People's Supreme Court Invites Public Opinion On Its Draft Rules On Anti-Monopoly Cases

The Supreme People's Court announced that it would accept opinions regarding its draft "Interpretation on Certain Issues Concerning the Application of Laws during the Trial of Anti-monopoly Civil Disputes". The draft Interpretation expressly places on the victim the burden of proof to show monopoly status caused the victim's injuries. When such causation is proved, the monopoly shall bear civil liabilities for the damages it has caused. The Interpretation does not change the legislative requirement that victims may not bring civil action to the courts directly, but must file a complaint to the Anti-Monopoly Supervision Agency, which then has the right to decide whether or not to initiate action.

New Regulations on Permits for Operating Bookstores

The General Administration of Press and Publication (GAPP) issued the "Administrative Regulations on the Publication Market", which regulates the permit and licensing system for the distribution of publications. No distribution of publications may be made without a government permit.

The regulation allows the establishment of wholly-foreign owned companies, as well as Sino-foreign joint ventures, Sino-foreign cooperative companies, and domestic companies, to engage in the distribution of books, newspapers, journals and electronic publications. Sino-foreign cooperative companies are allowed to engaged in the distribution of audio-visual products. Where a foreign-invested chain store sells books, or periodicals, the number of stores may not exceed 30, and the foreign capital must be a minority share.

Taiwan's Draft Amended Patent Law Still Pending Review

Taiwan's Patent Law, last revised in 2003, is pending review by the Legislative Yuan. The Executive Yuan issued a draft amended law in early 2010, and it has been in committee review for the past year. The main purpose of the new law is to increase protections for bio-engineered products, to support further advancement in Taiwan's bio-technology industry. Among the other issues expected to be addressed are farmers' rights to save seed for future crops, eliminate the prohibition on patenting of any life forms, revising the invalidation and compulsory licensing systems, and revising the requirements for determining infringement and damages calculations.

China's Civil Procedure Law Under Revision

The National People's Congress has begun the long work of revising the Law to improve China's legal system. Among the various aspects under revision, three stand out for foreign investors seeking protection in China: Rules on Evidence, Pre-trial Rules, and Post-judgment Enforcement Rules.

China Establishes Security Review System for Foreign Acquisitions of Domestic Companies

The General Office of the State Council issued an advisory notice on the policy for review of foreign investments. The "Circular on the Establishment of Security Review System for Merger and Acquisition of Domestic Enterprises by Foreign Investors" (the Circular) is generally seen as an effort to create reciprocity with the US' Committee on Foreign Investment in the United States (CFIUS). The Circular establishes a ministerial level joint committee to review foreign mergers and acquisitions of Chinese enterprises. The Circular also generally states some aspects of the scope, content, working mechanism and procedure for security review.

The Circular points out that the scope of security review includes foreign domestic military industrial companies, military equipment companies , companies located near key and sensitive military facilities, and units related to national defense and security, as well as key farm products, energy and resource related enterprises, important basic infrastructure, transportation services, key technology, and major equipment manufacturing enterprises, and those in which foreign investors may gain effective, although not nominal, control.

In accordance with the Circular, foreign applicants for mergers or acquisitions of domestic companies, investors must apply to the Ministry of Commerce, and the Ministry should submit the application to the joint committee for security review within five working days. There is no deadline set for the joint committee's decision. China has long has an Investment Catalogue, in which many industries, such as defense, Internet, mining, are designated as off-limits to foreign investors. The Circular establishes an additional layer of review to ensure that national assets do not fall under informal or unintended foreign control.

China's Investment Catalogue To Be Further Opened To Foreign Investors

The National Development and Reform Commission, in concert with the Ministry of Commerce and other departments, proposed revisions to the national government's "Foreign Investment Industrial Guidance Catalogue". The last revision was issued in 2007, and liberalized several sectors of industry to foreign investment, particularly to meet WTO accession requirements. The Catalogue lists 3 categories: Prohibited, Restricted, and Encouraged. Any industries that are not listed in one of those 3 categories is considered to be Permitted.

Among the proposed revisions are moving health care from the Restricted category, limited to joint ventures and cooperative companies, to the Permitted category, where wholly-foreign owned investment is allowed. A small part of the field of education may also be moved into the Encouraged category. Vocational training, an area in which China would like to receive foreign expertise, will move from permitted, to Encouraged. Most of the field of Education is strictly controlled by the Chinese Communist Party, and thus Restricted to foreign investment.

The Encouraged category will also include automotive essential components, and elements of "green technology". However, the Catalogue also moved some items into the Prohibited category. Construction of residential villas, and domestic courier service are now prohibited to foreign investment.

In addition, the National Industrial Infrastructure Catalogue has hundreds of industrial and commercial fields, listed as either of 4 levels of foreign investment: Prohibited, Restricted, Permitted, or Encouraged for foreign Investment.

Foreigners No Longer Generally Excused from Criminal Penalties in China

For decades, foreigners could expect better treatment from Chinese authorities than meted out to Chinese citizens. However, recent years have seen an increasing number of foreigners subjected to Chinese criminal process. It may be that the changing demographics of the foreigners in China correlates to an actual increase in criminal behavior, or foreigners expect to "get away" with more and respond badly to authorities in China. Either way, foreigners in China are more likely to face the legal system than ever before. Chinese police have received guidance to no longer turn a blind eye to misbehaving foreigners, but to treat them equally with Chinese citizens. You may read more about this issue in the spring 2011 issue of the ABA's INTERNATIONAL LAW NEWS, in an article by Wang and Wang attorneys.