On May 23, 2007, the Ministry of Commerce and State Administration of Foreign Exchange jointly issue Notification on Further Strengthening and Standardizing the Examination and Approval of Foreign Direct Investment in Real Estate Industry. In accordance with the Notification:
A. the State will strengthen the examination, approval and supervision of foreign-invested real estate enterprises, and strictly control foreign investment in top grade real estate;
B. in case of applying for starting a real estate company, the land use right and the ownership of real estate building shall have been obtained or pre-contract on land use right assignment/real estate property purchase has been signed with land administration department or land developer/owner of real estate building. Otherwise the authority shall not approve the establishment of such foreign-invested real estate enterprise;
C. If the existing foreign-invested company wants to expand its business scope and engage in real estate development or operation, or foreign-invested real estate company wants to conduct new real estate project development. It shall go through relevant formalities as required by Chinese law and apply with the examination and approval authority;
D. The Chinese party and the foreign party to the foreign-invested real estate enterprise shall not conclude clauses which guarantee fixed return or fixed turn in disguised form for any party by any means;
E. The local authority responsible for examining and approving the establishment of foreign investment shall record the approved foreign-invested real estate companies for file at the Ministry of Commerce;
F. The authority responsible for foreign exchange administration and designated foreign exchange bank shall not handle procedure of settlement, sale and remittance of capital exchange for foreign-invested real estate companies who have not completed the procedure for record for file in the Ministry of Commerce or have not passed the joint annual inspection on foreign-invested enterprises.
Thursday, August 30, 2007
Sunday, August 26, 2007
China's first anti-monopoly law to be voted
BEIJING, Aug. 24-- China's first anti-monopoly law, which requires foreign purchases of Chinese companies to go through national security checks, is expected to be put for a vote later this month after being mulled for 13 years.
The draft law is "mature and ready for adoption," the Law Committee of the National People's Congress (NPC) told the ongoing session of the NPC Standing Committee on Friday when submitting the bill for consideration.
The draft said, "besides anti-monopoly checks stipulated by this law, foreign mergers and acquisitions of domestic companies or foreign capital investing in domestic companies' operation in other forms should go through national security checks according to relevant laws and regulations if the cases are related to the issue."
The draft bill, aiming to protect fair competition, prevent and check monopolistic behavior and maintain a regulated market place, was first drafted in 1994 and submitted for the first review in June 2006, for the second review in June 2007.
The anti-monopoly law is call economic constitution, which has been in place in more than 80 countries in the world.
Lawmakers have said China's socialist market economy has turned mature over more than one decade, and in current market circumstances, the introduction of an anti-monopoly law is imperative.
Besides the draft anti-monopoly law, the week-long session will also discuss draft laws on emergency response, employment promotion, labor dispute arbitration and recycling economy, and the draft amendment to the Law on the Administration of the Urban Real Estate, the Law on Science and Technology Progress and the Law on the Prevention and Control of Water Pollution.
The draft law is "mature and ready for adoption," the Law Committee of the National People's Congress (NPC) told the ongoing session of the NPC Standing Committee on Friday when submitting the bill for consideration.
The draft said, "besides anti-monopoly checks stipulated by this law, foreign mergers and acquisitions of domestic companies or foreign capital investing in domestic companies' operation in other forms should go through national security checks according to relevant laws and regulations if the cases are related to the issue."
The draft bill, aiming to protect fair competition, prevent and check monopolistic behavior and maintain a regulated market place, was first drafted in 1994 and submitted for the first review in June 2006, for the second review in June 2007.
The anti-monopoly law is call economic constitution, which has been in place in more than 80 countries in the world.
Lawmakers have said China's socialist market economy has turned mature over more than one decade, and in current market circumstances, the introduction of an anti-monopoly law is imperative.
Besides the draft anti-monopoly law, the week-long session will also discuss draft laws on emergency response, employment promotion, labor dispute arbitration and recycling economy, and the draft amendment to the Law on the Administration of the Urban Real Estate, the Law on Science and Technology Progress and the Law on the Prevention and Control of Water Pollution.
Thursday, August 16, 2007
Salt VAT rate will be adjusted
On July 26, 2007, the Ministry of Finance and State General Taxation issued Notification on adjustment of VAT rate for industrial and edible salt. According to this Notification, from September 1, 2007, The VAT rate for salt will be adjusted from 17% to 13%.
Wednesday, August 15, 2007
Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of Hong Kong
On 14th July 2006, the Arrangement on Reciprocal Recognition and Enforcement of Judgment in Civil and Commercial matters (“the Arrangement”) was signed between Mainland China and Hong Kong. The Arrangement has not yet taken effect. To give effect to the Arrangement, a judicial interpretation is required to be promulgated in Mainland China and implementing legislation is required to be passed in Hong Kong; On the Hong Kong side, a Mainland Judgment (Reciprocal Enforcement) Bill (“the Bill”) was gazetted on 23rd February 2007 and the 1st reading of the Bill took place on 7th March 2007. Since the implementation of the Arrangement will have significant impact on cross-border and commercial activities between Mainland China and Hong Kong, a Bills Committee has been formed on 9th March 2007 to study the Bill.
Application
Prior to the signing of the Arrangement, there was no reciprocal enforcement of court judgments between the courts of Mainland China and the courts of Hong Kong. The Arrangement now provides a way to enforce cross-border judgments but it applies only to judgments that satisfy the following criteria:
1) Commercial contracts that result in a judgment for payment of money;
2) Judgments of courts above the Intermediate People’s Courts in Mainland and the courts above the District Court in Hong Kong;
3) A valid clause in the commercial contract stating which court that has exclusive jurisdiction; and
4) Judgments that are final and conclusive, which includes any judgment, ruling, conciliation statement and order of payment in Mainland China, and includes any judgment, order and allocatur in the case of Hong Kong.
Grounds of refusal
The application for recognition and enforcement of a judgment will be refused under the following circumstances:
1) The choice of court agreement is invalid under the place of the original trial, unless the chosen court has determined that the choice of court agreement is valid;
2) The judgment has been fully executed;
3) The court of the place where enforcement is sought has exclusive jurisdiction over the case according to its law;
4) The losing party was not summoned to the original court or has not been given sufficient time to defend his case;
5) The judgment has been obtained by fraud; or
6) The court of the place where enforcement is sought has made a prior judgment on the same cause of action.
Further, an application for recognition and enforcement of a judgment shall be refused by the court concerned if:
1) The People’s Court of Mainland China considers that the enforcement of the Hong Kong judgment is contrary to the social and public interest of Mainland China; or
2) The Hong Kong Court considers that the enforcement of Mainland China judgment is contrary to the public policy of Hong Kong.
Practical consideration
In principle, the Arrangement should facilitate a judgment creditor to enforce a money judgment in a more expeditious manner. We shall now look into the practical issues that may be encountered when one seeks reciprocal recognition and enforcement of judgments between Mainland China and Hong Kong.
Application
The Arrangement has limited application. It is only applicable for commercial contracts. Contracts relating to employment, marriage, winding up, bankruptcy or consumer matters will not be covered. Further, the court may not enforce judgments for equitable reliefs such as orders for specific performance or injunctions.
It is pertinent to have a valid exclusive jurisdiction clause in the commercial contract concerned. If the subject matter of the commercial contract is by law subject to the exclusive jurisdiction of a specific court, then the application for reciprocal enforcement may be refused if the exclusive jurisdiction clause in the contract provides otherwise and hence the clause being invalid. For example, according to the laws of Hong Kong and Mainland China, the court where the immovable property is situated assumes exclusive jurisdiction. If a commercial contract regarding Hong Kong real estate issues states that Mainland China court has exclusive jurisdiction, the said clause is invalid and unenforceable.
Grounds of refusal
Where a Mainland judgment is contrary to the “public policy of Hong Kong” or a Hong Kong judgment that is contrary to the “social and public interest of Mainland China”, the judgment will not be reciprocally recognized and enforced. Due to the different legal systems in Hong Kong and in Mainland China, the respective courts do not necessarily share the same view on the definition of “public policy” and “social and public interest”. Under the common law system, “public policy” is a legal concept which is construed narrowly whilst Mainland China courts consider “social and public interest” under the administrative and political spectrum.
Procedure and time limitation
The application for reciprocal enforcement requires the applicant to provide a copy of the judgment sealed by the court which made the final judgment or a certificate issued by the original court that verifies the finality of the judgment. The applicant also needs to provide the proof of identity (including individuals or legal corporation).
The Arrangement provides that an application for reciprocal enforcement shall be governed by the jurisdiction where the enforcement is sought. The time limit for application where one or both parties are individuals is one year and if both parties are legal persons, the limitation period is six months.
Conclusion
While the Arrangement may provide a mechanism to recognize and enforce money judgment reciprocally between Mainland China and Hong Kong, its application is limited and there are practical difficulties on effective implementation of the Arrangement. Having said that, both places are striving their best efforts to instigate appropriate legislations and promulgate relevant judicial interpretation to give full effect to the Arrangement. The signing of the Arrangement is a breakthrough for the judicial systems in Mainland China and in Hong Kong. Whether the Arrangement will become a useful and effective system for reciprocal recognition and enforcement of judgments relies on the continuing effort and development by the Mainland China and Hong Kong.
Application
Prior to the signing of the Arrangement, there was no reciprocal enforcement of court judgments between the courts of Mainland China and the courts of Hong Kong. The Arrangement now provides a way to enforce cross-border judgments but it applies only to judgments that satisfy the following criteria:
1) Commercial contracts that result in a judgment for payment of money;
2) Judgments of courts above the Intermediate People’s Courts in Mainland and the courts above the District Court in Hong Kong;
3) A valid clause in the commercial contract stating which court that has exclusive jurisdiction; and
4) Judgments that are final and conclusive, which includes any judgment, ruling, conciliation statement and order of payment in Mainland China, and includes any judgment, order and allocatur in the case of Hong Kong.
Grounds of refusal
The application for recognition and enforcement of a judgment will be refused under the following circumstances:
1) The choice of court agreement is invalid under the place of the original trial, unless the chosen court has determined that the choice of court agreement is valid;
2) The judgment has been fully executed;
3) The court of the place where enforcement is sought has exclusive jurisdiction over the case according to its law;
4) The losing party was not summoned to the original court or has not been given sufficient time to defend his case;
5) The judgment has been obtained by fraud; or
6) The court of the place where enforcement is sought has made a prior judgment on the same cause of action.
Further, an application for recognition and enforcement of a judgment shall be refused by the court concerned if:
1) The People’s Court of Mainland China considers that the enforcement of the Hong Kong judgment is contrary to the social and public interest of Mainland China; or
2) The Hong Kong Court considers that the enforcement of Mainland China judgment is contrary to the public policy of Hong Kong.
Practical consideration
In principle, the Arrangement should facilitate a judgment creditor to enforce a money judgment in a more expeditious manner. We shall now look into the practical issues that may be encountered when one seeks reciprocal recognition and enforcement of judgments between Mainland China and Hong Kong.
Application
The Arrangement has limited application. It is only applicable for commercial contracts. Contracts relating to employment, marriage, winding up, bankruptcy or consumer matters will not be covered. Further, the court may not enforce judgments for equitable reliefs such as orders for specific performance or injunctions.
It is pertinent to have a valid exclusive jurisdiction clause in the commercial contract concerned. If the subject matter of the commercial contract is by law subject to the exclusive jurisdiction of a specific court, then the application for reciprocal enforcement may be refused if the exclusive jurisdiction clause in the contract provides otherwise and hence the clause being invalid. For example, according to the laws of Hong Kong and Mainland China, the court where the immovable property is situated assumes exclusive jurisdiction. If a commercial contract regarding Hong Kong real estate issues states that Mainland China court has exclusive jurisdiction, the said clause is invalid and unenforceable.
Grounds of refusal
Where a Mainland judgment is contrary to the “public policy of Hong Kong” or a Hong Kong judgment that is contrary to the “social and public interest of Mainland China”, the judgment will not be reciprocally recognized and enforced. Due to the different legal systems in Hong Kong and in Mainland China, the respective courts do not necessarily share the same view on the definition of “public policy” and “social and public interest”. Under the common law system, “public policy” is a legal concept which is construed narrowly whilst Mainland China courts consider “social and public interest” under the administrative and political spectrum.
Procedure and time limitation
The application for reciprocal enforcement requires the applicant to provide a copy of the judgment sealed by the court which made the final judgment or a certificate issued by the original court that verifies the finality of the judgment. The applicant also needs to provide the proof of identity (including individuals or legal corporation).
The Arrangement provides that an application for reciprocal enforcement shall be governed by the jurisdiction where the enforcement is sought. The time limit for application where one or both parties are individuals is one year and if both parties are legal persons, the limitation period is six months.
Conclusion
While the Arrangement may provide a mechanism to recognize and enforce money judgment reciprocally between Mainland China and Hong Kong, its application is limited and there are practical difficulties on effective implementation of the Arrangement. Having said that, both places are striving their best efforts to instigate appropriate legislations and promulgate relevant judicial interpretation to give full effect to the Arrangement. The signing of the Arrangement is a breakthrough for the judicial systems in Mainland China and in Hong Kong. Whether the Arrangement will become a useful and effective system for reciprocal recognition and enforcement of judgments relies on the continuing effort and development by the Mainland China and Hong Kong.
Subscribe to:
Comments (Atom)
