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.
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 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.
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.
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.
The State Administration of Foreign Exchange recently found 600 websites guilty of illegally providing foreign exchange (FX) margin trading services. The high yields associated with such high-risk investments have led many countries to introduce strict regulations. In China, the financial regulatory authorities have clarified that no legal institutions can conduct FX margin trading business and that those who break the law in order to engage in such business may incur administrative or criminal penalties.
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'.
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.
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.
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.
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.
The State Administration for Market Regulation (SAMR) recently published the Draft Amendment to the Anti-monopoly Law (AML) for public comment. The draft amendment demonstrates the SAMR's strong stance on monopoly behaviour and is based on 12 years of antitrust enforcement. It conveys to the public that the Chinese authorities will strengthen enforcement relating to monopoly conduct. This article provides a summary of the draft amendment's main changes and the practical implications thereof.
The State Administration for Market Regulation recently released a revised draft of the Anti-monopoly Law (AML) for public comment. In general, the revised draft follows the current AML's basic framework; however, it significantly enhances the legal liability of AML violators. This article highlights key changes proposed by the revised draft and discusses why these changes matter for business entities from a practical point of view.
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.
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.
The Ministry of Justice recently published for public comment the draft Atomic Energy Law, which the legislature had been drafting for nearly 30 years. Together with the Nuclear Safety Law, which entered into force in January 2018, the law is expected to form the fundamental legal framework for China's nuclear energy industry. This article discusses two important issues concerning nuclear energy in China: the relationship between the two laws and the nuclear damages compensation system.
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.
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.
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.
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.
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.
In terms of premium revenue, China is the second largest insurance market in the world. However, regulators and insurers are often frustrated due to a lack of insurance innovation. In response to such frustration, litigation property preservation liability insurance has emerged and become a typical insurance solution to satisfy market demand and address unique Chinese insurance requirements in order to align them with the country's judicial system.
Insurance subrogation is an important legal mechanism which enables insurers to reduce their losses after insurance indemnities are paid. However, opinions differ as to the application of reinsurers' right of subrogation. This article answers questions which frequently arise in this regard from a Chinese perspective.