trustor establishes a trust or purchases trust products as an investor. The second level is that the trustee uses trust property as an investor to make investment. When the trustor of commercial trust transfers the trust property to the trustee, the property right breaks down and a new type of property right comes into being.Firstly, the transfer of the ownership of the trust property of commercial trust trustor is the premise of the effective establishment of the trust. It is one of the essential characteristics of trust that property is transferred and managed by others. As for the transfer of property, although the Trust Law of China avoids this problem, from the perspective of legislative provisions, the effective establishment of trust should include two aspects: the expression of the trustor's intention to establish a trust and the transfer of property to the trustee. If the transfer of property is denied, the trustee can neither manage nor dispose the trust property in the name of him, nor can make the effect of achieving property in law. Others' management means that the trustee manages, uses and disposes the trust property in the name of him according to the needs of investors and the actual situation of the financial market. Therefore, due to the essential feature of property transfer and management by others, during the trust relationship, the trustor transfers his ownership of the trust property to the trustee.Secondly, in the trust duration the trustee has the right of a special technical structure which is the ownership of the trust property. The subject of commercial trust is mainly two kinds of types including investors and principals in form, but three kinds of different appearances including principal, trustee and beneficiary in fact. That is to say, in the commercial trust relationship, the trustor and the beneficiary are often combined. The management, use and disposal of the trust property by the trustee are not determined by the sole intention of the trustor or the trustee, but by the trustor or the trustee, or by the consensus of the trustor and the trustee. Therefore, the trustee's right to manage, use and dispose the trust property is a kind of right with special technical structure, which can be called the ownership of the trust property. Because the object of trust is trust property, the ownership of trust property is not the ownership in the sense of property law, but the special category of trust law. Its specific powers mainly include possession, use, disposal, management, investment, compensation for damages, and so on, but its exercising is limited by the trust terms, and in the case of commercial trust clients are mostly beneficiaries, many powers of the trust property ownership can actually be exercised by the beneficiaries.Lastly, the beneficiary enjoys the benefit rights of trust property in the trust duration. The purpose of legal transplantation is to give full play to the substantive functions of foreign systems rather than to copy the formal design of foreign systems. Different from the emphasis on the expression of the trustor in civil trust, commercial trust emphasizes the special protection of the rights and interests of the trustor and beneficiary as the consumers of trust products and trust services. Therefore, in terms of the two institutional functions of commercial trust which include the management of trust property and the protection of the rights and interests of beneficiaries, the latter one is more prominent. Some views even point out that, in a sense, the trust system is centered on the relief of the beneficiary's interests. So on the issue of the ownership of trust property, after the trustor transfers the ownership of the property, not only does the trustee become the owner of the trust property in trust law, but also the beneficiary has a special legal status, that is to say, the beneficiary enjoys the benefit rights of trust property, including the income, recourse and priority of the remaining property after the expiration of the trust, the priority. The benefit rights of trust property should also be the unique category of trust law. It is not a claim, nor a real right, but an independent property right with both the property right and the creditor's right.In addition, the commercial trust focuses on the arrangement of the trustor (beneficiary), the trustee and their relationship with the third party, which is out of the scope of property law, and its actual function cannot be realized simply by means of contract. So some scholars have proposed that if the commercial trust can be recognized as an 'organization of mechanism type' in theory, the trustor is the initiator of the trust organization, the trustee is the operator and representative of the trust organization, and the beneficiary has the right to claim the distribution of the property income of the trust organization based on the purpose of the trust. Only the trust organization has the complete ownership. This provides another feasible way to break the theoretical dilemma of 'dual ownership'. C. Establishing the System of Trust RegistrationAt present, the registration system of trust property which is still a blank in legislation is the guarantee to determine the ownership of trust property. In trust practice, the lack of trust property registration system has brought great negative effects, such as hindering the basic functions of trust to play effectively, not fully reflecting the advantages of trust system, and even restricting the development of trust system in turn. Therefore, it is urgent to establish the trust property registration system. According to the Trust Law, only the property that needs to be registered to have the effect of property transfer belongs to the scope of trust property registration, mainly including two categories. One is real estate and movable property including the real estate with registration as the effective element and the movable property with registration as the antagonistic element. The other is rights, including trademark rights, patent rights and other intellectual property that needs to be registered. As for securities, such as equity and creditor's rights, the continuous sale and purchase of securities in a securities investment trust make it impossible to register the trust continuously, so it is only necessary to record the securities as trust property on the company's stock register or the company's bond stub.IV. JUDICIAL SOLUTION TO THE UNCERTAINTY OF COMMERCIAL TRUST JUDICIAL JUDGMENT: THE JUDGMENT CONCEPT OF TOLERANCE AND PRUDENCEIn terms of the concept of judicial adjudication of commercial trust, the autonomy of private law should be strengthened in order to maintain the parties' true intention and encourage the innovation of the trust system. The judicial intervention should be paid great attention in order to consider the transaction security and to protect the interests of the third party. Therefore, the judicial judgment of commercial trust should be based on the essence of commercial trust and the way of thinking of commercial law, and strengthen the autonomy of private law. In the judicial practice of commercial trust, the judgment concept of tolerance and prudence should be followed in the determination of commercial trust relationship.A. The Concept of Tolerance in the Judicial Judgment of Commercial TrustThe concept of tolerance of the judicial judgment of commercial trust means that the judicial judgment of commercial trust should hold a tolerant attitude and should not pursue too much the expression of the true will of the parties or the manifestation of the trust. Its contents include the tolerance of the untrue expression of the will of the parties, the tolerance of the form of commercial trust and the tolerance of the agreement of the parties.Firstly, for the establishment of commercial trust, according to the provisions of paragraph 3 of article 8, and article 14 of the Trust Law of China, commercial trust is also the agreement between the parties. Therefore, in the judgment of commercial trust, there is no doubt that the true intention of the parties should be respected. But this is not absolute. From the perspective of commercial law thinking, different from the civil law thinking of respecting the expression of the parties' true intentions, the judicial judgment of commercial trust should emphasize the adherence to the rechtsschein theorie in principle. The judgment of rechtsschein theorie is mainly based on the exclusion of improper purpose. If a commercial act does not violate the mandatory provisions of laws and regulations, and does not deserve the negative evaluation of the law, then the appearance of the commercial act should be respected and tolerated. In the practice of commercial trust, due to the lack of the current trust legal system, the problems of explicit contract and implicit contract usually exist. In order to evade the law, the parties evade the constraint of the compulsory law by fabricating the behavior appearance with legitimate form, or apply the legal norms that could not be used originally by false means. There may be two contracts between the parties. One is an explicit contract with legal form, and the real transaction purpose of both parties is recorded by another set of language recognized by the Contract Law which is implicit contract. The case of Anxin Trust and Investment Co., Ltd. v. Kunshan Chungao Investment and Development Co., Ltd is the typical example. In this case, the original intention of Anxin Trust is to issue trust loans, but due to policy restrictions, both parties can only abandon the financing mode of 'collective trust + loan' and choose the financing mode of 'asset income right trust', and they signed the Kunshan-federal international asset income property right trust contract as the 'Yang contract' and the trust loan contract as the 'Yin contract'. Among them, the former is not the real intention of both parties, while the latter is. In this regard, we believe that the judicial judgment should follow the rule of tolerance, that is, as long as the purpose of the trust does not violate the law, and the way of borrowing other systems does not violate the law, we should affirm the commercial trust relationship between the two parties.Secondly, in practice, commercial trusts are mostly conducted by means of trust contracts, but there are also other written forms of non-trust contracts. For the commercial acts of non-trust contract form, the judicial judgment should also follow the tolerance rule. As long as it conforms to the above-mentioned commercial trust's essential characteristics, it can be recognized that the commercial trust is established. For example, there is a dispute about whether it is investment or actually a loan relationship or an investment trust relationship. The details of a case are as follows. Company A is a real estate development enterprise funded and established by the research institute of a provincial academy of agricultural sciences. With the approval of its superior competent authority, the research institute planned to dispose of its construction land resources in the form of external transfer of the company's equity. In August 2006, Liu invited company B to participate in the stock acquisition of company A. According to the oral negotiation between Liu and company B, Liu invested 2 million yuan in cash and cooperated with company B to participate in the acquisition. After that, company B invited Tang to contribute 5 million yuan, and invited Hu to contribute 8 million yuan, totaling 25 million yuan by adding its own self-raised funds 10 million yuan. After Liu, Tang and Hu transferred the investment funds to company B according to their agreement, they became anonymous investors of company B's participating in the stock acquisition project of company A. In August 2008, company B fully recovered its investment and made more than 60 million yuan of profit. In September 2009, company B transferred 49 percent of its shares to company C in the form of a net profit of 50 million yuan. Afterwards, company B settled accounts with Liu about the return of investment funds and profit distribution, and issued an IOU of '8 million yuan of investment funds and dividends owed to the sunshine water bank project'. And company B did not settle accounts with Tang and Hu. After that, for reason of the capital contribution of the anonymous participant is namely investment while actually the loan, company B was willing to return the capital contribution and legal interest, but refused to perform the profit distribution obligation according to the capital contribution agreement and the settlement confirmation amount of parties. Then the dispute arose. In this case, it can be analyzed according to the nature of the commercial trust. Liu has agreed with company B on the investment matters verbally, and transferred the funds to company B, which is in line with the characteristics of property transfer and management by others of the commercial trust. Secondly, company B's participation in the project development in its own name is the management, application and disposal of the entrusted property, and the IOU issued by company B indicates the recognition of the beneficial rights of Liu and others. So the characteristics of fiduciary duty of commercial trust can also be reflected. Therefore, in this case, the relationship between company B and Liu and others should be a trust relationship rather than a loan. In essence, commercial trust is a kind of commercial transaction in which the trust structure plays a unique institutional advantage. In the judicial judgment of commercial trust, as long as a commercial act has the characteristics of commercial trust, the trust can be established.Lastly, the management, use and disposal of the commercial trust property should be based on the respect of the parties' intentions. The trustee can manage, use and dispose the trust property fully and independently, or the trustor can retain a certain degree of control. In the latter case, when the trustor retains a certain degree of control, the establishment of the trust relationship should not be affected. In the case of L's Son and Others v. F, the original court held that although 46 percent of the equity was registered in the name of G Co. when handling industrial and commercial registration, according to the equity investment fund trust contract signed by the trust company and L and others, the equity was only transferred in the name of G Co., and the trustee should exercise the shareholder's rights of the limited company by obtaining the written consent of the L and others, which indicated that the trust company only holds shares on behalf of L and others, and it is a nominal shareholder, while L and others are the actual investors. The court of second instance also affirmed the judgement, and further pointed out that as the trustee, G Co. can only passively accept the instructions of the trustor for property's management or disposal, so there is the principal-agent relationship between G Co. and L and others. Such a judgement is not in line with the common practice of international legislation, and also reflects a harsh attitude. In this case, G Co. signed an equity investment fund trust contract with L and others for the purpose of establishing trust. The contract is legal and effective, and the trust property has also been transferred. Based on the above facts, the relationship between L and G Co. should be commercial trust rather than principal-agent relationship.B. The Concept of Prudence in the Judicial Judgment of Commercial TrustThe concept of prudence in the judicial judgment of commercial trust means that the judicial judgment of commercial trust should encourage and maintain system innovation, and the system innovation which is still blank in legislation but conforms with the characteristics of commercial trust should be prudently judged and not be negated its legitimacy easily. From a macro perspective, most of the commercial trusts in China's trust market are different from the mainstream trust forms in the west countries, and with the development of practice, a large number of financial innovations appear. Therefore, in the judicial adjudication of commercial trusts, we should consider comprehensively the current economic situation, reform background, reform direction and the guiding function of judicial adjudication to judge prudently the establishment and effectiveness of the commercial trust relationship.From a micro perspective, taking the form of trust property as an example, parties of the trust often take other types of property which are not regulated by our current legislation as the trust property in practice. In the case of Anxin Trust and Investment Co., Ltd. v. Kunshan Chungao Investment and Development Co., Ltd, there are two innovations arising from the game and acquiesced by the industry in the trust practice. One is the assignation of 'property right trust contract' and 'trust loan contract' in order to avoid the policy restrictions. The other is setting up a trust with the right of asset income as the trust property. For the first innovation, it is not described in this article to avoid repetition. For the second innovation, the court did not directly determine the nature of the asset income right, but recognized the economic right of the property from the perspective of the consistency of many terms between the trust contract and the loan contract, so that the mortgage right and the right of recourse of joint and several liability guarantee attached to the basic assets were recognized. So the court indirectly recognized the innovation of the asset income right as the trust property. In fact, this judicial decision treats this innovation with prudence rules. Therefore, as far as the form of trust property is concerned, the court should follow the prudence rules of judicial intervention, that is, to expand the certainty of trust property stipulated in the Trust Law, and include the right of asset income into the scope of trust property to encourage the innovation of commercial trust system.Of course, it is undeniable that there may be various opportunistic behaviors in the process of innovation, which may lead to moral hazard, thus damaging the interests of investors outside the case. Therefore, at the same time to treat the institutional innovation of commercial trust prudently and encourage innovation without denial easily, the moral hazard needs to be internalized, and the tendency of opportunism of discounters and financial intermediaries needs to be reduced or eliminated.In addition, the prudence concept of commercial trust judicial judgment is also reflected in the comprehensive consideration of many factors. For example, in the case of L's Son and Others v. F, different from general commercial trust, part of the capital source in this case is the loan of trustee G Co., the other part is the assets raised by the trustor's financing, and then the trustor trusts the whole to G Co. to acquire the equity. However, the acquired equity comes from the qualification of state-owned enterprise's restructuring, and the trustor has not acquired equity all the while. So the rationality of defining it as a commercial trust relationship lies in that if the nature of the trust relationship is denied, the nature and content of the trust property may be simplified when inheritance occurs. If it is included in the trust legal framework, the definition of the trust property in this case is clearer.The defect of legislation is an important reason for our country's trust industry to fall into a low state, but the misjudgment of commercial trust in judicial practice has also brought a great negative impact on the development of trust industry. Therefore, it has an important basic and guiding role to establish the correct judgment concept and rules of commercial trust. On the basis of respecting China's national conditions, adopting the concept of balance between autonomy of private law and judicial intervention and the rules of tolerance and prudence, will not only help to strengthen the localization of trust law in its transplantation process, avoiding changing with their environment, but also help to correct the operational defects of trust institutions and promote the vigorous development of trust industry.
