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.


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
Punitive damages highlighted in new judicial interpretation on food safety
  • China
  • 01 March 2021

The Interpretation on Several Issues Concerning the Application of Laws in the Trial of Civil Cases Involving Disputes over Food Safety (I) recently came into force. The 14-article interpretation sets out the scenarios in which various parties will be held liable and the level of compensation liability that they will assume. This article explores some of the interpretation's key takeaways, including with respect to e-commerce and parallel imports.

Publishing house awarded Rmb1.5 million in damages for trade dress copycat
  • China
  • 22 February 2021

The Commercial Press has published the Dictionary of Frequently Used Ancient Chinese Characters since 1979. It has been reprinted more than 160 times and sold over 22 million copies. The Commercial Press was recently awarded Rmb1.5 million in damages in the first court ruling in which a book planning firm and a publisher were held liable for joint infringement in a dispute concerning book decoration.

National People's Congress passes fourth amendment to Patent Law
  • China
  • 15 February 2021

The National People's Congress recently passed the fourth amendment to the Patent Law, which will come into effect on 1 June 2021. It has been eight years since the first draft was released for public opinion. This article provides an overview of how the patent regime will be updated.

Third amendment to Copyright Law
  • China
  • 08 February 2021

The Standing Committee of the National People's Congress recently adopted the third amendment to the Copyright Law, which is the result of decade-long legislative efforts of the Legislation Office of the State Council and the National Copyright Administration. The amendment will enter into force on 1 June 2021. This article provides an overview of the key highlights of the new law.

Best strategies for fighting trademark squatting
  • China
  • 01 February 2021

The number of trademark applications has increased progressively in recent years and this has created serious adverse consequences, including with respect to trademark squatting. Rights holders must be aware that legal means are available to help them deal with trademark squatters and know that, since the government has decided to tackle the problem, these legal means are effective.