China updates

Arbitration & ADR

Fraud claims in letter of guarantee not subject to arbitration clause in underlying contract
  • China
  • 17 October 2019

An independent letter of guarantee involves a legal relationship between the applicant, the issuer and the beneficiary. Without an arbitration clause in a letter of guarantee, it is unclear whether the arbitration clause in the underlying contract can also bind the issuer. A recent Supreme People's Court ruling provides a clear answer to this question.

Does an invalid arbitration clause equal no arbitration clause?
  • China
  • 25 July 2019

The Fushun Intermediate People's Court recently ruled that, although an arbitration clause was invalid on the grounds that it allowed disputes to be resolved through arbitration or litigation, the award issued by the arbitration commission was final and binding as the company had failed to challenge the validity of the arbitration clause or the arbitration commission's jurisdiction over the dispute within the mandatory timeframe.

Mainland China and Hong Kong agree mutual interim measures to aid arbitral proceedings
  • China
  • 16 May 2019

Mainland China and Hong Kong recently signed the Arrangement Concerning Mutual Assistance in Court-Ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the Hong Kong Special Administrative Region. Historically, it has been impossible for parties to arbitral proceedings with a seat outside mainland China to obtain interim measures from mainland courts. This situation will change completely after the arrangement comes into force.

Are recordings made without counterparty's consent admissible as evidence in arbitration?
  • China
  • 21 March 2019

It has long been disputed whether video or audio recordings can be admitted as evidence in arbitration where they are made without the counterparty's consent. Although the general attitude in this regard has become more relaxed, such private video and audio recordings are not an effective form of evidence, as the counterparty may dispute them for many reasons. Thus, in order for recordings to be accepted as evidence, a number of factors should be considered.


Competition & Antitrust

Contributed by AnJie Law Firm
SAMR publishes leniency guidelines
  • China
  • 10 September 2020

The Anti-monopoly Bureau of the State Administration for Market Regulation recently published the Guidelines on Leniency for Horizontal Monopoly Agreements. The guidelines propose a relatively reliable leniency system under the Anti-monopoly Law, which is of great significance for improving the effectiveness of antitrust enforcement, while providing a valuable source of guidance for Chinese market players to follow.

Implications of antitrust guidelines for automobile sector on regulation of vertical restraints
  • China
  • 03 September 2020

China's antitrust agency's greatest competition concerns in the automobile sector relate to vertical restraints. Possibly underscoring this concern, the newly published Antitrust Guidelines on the Automobile Industry placed its main focus on clarifying issues arising therefrom. To help companies in the automobile industry better make their own assessments on antitrust compliance in China, this article explains the antitrust rules relating to vertical restraints provided in the guidelines and analyses their implications.

Hybrid antitrust law – interaction between administrative enforcement and private action
  • China
  • 23 July 2020

Alongside increased administrative action, Chinese companies increasingly bring private antitrust actions against rival companies, particularly in the technology sphere. These suits are often accompanied by an administrative complaint that can lead to investigations and penalties. This article clarifies China's hybrid antitrust system in order to better understand the antitrust risks facing foreign enterprises in China.

SAMR continues to scrutinise semiconductor mergers
  • China
  • 30 April 2020

China's merger review practice has not been negatively affected by the COVID-19 outbreak. According to public statistics, in the first quarter of 2020 the State Administration for Market Regulation (SAMR) completed 111 filing reviews, with a slight year-on-year growth of 0.9%. The current economic downturn raises the question of whether the SAMR will relax its antitrust scrutiny to encourage M&A activity. However, recent merger review practice in China suggests that this has not been the case in the semiconductor sector.

Merger control review 2019
  • China
  • 16 April 2020

The year 2019 marked the 11th anniversary of the implementation of the Anti-monopoly Law and was also the first full calendar year since the State Administration for Market Regulation (SAMR) became China's single centralised antitrust enforcement agency. Evidently. the SAMR has become more stringent and detail oriented with respect to the analysis of relevant markets and the competition impact of mergers.


Energy & Natural Resources

Government greenlights national oil and gas pipeline network company
  • China
  • 08 April 2019

The Communist Party's Central Comprehensive Deepening Reform Committee recently approved the Implementation Opinions on the Reform of the Operation Mechanism of the Oil and Gas Pipeline Network and the establishment of an independent national oil and gas pipeline network company. This initiative will significantly transform China's oil and gas sector into a more competitive and non-discriminatory environment for all players.

Government issues new policies and regulations to develop PV industry
  • China
  • 04 March 2019

As photovoltaic (PV) technology advances, development and construction costs continue to decrease. In 2017 the average construction cost for new PV power plants was 45% lower than in 2012, which led the state to reduce subsidies and ease the pressure on subsidy funds. As such, in May 2018 and January 2019 various government bodies issued two policies concerning PV power generation, which have both contributed to the industry's development.


Insurance

Contributed by AnJie Law Firm
WFOE shopping: how do Beijing, Shanghai and Shenzhen compare for establishing an insurance WFOE in China?
  • China
  • 15 September 2020

Foreign insurers cannot directly sell insurance products in China unless they have successfully established a joint venture or wholly foreign-owned enterprise (WFOE) insurer in mainland China. In light of Shenzhen's recent pilots and reforms, it is now the most favourable destination for foreign insurers seeking to establish a WFOE in mainland China.

China, GATS, Trump: do non-US insurers get a piece of the US-China trade deal?
  • China
  • 11 August 2020

Despite the tortuous path ahead for the US election campaigns and the trials and tribulations of 2020, the US-China Phase One Trade Deal remains in place. As China begins to further open its financial market, foreign insurance institutions (FIIs) may be wondering whether non-US FIIs have any chance of benefiting from China's treatment of US insurers. If only US insurers benefit, would that be a Global Agreement on Trade in Services (GATS) violation or would it be GATS compliant?

Why business interruption insurance covers only losses resulting from damage to property
  • China
  • 28 July 2020

The rapid spread of the COVID-19 pandemic has affected business operations worldwide. For many companies, business interruption (BI) as a result of the pandemic is one of the greatest operational risks of 2020. Although many companies are insured against BI, their coverage may not extend as far as they believe. For example, compensation under a BI policy is often based on the condition that damage to property has occurred. This article sheds some light on this rule.

Can foreign investors capitalise on insurtech's growth in China?
  • China
  • 30 June 2020

It is no secret that China's insurance industry presents good upside growth opportunities and China's insurtech market continues to grow rapidly. Foreign insurers are currently underrepresented in this market, even as former market barriers to entry continue to fall. This market presents great potential for foreign insurers, and Western insurers in particular have centuries of experience to share with their Chinese counterparts.

Developments and typical disputes regarding D&O insurance in China
  • China
  • 28 April 2020

In early 2020, the Luckin Coffee scandal drew attention from the insurance, legal and security industries and turned the spotlight on directors' and officers' (D&O) liability insurance policies in China. With the developing pace of the security and insurance markets, the refreshed focus on D&O insurance gives Chinese underwriters plenty to contemplate.


Intellectual Property

Contributed by Wanhuida Intellectual Property
Legislative overview 2020: patent law, trade secrets and judicial interpretations
  • China
  • 18 January 2021

During a volatile 2020, China's legislature completed the overhaul of an amendment to patent and copyright law and promulgated varied judicial interpretations and policy documents projected to bring substantial changes to the nation's IP landscape from 2021. These well-coordinated legislative efforts ensure that parties will have detailed rules and criteria to follow and will improve the consistency, predictability and transparency of IP protection in China.

Stopping patent infringement in four months through administrative action
  • China
  • 30 November 2020

LPG Systems recently received an administrative decision from the Beijing Intellectual Property Office ordering an infringer to stop its design patent infringement. Previously, LPG had prevailed in an invalidation proceeding initiated by the infringer against its design patent in which the China National Intellectual Property Administration maintained the validity of this design.

Bolar exemption does not apply to offering to sell patented drugs
  • China
  • 23 November 2020

The China National Intellectual Property Administration recently released details of 10 exemplary patent administrative enforcement cases from 2019. One selected case concerned a patent infringement dispute relating to the anti-tumour drug sorafenib, which has been selected for its significance in respect of the application of the Bolar exemption.

Does use of trademark in title of product sold online constitute trademark infringement?
  • China
  • 16 November 2020

Whether the use of a trademark in the title of a product sold online constitutes trademark infringement typically depends on whether such use is fair. When products are sold online, determining what constitutes fair use can be tricky. Two cases involving famous mobile phone manufacturers Xiaomi and Oppo illustrate this problem.

Beijing High Court guidelines on determining compensation for IP rights infringement
  • China
  • 09 November 2020

In April 2020 the Beijing High Court published the Guidelines on the Determination of Damages and Statutory Damages in Disputes over Intellectual Property and Unfair Competition. These guidelines, which entered into effect on the date of issuance, are detailed, precise and even innovative. Even if they have binding force on only the Beijing courts, they should be influential throughout the rest of the country.