Cases show need to foster private sector

China's top court has reaffirmed the need to strengthen judicial support for the private sector by revealing three criminal retrials in which entrepreneurs were acquitted of economic offenses.

As it released the notable cases on Wednesday, the Supreme People's Court urged judges nationwide to swiftly rectify miscarriages of justice and refrain from treating commercial matters as criminal ones in order to promote the sustainable, healthy and high-quality development of the private economy.

The top court emphasized that the rule of law provides the best business environment, noting that all market entities, whether State-owned or private, deserve equal legal protection.

"Unjust judicial actions or decisions can lead to anything from harm to an individual's rights to, in severe situations, financial ruin," it said.

"By sharing these cases, we aim to address public concerns and enable private enterprises and entrepreneurs to focus on innovation, operate with peace of mind and pursue development confidently," it added.

One case involved an individual surnamed Ye, the owner of a trading company in Sichuan province. On Dec 6, 2007, Ye's company won a bid to acquire a shopping mall for 4.6 million yuan ($645,384). After signing a transfer agreement on Dec 29 that year, Ye paid an initial fee of 1.2 million yuan to the local development and reform department but did not pay the remaining amount.

In June 2008, two mall tenants, surnamed Hu and Wang, signed a lease contract with Ye for 300,000 yuan, paying him an initial 60,000 yuan. They agreed to pay the remaining 240,000 yuan once Ye secured the property rights.

To collect the remaining rent, Ye forged a receipt indicating that the local development department had received the outstanding 3.4 million yuan, prompting the mall to sue Ye for defrauding the tenants.

Initially, a district court sentenced Ye to three years in prison with a five-year reprieve and fines for fraud. After Ye appealed, an intermediate court upheld the decision. Ye then sought a retrial from the Sichuan High People's Court.

Upon rehearing the case, the high court ruled in April 2024 that Ye was not guilty of fraud, determining that the matter was a contractual economic dispute rather than a criminal offense.

"Ye entered into a transfer agreement with the shopping mall and paid part of the fee," the high court noted. "Although he forged a receipt to gain the tenants' trust and collected their rent, his actions did not cause any losses to the tenants."

"Moreover, after signing the lease contract, the tenants were able to possess and use the mall's shops, meaning that Ye did not intend to unlawfully appropriate their properties, so his actions didn't constitute the crime of contract fraud," it added.

The top court highlighted the necessity of correcting the original ruling, stating, "The key to distinguishing between a contractual commercial dispute and the crime of contract fraud is accurately assessing whether an individual intended to unlawfully possess someone else's property."

"In essence, judges cannot classify someone's actions as contract fraud merely because he or she fabricates facts or conceals the truth," it concluded.

The court instructed judges nationwide to further advance the regularization and institutionalization of the review and correction of wrongful prosecutions involving property rights.