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.


Competition & Antitrust

Contributed by AnJie Law Firm
Merger control review 2020
  • China
  • 01 April 2021

The year 2020 was unusual. The outbreak of the COVID-19 pandemic and continued international trade tensions posed challenges to the Chinese antitrust law enforcement authority, the State Administration for Market Regulation (SAMR). Despite the challenges, the SAMR maintained a prudent attitude towards merger control review and even concluded more merger cases compared with 2019.

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.


Insurance

Contributed by AnJie Law Firm
Applicants must disclose facts when prompted by insurers to avoid rescission
  • China
  • 13 April 2021

When concluding insurance contracts, applicants have a duty of disclosure. However, applicants need not disclose information unless the insurer enquires. Insurers' remedy for breach of this duty varies. They can either rescind the contract and keep the premium or rescind the contract but return the premium. However, insurers have no right to rescind the contract if they underwrote it fully aware that the applicant had not provided honest answers.

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.


Intellectual Property

Contributed by Wanhuida Intellectual Property
Supreme People's Court promulgates opinions on copyright
  • China
  • 12 April 2021

Soon after the recent adoption of the third amendment to the Copyright Law, the Supreme People's Court promulgated the Opinions on Strengthening the Protection of Copyright and Copyright-Related Rights. The opinions aim to encourage the development of emerging industries and improve the quality and efficiency of copyright trials.

Court grants protection of unregistered Romanée-Conti GI
  • China
  • 05 April 2021

In a notable trademark case, the Beijing High Court found on appeal that the trademark 罗曼尼·康帝, a Chinese transliteration of 'Romanée-Conti', should be protected. The trademark contained characters that were found to have a stable corresponding relationship with the geographical indication (GI) Romanée-Conti, so the court found that its registration violated the Trademark Law. The decision suggests that unregistered foreign GIs may be granted protection in China.

Courts uphold decision to invalidate place name trademark
  • China
  • 29 March 2021

In an exemplary trademark case, Inner Mongolia Yunlu Water Industry Company Limited filed an invalidation claim against a trademark on the grounds that it breached the Trademark Law. The trademark in question was the name of a place in Inner Mongolia, China, which was known for its rich mineral resources. Therefore, the trademark's registrability depended on whether the name had acquired any additional meanings other than that of the place name.

New judicial interpretation aims to combat IP rights crimes
  • China
  • 15 March 2021

In September 2020 the Supreme People's Court and the Supreme People's Procuratorate jointly promulgated Interpretation III on Several Issues Concerning the Specific Application of the Law in Handling Intellectual Property Criminal Cases. The judicial interpretation aims to reduce IP rights crimes and create a business-friendly environment by establishing unified standards in the application of the law in this regard.

Promulgation of provisions on evidence in IP rights civil litigation
  • China
  • 08 March 2021

The Supreme People's Court recently promulgated Several Provisions on Evidence in Civil Litigation Involving Intellectual Property Rights. The 33-article provisions alleviate the burden of proof on IP rights holders and streamline the formal requirements for evidence sourced outside China. They also introduce penalties for evidence obstruction.


Tech, Data, Telecoms & Media

Contributed by AnJie Law Firm
Supreme People's Procuratorate issues provisions on handling of cybercrime cases
  • China
  • 19 March 2021

The Supreme People's Procuratorate recently issued the Provisions on the Handling of Cybercrime Cases by the People's Procuratorates, which include general provisions, as well as provisions on the guided collection of evidence and case reviews, the review of electronic data and court attendance in support of public prosecutions. Among other things, the provisions require the people's procuratorates to strengthen the penalties handed down in cybercrime cases.

MIIT launches cybersecurity pilot programme
  • China
  • 12 March 2021

The Ministry of Industry and Information Technology recently issued the Circular on Launching the Pilot Programme on Classified and Graded Management of Cybersecurity of Industrial Internet Enterprises. The pilot programme is initially scheduled to launch in 15 provinces and aims, among other things, to perfect the rationality, effectiveness and operability of the rules, standards, classification procedures and grading for industrial internet cybersecurity.

Proposal to tighten controls on import and export of commercial cryptography products
  • China
  • 29 January 2021

In August 2020 the State Cryptography Administration released the Regulations for the Administration of Commercial Cryptography (Draft for Comment). The draft regulations provide that the import of commercial cryptography products on the Commercial Encryption Import Licence List and the export of commercial cryptography products on the Commercial Encryption Export Control List should be subject to the import and export licence for dual-use items issued by the State Council.

Ministry of Commerce to launch pilot programme on cross-border data transfer security management
  • China
  • 22 January 2021

In August 2020 the Ministry of Commerce issued the Master Plan for Comprehensively Deepening the Pilot Programme on the Innovative Development of Trade in Services. The plan covers 28 provinces and municipalities directly under the central government, including Beijing, Tianjin and Shanghai. The pilot programme, which concerns cross-border data transfer security management, will run for three years.

Draft Guidelines on the Construction of a Data Security Standards System in the Telecoms and Internet Industries
  • China
  • 15 January 2021

In 2020 the Ministry of Industry and Information Technology issued the Guidelines on the Construction of a Data Security Standards System in the Telecoms and Internet Industries for public comment. According to the draft guidelines, the data security standards system for telecoms and internet industries comprises four categories: basic and general standards, critical technology standards, security management standards and critical field standards.