China updates

Arbitration & ADR

Contributed by Global Law Office
Effects of unauthorised agency on arbitration agreements
  • China
  • 18 October 2018

The Changsha Intermediate Court recently ruled on whether the arbitration clause in a share transfer agreement had a binding effect on the petitioner – who was a controlling shareholder of a public company – and a company to which he had intended to transfer his shares. The validity of the arbitration clause hinged on whether a director of the public company who had signed the share transfer agreement on the petitioner's behalf could express the petitioner's intention to arbitrate.

Arbitration clause not binding on insurer by way of subrogation
  • China
  • 14 October 2010

It is generally accepted that when a claim or a debt is assigned, the arbitration agreement attached thereto is also assigned. However, the Supreme People's Court has opined that an arbitration clause contained in a contract for carriage of goods by sea was not binding on an insurer that stepped into the shoes of the insured consignee by way of subrogation.

When is a dispute an inheritance dispute?
  • China
  • 05 August 2010

The Supreme People's Court recently issued a direction that an arbitral award should be refused recognition and enforcement as the arbitration concerned an inheritance dispute and was therefore not arbitrable. However, a request for a declaration of title to a 50% equity share in a company by way of succession could be characterized as a commercial matter.

Award by truncated tribunal refused recognition and enforcement
  • China
  • 27 May 2010

The Supreme People's Court has upheld the Chinese courts' first decision on an arbitral award issued by a truncated tribunal. Recognition and enforcement were refused in accordance with Article V(1)(d) of the New York Convention. However, Chinese arbitration law and practice do not absolutely reject an arbitral award issued by a truncated tribunal.

Foreign arbitral award refused recognition and enforcement on public policy grounds
  • China
  • 04 February 2010

For the first time since China acceded to the New York Convention in 1987, a foreign arbitration award has been refused recognition and enforcement in China on public policy grounds. Although the court apparently intended to set a precedent on these grounds, the case leaves open a number of significant questions.


Banking

Contributed by Jingtian & Gongcheng
New regulations promote issuance of panda bonds
  • China
  • 19 October 2018

The People's Bank of China and the Ministry of Finance recently issued the Interim Measures for the Administration of Bond Issuance by Overseas Institutions in the National Inter-bank Bond Market. Among other things, the new measures further clarify the qualification, application procedure, bond issuance, registration, custody and settlement and information disclosure requirements for overseas institutions that issue so-called 'panda bonds'.

PBOC issues new compliance requirements for cross-border financial network and information services
  • China
  • 24 August 2018

The People's Bank of China recently issued a notice to strengthen the provision of cross-border financial network and information services. The notice includes a number of compliance requirements concerning the provision and use of such services, including with regard to overseas providers, domestic users and industry self-discipline.

CBRC issues new circular to regulate private lending
  • China
  • 08 June 2018

The China Banking Regulatory Commission's Circular on Matters concerning Regulating Private Lending and Maintaining Economic and Financial Order recently came into effect. The circular was formulated in accordance with various laws and measures and establishes the basis for clarifying credit rules and prohibiting illegal private lending. According to government officials, the circular will be implemented in three stages.

CBRC publishes new rules on equity management of commercial banks
  • China
  • 06 April 2018

The China Banking Regulatory Commission (CBRC) recently issued its Interim Measures for the Equity Management of Commercial Banks. The measures have tightened the CBRC's regulation of the information disclosure and reporting requirements imposed on material shareholders that have a significant impact on the operation and management of commercial banks established in China.

State Council relaxes requirements for foreign-invested banks to conduct Rmb business in Beijing
  • China
  • 19 January 2018

The State Council recently announced a pilot programme that has lifted the requirements on foreign-invested banks entering the renminbi yuan (Rmb) business market in Beijing until May 5 2018. As a result, foreign-invested banks are no long required to have operated for more than one year before applying to conduct Rmb business in Beijing. The programme is another step towards encouraging foreign investment in the financial sector.


Competition & Antitrust

Contributed by AnJie Law Firm
SAMR revamps procedural penalty rules
  • China
  • 29 November 2018

The newly established State Administration for Market Regulation recently embarked on its first major overhaul of procedural rules by publishing the draft Interim Provisions on Administrative Penalty Procedures in Market Regulation and the related interim measures for public comment. Unsurprisingly, market observers and practitioners promptly examined the draft documents in an attempt to deduce any changes to the intended-to-be-repealed State Administration for Industry and Commerce rules.

Court examines refusal to deal in private antitrust litigation against Tencent
  • China
  • 18 October 2018

The Shenzhen Intermediate People's Court recently issued its judgment in the private antitrust litigation brought by domestic software company Shenzhen Micro Source Code Software Development Co Ltd (SMSCSD) against tech giant Tencent. SMSCSD had alleged that Tencent possessed a dominant position in the China mainland market for mobile instant messaging and social platform services and had abused this dominance by blocking its WeChat Official Accounts and engaging in discriminatory practices.

The global influence of Chinese merger control
  • China
  • 04 October 2018

China's rise to prominence as an antitrust regime of major importance for companies engaging in global M&A activity has granted it considerable leverage to influence the landscape of the industries in which its domestic companies participate. However, recent events have raised the prospects for greater activism by the national regulators in determining whether a merger or acquisition should go ahead and, if so, on what conditions.

SAMR adopts stricter view on identification of competitors in monopoly agreement case
  • China
  • 30 August 2018

The State Administration for Market Regulation recently fined two Shenzhen tally companies a total of Rmb3,163,108 for entering into a horizontal monopoly agreement. This is one of the first cases to be announced by the newly established antitrust law enforcement agency and may therefore indicate its attitude towards certain industries and behaviours. In particular, the way in which the competitors in this case were identified could raise new compliance challenges for companies doing business in China.

SAMR finalises long-awaited reform of its antitrust agency
  • China
  • 16 August 2018

The finalised three-pronged plan for consolidating China's antitrust agencies under the State Administration for Market Regulation was recently released. This initiative has been anticipated and speculated on since the central government's release of its structural reform plan in March 2018. According to the government's plan, the three-pronged plan should have been released in June 2018, but this was substantially delayed due to differences of opinion regarding the reform.


Energy & Natural Resources

Contributed by Broad & Bright
State Council issues guidelines for stable development of natural gas sector
  • China
  • 15 October 2018

The State Council recently issued Several Opinions on Promoting the Coordinated and Stable Development of Natural Gas. The opinions aim to accelerate the development and use of natural gas in a coordinated and stable manner, advance the energy production and consumption revolution and build a clean, low-carbon, safe and efficient modern energy system. The main purpose of the opinions is to aid in the development of strategies on the comprehensive development of the natural gas industry.

Latest negative list opens power sector up to foreign investors
  • China
  • 20 August 2018

The 2018 negative list was released in the middle of the current Sino-US trade war and is thus largely a gesture to show China's commitment to making consistent, reformative progress towards trade liberalisation. The new negative list has significantly opened the market up to foreign investment, particularly in the energy sector. Among the restrictions which have been lifted are those regarding power grid construction and the exploration and exploitation of oil and natural gas in free trade zones.

New measures enhance development of distributed wind power projects
  • China
  • 11 June 2018

The National Energy Administration recently issued the Interim Administrative Measures for the Development and Construction of Distributed Wind Power Projects, which aim to simplify the existing approval and development process for wind power projects. The development of distributed wind power will help to realise the sustainable development of China's wind power industry, accelerate energy transformation and revitalise the development of the national economy.

NDRC officially initiates national carbon emission trading system
  • China
  • 29 January 2018

The National Development and Reform Commission (NDRC) recently promulgated its Plan for Building the National Carbon Emission Trading Market (Power Generation Industry). According to the NDRC, the plan's implementation will play an important role in establishing the national carbon market and constitutes the official start of the national carbon emission trading system. However, a robust carbon emission trading system and a fair market trading environment for investors are still a long way off.

Supreme Court issues judicial interpretation to regulate mining rights allocation
  • China
  • 13 November 2017

Under the existing legal framework, the state owns all mineral resources in China and the allocation of mining rights is heavily regulated. However, the various courts have different understandings of the relevant laws and regulations and judgment criteria for mining right disputes vary from court to court. As such, the Supreme People's Court recently issued an interpretation on the application of law in hearing cases involving mining right disputes.


Environment & Climate Change

New measures further reform pollutants discharge permit system
  • China
  • 09 April 2018

The Ministry of Environmental Protection recently issued new administrative measures concerning pollutants discharge permits. In addition to providing the issuance procedure for such permits, the measures stipulate penalties for various violations. The promulgation of the measures will likely be viewed as a signal of more stringent legislative control over enterprises' environmentally sensitive activities.