Jenny Zhang, Attorney at Law, Lawyer, Law firm in Dalian, China

A foreign who involved in a sexual assault against a Chinese woman arose a new campaign against foreigners who entry in to China illegally.

The 100-day campaign will start on Tuesday, according to the public security bureau. Wang Wenjie, a spokesman for the bureau, dismissed any suggestion that the move is linked to the arrest last week of a British tourist suspected of indecently assaulting a Chinese woman. The man, who has not been identified by Beijing police but was confirmed as a tourist with a valid visa, was detained in Xuanwumen Dajie, in Xicheng district, on May 8 at about 11 pm after a confrontation with several men that was caught on camera and broadcast on the Web. The campaign is aimed at tackling the illegal employment of foreigners, overstaying and illegal entry. These are “major problems”, said Lin Song, the police officer in charge of the campaign who works for the bureau’s section overseeing exit and entry into the country. Foreigners must carry passports and accommodation registration documents at all times in line with Chinese regulations. “We will enforce the rule and make sure that every foreigner knows that,” said Lin. “We’ll check passports and accommodation registrations in areas where foreigners gather in the capital.” Among the locations he mentioned specifically were Sanlitun, an area popular for its shops, bars and restaurants in Chaoyang district, and universities in Haidian district. Lin also said authorities had asked police across the city to publicize this to foreign residents by publishing notices in communities and engaging in face-to-face conversations. Police have already posted information about the campaign in Korean in Wangjing, Chaoyang district, where about 40,000 foreigners, mostly Korean, live, Lin said. They have also asked colleges in Haidian to inform foreign students of the campaign. “In the meantime, we’ll invest more police officers to do more checks in hotels, at embassies and at customs checkpoints,” he added. News about the campaign received a mixed response among Sina Weibo micro-bloggers on Tuesday. Some Chinese and foreign users hailed it as a positive step, while others raised concerns that it may cause animosity among law-abiding expatriates.

Officials in Chengdu, capital of Sichuan Province, have confirmed that a similar campaign will be rolled out there soon. A spokesman for the public security bureau in Guangzhou, capital of Guangdong province, declined to comment on whether the city will follow suit, while his counterparts in Shanghai were unavailable for comment as of Tuesday night. Beijing, second only to Shanghai in terms of the number of foreigners with residency permits, was home to almost 120,000 foreigners at the end of 2011. The capital has reported 13,000 cases of illegal entry, overstaying and illegal employment concerning foreigners from more than one hundred countries since 2008, according to exit-entry statistics. Although 80 percent of foreigners identified as illegally residing in China do not initially intend to do so, according to recent statistics from the Ministry of Public Security, “the issue still needs attention,” he said. “Some foreigners, whose visas expired, couldn’t afford tickets back to their countries and were afraid to find normal jobs in China. Instead, they committed crimes,” he said. A hotline will allow residents to give tip-offs to the police, he added. Chengdu, the largest sub-provincial metropolis and provincial capital of Sichuan, said it will launch a similar plan by the end of this year, Wang Lin, deputy director of Chengdu exit and entry administration bureau, confirmed. Yang Huanning, vice-minister of public security, told lawmakers at the legislature’s bimonthly session that foreigners who work without an authorized permit in China are mostly language teachers, performers, and domestic helpers, while most illegal entrants come from neighboring countries. The number of foreigners who stayed for at least six months rose to 600,000 in 2011 from fewer than 20,000 in 1980, he said. But due to a lack of repatriation centers and language barriers it has been difficult to crack down, he said. Yang Lin, an attorney at Ying Ke Law Firm who specializes in cases involving foreigners, suggested police distribute brochures highlighting relevant Chinese regulations for foreigners in different languages at the airport. “After all, many foreigners have no knowledge about local laws and regulations and police should tackle the problem at source,” she added.

(from China.org.cn)

 

the Standing Committee of the National People’s Congress of the People’s Republic of China

Order of the President of the People’s Republic of China

No. 39
The Notarization Law of the People’s Republic of China, which was adopted at the 17th meeting of the Standing Committee of the National People’s Congress of the People’s Republic of China on August 28, 2005, is hereby promulgated and shall go into effect as of March 1, 2006.

President of the People’s Republic of China Hu Jintao

August 28, 2005

Notarization Law of the People’s Republic of China ContentsChapter I General Provisions

Chapter II Notarial Offices

Chapter III Notaries

Chapter IV Notarization Procedures

Chapter V Effect of Notarization

Chapter VI Legal Liabilities

Chapter VII Supplementary Provisions

Chapter I General Provisions

Article 1

With a view to regulating notarization activities, ensuring that the notarization institutions and notaries perform their duties in accordance with the law, preventing disputes and protecting the legitimate rights and interests of the natural persons, legal persons or other organizations, this Law is formulated.
Article 2

Notarization means an act performed by a notarial office, upon the application of a party concerned, to certify the authenticity and legality of a civil juristic act, a fact of legal significance and a document in accordance with the statutory procedures.
Article 3

A notarial office shall abide by the law and adhere to the principle of objectiveness and impartiality when performing notarial acts.
Article 4

China Notary Association shall be established as a national notary association and each province, autonomous region or municipality directly under the Central Government shall establish a local notary association. China Notary Association and local notary associations shall be social organizations with legal personality. The constitution of China Notary Association shall be formulated by the general assembly of the representatives of its members and shall be filed with the judicial administrative department of the State Council for record.

The notary associations are self-disciplinary organizations of the notarization sector. They shall carry out notarial activities according to the constitution and shall carry out supervision over the practice of the notarial offices and notaries.
Article 5

The judicial administrative department shall supervise and guide the notarial offices, notaries and notary associations in accordance with the Law.
Chapter II Notarial Offices
Article 6

A notarial office is a non-profit certification institution that is lawfully established and independently exercises the notarial functions and bear corresponding civil liabilities.
Article 7

A notarial office may, according to the principle of overall planning and rational distribution, be established in a county, undistricted city, districted city, municipality directly under the Central Government or district directly under a city. One or more notarial office(s) may be established in a districted city or municipality directly under the Central Government. The notarial offices are not established hierarchically according to the levels of administrative divisions.
Article 8

A to-be-established notarial office shall satisfy the following requirements:

(1)Having its own name;

(2)Having a fixed place;

(3)Being staffed with 2 or more notaries; and

(4)Having the funds necessary to conduct notarization.
Article 9

Where a notarial office is to be established, it shall be reported by the local judicial administrative department to the judicial administrative department of the province, autonomous region or municipality directly under the Central Government. Upon the approval granted by the judicial administrative department of the province, autonomous region or municipality directly under the Central Government, the local judicial administrative department shall issue a practicing certificate of notarial office according to the prescribed procedures.
Article 10

The person-in-charge of a notarial office shall be elected from the notaries who have 3 or more years of practicing experience, shall be subject to the examination and approval of the local judicial administrative department, and shall be reported to the judicial administrative department of the province, autonomous region or municipality directly under the Central Government for record.
Article 11

Upon request of a natural person, legal person or any other organization, the notarial office shall perform notarial acts for the following matters:

(1)Contract;

(2)Inheritance;

(3)Authorization, declaration, bestowal, will;

(4)Division of property;

(5)Bidding and tendering, auction;

(6)Marriage status, kindred relationship, adoption relationship;

(7)Birth, existence, death, identity, experience, education background, academic degree, job title, professional technical title, Whether or not having any illegal and criminal record;

(8)Articles of association;

(9)Preservation of evidence;

(10)Signature, seal and date as indicated in a document, duplicate or photocopy of a document conforming with the original document; and

(11)Other matters that a natural person, a legal person or any other organization voluntarily requests for notarization.

As for any matter that shall be notarized under laws or administrative regulations, the relevant natural person, legal person or any other organization shall apply with the notarial office for notarization.
Article 12

Upon the request of a natural person, legal person or any other organization, the notarial office may handle the following affairs:

(1)The affairs that shall be registered by a notarial office under laws or administrative regulations;

(2)Preservation of evidence;

(3)Preservation of will, heritage or other property, articles and documents relating to the notarization affair;

(4)Making notarization-related legal documents for others;

(5)Providing legal consultation services pertaining to notarization.
Article 13

No notarial office is allowed to:

(1)Issue a notarial deed for any untrue or illegal matter;

(2)Destroy or fraudulently alter any notarial document or archives;

(3)Canvass notarial business by denigrating other notarial offices or notaries, or by paying kickbacks or commissions, or by any other unfair competition methods;

(4)Reveal any state secret, business secret or personal privacy it has access to in its practice;

(5)Charge notarial fees in violation of the prescribed standards; or

(6)Commit any other acts as prohibited by laws or regulations, or provisions of the judicial administrative department of the State Council.
Article 14

A notarial office shall establish management rules for its business, financial affairs and assets, shall supervise the practices of its notaries and shall set up a malpractice liability system .
Article 15

The notarial office shall buy notarial liability insurance.
Chapter III Notaries
Article 16

A notary is a practitioner who satisfy the requirements as prescribed by this Law and engage in notarization business in a notarial office.
Article 17

The number of notaries shall be determined in light of the needs of notarial business. The judicial administrative department of a province, autonomous region or municipality directly under the Central Government shall, in light of the establishment of notarial offices and the needs of notarial business, determine the plan on the staffing of notaries and shall file it with the judicial administrative department of the State Council for record.
Article 18

A notary shall satisfy the following requirements:

(1)Having the nationality of the People’s Republic of China;

(2)Being 25- 65 years old;

(3)Being impartial and upright, observing discipline and abiding by the law, being of good conduct;

(4)Having passed the National Judicial Examination; and

(5)Having acted as an intern in a notarial office for 2 or more years, or having 3 or more years of experience of another legal profession and having acted as an intern in a notarial office for 1 year or more, and having passed the evaluation.
Article 19

As for a person who was engaged in teaching and research of law and hold a senior title of professional post, or a public servant or lawyer who hold a university diploma or above and has full 10 years of experience in judicial or procuratorial work, legal affairs or legal service, if he has left his post and has passed the evaluation, he may serve as a notary.
Article 20

A person under any of the following circumstances may not undertake the job of a notary:

(1)Being incapable for civil conduct or having limited capacity for civil conduct;

(2)Having been subject to any criminal penalty due to a calculated crime or duty-related crime;

(3)Having been discharged from public employment;

(4)His practicing certificate has been revoked.
Article 21

Anyone who intends to serve as a notary shall satisfy the qualifications for a notary,, and shall file an application. The local judicial administrative department shall, upon the recommendation of the applicant by relevant notarial office, report the application to judicial administrative department of the people’s government of the province, autonomous region or municipality directly under the Central Government for examination and approval. If the judicial administrative department of the people’s government of the province, autonomous region or municipality directly under the Central Government grants the approval, it shall request the judicial administrative department of the State Council for appointment and shall issue a practicing certificate of notary to the applicant.
Article 22

A notary shall observe the disciplines and the law, scrupulously abide by the professional ethics, lawfully perform his notarial duties, keep confidential the secrets he has access to in his practice.

A notary shall have the right to obtain labor remunerations, and to enjoy insurance and welfare treatments. He has the right to resign from his job, to lodge a complaint or file a charge. He may not be disposed from his post or be punished unless there is a statutory reason or unless the statutory procedures have been completed.
Article 23

No notary is allowed to:

(1)Concurrently hold the post of notary in 2 or more notarial offices;

(2)Undertake other paid job(s);

(3)Perform any notarial act for his near relative or himself or perform any notarial act in which he or his near relative have an interest;

(4)Illegally issue any notarial deed;

(5)Unlawfully issue a notarial deed;

(6)Encroach upon or misappropriate the notarization fees or encroach upon or steal any articles for the exclusive use of notarization;

(7)Destroy or fraudulently alter any notarial document or archives;

(8)Reveal any state secret, business secret or personal privacy he has access to in his practice; or

(9)Commit any other acts as prohibited by laws and regulations and provisions of the judicial administrative department of the State Council.
Article 24

In case a notary is under any of the following circumstances, the local judicial administrative department shall report him to the judicial administrative department of the people’s government of the province, autonomous region or municipality directly under the Central Government for dismissing him from the post of notary:

(1)He has lost the nationality of the People’s Republic of China;

(2)He has attained the age of 65 or he is incapable of performing his duties continuously for reasons of health;

(3)He has resigned from the post of notary of his own accord; or

(4)His practicing certificate of notary has been revoked.
Chapter IV Notarization Procedures
Article 25

Any natural person, legal person or any other organization in request for notarization may apply for notarization with the notarial office of the place where his (its) domicile or habitual residence is located, or where the relevant act is committed, or where the relevant fact occurs.

The applicant in request for the notarization of real property shall file an application with the notarial office of the place where the real property is located. The provisions of the preceding paragraph are applicable to the notarization of the power of attorney, statement, bestowal and will concerning the real property.
Article 26

A natural person, legal person or any other organization may entrust others to handle notarial affairs on behalf of the former with the exception of the notarization of a will, survival, and adoption relationship, which shall be performed by requestor himself.
Article 27

The party in request for notarization shall faithfully provide the notarial office with the relevant information about the matter it (he) requests for notarization, as well as genuine, lawful and adequate certification documents. If the certification documents are incomplete, the notarial office may demand it (him) to make supplementation.

The notarial office shall, after its acceptance of a notarization request, inform the party concerned of the legal significance and the possible legal consequences of the matter it (he) requests for notarization, and shall put on file those things it has informed the party concerned.
Article 28

When handling notarial affairs, a notarial office shall, according to the rules for handling different notarial affairs, examine the following items respectively:

(1)The identity of the party concerned, the qualifications for requesting for the notarization and the corresponding rights;

(2)Whether or not the documents he (it) offers are complete, whether or not the meanings are clear and whether or not the signature and seal are complete;

(3)Whether or not the certification documents are authentic, lawful and adequate; and

(4)Whether or not the matters under request for notarization are genuine and lawful.
Article 29

The notarial office shall verify or authorize a public office located in another place to verify the matter under request for notarization and the certification documents provided by the party concerned, if it is necessary to do so according to the rules for conducting notarization or if it has any doubt about them. The relevant entity or individual shall offer assistance.
Article 30

If the notarial office, upon examination, considers that the certification documents provided by the party concerned are authentic, lawful and adequate, and that the matter under request for notarization is true and lawful, it shall issue a notarial deed to the party concerned within 15 days after its acceptance of the notarization request. However, the time for force majeure, supplementing certification documents or verifying the relevant information may not be included in the aforesaid time period.
Article 31

Under any of the following circumstances, a notarial office shall refuse to perform a notarial act:

(1)The person without or with limited capacity for civil conduct has no guardian to request for notarization on his behalf;

(2)The party concerned has nothing to do with the matter under request for notarization;

(3)The matter under request for notarization is a matter of professional technical authentication or appraisal;

(4)The parties concerned disputes over the matter under request for notarization;

(5)The party concerned makes up a story, disguise the fact or provides any false certification documents;

(6)The party concerned fails to provide adequate certification documents or refuses to supplement the certification documents as required;

(7)The matter under request for notarization is untruthful or unlawful;

(8)The matter under request for notarization transgresses the social morality; and

(9)The party concerned refuses to pay the notarization fees.
Article 32

A notarial deed shall be made in the format as required by the judicial administrative department of the State Council and shall be affixed with the signature or seal of the notary as well as the seal of the notarial office. The notarial deed takes effect as of the date of issuance.

A notarial deed shall be made in the written language commonly used nationwide. In a national autonomous area, it may be made in the minority language commonly used in the area.
Article 33

Where a notarial deed needs to be used outside China, if the country where the notarial deed is to utilized requires authentication in advance, it shall have been authenticated by the Ministry of Foreign Affairs of the People’s Republic of China or its authorized institution and the China-based embassy (consular office) of the relevant country.
Article 34

The party concerned shall pay notarization fees according to the relevant provisions.

If the party concerned meets the conditions for obtaining a legal aid, the notarial office shall reduce or remit the notarial fees.
Article 35

A notarial office shall classify the notarial documents into different categories and keep them as archives. At the expiration of the retention period of notarial archives of the important matters, which shall be subject to notarization under the law or administrative regulation, the notarial office shall hand over these notarial archives to the local archives for preservation.
Chapter V Effect of Notarization
Article 36

The notarized civil legal act, fact and document of legal significance shall be taken as the basis for ascertaining a fact except those that can be overturned by counter-evidence.
Article 37

As for a notarized credit document that states the payment and the commitment of the debtor to accept the forcible execution, if the debtor fails to fulfill or to properly fulfill its (his) duties, the creditor may apply with the jurisdictional people’s court for forcible execution.

In case a definite error is found in the credit document as mentioned in the preceding paragraph, the people’s court shall refuse to execute it, and shall serve the both parties concerned and the notarial office with its ruling.
Article 38

Where laws or administrative regulations provide that a certain matter has no legal effect unless it is notarized, this law or administrative regulation shall be complied with.
Article 39

Where an interested party of the party concerned or of a notarized matter considers that the notarial certificate contains a definite error, it may propose the notarial office that issued the notarial certificate to review it. If the contents of the notarial deed are illegal or do not consist with the facts, the notarial office shall revoke the notarial deed and publish an announcement, and the notarial deed shall be invalidated from the very beginning. If any other error is found in the notarial certificate, the notarial office shall make corrections.
Article 40

Where a party concerned or interested party of the notarized matter disputes over the contents of the notarial certificate, it may file a civil suit in the people’s court.
Chapter VI Legal Liabilities
Article 41

Where a notarial office or any of its notaries commits any of the following acts, it (he) shall be a warning by the judicial administrative department of the people’s government of the province, autonomous region or municipality directly under the Central Government or districted city. If the circumstance is serious, the notarial office shall be imposed a fine of no less than 10, 000 Yuan but no more than 50, 000 Yuan, the notary shall be imposed a fine of no less than 1, 000 Yuan but no more than 5, 000 Yuan, and may be given a punishment of suspending his practice for 3 to 6 months. If there are any illegal gains, such illegal gains shall be confiscated:

(1)Canvassing notarial business by denigrating other notarial offices or notaries, or by paying rebates or commissions, or by any other unfair competition methods;

(2)Charging notarization fees in violation of the prescribed standards;

(3)Practicing as a notary in 2 or more notarial offices concurrently;

(4)Undertaking other paid job(s);

(5)Performing a notarial act for himself or his near relative, or performing a notarial act in which he himself or his near relative has interests; or

(6)Other acts that shall be punished under laws or administrative regulations.
Article 42

Where a notarial office or any of its notaries commits any of the following acts, it shall be given a warning by the judicial administrative department of the people’s government of the province, autonomous region, municipality directly under the Central Government, or districted city, and shall be imposed a fine of no less than 20, 000 Yuan but no more than 100, 000 Yuan, and may be given a punishment of suspending business for rectification for 1 to 3 months. It shall give the notary a warning and shall impose upon him a fine of no less than 2, 000 Yuan but no more than 10, 000 Yuan and may be given a punishment of suspending his practice. If there are any illegal gains, such illegal gains shall be confiscated. If the circumstances are serious, the judicial administrative department of the people’s government of the province, autonomous region or municipality directly under the Central Government shall revoke the practicing certificate of the notary. If a crime is constituted, it (he) shall be investigated for criminal liabilities according to law:

(1)Illegally issuing any notarial certificate;

(2)Issuing a notarial deed for any untrue or unlawful affair;

(3)Encroaching upon or misappropriating the notarization fees or encroaching upon or steal any articles exclusively used for notarization;

(4)Destroying or fraudulently altering the notarial documents or notarial archives;

(5)Revealing any state secret, business secret or personal privacy it has access to in its practice; or

(6)Other acts that shall be punished under laws or administrative regulations.

Where anyone commits any crime intentionally or commits any position-related crime due to negligence and is thus given a criminal penalty, his practicing certificate of notary shall also be revoked.
Article 43

Where a notarization office or any of its notary causes any losses to the party concerned or interested party to the notarization matter for the reasons of its (his) fault, the notarial office shall assume the corresponding compensation liabilities for the loss. The notarial office may, after making the compensation, seek compensation from the notary who has committed intentional or gross mistakes.

If the party concerned, interested party of the notarization matter and the notarial office dispute over the compensation, a civil lawsuit may be initiated in the people’s court.
Article 44

A party concerned or any other individual or organization commits shall bear the civil liabilities if it (he) commits any of the following acts and thus causes any losses to others. In the case of violation of the pubic security administration, it (he) shall be given a public security administrative punishment. In the case of a crime constituted, it (he) shall be investigated for criminal liabilities according to law:

(1)Obtaining any notarial deed by providing false certification documents;

(2)Using any false notarial deed to commit fraudulent acts; or

(3)Counterfeiting, altering or buying or selling any counterfeited or altered notarial deed or seal of notarial office.
Chapter VII Supplementary Provisions
Article 45

The embassies (consular offices) of the People’s Republic of China stationed abroad may perform notarial acts in accordance with this Law or the international treaties, which the People’s Republic of China has concluded or has acceded to.
Article 46

The charging standards for notarization fee shall be formulated by the public finance and price administrative departments of the State Council in conjunction with the judicial administrative department of the State Council.
Article 47

This Law shall go into effect as of March 1, 2006.

the Standing Committee of the National People’s Congress of the People’s Republic of China 2005-08-28

Recently I read an article written by an attorney of the same trade with me, Selling Your Products into China: 3 Choices. His idea is brilliant and knowledgeable.

Mainly there are 3 ways whereby one can export his/her goods in China:

(1) Distribute your goods directly;

(2) Establish a joint venture;

(3) Find a qualified agent or distributor with a vast sales network

Before exporting your goods into China or choosing a Chinese partner, it is advised for you to conduct thorough market research and due diligence. Companies should be mindful of possible problems in export rights, regulations and intellectual property rights protection. If the company decides to distribute the goods directly, then it will have to be aware of the distribution rights and understand the licensing process in China.

Distributing your goods directly may be a complicated and time-consuming process as one may not be familiar with China’s business practices and government regulations. Application for distribution rights and establishment of own distribution channels will be difficult. Chances of failure will be higher as a result. Establishing a joint venture will thus be a better option. Establishing cooperation with a local partner can allow you to have faster access into China’s market and with the local partner’s knowledge and experiences of China’s market, your success rate will be higher and goods can be better distributed. Acquiring help from a local partner does give you many advantages in penetrating the China’s market. A side issue to note will be that joint venture usually requires large amount of capital and China’s government may have capital control towards outflow of funds should one transfer his/her funds back to his/her home country. The government will also need to assess the potential economic benefits that it can bring to China, e.g. does it create job opportunities for the local population before approving it.

For small and medium sized companies, the best way to enter the China market is through a reputable or well-known agent or distributor. These companies are located regionally and typically have large sales network. Thus they will be able to have a better understanding of the China’s market and can provide assistance in developing distribution strategies in China and the region. In this way, new products can be launched easier into the market and distribution network can be set up rapidly without any problems dealing with distribution rights and licensing.

Besides all these, the most important step that one must take before exporting his/her products into China will be have a thorough understanding China’s customs, regulations and controls towards imported goods. A sound market entry strategy is also necessary in order to penetrate the China’s market. An assessment of your goods’ strengths, weakness, opportunities and threats can allow you to promote and distribute your products better. Understanding the profitability and marketability of your products in the China’s market is thus vital before exporting your products into China.

This article analyzed the benefits and shortcomings of each way of selling goods into a new overseas market. The sequence may be selling directly, finding an agent and JV. Besides those options, a WFOE as an importer is another one. Of course, a WFOE means a better understanding of local market and also ethical and legal environments. Risks involves a WFOE is much higher than the above three. But as a long-term business strategy, a WFOE is the best choice. I think maybe in the following days, I should write more about the legal issues arising from each business mode.

Many foreign friends hesitate to decide the form of investment, a WFOE or a Representative Office in China?To answer this question is just like to anwer “how do I decorate my condo?”. It absolutely varies from person to person.

Unlike the total “Chinese legal person” as a WFOE, a Representative Office is not a separate legal entity rather it is an extension of its parent enterprise. A Representative Office may only engage in non-profit making activities such as conducting research and survey for its parent enterprise in the local market or liaising with local and foreign contacts in China on behalf of the parent enterprise. As as resulet, a Representavie Office can’t invoice its business and the rights and obligations shall be undertaken by the parent enterprises. 

The governing rules on representative offices of foreign enterprises are Regulations on the Administration of Resident Representative Offices of Foreign Enterprises. In applying for the establishment of Representative Offices, a foreign enterprise shall submit the following documents and materials to the Registration Authority.

1. Application for the Registration of the Establishment of Representative Office;
2. Proof of the domicile of the foreign enterprise and legitimate business certificates for more than 2 years’ existence;
3. Articles of association or constitutional agreements of the foreign enterprise;
4. Letters of appointment of its chief representative and representative(s) issued by the foreign enterprise;
5. Identity certificates and resumes of the chief representative and representative(s);
6. Financial Creditworthiness Certificate issued by financial institutions that have business connections with the foreign enterprise; and
7. Certificate for the lawful use of the premises of the Representative Office.

If laws, regulations or State Council rules provide that approval is required for the establishment of Representative Offices, the relevant foreign enterprises shall, within 90 days from the date of approval, file an application for establishment registration with the Registration Authority and submit relevant approval documents.

In China, the word “arbitration” can be labor dispute arbitration, which is unique to China. That is a compulsory prepositional procedure for lawsuit in Chinese court for any dispute between the employer and employee. But in business transactions, arbitration generally refers to the resolution of dispute, opposite to litigation at court.

Arbitration has a lot of advantages over litigation, speedy, confidential, convenient and so on. Of course, it is more expensive than litigation. But considering the cost of time and energy, I think in any event the arbitration is a better option for foreign parties.

In fact, a lot of clients have noticed this point and include an arbitration clause in their agreement with Chinese party. But most of time, these arbitration clause turns to be invalid as our foreign clients don’t understand the specific requirements for a valid arbitration, especially when they choose Chinese arbitral tribunal. Here the following is the typical one which can not be enforceable.

1. “Any dispute difference or question which may arise at any time hereafter between the Seller and the Buyer touching the true construction of this Agreement or the rights and liabilities of the parities hereto or any matter arising in connection with this Agreement shall be referred to the decision of a single arbitrator to be agreed upon between the parties hereto, or in default of agreement for fourteen days after one party has requested the other to agree to an appointment, to be appointed at the request of either party hereto by ____.”

The flaws in this article:

Ad hoc arbitration. Since China has been a member of New York Convention, the ad hoc arbitration award in the other contracting states can be enforced by Chinese court. But as the provision is so simple and concise in this clause, once the parties can’t make an agreement with regard to the procedures, it is quite hard for the arbitration to proceed.

Institutional arbitration. As ad hoc arbitration can’t move on, the parties may intend to resort to institutional arbitration. In this case, our client guessed it would be convenient to arbitrate in China because the seller is a Chinese business. However, Chinese Arbitration Law and CIETAC arbitration rules don’t support ad hoc arbitration. China’s arbitration law is substantially different from the UNCITRAL Model Law, and generally provides for a lower level of party autonomy. Under China’s arbitration law, only a standing arbitral organ can suffice, and that means such a clause can’t meet the requirement of a binding arbitration clause in China. Thus, neither CIETAC nor any other Chinese tribunal can accept this case.

Another example:

1. Any dispute or controversy arising from or in connection with this Contract shall be settled through friendly consultations between both parties. In case no settlement can be reached through consultations, the disputes shall be submitted for arbitration or to the court with competent jurisdiction. (“凡因执行本合同所发生的或与本合同有关的一切争议，双方应通过友好协商解决，如果协商不能解决，应提交仲裁机构进行仲裁或提交有管辖权法院进行审判。”)
2. JURISDICTION：All disputes arising under or in connection with this Bill of Lading shall be determined by Chinese Law in the courts of，or by arbitration in，the People’s Republic of China．[i](中译文为：“管辖权：所有因此提单产生的争议应按照中华人民共和国法律在中华人民共和国法院审理或在中华人民共和国仲裁。”)

As the first sample, the second one and the third one also lack the specific arbitration institution. Moreover, the above clauses contain both arbitration and litigation. If the parties would hold conflicting opinion with regard of the settlement, they would make supplementary agreements further. But if they could not reach any agreement, Chinese law would just render it noneffective as the principle in China is “the obscure arbitration agreement is invalid unless the parties could make it clear through construction and amendment.” However, in international practice, the arbitral organs or the courts with competent jurisdiction would construe the arbitration agreement as far as possible to make it applicable.

We shall notice the differences in the standards between international arbitration and China’s arbitration and try to prevent the problems of arbitrability arising from the ambiguities when we review the agreement for clients.

Here is my book published in Law Press, a leading press in legal area. After half -a -year’s hard work, I finally completed the translation of Interntional Business Transaction, one of the Netshell series. When translating, I spent a lot of time on reviewing American laws, international principles,  customs and cases.  But all work deserves because I gained a lot.