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China Law Insight

Tag Archives: English

The Principle of Balancing Benefits and Losses Established – New Judicial Interpretation to the PRC Contract Law

Posted in Corporate, Dispute Resolution

by Xia Dongxia  Yang Ting King & Wood Mallesons’ Dispute Resolution Group

The Interpretation of the Supreme People’s Court on Issues Concerning the Application of Law for Hearing Cases of Sale and Purchase Contract Related Disputes (the “Interpretation”) was ratified at the 1545th Meeting of the Judicial Committee of the Supreme People’s Court on March 31, 2012, and became effective on July 1, 2012. The Interpretation, which includes eight parts and forty-six articles, further clarifies the application of laws regarding the establishment and validity of sa… More…/更多

Cross Border Transactions– How Many Hardships does China Need to Overcome?

Posted in Corporate, Mergers & Acquisitions

By Rupert Li  King & Wood Mallesons

People frequently observe the cultural barriers which the Chinese companies find difficult to overcome in relation to China’s nascent outbound investment program.  Since China is culturally and politically different from the mainstream trading countries, an attribution of the anguish on both sides of the negotiation table to cultural barriers is indeed tempting but often misplaced.  Any professionals operating in places other than in the rule setting non Anglo-American jurisdictions always have war stories to share with their colle… More…/更多

Shanghai Courts Adopt New Methods to Compel Compliance of Preliminary Injunctions in Intellectual Property Infringement Disputes

Posted in Intellectual Property

By Denning Jin King & Wood Mallesons’ IP Litigation Group Shanghai Office

In June of 2012, the Shanghai No. 1 Intermediate People‘s Court issued several orders against individuals responsible for violating a preliminary injunction, including fines and detention. This event was significant because it was the first time a court in Shanghai took such measures to compel enforcement of a preliminary injunction.

In June, 2012, a Belgian Company discovered that a Guangdong Company was likely infringing one of its design patents. According to the Belgian company, the Guangdong Comp… More…/更多

New Enterprise Income Tax Rule in relation to Enterprise Relocation

Posted in Corporate, Tax

By Mark Schaub Chen Bing King & Wood Mallesons’ FDI Group Shanghai Office.

State Administration of Taxation of the PRC (“SAT”) promulgated the Administrative Rules on Income Tax for Policy-based Relocation of Enterprises on August 10, 2012 (“Rule 40″) which is set to become effective on October 1, 2012.   Policy based relocation refers to relocations at the request of the authority rather than voluntary relocations by enterprises (see below for more details).

Rule 40 aims at establishing more specific and systematic rules in terms of prefere… More…/更多

Development of Project Finance Deals in China and with Chinese Banks

Posted in Corporate, Finance

By Liu Zhigang King & Wood Mallesons’ Finance Group

The history of Project Finance in China is not long, but it is rich. In the earliest days, Project Finance was used mainly in power plant deals, then later extended to water plant deals and petrochemical projects. At that time, Chinese sponsors were short of funds and experience, and Chinese banks were short of foreign exchange and caught up in bad loans. Furthermore, China’s infrastructure base was very weak, and the production capability of Chinese entities was also unreliable. Therefore, the lenders in the Pr… More…/更多

Chinese Antitrust Regulators Vow to Increase Transparency

Posted in Antitrust & Competition

By Susan Ning, Sun Yiming and Kate Peng

On the International Symposium on Controversial Issues regarding Chinese AML Enforcement held in Hangzhou on Monday this week, both the National Development and Reform Commission (“NDRC”) and the State Administration for Industry and Commerce (“SAIC”) announced that they will increase the transparency of their enforcement actions under the AML. 

NDRC and SAIC are the regulators for anti-monopoly conducts in China. The powers are divided between the two authorities in the way that NDRC is responsible for price-rela… More…/更多

Tax Considerations for IP Transfer

Posted in Corporate, Intellectual Property, Tax

By Tony Dong and Philip Liu King & Wood Mallesons’ Tax Group

Technology innovation is the engine that will drive the 21st century economy. With growing economic demand for core technologies from Chinese enterprises, recent years have witnessed the robust development of Intellectual Properties (“IP”) transactions in China, in which tax issues are often important elements to consider when structuring IP transactions, especially for the IP transfers carried out in the context of IPOs, mergers, acquisitions, or investment projects. We will discuss in the artic… More…/更多

Arbitration as A Tool to Manage Political Risk in Foreign Investment

Posted in Dispute Resolution, Foreign Investment

By Monique Carroll, Huang Tao King & Wood Mallesons’ Dispute Resolution Group

‘Political risk’ in foreign investment is the risk that an investment will be adversely affected by a host country’s political or regulatory decisions. These political or regulatory decisions might result in unfavorable tax legislation, revocation of a business license or, nationalization or ‘expropriation’ of an investment by, for example, the direct or indirect taking of control over the investment by the government. For instance, earlier this year th… More…/更多

Coping Mechanisms for Trade Secret Infringement in Outbound Investment

Posted in Corporate, IP

By Chen Changhui and Jiang Zhipei King & Wood Mallesons’ IP Legal  Group

For decades, more and more Chinese overseas students and experienced employees in foreign enterprises have been flocking to domestic enterprises. In some cases, these employees have successfully developed products, that had been monopolized by enterprises in western countries in the name of trade secrets. Thus, Chinese enterprises are highly vulnerable to allegations by transnational enterprises of trade secret infringement. For Chinese enterprises, how to avoid falling into the pitfall of trad… More…/更多

NDRC Reply on RMB Fund with FIE GP

Posted in Corporate

By Zhang Yi, Alan Du and Hu Xia King & Wood Mallesons’ Securities Group Shanghai Office

In the April, 2012, it was reported by various media sources that the National Development Reform Commission (NDRC) had issued certain policies requiring that an RMB fund (the “FIE GP Fund”) with a foreign invested enterprise (FIE) acting as the general partner (the “FIE GP“) and domestic investors (exclusive of FIEs established in China) acting as limited partners be regarded as a foreign investor. Being defined as a foreign investor means that the portfolio investments of such a FIE GP F… More…/更多

New Trends in Legislation on the Adjudication for Copyright Related Legal Liability for Internet Service Providers

Posted in Corporate, Dispute Resolution, Intellectual Property

By Dang Zhe and Jiang Zhipei King & Wood Mallesons’IP Litigation Group

This spring has witnessed several important moves in copyright law related legislation in China. On March 31, the National Copyright Administration issued the draft of the PRC Copyright Law (Revised Draft) (the “Draft”)to gauge public opinion. Indeed the articles on copyright liability for ISPs caused heated discussion. On April 22, the Supreme People’s Court, in a similar attempt to gauge public opinion, issued the exposure draft of the Regulation of the Supreme People’s Court on Several Issues Con… More…/更多

How Luxury Brands Can Cooperate with Agents to Protect Their Rights

Posted in Corporate, Intellectual Property

By Harry Liu & Sam Li  King & Wood Mallesons’ Dispute Resolution  Group,  Shang Hai office

The Hemline Index, presented by American economist George Taylor in 1926, suggests that the hemlines on women’s skirts and dresses rise and fall with the rise and fall of the economy. Under this theory, the popularity of short hemlines coincides with a booming economy, but in bad times, long skirts and dresses show the modesty that bad economic times seem to require. However, assorted 2009 fashion weeks did not really reflect staying power of this economic theory. Only a few top lu… More…/更多

A General Picture of SAIC’s Antitrust Enforcement

Posted in Antitrust & Competition

By Susan Ning, Liu Jia and Kate Peng

It is generally known that the antitrust enforcement powers are shared by three government authorities in China: the Ministry of Commerce (“MOFCOM”),  which is responsible for merger control,  the National Development and Reform Commission (“NDRC”), which is responsible for price-related monopoly conducts, and the State Administration for Industry and Commerce (“SAIC”), which is responsible for non-price related monopoly conducts.  Compared to the former two authorities, SAIC  keeps a relativel… More…/更多

FAQs about Administrative Review of Antitrust Enforcement Decision

Posted in Antitrust & Competition

By Susan Ning and Kate Peng

Since the enactment of the China’s Anti-Monopoly Law (“AML“), the State Administration of Industry and Commerce (“SAIC“) and the National Development and Reform Commission (“NDRC“) have investigated into a number of cases that raise competition concerns and have imposed penalties on some companies within their respective authorities.  Please see our previously published articles including “First Public Enforcement Decision by SAIC against concrete manufacturers“, “Earlier RuMore…/更多

MOFCOM Approves UTC’s Acquisition of Goodrich with Divestiture Requirement

Posted in Antitrust & Competition

By Susan Ning and Hazel Yin On June 15, 2012, the Ministry of Commerce (“MOFCOM”) approved the acquisition of Goodrich Corporation (“Goodrich”) by United Technologies Corporation (“UTC”) subject to the divestment of the electronic systems business of Goodrich.  Both companies are headquartered in the United States and active in the production and sale of aviation equipment.  This marks the fourth conditional clearance issued by MOFCOM in the first half of 2012 and the only case where the core remedies are structural.

 Review Process.  MOFC… More…/更多

Hong Kong’s new competition law: get ready for the antitrust revolution

Posted in Corporate

By Martyn Huckerby Jill Wong King & Wood Mallesons’ Foreign Direct Investment Group

On June 22, 2012, Hong Kong’s first cross-sector substantive competition law regime was published in the official gazette, bringing with it a new regulator ready to change business practices in the Asian region, and armed with extensive enforcement powers, including the ability to conduct dawn raids and levy significant fines for anti-competitive conduct once the changes come into force.

The Competition Ordinance will prohibit cartel conduct, abuses of market power and other forms of anti-c… More…/更多

Resale Price Maintenance – Not Per Se Illegal Under the AML

Posted in Corporate

By Liu Cheng  Martyn Huckerby and Yu Chenchen  King & Wood Mallesons’ M&A Group

Whether a resale price maintenance (“RPM”) provision is deemed to infringe the Anti-Monopoly Law (“AML”)[1] regardless of whether it has an impact on competition has been one of the most cloudy issues under the AML since the law came into effect in 2008. A recent decision by the Shanghai No.1 Intermediate People’s Court (“Shanghai Court”) has found that for RPM to infringe the AML it must have an adverse impact on competition. While it is still too early to say if this court dec… More…/更多

The Validity of Arbitration Agreements under Chinese Law

Posted in Corporate, Dispute Resolution

By Huang Tao  King & Wood Mallesons’ Dispute Resolution Group

The fast growth of China’s economy has gotten more and more foreign enterprises to invest in Mainland China. Foreign investors need to establish a local presence Chinese, for example, a representative office, a branch, a subsidiary, or a joint venture so that they can do business in China. As the business ties between China and the rest of the world strengthen, the number of China-related business disputes has been increasing.

Arbitration is one of the most favored international business transaction dispute resol… More…/更多

Safe New Rules to Boost Private Outbound Investment

Posted in Corporate, Finance

By King & Wood Mallesons’ Finance Group

In May 2010, the State Council issued the Opinions on Encouraging and Guiding the Healthy Development of Private Investment (Guo Fa [2010] No.13) to promote private investment activities . In order to solve the difficulties faced by private companies in terms of overseas financing and the lack of liquidity, and to simplify the foreign exchange control policies for outbound investment activities by private companies, SAFE released new rules on private outbound investments, the Circular of State Administration of Foreign Exchange on F… More…/更多

Key Disputable Issues regarding the Draft Amendments to China Copyright Law

Posted in Intellectual Property

By Jiao Hongbin  King & Wood Mallesons’ Intellectual Property Group

On March 31, 2012, the National Copyright Administration of the PRC (NCAC) released the Draft Amendments to the Copyright Law of thePRC (the “Copyright Law”) (the “Draft Amendments”) and the Brief Explanations on the Draft Amendments (“Brief Explanations”)[i] for soliciting public opinions. Unlike the two previous revisions, the Draft Amendments proposed by China on its own initiative are home-grown. 

The prevailing Copyright Law was adopted by the … More…/更多

Forum Shopping in China: CIETAC vs. UNCITRAL

Posted in Corporate, Dispute Resolution

By Huang Tao and Dai Yue  King & Wood Mallesons’ Dispute Resolution Group

Lacking knowledge of and exposure to China’s judicial and arbitrational system, foreign companies usually worry about dispute resolution clauses more than any other clause in a contract. Deciding which arbitration tribunal and what arbitration rules to specify becomes a sensitive and important aspect of contract negotiations for wholly foreign owned entities (“WFOE”) and cooperative joint ventures (“CJV”).

I.     Choice of Arbitration Tribunal

Contracts in which one party … More…/更多

Supreme Court of China Issues Judicial Interpretation Governing Private Antitrust Litigations

Posted in Antitrust & Competition

By Susan Ning,Liu Jia and Hazel Yin

On 3 May 2012,China’s Supreme People’s Court issued the Rules of the Supreme People’s Court on Several Issues Concerning the Application of Law in Hearing Civil Cases Caused by Monopolistic Conduct ("Rules").The Rules contain 16 articles covering standing of plaintiffs,jurisdiction,burden of proof,evidentiary rules,expert witness,the judicial process, form of civil liabilities and the statute of limitations.The Rules entered into force on 1 June 2012.

Compared to the draft Rules released last year for public co… More…/更多

NDRC reply on RMB Fund with FIE GP

Posted in Corporate, Finance, Foreign Investment

By Zhang Yi, Alan Du and Hu Xia  King & Wood Mallesons’ Corporate Group Shanghai Office

Recently, it was reported by various media sources that the National Development Reform Commission (NDRC) had issued certain policies requiring an RMB fund (the ‘FIE GP Fund’) with a foreign invested enterprise (the ‘FIE’) acting as the general partner (the ‘FIE GP’) and domestic investors (exclusive of FIEs established in China) acting as limited partners to be regarded as a foreign investor. Being defined as a foreign investor means that the portfolio investments of such a F… More…/更多

The Legal System and Civil Procedure for Commercial Dispute Resolution in Hong Kong (Part II of II)

Posted in Corporate, Dispute Resolution, Foreign Investment

By Renee Gu  King &  Wood Mallesons’ Dispute Resolution Group

This article continues to discuss The Legal System and Civil Procedure for Commercial Dispute Resolution in Hong Kong. The first part of this article was published on Chinalawinsight on May 2012.

VIII.Summary Judgment

As an alternative to resolving a dispute by way of a full trial, it may be an option to apply for a summary judgment. The purpose of the summary judgment is to give judgment before trial to a plaintiff, where the defendant has no defence to the claim[i]. … More…/更多