Financial assistance, economic compensation and damages on divorce: how do they relate?

In divorce cases the parties often cannot distinguish between financial assistance, economic compensation and damages, and use the three terms interchangeably.

In fact they are the three main remedies available on divorce in China, and each has a different legal meaning.

01 Financial assistance on divorce

Where one spouse is in difficulty at the time of divorce, the other spouse, if able to do so, shall give appropriate assistance.

Financial assistance requires only that one spouse be in difficulty at the time of divorce and that the other be able to bear the burden; no further condition is attached. It protects the basic means of survival of the spouse in difficulty and is the fallback institution within the divorce relief system, its core being provision.

The text of the provision

Article 1090 Where one spouse is in difficulty at the time of divorce, the other spouse, if able to bear the burden, shall give appropriate assistance. The specific arrangements shall be agreed between the parties; failing agreement, they shall be determined by the people's court.

02 Economic compensation on divorce

The spouse who bore more of the family's obligations may claim economic compensation on divorce. Economic compensation reflects the respect the law gives to the value of work within the home.

The family is the basic unit of society. Under the principle in civil law that rights and obligations correspond, every family member, while enjoying the peace and warmth the family provides, is under an obligation to maintain the stability of the family and to undertake a corresponding share of housework.

In practice, however, one spouse often takes on more of the household affairs for the good of the family as a whole and of the other's career, devoting more energy to housework while his or her own development and advancement are constrained. This is particularly so for women who gave up work after marriage to look after children and the home and who, lacking social experience or financial capacity, find themselves without economic security once the marriage ends.

The Civil Code widened the protection of the spouse who performs housework and removed the rule that economic compensation applied only where the spouses had agreed a separate property regime. A spouse who bears more obligations because of raising children, caring for elderly family members or assisting the other in his or her work is entitled to claim compensation from the other on divorce. Protection for the spouse who performs housework is thereby widened.

The right to claim economic compensation does not depend on whether the claimant is in difficulty: even where the spouse who bore more family obligations is in a better financial position than the other, he or she may still claim compensation on divorce. This is the marked difference between economic compensation and financial assistance.

The text of the provision

Article 1088 Where one spouse bears more obligations because of raising children, caring for elderly family members, assisting the other in his or her work or otherwise, that spouse is entitled to claim compensation from the other on divorce, and the other shall give it. The specific arrangements shall be agreed between the parties; failing agreement, they shall be determined by the people's court.

03 Divorce damages

On divorce, the spouse without fault is entitled to claim damages from the spouse at fault.

Fault covers bigamy, cohabitation with another person, domestic violence, abuse or abandonment of family members, and other serious fault as a residual category.

Damages cover both pecuniary loss and mental distress.

Compensation for pecuniary loss generally follows the principle of full compensation, assessed by reference to the degree of fault and the actual loss caused by the conduct.

Compensation for mental distress may take account of the degree of fault, the means used, the setting, the consequences and the impact, so as to soothe the psychological trauma and distress of the spouse without fault while imposing an effective sanction on the spouse at fault.

The Civil Code added other serious fault as a residual ground on which divorce damages may be awarded, bringing other conduct that causes serious harm to the other spouse within the scope of damages. The divorce damages system is thereby further improved and the interests of the spouse without fault are better protected.

The text of the provision

Article 1091 Where any of the following circumstances leads to divorce, the spouse without fault is entitled to claim damages:

(1) bigamy;

(2) cohabitation with another person;

(3) domestic violence;

(4) abuse or abandonment of family members;

(5) other serious fault.

All three remedies arise when the marriage is ended and take the form of a one-way provision from one spouse to the other, mostly in money, and all three protect the weaker party to some degree. They differ, however, in the conditions for their use and perform different regulatory functions. Parties to a divorce should make proper use of the law to protect their lawful rights and interests.