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.


Aviation

Contributed by KaiRong Law Firm
Drone regulations: what you need to know before you fly a drone
  • China
  • 16 June 2021

In recent years civilian unmanned aerial vehicle (UAV) technology has developed rapidly and the use of UAVs has become increasingly widespread. Both amateur and professional drone users should treat all applicable regulations and normative documents with caution to avoid legal sanctions and administrative penalties. This article is a brief introduction to the registration, certification and licensing requirements relating to civil unmanned aircraft in China.

SGHA cannot protect ground handling companies as before
  • China
  • 08 July 2015

The Standard Ground Handling Agreement (SGHA) has been adopted for a substantial number of ground handling agreements between airlines and ground handling companies. Article 8.1 of the SGHA is typically used to exempt ground handling companies from liability for damages caused by them. A Shanghai High Court judgment has clarified significant issues relating to the interpretation of this article.

Air passenger bears consequences for lack of visa
  • China
  • 28 January 2015

Border entry and exit permissions are an important aspect of international air transport. A case before the Jingan District People's Court has confirmed that since the regulation of immigration is a government function, the passenger will bear the consequences if air travel is interrupted due to visa issues.

Court considers strange circumstances of lost luggage claim
  • China
  • 02 April 2014

When Austrian Airlines found the luggage of one of its passengers several months after it had gone missing, the passenger was notified to reclaim it. The passenger checked the luggage and found that all of the previously declared contents were intact. However, he then unexpectedly claimed that valuables worth Rmb200,000 were missing. The court considered the extent of the airline's liability in the subsequent compensation claim.

Air China triumphs in ticket re-issuing dispute
  • China
  • 30 October 2013

The courts recently found in favour of Air China in a dispute arising from the re-issuing of the return portion of a ticket. They held that it was legal for both parties to agree to re-issue the ticket and extend its validity period, and therefore both parties should have acted according to the amended contract. As the passenger did not take the re-issued flight as agreed, he was responsible for the consequences.


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
SPC releases judicial interpretation relating to punitive damages in IP cases
  • China
  • 14 June 2021

In China, decisions in which punitive damages are claimed and supported by the court are becoming increasingly frequent. The Supreme People's Court recently released a Judicial Interpretation on the Application of Punitive Damages in the Trial of Civil Cases Involving Infringement of Intellectual Property Rights with immediate effect. The judicial interpretation's main purpose seems to be to coordinate and unify the criteria and language used in different IP laws.

How new Patent Law transforms patent litigation
  • China
  • 07 June 2021

The fourth amendment to the Patent Law, which makes substantial changes to patent filing and enforcement, recently took effect. The amendment largely codifies the evolving patent practice of the Chinese judiciary. It incorporates various revisions, including raising statutory damages, introducing punitive damages and leveraging the good-faith principle to address the abuse of patent rights. This article analyses these revisions and helps stakeholders to navigate the changing litigation landscape.

IP Court promulgates three important reports on 2020 IP cases
  • China
  • 31 May 2021

In February 2021 the IP Court of the Supreme People's Court promulgated the Annual Report 2020, the Judicial Gist Synopsis 2020 and Ten Exemplary Technology IP Cases of 2020. This article provides a summary of the reports and explores their implications for technology-related IP litigation in China moving forwards.

Business name registration amendment takes effect
  • China
  • 24 May 2021

The Regulation on Business Name Registration (Amendment) issued by the State Council recently took effect. The amendment introduces various changes – including a new name approval system, new restrictions on business names, a new dispute mechanism and revised oversight procedures for the local Administration for Market Regulation.

Fourth IP Court unveiled in Hainan
  • China
  • 17 May 2021

In 2020 the Standing Committee of the National People's Congress passed the Decision on the Establishment of the IP Court at the Hainan Free Trade Port. The decision took effect in January 2021. The Hainan IP Court, which is the fourth IP court in China, has jurisdiction over various IP matters in Hainan Province. The Hainan High Court has jurisdiction over any appeals filed against the Hainan IP Court's first-instance decisions