China: Legal Environment

In this page: Business Contract | Intellectual Property | Legal Framework of Business | International Dispute Resolution

Business Contract

General Observation: You must specifically define the obligations of each party.
Law Applicable to the Contract: Law on contracts
Advisable Incoterms: Preferably an FOB or CIF incoterm should be chosen.
Language of Domestic Contract: The contracts can be written in English and Chinese. But in the event of conflict, Chinese contract will prevail, it is thus necessary to pay great attention to the translation.
Other Laws Which Can Be Used in Domestic Contracts: Possible, if the two parties agree.

Intellectual Property

National Organisations: China National Intellectual Property Administration (CNIPA)
Trademark Office (SAIC)
Regional Organisations: Expert Group on Intellectual Property Rights (IPEG)
International Membership: Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)

National Regulation and International Agreements

Type of property and law	Validity	International Agreements Signed
Patent Patent Law 1992	20 years, non renewable	Patent Cooperation Treaty (PCT)
Trademark Law on Marks	10 years, renewable indefinitely	Trademark Law Treaty Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks
Design Patent Law	10 years
Copyright Copyright Law	During the lifetime of the author and 50 years after his or her death	Berne convention For the Protection of Literary and Artistic Works Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms Rome ConventionFor the Protection of Performers, Producers of Phonograms and Broadcasting Organizations WIPO Copyright Treaty WIPO Performances and Phonograms Treaty
Industrial Models Patent Law	10 years

Legal Framework of Business

Equity of Judgments

Equal Treatment of Nationals and Foreigners: The judiciary does not guarantee an impartial trial to a foreign national. A high degree of corruption has been reported in the country and within the CCP.
The Language of Justice: Mandarin-Chinese
Recourse to an Interpreter: Possible
Legal Similarities: The legal system is based on the Confucian philosophy of the social order by moral education. After the 1911 revolution, the Republic of China mainly adopted a legal code of Western type inspired by the German law. The establishment of the People's Republic of China in 1949 brought a Soviet system influenced by socialism. There does not exist a tradition of constructive law in China and the first civil code dates from the beginning of the year 1980. As compared to the Western laws, it is written in a rather incomplete fashion, which leaves an important place for arbitrary judgements. The law is subject currently to a progressive reform encouraged by external and internal pressures. The constitution in force currently was promulgated in December 1982.

The Different Legal Codes

Base of the state, individuals rights, and private property returned in constitution in 2004	Constitution of 1982 (after 2004 amendments)
Regulations on the litigations on environmental protection, taxation and customs, the quality of products, and opposition to administrative decisions	Administrative Law and Administrative Procedure Law
Civil Law (Property law and the General Law on Registered Trademarks)	Civil law, Civil Law Procedure
Criminal Law	Criminal law and Criminal Procedure Law
Labor Law	Labour Law
Commercial Law	Law on Contracts, Law on Prices, Foreign Trade Law, Law of Protection of Consumers, and Law against Unfair Competition
Company Law	Companies Law, Law on Foreign Company Venture Capital, and WFOE Law

Checking National Laws Online: China Legislative Network System
Other Useful Resources: China Law Blog
LLRX.com, research guide to the Laws of China

The Jurisdictions

Supreme People's Court	Highest Court in the legal system of China.
Intermediate People's Court	The trial courts are responsible for criminal and civil cases.
Special Courts	Military court, Court of railway transport and Maritime Court of China.
Supreme People's Procuratorate	They exert their authority in cases endangering the safety of the State and public safety, damaging the economic order and violating the personal and democratic rights of the citizens and other important criminal causes.

Court Officials

The judge: The Judge exerts the legal authority of the Government according to the law, he must judge a case according to the law.
The judges are also cross-examiners who examine the witnesses.
Differing from traditional courts, only evidence presented in the court is considered.
The prosecutor
Law minister: Justice and prison administration, governs the lawyer's profession and supervises the examinations of admission to the law profession.
Lawyers: The lawyer has an advisory role towards his client and must defend him.
Ministry of public safety: It is the authority of the police force. The police is responsible for maintenance of law and order, conduct investigations and arrest suspects in criminal cases.
May intervene in settling disagreements between private individuals.

International Dispute Resolution

Arbitration: China has several institutions for arbitration such as China International Economic and Trade Arbitration Commission (CIETAC). Only litigations containing an "external element" can be arbitrated outside China.
Arbitration Law: Arbitration law inspired from the CNUDCI model.
Conformity to International Commercial Arbitration Rules: Party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
Appointment of Arbitrators: The arbitration court comprises three arbitrators except for claims for an amount lower than 500000 RMB or if the parties can settle it otherwise. Each party can appoint an arbitrator or authorize the president of the CIETAC to name an arbitrator.
Arbitration Procedure: The official language is Chinese (except decision expressed by the parties). Arbitration can begin only after the plaintiff has lodged a request with the secretariat of the arbitration committee. The opposing party will have to present its written defense and evidence. An attempt at conciliation will be initially made. The court of arbitration will have to deliver its sentence in the 6 months following the date of constitution of the arbitration court. The final decision made by the court of arbitration is final, obligatory for the 2 parties and irrevocable. For more information, see the CIETAC site.
Permanent Arbitration Bodies: International Economic and Commercial Arbitration Commission (CIETAC) (Sectors Covered: Economic and commercial)

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