Authored by Zhan Hao (zhanhao@anjielaw.com) and Song Ying (songying@anjielaw.com) at AnJie Law Firm

On 8 September, 2017, an exposure draft of amendments to the Provisions on Antitrust Review of Concentrations (the “exposure draft”) issued by the Ministry of Commerce of PRC (the “MOFCOM”) was released for soliciting public comments. 

The Provisions on Antitrust Review of Concentrations (the “Antitrust Review Provisions”) were originally published on November of 2009. The purpose of amendments this time is understood to make the Antitrust Review Provisions more functional, comprehensive and improved by summarizing the past experience and best practice of MOFCOM since 2008.

 

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Authored by Michael Gu (michaelgu@anjielaw.com) and Sihui Sun at AnJie Law Firm

According to a press release2 published by the National Development and Reform Commission (“NDRC”) on its website on 10 July, China’s Zhejiang Provincial Price Bureau3 (“Price Bureau”) recently concluded the investigation of a cartel case organized by a local trade association. In this case, 17 paper manufacturers reached and implemented a horizontal monopoly agreement under the organization of the local trade association in Hangzhou – Fuyang Paper Manufacturers Association (“Paper Manufacturers Association”). The 17 paper manufacturers were fined a total amount of RMB 7.78 million, accounting for 1% of their sales value in 2016. Furthermore, it is worth noting that the Paper Manufacturers Association, which played a critical and leading role in organizing and facilitating the aforementioned conspiracy, was forced to de-register by the Price Bureau for its wrongdoings. This is the first time an antitrust authority in China has ever invoked Article 46(3) of the Anti-Monopoly Law (“AML”) to de-register a trade association.

 

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Authored by Arthur Dong (dongxiao@anjielaw.com) and Darren Mayberry (darren.mayberry@anjielaw.com) at AnJie Law Firm

As discussed in the first post in our series, the Chinese arbitration system has matured over the last several years. Foreign parties should favor arbitration clauses in their China deals. Even so, this brings us to yet another question. Should a dispute resolution clause for a China-centered contract select a China-based institution to host the arbitration? Or should a non-Chinese party instead take refuge with regional offshore powerhouse institutions?
 

Answers will of course vary according to the contemplated contract’s particular circumstances. Nonetheless, Chinese arbitration institutions offer two clear advantages. Chinese courts will facilitate China’s institutional interim measure requests. Also, Chinese institutions offer international service without the cost premium. We explore how these advantages each can impact a dispute. We book-end the advantages with reassurances that Chinese institutions offer truly international arbitration. 
 

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Authored by Arthur Dong (dongxiao@anjielaw.com) and Darren Mayberry (darren.mayberry@anjielaw.com) at AnJie Law Firm

Early this year, Dan Harris of China Law Blog  directed his attention to the erstwhile arbitration versus litigation debate. Dan Harris’s position, as of 2014, was that international arbitration was a bad idea when considering China-based enforcement. He seems to have softened his position since then, but without abandoning his priors. Logic and recent available statistics should favor international arbitration in China deals. This is the Introduction to five subsequent posts in a series which addresses the international arbitration process with a particular focus on China.
 
Dan Harris offered a guarded appraisal for international arbitration as a dispute resolution selection for US companies engaged in China deals:
 
Arbitration is usually not the best way to go when dealing with Chinese companies, but sometimes it is. 
 
Arbitration acts as the form of alternative dispute resolution most similar to litigation. Just as in litigation, representatives advocate the merits for its party. Just like a court judgment, it is a formal and adversarial process that results in a written decision. A tribunal sits as ‘judges’ and comes to a final decision. But the representatives may be lawyers from any jurisdiction (or not licensed at all). The members of the Tribunal also may be from the United States, Canada, China, or any other country. Unlike litigation, arbitration only rarely allows for appeals on the merits. Most importantly, arbitration removes jurisdiction from a national court and places it in the hands of an institutional arbitration commission.  And foreign arbitral awards experience routine enforcement, even in present-day China.

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Authored by Zhan Hao (zhanhao@anjielaw.com) and Sharif Hendry (sharifhendry@anjielaw.com) at AnJie Law Firm

In the first meeting between Chinese President Xi Jinping and U.S. President Donald Trump at a summit held on 6-7 April 2017, the two leaders set the tone for future cooperation on a wide range of issues, not least market access between the two countries. According to Chinese and US officials, better access for US financial sector investments into China was mooted for inclusion as part of a “100 day plan” to improve trade-ties1. This could have interesting implications for the Chinese insurance industry, and make inward investment by US financial houses an increasingly advantageous proposition.

 

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Authored by Arthur Dong (dongxiao@anjielaw.com) and Darren Mayberry (darren.mayberry@anjielaw.com) at AnJie Law Firm

The post Enterprises in China’s Free Trade Zones Enter 2017 with New Options for Arbitration appeared first on Kluwer Arbitration Blog.

On December 30, 2016, the Supreme People’s Court (“SPC”) issued a set of new Opinions.  It covers an array of matters relating to legal measures to expedite the development of Free Trade Zones. (Opinions on Providing Judicial Protection for the Construction of Pilot Free Trade Zones, December 30, 2016). Among other matters, the SPC sought to open the Free Trade Zones  to further options regarding alternative dispute resolution. Remarks made in Article 9 have effectively designated as Foreign Per Se any Wholly Foreign-Owned Enterprises which are registered in one of 11 current Free- Trade Zones. In three brief paragraphs, the SPC seems to have shifted the landscape for China-based arbitrations. The immediate practical significance of the Opinions may remain humble and limited. In time, the SPC’s Opinions may  permit increased deference and  jurisdictional purview to foreign tribunals. It also may serve as the  beginning of ad hoc arbitration in China.

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Recently the revised version of the Administrative Measures for the Licensing of Telecommunication Business Operation (Draft) (“the Draft”) was published by the Ministry of Industry and Information Technology (“MIIT”) for public comments.

Article 3 is new in the Draft, which provides that China will establish an integrated management platform for the telecommunication industry, to promote the online license application, approval and management, and the publication, inquiry and sharing of related information.

The Draft added a new provision in Article 5 and 6, providing that to apply for telecommunication business license “the company and its main management personnel are not on the List of Dishonest Telecommunication Business" (“the List”), which aims to strengthen the binding effect and guiding function of the industry credit mechanism encouraging business operators to be honest and value credibility. In accordance with this provision, companies will not be allowed to apply for telecommunication business license if it is on the List.

The Draft made significant modification to Article 36 and 37, which have replaced the Annual Inspection System by the Annual Report and Publication System. In the first quarter of each year, the telecommunication business operators shall report to the authority their whole-year operation performance, special matters, and how their network and information security mechanism was executed in the previous year.

Recently the Office of State Commercial Cryptography Administration (OSCCA) released the Cryptography Law of the People’s Republic of China (Draft for Public Comments) (“the Draft”). Highlights of the Draft are as follows:

  • Article 11 sets forth that commercial encryption products that are sold or used in business activities, as well as the provision of commercial encryption services are subject to approval of competent authority in accordance with relevant catalogues.
  • Article 12 provides that Critical information infrastructure shall be protected by the use of encryption according to the provisions of laws and regulations as well as the mandatory requirements of encryption-related national standards.
  • Article 15 provides that the government will strengthen the encryption security system, improve the encryption security management regulations, and consolidate the encryption security protection capabilities.
  • Article 17 provides that the government will fortify the encryption monitoring and authentication systems, and will work out encryption monitoring and authentication rules. Article 18 provides that the government will conduct categorized and hierarchical evaluation of the encryption security in critical information infrastructure.
  • Article 22 provides for government support to scientific and technological research on encryption, academic exchanges and the development of the encryption industry. The government will provide legal protection to encryption intellectual property rights to stimulate innovation of encryption technology.
  • Article 23, 24, 25, and 26 provide for regulations on the encryption industry from the perspective of standardization system, awards for encryption technology, development of encryption talent teams and encryption education and popularization.

 In the Draft Fourth Amendments to the Chinese Patent Law released for public comment in end of 2015, SIPO proposes in Art. 2(4) that China should allow partial design to be patentable, which expands the scope of design patent from merely design of a product to partial design of a product. And according to the State Council’s 2017 Legislative Work Plan, revising the Draft Fourth Amendments to the Patent Law is a project to be completed within the year.

It came to our attention that an unofficial survey (at https://sojump.com/m/13469141.aspx?from=singlemessage&isappinstalled=0) was released on April 18, 2017 seeking opinions from private sector regarding protection of partial design and patent evaluation report. This survey is trying to see how introducing partial design to China will affect private businesses in protecting their micro innovation, and whether scope of eligible applicant and timing for applying for patent evaluation report should be changed from private perspective.

We will monitor the development closely and once the Fourth Amendments to the Patent Law is passed, we will be expecting more detailed rules regarding application requirements and scope of protection for partial design in implementation rules and examination guidelines.

China Academy of Information and Communications Technology (CAICT) and China Communications Standardization Association (CCSA) held 2017 Big Data Industry Summit on March 28 and 29 instructed by the Ministry of Industry and Information Technology of PRC.

During the summit experts reported on big data sharing, open and protection and other issues. “Big Data Industry Development Plan (2016-2020)” was expounded by the summit. Meanwhile, CAICT announced the results of data flow testing, trusted application store evaluation, big data product evaluation. China Telecom Co., Ltd. cloud computing branch (中国电信股份有限公司云计算分公司) and other six companies become the first batch companies which have passed the data flow testing. Other six companies’ products such as “360 mobile assistant “were awarded a trusted application store certificate.

Here are some highlights conveyed in the summit:

  1. Big data industry in China is currently based on the Cyber Security Law for the management requirements. There are no specific regulatory guidelines at present.
  2. CAICT has proposed a cross-border data flow assessment policy, covering elements such as size of the data, type of data, legal protection level in the receiving countries, and bilateral relations with such receiving countries.
  3. Data for key industries can be regularly assessed by the government to determine whether cross-border or conditional cross-border transfer is allowed.
  4. The principle of authorization includes the user’s direct consent or indirect consent, and it is recommended that different assignments be classified and the authorization process should be clearly defined.
  5. It is recommended to provide clearer guidance in order to achieve the true data desensitization through a standard for data output patterns and data desensitization requirements. It is advisable to have an ex post supervision (instead of a pre-approval system) or third party evaluations and improve the corresponding standard mechanism. Meanwhile, it is recommended that there should be a corresponding emergency mechanism and a reasonable risk compensation mechanism.