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Democracy: A New Part of China's Civic Dialogue?

The State Council's White Paper on the Rule of Law was released late last month. Donald Clarke has posted a single-page English-language version of the entire white paper, but there's an excerpt of the White Paper on the China Daily website and apparently included on page 4 of the physical newspaper itself, interesting because, well, the title of the article is called "Striving Ahead on the Road of Democracy." The article also includes this photograph:


The box reads: "Ballot Box."

Naturally, a story or two about democracy and voting in the Chinese news doesn't necessarily signify a policy shift, but could it be possible that China's media may well be introducing democracy to China's civic conversation? On Tuesday, our managing director Edward Lehman participated on a CCTV "Dialogue" program called "Voices and Votes." The episode featured a discussion of progress in China's still-developing rule of law as well as the stronger movement against corruption in the Chinese government.


To view the video, please visit the CCTV website: Part 1, Part 2, Part 3, Part 4, Part 5

Update: Here's another (awkwardly titled) story in China Daily describing China's path to democracy: Democracy on nation path

China Law 0 Comment March 14, 2008, 10:58 am

Seminar: China's First Comprehensive Antitrust Statute

From China Law Mailing list:

4:00 pm - 5:30 pm China's First Comprehensive Antitrust Statute

After 13 years of effort, China in 2007 enacted its first comprehensive antitrust law, effective August 1, 2008. This law, with its broad imposition of merger control and expansive definition of market dominance, as well as stringent rules on market conduct and express references to intellectual property, may have a substantial impact on foreign investors in China, particularly those holding significant IP portfolios. A key enforcer of the law will discuss its implementation, while a leading Chinese competition law scholar will analyze its major provisions and a seasoned China practitioner will explain its impact on foreign investors. Senior U.S. antitrust enforcers will offer lessons learned from the U.S. experience for the implementation of the China's Anti-Monopoly Law.

Program Chair:
Yee Wah Chin (Moderator), Ingram Yuzek Gainen Carroll & Bertolotti LLP, New York, NY

Zhongliang Zhu, Deputy Division-Chief, Antimonopoly Investigation Office, Law and Treaty Department, Ministry of Commerce, Beijing, China
Xiaoye Wang, Professor and Director, Economic Law Department, Institute of Law, Chinese Academy of Social Sciences, Beijing, China
William Blumenthal, General Counsel, Federal Trade Commission, Washington, DC
James J. O'Connell, Chief of Staff, Deputy Assistant Attorney General, U.S. Department of Justice Antitrust Division, Washington, DC
Lester Ross, Wilmer Cutler Pickering Hale and Dorr LLP, Beijing, China


China Law 0 Comment March 6, 2008, 2:40 pm

China¡¯s new Anti-Monopoly Law: Protectionism?

Much has been said about China¡¯s new Anti-Monopoly Law. Sceptics have particularly zeroed in on the pre-merger/acquisition review which must take place for companies which meet certain thresholds (which are yet to be determined). The law provides that one such factor to be considered in the review process is "development of the national economy". People¡¯s Daily, some months ago, printed the following story (excerpted below) relating to foreign M&As of Chinese companies:

China will introduce more than 20 supporting regulations on foreign mergers and acquisitions (M&A) of domestic firms before August, a senior Chinese legislator said on Saturday.

The regulations will come out in a series before the Antitrust Law goes into effect on Aug. 1, 2008, Cheng Siwei, vice chairman of the Standing Committee of the National People's Congress, told a forum in Beijing.

The regulations will help ensure that foreign M&A deals promote China's economic growth without threatening its economic security, Cheng stated.

Under the Antitrust Law, China would scrutinize foreign M&A proposals if they posed a potential threat to national security, he noted.

To evaluate foreign M&A deals, the first factor should be whether the domestic firms were fairly priced. The second was whether the deal would lead to company asset growth, Cheng added.

November 25, 2007

While it is understandable and expected that anti-monopoly/competition laws further development of the national economy, it is yet to be seen how such wording will be implemented, and impact on foreign M&A deals in China.


China Law 0 Comment January 31, 2008, 5:02 pm

ACEF wants more people in court

From China Daily:

Less than 1 percent of the more than 100,000 disputes over environmental violations reported last year reached the courts, figures from an environmental group showed Tuesday.

The numbers show the mounting challenges faced by the masses in fighting pollution and other environmental violations, the All-China Environmental Federation (ACEF), the only nongovernmental organization active nationwide, said Tuesday.


Lu said the ACEF is planning to establish a nonprofit law firm this year to help bring polluters to court. It will work with the All-China Lawyers Association to get support from lawyers nationwide and provide legal services to victims of such violators, Lu said.

With all the environmental violations here, China seems like an ideal place for an aspiring environmental lawyer from overseas in search of a job to get some substantial and highly marketable experience.

More information about ACEF from their website.

China Law 0 Comment January 21, 2008, 3:45 pm

Status Update on the Labor Law

There are new guidelines out on calculating compensation according to the new labor law.

Now that the new year and the new law is with us, here are some thoughts about the new law...

Although the Chinese government claims that the new labor contract laws provide for a more harmonious working envirnment which appeals to employers and employees alike, many companies remain threatened by the new measures. Because of the new rights allotted to the individual employee, as well as the strengthening of trade unions, the position of the worker seems far stronger than before. Many enterprises demonstrated ouvertly if not direct opposition, then at least fearful apprehension of the new laws' consequences. For example, Huawei Technologies encouraged long-term workers to resign only to be re-hired in order to avoid protecting them from dismissal without cause. This displays not only an unwillingness to embrace the projected work environment, but also indicates underlying issues between existing employer-employee contracts.

If measures such as these are being taken nationwide, perhaps it is time that working conditions become more "stabilized." Despite these various fears that these laws will greatly hurt companies, however, many cite provisions included in the legislation that protect employers as well, such as reformed income taxes. Others claim that future lack of enforcement will prevent any drastic change anyway. However, little can be definitively said about the effects of this law, even if compared to similar actions taken in other countries.

If labor laws can improve the conditions of workers without badly curbing employers, many affirm the work environment will appeal more to foreign investors. On the whole, it seems as though the new laws are if nothing else an attempt to correct a less-than desireable work environment. Employers, at the very least, will have an opportunity to re-organize their management and possibly boost efficiency. However, as in the case of Huawei, this can be severely hampered by an unwillingness of companies to accept the laws.


China Law 0 Comment January 15, 2008, 5:07 pm

Bejing People's High Court Rulings on Music Search Engines

Looks like the RIAA has been busy here in China:
Record companies lose lawsuit against Chinese Baidu
Yahoo loses music download case in ruling
. Both cases had been decided in the intermediate-level courts and affirmed by the Beijing People's High Court. I'd love to see the reasoning as to why the outcomes were different, seeing as both search engines defended themselves using apparently the same logic -- "that, as a search engine, it only provided links in its music search results and should not be held responsible for the content of third-party web sites."


China Law 0 Comment January 8, 2008, 9:41 am

Implementation Rules of the Enterprise Income Tax Law of the People¡¯s Republic of China

Don't miss attorney Gregory Sy's article on the Implementation Rules of the Enterprise Income Tax Law, published on January 1, 2008. The article is a brief guide to understanding the Rules, which were adopted at the 197th Session of Executive Meeting of the State Council. To read a translation the Rules courtesy of our translation department, please click here.

To read the text of the Enterprise Income Tax Law itself, please follow this link.

Don't miss these invaluable resources on China law and China IP law! If you haven't signed up for Lehman, Lee & Xu's weekly newsletters, be sure to do so here.


China Law 0 Comment January 7, 2008, 10:39 am

The first case of an adverse reaction to a recalled Merck & Co. vaccine in China

Junbo Hao, a member of our litigation team, spoke to Sina.com in December about the first case in China of an adverse reaction to Merck & Co.¡¯s recently-recalled Haemophilus influenzae type B vaccine, PEDVAXHIB.

Here¡¯s a summary of the article, which is written in Chinese:

On December 19, Mr. Hao received a phone call from one Mr. Zhou in Qingdao, whose two year old child had a severe rash on his face from a recent injection of the PEDVAXHIB vaccine. Upon hearing of the recall, Mr. Zhou examined the packaging of the vaccine and found that his child¡¯s vaccine indeed belonged to the recalled batch.

PEDVAXHIB is a Haemophilus influenzae type B vaccine, which is produced in the United States by Merck & Co. Due to Merck¡¯s discovery that some of the production equipment may have been contaminated, the company recalled 11 batches of the vaccine last week.


China Law 0 Comment January 7, 2008, 10:27 am

A Special Note from Our Patent/Trademark Team

Article 11 of the Patent Law of the People¡¯s Republic of China states that:

¡°After the grant of the patent right for an invention or utility model, unless otherwise prescribed in this Law, no entity or individual is entitled to, without permission of the patentee, exploit the patent, that is, to make, use, promise the sale of, sell or import the patented product, or use the patented process and use, promise the sale of, sell or import the product directly obtained from the patented process, for production or business purposes.

After the grant of the patent right for a design, no entity or individual is entitled to, without permission of the patentee, exploit the patent, that is, to make, sell or import the product incorporating its or his patented design, for production or business purposes.¡±

Many patents are held by individual inventors or by small- and medium-sized businesses, for whom legal fees often make it difficult or impossible to defend their rights against infringement. Even large enterprises may run into difficulties when faced with infringement overseas or by multinational companies.

Our firm, Lehman, Lee & Xu, together with a number of major law firms in the United States, the United Kingdom and the European Union, are now pleased to be able to offer patent enforcement litigation services on a contingency basis to patentees whose rights are being infringed.

Initially, there is a small fee for us to appraise the validity and scope of your patent rights, and to determine whether and to what extent your rights are being infringed. If after this stage we determine that your patent rights are materially infringed, we will then take prompt action to vindicate your rights. Other than the initial evaluation, you will not be required to pay any attorney¡¯s fees unless the enforcement action is successful, in which case our attorney¡¯s fees will be deducted from any compensation which the court grants. If the litigation is unsuccessful, on the other hand, you need not pay any attorney¡¯s fees.

If the prospect of enormous legal bills is preventing you from defending your patent rights, please don¡¯t hesitate to contact us. We look forward to working with you to achieve a win-win result.


China Law 0 Comment January 4, 2008, 11:40 am

New energy law released for public comment

December 19, 2007 - by Maggie Xu

According to law expert Ye Rongsi, the earliest possible date for China's Energy Law would take effect in 2009.

Recently, the National Energy Leading Group (NELG) published a draft of the law on its website for public comment. The draft will also be carried by selected newspapers. The public will be able to submit opinions or suggestions by mail, fax or e-mail to the NELG.

The draft stipulates that the government will establish a partially market-based energy pricing system, which will reflect supply and demand, as well as environmental costs.

The draft does not, however, mention the establishment of a ministry of energy, which has been suggested by many energy experts.

The public-comment period ends Feb. 1, 2008.

Since the start of 2006, China has drawn up four versions of the energy law. A draft was prepared for discussion in September by the National Committee of the Chinese People's Political Consultative Conference, National People's Congress, local governments, companies and industry associations.

China Law 1 Comment December 19, 2007, 3:59 pm

Regulations protect rural workers' rights and rnterests

December 17, 2007 - by Maggie Xu

Employers in central China's Henan Province who fail to sign labor contracts with rural workers for more than one month since their employment will be punished to pay double the monthly wages to the workers as compensation.

As a largest province, Henan has accepted plenty of rural workers nationwide.now The local provincial legislature adopted a package of regulations which will be promulgated on January 1st,2008 on protecting the legitimate rights and interests of the 18-million rural migrant workers in Henan.

The regulations state employers must sign labor contracts with the workers when they are employed. The contracts must include clauses on the contract term, payment, working hours, breaks and holidays, and social insurance,etc.

The regulation also notes rural workers with relatively stable jobs should be incorporated into the basic pension insurance system.

Eligible workers have rights to apply for [url=http://english.china.com/zh_cn/business/news/11021613/20070926/14366146.html][color=Orange]...

China Law 0 Comment December 17, 2007, 11:34 am

New M&A Regulations to Be Introduced Soon

Just a short note to let our readers know that China has announced that it plans to introduce more than 20 new regulations on foreign merger and acquisitions some time before the new Anti-Monopoly Law goes into effect in August 2008. According to Xinhua¡¯s report, Cheng Siwei, vice chairman of the Standing Committee of the National People¡¯s Congress, said that foreign M&A deals will be evaluated based on whether or not domestic firms are fairly priced, and whether the deal would lead to company asset growth.

No word on the details of these regulations yet, but our friend Paul Jones at Jones & Co. mentioned to us that he thinks the number of regulations means that the new regulations will probably introduce sector-specific regulation.

China Law 0 Comment December 3, 2007, 4:31 pm

China judicial reforms make good results

December 3, 2007 - by Maggie Xu

Court reforms launched in China over the past decade have helped obtain judicial efficiency, including significant progress in the rulings in major, difficult or controversial cases, the country's top judge said recently.

According toXiao Yang, Supreme People's Court (SPC) President, the reform of judicial committees, the highest decision-making bodies in the country's judicial system, has vastly improved trial quality and rulings.

But the reforms have made judicial committee members, along with other judges or panels, join the bench to hear or try the cases.

Each judge must read the case document, express his opinion and directly question litigants, moreover, for difficult, complicated or socially important cases, judicial committees have to hear the cases in person to better understand the facts and reduce the chances of biased rulings. Besides, SPC judicial committees have been divided into two groups, one for criminal cases and the other for civil and administrative cases, to improve efficiency and accuracy.

Local high courts and immediate people's courts have formed their own criminal, civil and administrative committees, too. As part of the reforms, judicial committees have also used secret ballots to arrive at a ruling.

Renmin University of China's professor of criminal law Chen Weidong has welcomed the reforms as "the transfer from closed sessions to trial participation in accordance with trial characteristics". Chinese courts are becoming more professional and specialized, with the formation of special judicial committees and excellent judges who know how to deal with major cases,Chen stated.

China Law 0 Comment December 3, 2007, 11:01 am

Problem: nanny and housekeeping domestics not protected in labor contract law

November 30, 2007 - by Maggie Xu

The Labor Contract Law that goes into effect soon will not protect people who work as domestics inside private homes. Moreover, that recruit these kinds of workers serve just as an intermediary and do not sign contracts with them.

With the rapaid progress of china's social and economic development, there are increasing demand for nannies and housekeeping domestics in big cities. Let us take Guangzhou for example, arounmaid agenciesd 400,000 people are involved in this industry, with 90 percent of them currently maintaining an intermediary relationship with maid agencies.

Recently, some big maid agencies have begun to hire workers directly in order to provide better service for their clients. To manage these people effectively the company must sign a contract with their employees and pay them on time. Nannies and domestics would benefit the most from this kind of management because, as an employee of the company, they would not only have the opportunity to undergo training but they would also be entitled to a workman's compensation insurance the company purchases for them.

But this trial move will perhaps be smothered by the new law since it does not require the part-time employers to sign contracts with the workers. Neither do such employers need to pay compensation to the workers when the labor relations are terminated or canceled.

According to many experts, all kinds of domestics: nursemaids, nannies, housekeepers and cooks -- all be included in standard labor laws. A special chapter should be given to these domestic workers. Special rules should be set up to protect their rights so that they may enjoy workman's compensation just like other city employees.


China Law 0 Comment November 30, 2007, 5:03 pm

Chinese netizens want law to protect their personal information

November 28, 2007 - by Maggie Xu

Around 90 % Chinese Internet users (netizens) have required the enactment of a law ASAP to protect their personal information from unauthorized spread in the internet.

The widespread disclosure of personal data in the internet arose hot attention and aggressive abuse among netizens.

Nowadays, Many Chinese have begun to buy and sell stock in the bullish stock market. One stockholder, complained he received constant phone calls about stock recommendations from strangers.

New home and car owners, and even parents of newborn babies, have received unwanted calls or short text messages promoting various products.

The government began drafting a law on personal information protection in 2003 and the draft law by experts from Chinese Academy of Social Sciences (CASS) was submitted to the State Council in 2005.

The draft is still under discussion, according to the State Council.

According to Zhou Hanhua, who was in charge of the draft, said the new law on personal information would make dealers of personal data liable to civil and criminal legal action.

The personal information, including phone numbers, home addresses, medical files, would be protected under the draft law.


China Law 1 Comment November 28, 2007, 9:43 am

China's Internet Search Engines and its Struggle for Copyright Enforcement

November 13, 2007 - by Maggie Xu

With copyright infringement running rampant among the world's second largest Internet population, China has become as much a source of frustration as a source of opportunity for multi-national music labels. They are now often looking to China's courts for protection.

According to my personal experience of dealing with the cases of copyright infringement, PRC courts will, in general, look for the following elements when deciding whether an action constitutes copyright infringement:

Whether the plaintiff is the legal holder of the rights under dispute;
Whether the plaintiff's rights have been infringed upon;
Whether the actions of the defendant were illegal;
Whether causation exists between the plaintiff's losses and the defendant's actions; and
Whether the defendant had the intention of infringing upon the plaintiff's rights.
All five elements must be present to establish a valid claim of infringement.

I. Is the plaintiff the legal holder of the rights under dispute?

Article 41 Paragraph 1(1) of The PRC Copyright Law ([url=http://www.chinaiprlaw.com/english/laws/laws10.htm]the "Copyright Law"[/url]) grants the producer of audio products the right to disseminate such products to the public via the Internet or "the right of dissemination"; and except for fair use(2) or statutorily authorized use(3) expressly provided in the Copyright Law, no party shall disseminate copyrighted audio products via the Internet without authorization. Any party that engages in unauthorized dissemination shall bear civil liabilities such as ceasing the infringing action, eliminating any remaining negative impact, and compensating for damages.

II. Have the plaintiff's rights been infringed upon?

According to Paragraph 1 Article 41 of the Copyright Law, the plaintiff has the right to authorize a third party to disseminate the disputed audio product via information networks and is entitled to receive consideration for such authorization.

III. Were the defendant's actions illegal?

The Copyright Law and Rules on Protecting Rights of Dissemination via Information Networks both define "actions of disseminating via information network" as "providing copyrighted works (and performance and audio and video products) to the pubic via a wired or wireless network at the time and location decided by the Internet users".

Article 4 of the Supreme People's Court's Judicial Interpretation on Issues Regarding the Trial of Copyright Disputes on Computer Networks ("Judicial Interpretation"wink.gif sets forth that "the People's Court shall find joint liability between the content provider and its users according to Article 130 of the General Rules of Civil Procedures, where the content service provider does not take measures to eliminate the negative impact of infringement including removing the infringing content from the a website after becoming aware of any infringement upon a third party's copyright or having received notice from the copyright holder." In accordance with this provision, the links provided by the plaintiffs in both cases would be illegal, and if such parties continued to provide these links while being aware that their existence caused the unauthorized dissemination of copyrighted music, the plaintiffs would be subject to "contributory infringement" and jointly liable for infringement along with the website that the search engine linked to.

IV. Whether causation exists between the plaintiff's losses and the defendant's action?

On one hand, as stated above, the disputed music would not be as widely accessible if the operator of these search engine websites removed these links from their servers or shut off their servers entirely. However, the Internet community would still be able to access the disputed content by going directly to the content-hosting website. This would be possible even if all links to the site were removed. Obviously, causation between the plaintiff's losses and the defendant's actions is hard to establish. On the other hand, undoubtedly, the websites that set up the links aid the Internet community in discovering and downloading the disputed music and expands the scope of music that becomes easily accessible through a single portal. This further aggravates the losses and damages incurred to the plaintiff.

V. Whether the defendant has the intention of infringing upon the plaintiff's rights?

In general, the principle of "non-misfeasance" is the major criterion in establishing intellectual property infringement. In other words, regardless of whether the defendant possessed the intention to cause copyright infringement, the court may establish infringement and impose liability on such a defendant to cease the infringing actions. However, this does not mean that the state of mind of the infringing party is not taken into account in the court's judgment. In fact, the intent of the infringing party is of vital importance to the court in rendering remedies other than ceasing the infringing action. For example, when assessing the extent of indemnification, the court may increase the amount if the infringing party possessed the intention to infringe or knowledge of infringement. In determining whether intent existed, the court will often look to the actions of the defendant when making their assessment.

Google's worldwide success shows the massive potential market for search engine services. The rapid growth of baidu again proves the value of search engine technology. While the potential commercial profit makes search engine services as sweet as candy, excessive candy consumption can cause toothaches. The inherent risk of infringement in cyberspace is the candy that might cause a cavity. Search engine service providers need to be very careful about the websites to which they link and remove the links of disputed content as quickly as possible when they receive warnings from legal copyright holders. It is always good to eliminate problems early, to save court fees or a trip to the dentist.


China Law 0 Comment November 13, 2007, 9:44 am

Draft rules on paid vacation for comments

November 12, 2007 - by Maggie Xu

The Legislative Affairs Office of China's State Council has given the public ten days to make submissions on its draft regulations on paid vacation.

According to the draft released Monday, all employees of government organs, civil organizations, enterprises, and public-service institutions are entitled to take paid vacation after serving the same employer for one year.

Employees who have worked from one to ten years would have five days paid vacation; those who have worked for ten to 20 years would have ten days; and those with more than 20 years 15 days. Legal holidays and weekends will not be included as paid vacation.

However, the paid vacation time would be deducted from winter and summer vacations, which some professions were entitled to.

They shall also be deducted from vacations designed for employees to visit their parents or spouses, if they are not living in the same city, according to the draft.

The draft stipulates that "employees should enjoy their full daily salary and welfare during the vacation just as when they are working".

The draft was issued in accordance with the Labor Contract Law and the Law on Civil Servants, says the draft regulations.

Paid annual vacation has been focus of publicly debated for some time in China.

The State Council set Nov. 16 as the deadline for submissions.


China Law 0 Comment November 13, 2007, 9:29 am

Food safety law amended

November 5, 2007 - by Maggie Xu

In the wake of headline food scandals, China's cabinet recently approved in principle a draft law on food safety to address the "weak points" in food production, processing, delivery, storage and sales.

"Food safety is vital to improving people's lives and health, so relevant legislation must match national efforts of safeguarding food safety," said Chinese Premier Wen Jiabao

The draft law, based on the existing Food Hygiene Law, was discussed at Wednesday's executive meeting of the State Council, which was presided over by Wen.

The draft law proposed a food safety risk supervision and evaluation mechanism to provide a "key basis" for constituting food safety standards and food born disease control measures. The mechanism demanded a "unified, timely, objective and accurate" disclosure of emergency information.

Related institutional systems covering food production, processing, delivery, storage and sales should be set up to prevent food safety problems, according to the premier.

The government would standardize practices such as food production licensing, inspection and quarantine results recording, product labeling and recalling, said the premier, adding the producer would bear major responsibilities for food safety scandals and be punished more severely.

The draft law says imported food and additives must meet China's national food safety standards while food products exported from China to other countries and regions should satisfy the compulsory requirements set by importers and pass local entry inspection and quarantine.

Local governments have legal obligations to supervise food safety and build fast and convenient aid channels to protect consumers' rights, said the premier.

The draft law will be submitted to the National People's Congress, the country's legislature, for debate and adoption.

World Health Organization (WHO) chief Margaret Chan on Wednesday expressed appreciation on China's efforts to crack down on food safety problems.


China Law 0 Comment November 6, 2007, 11:26 am

The Emergency Response Law takes effect

November 5, 2007 - by Maggie Xu

The Emergency Response Law, which is to take effect on Nov. 1, is aimed at improving handling of industrial accidents, natural disasters, health and public security hazards.

The law, bans the fabrication and spreading of false information on accidents and disasters and requires governments to provide accurate and timely information.

This 70-article law would help minimize losses and prevent minor mishaps from turning into major public crises.

The law stipulates that "People's governments in charge of coping with an emergency should provide coordinated, accurate and timely information on the emergency and its development."

The law also states that "units and individuals are prohibited from fabricating or spreading false information regarding emergencies and government efforts to cope with emergencies."

Offenders will be warned, it says. Media organizations or web companies could lose their business licenses if their offences lead to serious consequences.

Government officials will incur administrative punishment for providing inaccurate information, says the law.

Frequent natural disasters and industrial accidents have caused huge losses of life and property in China.

Police records show 5.61 million natural and industrial emergencies were reported in 2004, leaving 210,000 people dead and1.75 million injured. Direct economic losses topped 450 billion yuan (56.3 billion U.S. dollars).


China Law 0 Comment November 5, 2007, 2:32 pm

Law to give employees free arbitration

November 1, 2007 - by Maggie Xu

Arbitration services for employees in labor disputes will be provided free of charge if a new law is given the go-ahead.

Draft of the law on mediation and arbitration of labor disputes, submitted to the Standing Committee of the National People's Congress (NPC) for its second review on 24th October, proposes public funds cover the cost of arbitration committees.

According to NPC statistics, labor dispute cases in China are continuously increasing in recent years. Statistics show that labor dispute arbitration organizations at various levels dealt with 1.72 million labor dispute cases involving 5.32 million employees from 1987 to the end of 2005, with a growth rate of 27.3 percent annually.

One highlight of the draft is the granting of final decision-making powers to arbitration committees in three kinds of cases.

These are: Disputes over labor payments, workplace injuries, compensation and pensions; disputes over holidays and social security; and disputes over collective contracts.

The current regulation, adopted by the State Council in 1993, comprises a dispute-settlement process of mediation, arbitration and a trial.

The draft legislation, along with the Labor Contract Law and Employment Promotion Law, which are scheduled to take effect next January, will create a legal framework to further improve employment and labor relations.

Figures from the Ministry of Labor and Social Security show that since 1987, the number of labor dispute cases has been rising by an average of 27.3 percent a year as the country's economy grows and workers become more aware of their rights.


China Law 0 Comment November 1, 2007, 3:35 pm

Lawyers Law Amended

October 31, 2007 - by Maggie Xu

China's top legislature on Sunday adopted a draft amendment to the Law on Lawyers which will make it easier for lawyers to meet criminal suspects and obtain evidence.

The draft amendment to the Law on Lawyers was approved after being put to the vote at the end of the five-day session of the Standing Committee of the National People's Congress (NPC) after the third reading.

Chinese attorneys have long complained of difficulties in meeting criminal suspects and having access to files and evidence when defending criminal cases.

The amendment says lawyers, provided they have the requisite papers such as their legal practitioner certificate, are entitled to meet criminal suspects or defendants in person once judicial organs have finished their initial interrogation or taken mandatory measures.

Defense attorneys and criminal suspects will not be monitored when they have a conversation, the amendment said, and defense lawyers are entitled to look up all files and materials relating to the case.

Defense lawyers are entitled to apply to prosecuting organs and people's courts to collect and provide relevant evidence, and use courts to get witnesses to testify in court.

Lawyers, with requisite papers, may collect evidence themselves from relevant organizations or individuals, the amendment says.

To protect lawyers, the draft amendment specifies that opinions and remarks made by defense lawyers in court - provided they do not threaten national security or slander others - cannot lead to prosecution.

Judicial organs that decide to detain or arrest a lawyer suspected of involvement in a crime related to a case during the proceedings, must inform the lawyer's family relatives and his or her law firm, as well as the lawyer association within 24 hours, the amendment says.

The amendment also allows lawyers who have been practicing for five years - provided they didn't have their license suspended over the past three years - to establish individual law firms.

China now has more than 130,000 lawyers working in 13,000 law firms. In 2006 alone, Chinese lawyers dealt with more than 1.8 million litigation cases and 1.15 million non-litigation cases and provided legal aid in more than 5.2 million cases, according to statistics from the Ministry of Justice.

The Law on Lawyers was implemented on Jan. 1, 1997. It is the first revision to the law since its promulgation.


China Law 0 Comment October 31, 2007, 3:56 pm

Anti-monopoly, a must-step on China's economy developing road

October 29, 2007 - by Emma Tang

After 13 years consideration and development, China's first Anti-monopoly law has passed on August 30, 2007. At the same time, many controversial issues have been raised. The focus among them is whether the will prohibit foreign investment in china?

To answer the question, we must consider the background and the current situation of China. China's socialist market economy had matured in the last decade, and the legislation is vital for the market economy (in western countries, Anti-monopoly law is regarded as the basic law). Current market circumstances in today's China made the introduction of an anti-monopoly law imperative. China just absorbed experience from other countries and contains provisions on banning monopoly-oriented agreement, forbidding abuse of dominance in the market, as well as investigation and prosecution of monopolistic practices. No doubt the legislation is the must-step on China's economy developing road.

On the other hand, learning from the experiences of a number of Western countries, China's draft anti-monopoly law not only prohibits monopoly agreements and abuse of a dominant market position, but also the abuse of administrative powers to exclude and restriction competition, which will help create a fair and orderly marketplace and ensure that the market economy develops in a sound and healthy way. Of course, the law would prevent State-owned enterprises in monopolistic industries such as petroleum, telecommunications, mail services and tobacco from abusing their market dominance to lower services and disregarding the public interests. But actually even without this Anti-monopoly law, the foreign investors are almost forbidden from this area. Whatever the Anti-monopoly can be practiced in these above areas, at least it demonstrates the determination of the Chinese government against the administrative monopoly in these fields, and will intensify regulation of the market and help to provide a better market environment for both domestic and foreign investors.

Deregulation has become a global trend, and all countries have reached a common understanding that anti-monopoly laws should be maximized, while constraints to competition should be diminished. Business operators with dominant positions should abide by anti-monopoly law, and in particular should not abuse market dominance. That is, a must-step on China's economy developing road.

China Law 0 Comment October 29, 2007, 4:56 pm

Road Safety Law Change

October 29, 2007 - by Maggie Xu

Lawmakers are considering revising the road safety law to clarify the respective responsibilities of drivers and pedestrians involved in traffic accidents.

The draft amendment to the Road Transportation Safety Law, tabled at the Standing Committee of the National People's Congress (NPC) for its first review on 24th October, suggests car drivers who are found to be blameless should be liable for no more than 10 percent of the total compensation payment.

It suggests they should pay 40 percent if they are found to have had a "minor" responsibility for the accident, 60 percent for "half" responsibility and 80 percent for "major" responsibility.

The existing law holds motorists fully responsible for all accidents involving pedestrians or non-motorized vehicles, regardless of who is to blame.

Only if a driver can prove the other party broke a traffic rule and that they attempted to avoid collision, can he or she escape the burden of total responsibility.

This detail has caused great controversy since the law's implementation in 2004.

Many motorists have said it is unfair the law punishes them while allowing pedestrians and those in charge of non-motorized vehicles to get away with bad behavior on the road and escape responsibility.

China Law 0 Comment October 29, 2007, 10:37 am

A Completely Preventable Calamity

October 28, 2007 - by Emma Tang

"One billion people will die of tobacco-related diseases this century unless governments in rich and poor countries alike get serious about preventing smoking", "If we fight against that, by 2050 we can save 200 million lives." Douglas Bettcher, head of the WHO's Tobacco Free Initiative, said.

The harm tobacco causes is receiving increasing public attention. Statistics show that 66 percent of all male Chinese above 15 are smokers. Of the 1.1 billion smokers around the world, 350 million are Chinese.

To contain the damage tobacco causes to public health, efforts must be made to reduce the population of smokers. A ban on tobacco advertising is a key part of it.

China, the world's largest tobacco producer and consumer, determined and announce to open fire against the harm tobacco causes, and will ban all forms of tobacco promotion by January 2011. That means within the next five years, China must fulfill it commitment to comprehensively ban all forms of tobacco advertising, promotion and sponsorship.

Such a ban has actually been in place since 1996, but firms have managed to sidestep the rules and promote their brands in other more subtle ways such as sponsoring sporting events, or using their logos without mentioning "cigarettes" on television, radio and in newspapers and magazines.

The nation lags behind other countries in efforts to control the use of tobacco, and the biggest problem is the lack of national regulations banning smoking in public areas.

However, if governments introduced measures such as aggressive taxation, banning cigarette advertising and making offices and public places totally tobacco-free, smoking rates could halve by 2050

It's a completely preventable calamity. To lose it or win it, which only depends on what we do next.

China Law 0 Comment October 28, 2007, 4:53 pm

Focus: New rules to curb violations of pollution

October 23, 2007 - by Maggie Xu

China's environment chief unveiled a set of new rules to tackle worsening lake pollution. The regulations follow findings showing "rampant" violation of environment rules by almost nine in ten of the country's industrial parks and two fifths of companies.

The new rules covering China's three major lake areas -- the eastern Taihu Lake, Chaohu Lake andthe southwestern Dianchi Lake -- included:

-- A ban on all projects involving discharges containing ammonia and phosphorus, and the turning down of existing applications to establish such projects.

-- A ban on the production, use and sales of detergents containing phosphorous around the lake drainage areas.

-- The removal of all fish farms from the three lake areas by the end of 2008.

-- A ban on fishponds, vegetable and flower farms that may involve the use of fertilizers within one kilometer of the lakeside.

we all remembered that blue-green algae outbreaks have been reported in the three lake areas, endangering domestic water supplies. On July 4, water supplies to 200,000 people in Shuyang County, Jiangsu Province, were halted for more than 40 hours after ammonia and nitrogen were found in a local river.

Environmental problems, if improperly handled, can trigger major social crises, and improving water quality has become our most urgent task..

At the matter of fact, illegal activities that harmed the environment were "rampant".

SEPA investigations showed 87.3 percent of the 126 industrial parks in 11 provinces had violated environment rules, allowing environmentally harmful companies into their parks.

China recorded 161 pollution accidents last year, according to the SEPA. The authorities shut down 3,176 polluting plants in a campaign in which the discharges of 720,000 companies were inspected last year, according to the SEPA.


China Law 0 Comment October 23, 2007, 10:19 am

Detail read: The Labour Contract Law

October 22, 2007 - by Maggie Xu

On June 29, 2007, the PRC Labour Contract Law, a milestone legislation driving the job market in China, was passed on the 28th session of the 10th National People's Congress after four deliberations. Effective on January 1, 2008, the Law is a momentous first for China's labor and social security system as an ancillary legislation to the PRC Labor Law promulgated in 1994.

1. Establishment Procedures for an Employer's Internal Rules

The Law clarifies that the employer shall negotiate with employees or the employee representatives' congress and shall bring forward schemes and opinions to stipulate internal rules on an equal basis involving the following issues: remuneration, working hours, leave and holidays, labor security and sanitation, insurance and benefits, vocational training, labor discipline, and others.

2. Conclusion of Labor Contract in Written Form

The Law prescribes that where the employer has not signed a labor contract in written form with employees, the labor contract in written form must be concluded within one month of establishing the labor relationship. Where the employer fails to sign a labor contract in written form with an employee within one year from the day the employee starts to work for the employer, the employer shall be deemed to have entered into a non-fixed term contract with the employee.

3. Non-fixed-term Contract

The Law requires the employer to enter into a non-fixed-term labor contract with the employee after the employer executes two consecutive fixed-term labor contracts with such an employee, provided that there are no grounds for the legal termination of the employee's contract.

4. Retrenchment

The Law stipulates that the employer may lay off redundant employees, subject to mandatory procedures, under the following circumstances: (1) where the employer is restructuring in accordance with laws and regulations due to the bankruptcy of the enterprise; (2) where serious difficulties occur affecting the production and management of the employer; (3) where the employer engages in a change of product line, major technical renovation, or change of business model, and the employer still needs to layoff redundant employees after amendments to the original employment contract.

5. Severance

The Law clarifies that severance shall equal the employee's monthly remuneration multiplied by the employee's period of service and any period of time more than six months but less than one year will be counted as one year.The severance shall equal the employee's semi-monthly remuneration for employees whose service year is shorter than six months. Further, it stipulates the maximum amount shall be three times the average city salary with a 12-month cap. Severance payment is required when the employer does not renew the fixed term labor contract with the employee upon the expiration date, unless the employer maintains or improves the benefits under the contract or the employee is not willing to renew the contract.

6. Labor Dispatch

The Law clarifies that the obligations for labor dispatching enterprises are: (1) entering into a labor dispatching agreement with the ultimate employer; and (2) notifying the dispatched employee of the content of the labor dispatching agreement.? In addition, the dispatched employee shall have the right to organize or join a trade union in the dispatching enterprise or in the ultimate employment enterprise.

7. Non-competition

The non-competition clause shall apply to senior management, senior technical staff and other staff subject to confidentiality liabilities.? The non-competition period shall be limited to the maximum of two years.

8. Trade Unions

The Law has reinforced the role of labor unions in safeguarding the legitimate rights and interests of employees in the following areas: (1) formulating corporate rules and bylaws; (2) bargaining on collective contracts; (3) providing opinions on mass layoffs; and (4) providing opinions on the termination of labor contracts.

China Law 0 Comment October 22, 2007, 4:29 pm

Lawyers Law to be Revised

October 22, 2007 - by Robin

Beijing is preparing to put in place a more comprehensive set of rules governing the law practice that will have significant impact on how law firms represent their clients' interests within the People's Republic of China moving forward. This move must be applauded as it is about time that the Chinese legislature revisits the current Law to make sure that it keeps pace with the sweeping development of China's legal profession and with the momentous changes that have taken place in Chinese society. The Law on Lawyers of the PRC took effect on January 1, 1997. This will be the first revision to the law since its promulgation.

In late June this year, the Ministry of Justice of the PRC submitted to the Standing Committee of the National People's Congress draft revisions to the PRC Lawyers Law. In brief, the draft touches on, amongst others, the following issues:

(1) it recognizes the increased autonomy that lawyer associations have been exercising in practice for some time;
(2) it provides several practical measures that offer greater protection to lawyer-client relationships;
(3) it permits the establishment of sola practitioner firms;
(4) it strengthens the existing legal ethics and law firm governance requirements;
(5) it allows experts to get license without examination; and
(6) it discusses the various liabilities that lawyers and law firms face for dereliction of duty.

To summarize, the proposed revisions are well-drafted and, if enacted, will definitely reinforce the growing independence of legal practitioners and boost the quality and diversity of legal services available in China. To learn more about the draft revisions proposed by the Ministry of Justice, you may want to take a look at this memorandum prepared by Fried Frank LLP.

China Law 0 Comment October 22, 2007, 4:10 pm

China's cabinet slashes administrative procedures

October 19, 2007 - by Maggie Xu

China's State Council recently decided to scrap 128 administrative procedures for examination and approval and amend 58 in order to cut government red tape.

The decision was made during an executive meeting presided over by Premier Wen Jiabao.

"The elimination and adjustment of the 186 administrative procedures is conducive to smoothing relations between the government and markets, government and enterprises, government and society and government and the public," said a circular from the State Council, or cabinet.

Since October 2001, the State Council has pushed a comprehensive reform of administrative procedures for examination and approval, and scrapped 1,806 items subject to examination and approval, said the circular.

The circular gave no details of the procedures that had been amended or scrapped.

The reform had laid a solid foundation for the government that could more effectively administer public services and social order, it said.

"Many redundant and excessive procedures have been eliminated," it said, adding the government should deepen the reform, strengthen supervision over administrative and approval rights and build a government ruled by law.

China Law 0 Comment October 19, 2007, 10:07 am

The Employment Promotion Law to take effect

October 18, 2007 - by Maggie Xu

The Employment Promotion Law, to take effect on Jan. 1 2008, is expected to boost employment by banning job discrimination, according to a senior labor official.

The law highlights the government's role in ensuring equal opportunities in a fair employment environment and combating work discrimination.

The nine-chapter and 69-article law, adopted in August by the Standing Committee of the National People's Congress (NPC), China's top legislature, has a chapter explicitly outlining the government's responsibility for employment aid.

He said the enterprises - labor-intensive small-and-medium ones in particular - that hire people with living difficulty will be subject to tax reduction and exemption and social security subsidy under the new law. Disadvantaged people, too, will be entitled to three years of tax reduction and exemption and micro-credit loans in entrepreneurial activities.

Meanwhile, seniors unable to start their own businesses and are not otherwise employed will be offered public welfare posts such as patrollers and cleaners and receive work subsidies as well as social security funds accordingly from local administrations, Zhang said.

He asserted that the law will urge all levels of government to "significantly expand communities' public welfare posts" for those individuals identified as the most needy. Likewise, free professional education and training will be prioritized for children from zero-employment households.

A lifelong training system of employment and re-employment for urban and rural workers alike, already set up with packages of national training plans for employees and professional training instructors, will be strengthened by the law's enactment. Earlier reports also said the law would oblige employers to offer training to their recruits.

In effect, the relevant content on improving such a training mechanism is "the most important aspect of the law and will prove vital to China's long-term employment situation in the future," Zhang said.


China Law 0 Comment October 18, 2007, 5:25 pm

Latest insights into China's red-hot new Corporate Income Tax Law

October 15, 2007 - by Robin Teow

China's revolutionary new Corporate Income Tax Law was enacted by the National People's Congress on March 16, 2007 ("CIT Law" ) and will take effect from January 1, 2008. The law, which sets unified corporate income tax rate for both domestic and foreign enterprise, has attracted widespread attention at home and abroad as it affects how foreign investors should formulate or adjust their investment strategy in China going forward in a big way. However, just like any other Chinese laws when they are first approved, nobody knows exactly how this law is going to be implemented or enforced come next year. Certain aspects of it are yet to be clarified and I am almost 100% sure that foreign investors are now waiting anxiously for the State Council to issue the detailed implementation rules and supplementary tax circulars that provide definitions of various important terms and explain the needed details of implementation to assess the potential tax impact on their business plan in China and to review their tax profile accordingly. There will be a need for new thinking and strategy to minimise China income tax. It is imperative that investors come up with a comprehensive review on how their foreign invested enterprises in China may optimise and take advantage of the new forms of tax incentives under the new regime.

PricewaterhouseCoopers in their latest news flash provided some very useful insights into China's new Corporate Income Tax Law and the draft detailed implementation regulations ("draft DIR" ). Basically, the news flash addresses the various significant provisions in the said draft impacting foreign investors' operations in China. The draft DIR, amongst others, contains important changes to the calculation of taxable income of an FIE, introduces the "contemporaneous documentation" requirement in transfer pricing enforcement, and provides definitions of non-tax resident enterprises deriving income from sources within China.

China Law 1 Comment October 15, 2007, 4:54 pm

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