International Law Office - Legal Newsletters, Law Firm Directory and Legal News

Arbitration

China

Overview
Including: international arbitration versus domestic arbitration; institutional and ad hoc arbitration; legal representation; commencement of proceedings; appointment of arbitrators; expansion of application and defence - further pleadings; hearing; rules of evidence; post-hearing pleadings; preservative measures; awards; enforcement of foreign arbitration award.

The much-debated Labour Dispute Mediation and Arbitration Law allows labour arbitration commissions to issue decisions which are immediately legally binding and which cannot be appealed in some cases. The fact that local labour arbitration commissions will allow workers to submit cases to arbitration for free is likely to result in more labour disputes being brought before the commissions.

China and Macau have signed an agreement to recognize awards made under their respective arbitration laws as being mutually legal and enforceable. A similar agreement is already in place between China and Hong Kong. The agreement applies to all arbitral awards made after December 20 1999.

Arbitration is the preferred method of dispute resolution for foreign investors in China. For a variety of reasons, foreign parties also prefer to arbitrate outside China. However, the first question confronting a party that wishes to arbitrate China-related disputes outside China is whether Chinese law allows the parties to do so. The answer, at least for now, is a qualified 'yes'.

Bilateral investment treaties are gaining recognition as sources of protection for foreign investors, as they allow investors to bring an arbitration claim directly against a host country. Historically, Chinese bilateral investment treaties have granted foreign investors limited rights of recourse through arbitration, but a new generation of treaties grants greater rights.

The Asian Domain Name Dispute Resolution Centre has been established in a joint venture between the leading Hong Kong and mainland Chinese arbitration institutions. It is one of only four globally that is authorized to arbitrate disputes relating to top-level domain names.

New Supreme People's Court provisions govern applications for the setting aside or enforcement of international arbitration awards, and cases concerning the validity of foreign-related arbitration clauses. They reflect the Chinese judiciary's desire to ensure that such cases are handled efficiently.

More updates >

Hong Kong

Overview
Including: Dispute Resolution in Hong Kong SAR

China's Supreme People’s Court has confirmed that awards made in ad hoc arbitration proceedings in Hong Kong are enforceable in China. This issue had been of particular concern because it had been unclear whether arbitration awards made with the assistance of the Hong Kong International Arbitration Centre would necessarily be treated as institutional awards or merely ad hoc awards.

Competition

China

The draft regulations to implement the merger control provisions of the Anti-monopoly Law provide clarification and procedural enhancements. However, buried in the detail are a proposal that becoming the single largest shareholder in a company will be enough to constitute a change of control, and a reserve power to subject deals which do not satisfy the notification thresholds to regulatory review.

China's first comprehensive competition law, over a decade in the making, is generally in line with international norms, but has some distinctive Chinese characteristics. This update examines its main features, the changes from the June 2007 draft and the implications for foreign companies doing business in China.

Corporate Finance/M&A

China

Foreign merging banks can now utilize a single-step approval process and apply directly to the People's Bank of China (PBOC) for final approval once the financial regulatory authority in the home jurisdiction has formally approved the merger. Previously, the PBOC's 'in-principle' approval had to be obtained before the merger in the home jurisdiction.

A notice recently issued by the China Securities and Regulatory Commission sets out conditions and procedures for the issuance of convertible bonds by listed companies. These include a requirement that listed companies issuing such bonds must have good cash flow.

Two recent foreign investments in Chinese telecommunications companies are examples of the trend towards liberalization in this sector. Although the stakeholdings acquired are relatively small, the deals indicate that China is one step closer to realizing its World Trade Organization market reforms.

The National People's Congress has amended the Equity Joint Venture Law in preparation for China's entry to the World Trade Organization. Foreign insurance companies may now provide services to equity joint ventures, and the latter are no longer obliged to report their production and operational plans to the authorities.

Including: Mergers Clarified; Application Procedure; Mergers with State Owned Enterprises; Due Diligence

A State Council Notice issued in October 2000 has effectively put any plans for mergers and acquisitions involving state owned power assets on hold for at least a year. The notice, rather than being specifically targeted at foreign investment, reflects renewed efforts by the central government to continue reforms in the power sector first initiated in 1998.

More updates >

E-commerce

China

On April 1 2005 China's first national level e-commerce legislation, the Electronic Signatures Law, came into effect. By giving legal weight to electronic signatures and to the creation and storage of business documents in electronic form, the law will not only facilitate online transactions, but also spur on the security and encryption business.

Intellectual Property

China

Under Chinese law, well-known trademarks receive special legal protection. However, a brand owner cannot unilaterally apply for a declaration that a trademark is well known under Chinese law. Such a determination can be made only in the context of administrative or judicial proceedings. An official interpretation aims to resolve the uncertainty surrounding well-known trademarks in China.

The Japanese Ministry of Trade, Economy and Industry and China's State Administration for Industry and Commerce have signed a memorandum of understanding on IP protection. Closer links are intended to foster joint efforts in areas such as trademark registration systems, the policing of counterfeit products and the prevention of unfair competition.

Legal measures are a key element of IP rights protection, but more is needed to keep a company's safeguards watertight. Businesses must take a holistic approach in developing a rights strategy that includes operational protocols and procedures, both internally and across the relevant supply chain and distribution network.

The most recent revisions to the People's Republic of China (PRC) Patent Law were passed to bring the law further into line with international standards and other PRC regulations. The recent revisions are also part of a national strategy to assist Chinese companies move towards greater innovation and to strengthen China's legislative and enforcement framework for the protection of IP rights.

The Supreme People’s Court has issued for public consultation a new draft of the Interpretation of Several Issues Regarding Application of Laws in Recognition and Protection of Well-Known Trademarks in Trademark-Related Civil Disputes for public consultation. It aims to set the criteria for the recognition of well-known trademarks and to standardize the remedies available for trademark owners.

A Chinese firm has won a patent infringement case against Schneider Electric and its Chinese distributor. The damages award - the equivalent of $48.6 million - is the largest issued in a patent infringement case in China and should encourage both Chinese and international companies investing in research and development in China.

More updates >

Offshore Services

China

The new Trust Law which recently took effect was enacted to protect the legitimate rights and interests of parties to a trust. The law provides a long-awaited legal framework for trusts in China, allowing for greater flexibility with regards to the holding and managing of property.