Saturday, February 28, 2009

China Enacts Sweeping, Tough Food Safety Law

The Standing Committee of China's National People's Congress passed a brand new Food Safety Law on February 28, 2009, and the law is set to become effective on June 1, 2009.  Without having a chance to read it carefully, I have some preliminary comments as follows:

1.  It repeals its predecessor law--the PRC Food Safety Law (1995) in its entirety.  With food safety disasters occurring back-to-back, tainted milk, pig organs, rice, and everything one can think of, the Chinese society in general has been facing a battle of life and death with respect to food safety.  The legislature acted quickly to pass this brand now law.  It is noteworthy that the Standing Committee did not just fiddle with the old law and try to amend it; rather, it saw too many problems in the provisions of the law, and saw the self-evident proof of deficient enforcement.  This really shows the resolve to get food safety under control.  I think this resolve and the NPC's solution are laudable in light of the dire food safety situation of late.

2.  Since the predecessor law is repealed by this law, all the related regulations, measures, rules, guidelines, opinions, etc. pursuant to the old law are also repealed.  This is good news.  With so many ministries, departments, divisions all responsible for food safety, what ended up in reality was that nobody was effectively responsible for enforcing food safety and ensuring health and safety of the Chinese people, which caused collateral damage around the world.  Now, the situation might be a little better under the new law as explained in the following.

3.  Food Safety Commission .  The new law, Art. 4, authorizes the State Council to establish the Food Safety Commission, which , presumably, oversees and coordinates the entire food safety law enforcement.  I say "presumably" because the law itself does not clearly define the authority and limitation of the Commission.  As stated above, one of the lethal shortcomings of the prior Food Safety Law is that there was no centralized authority to be ultimately responsible, which in a sense created a  responsibility vacuum.  In order to remedy that problem and based on the Chinese governance model, creating one centralized entity, like the Food Safety Commission, is the solution to that problem.  Will it be THE solution?  Will it remedy the enormous food safety problems in China?  I don't know, but I surely hope it would before all Chinese people kill themselves by eating tainted whatever.

4.   The law is comprehensive.  In ten (10) Chapters and one hundred and four (104) articles, it encompasses special provisions on food safety risk assessment, food safety standards, food production, food inspection, food import & export, food safety disaster management, local supervision and management, and liability.  New areas of interest in this law include special attention to food additives, the creation of a food safety information database, civil and criminal liability.  The real teeth of the law are the private right of action.  Consumers can sue for damages, and exemplary damages up to ten (10) times of the actual damage.  Yes, ten (10) times.  See Art. 96.

5.  Will the corresponding regulations come out soon?  A pattern has been developing lately in the Chinese law making process.  The NPC passes important yet controversial laws, but implementing regulations come out very slowly.  This has happened to the Enterprise Bankruptcy Law and the Anti monopoly Law.  Will this happen to the Food Safety Law?  I hope not.  Food safety is unlike the initiation of bankruptcy proceedings, nor like administrative monopolistic behaviors, in that disasters can strike immediately on a very large scale if food safety is compromised.  Food safety cannot wait. 

For other comments on the new law, read this.

Monday, February 23, 2009

Measures for the Registration and Administration of Import and Export Technology Contracts

On February 1, 2009, the Minister for China's Ministry of Commerce signed into law the Measures for the Registration and Aministration of Import and Export Technology Contracts. (in Chinese) ("Technology Contract Measures")  This is a ministry level administrative regulation, and it will become effective on March 2, 2009.

To summarize, the Technology Contract Measures include the following important provisions:

1. Definition:

Technology contracts are defined as: patent assignment contracts, patent application assignment contracts, patent implementation contracts, trade secret contracts, technology service contracts, and any other contracts involving the import or export of technology.

2. Content of the Registration Document:
a. Contract Serial Number: the regulation sets forth a standardized coding system to identify each technology contract within the purview of the Technology Contract Measures. [合同号]
b. Title of the Contract. [合同名称]
c. Provider of the Technology. [技术供方]
d. Receiver of the Technology. [技术受方]
e. User of the Technology. [技术使用方]
f. Summary of the Contract. [合同概况]
g. Monetary Amount in the Contract. [合同金额]
h. Method of Payment. [支付方式]
i. Term of the Contract. [合同有效期]
3. When to Register the Contract?  Within sixty (60) days from the date when the contract becomes effective. 
4. Where to Register?  There is a central on-line registration system designed by the Ministry of Commerce, just like the registration of commercial franchises.  The web address is:  But, before the on-line registration, the local commerce bureaus have jurisdiction over the administration of contract registration.  Application materials, including a copy of the original contract, a copy of the contract translated into Chinese, documents evidencing the contracting parties respective authorities (to determine whether the contract is valid in the first place), must be submitted.
5. Filing Amendments. Any subsequent changes, amendments and or rescions of contracts must be timely filed.
6. Other Laws: Where foreign parties invest technology as capital in joint ventures or foreign-owned entities, other laws governing such investments apply.



Friday, February 20, 2009

"Inside the Meltdown"

Frontline (PBS) recently produced an in-depth documentary on the financial meltdown. It is an attempt at figuring out the root causes of the problems that led to the current economic crisis affecting the entire globe. It is well worth your time to watch it.

China International Law Symposium at UT (Austin)

The University of Texas International Law Journal will be hosting a China law related symposium on February 26, and 27, 2009.

Here is how it is described:

Entitled “China’s Emergence: Effects on Trade, Investment, and Regulatory Law,” this one-and-a-half day symposium will address the legal and policy implications related to China’s rise in political and economic power.


Opening remarks of the main body of the symposium will be at 9:00 a.m. on Friday, February 27. Expert panelists will be coming fro China, Hong Kong, and throughout the United States. They will be discuss challenges and opportunities related to China's economic and political rise through the lens of three primary topic areas--(1) Trade, (2) Investment, and (3) Regulatory law. Experts from both academic and practioner backgrounds will present. Official from MOFCOM, the Office of the U.S. Trade Representative, and the Department of Commerce will also present.

This program is free and open to the public. So if you don't want to obtain CLE credits, it is free. Free education is good. Free education in beautiful Austin, Texas on such interesting topics is even better. I plan to attend on February 27th. If you are going to be in Austin on that day, I'd like to meet.

For more information, please check here.

Wednesday, February 18, 2009

Enforcements of Judgments in China: Pretty Good in Urban Areas (Republish)

Contrary to the popular view that enforcement of judgments is poor in China, Professor Randall Peerenboom stated in his recent article that: 

While enforcement is often portrayed as difficult in China, recent studies have found significant improvements in urban areas, where more than half of creditor-plaintiffs receive 100 per cent of the amount owed, and three quarters are able to receive partial enforcement, a situation explored in more detail [elsewhere]. Moreover, the main reason for non-enforcement is that defendants are judgment proof: they are insolvent or their assets are encumbered.  No legal system is able to enforce judgments in such circumstances.  Although cross-country comparisons can be misleading, it would appear that enforcement in China may be less problematic than in many jurisdictions, including in rich countries such as the United States, the United Kingdom, or Russia (He policy brief 3). In the World Bank’s ‘Doing Business 2008’ survey, China ranked twentieth out of 178 economies in enforcement of contracts. The survey measures the time, cost, and number of procedures involved from the moment a suit is filed until payment is made.

Looking into the reasons behind the improvement in enforcement of judgments, Peerenboom found that:

The main reasons for the improvement in enforcement are changes in the nature of the economy; general judicial reforms aiming at institution building and increasing theprofessionalism of the judiciary; and specific measures to strengthen enforcement (citation omitted). The economy in many urban areas is now more diversified, with the private sector playing a dominant role. The fate of a single company is less important to the local government, which has a broader interest in protecting its reputation as an attractive investment environment. As a result, the incentive for governments to engage in local protectionism has diminished (citation omitted).

According to Peerenboom, enforcement in less developed areas, i.e. rural China, remains a dire problem for a host of reasons.  Competency and quality of judges are still less than satisfactory.  Local economy still depend on a few sources; thus, the incentive for non enforcement of judicial judgments remain.

Improving enforcement of judgments in rural areas is likely to be a difficult task as it is not simply a judicial problem.  Lax enforcement, as can be inferred from the experience of urban areas, is a complicated institutional issue, linked to economic development, availability of well-educated, professional judges, and very significantly a thriving private business sector.  Given the reality in the vast rural areas, better enforcement in these areas probably won’t come any time soon, short of drastic changes to local conditions

Yellow Cranes, Will You Return? (Republish)


The Yellow Crane Tower

Forefathers departed on yellow cranes,The Yellow Crane Tower

leaving this spectacular tower empty.

Yellow cranes will not return,

leaving the white clouds for millennia without companion.

–by Cui Hao (704-754 A.D.), Tang Dynasty

This poem has remained one of my favorites, throughout my education in China. In college in the city of Wuhan, I passed by the truly spectacular Yellow Crane Tower hundreds of times while commuting to and fro Hankou, marveling at its beauty and historical significance. It looks beautiful when you observe it on the First Bridge over theYangtze River (Chang Jiang, for Chinese readers), as it sits on the Snake Hill, stretching into the clouds over the ever grand Wuhan stretch of the Yangtze. Before I get carried away with nostalgia and poetry, I’d better move on to Chinese business law.Luckily, I get to return to the “Yellow CraneTower” for this post on cybersquatting law inChina.

As reported,Yellow Crane Tower Tobacco Company (“TCTTC”) is one of the most famed tobacco companies in Wuhan and throughoutHubei Province. And when it sought to register the www.YellowCraneTowerTobacco.cndomain name in Chinese (Huanghelou) in June 2005, it found, to its dismay, that domain name had been registered by a certain Mr. Deng, a restaurant owner in Jiangxi Province.TCTTC further found that Mr. Deng also had registered a slew of domain names using the core words “Yellow Crane Towner,” such,, etc.

Naturally, TCTTC took Mr. Deng to court, in the Wuhan Intermediate People’s Court.

TCTTC sued Deng for trademark infringement in the form of cybersquatting. Since the central issue here is whether Deng’s registration of the domain names using the TCTTC’s registeredword mark constitutes trademark infringement, the 2001 Several Explanations on Domain Name Civil Disputes (“Domain Name Explanations”) issued by the China Supreme People’s Court apply in this instance. The Domain Name Explanations expressly provide that a mark owner can ask a court of competent jurisdiction to determine whether its mark is famous, and the court may order the cancellation of the infringing domain name if it finds unfair competition, and monetary damages are also available to the victorious plaintiff. Upon request, the Court may also order the transfer of such infringing domain name to the plaintiff. See Arts. 4-8.

To prevail, TCTTC must prove that its marks were infringed and they were famous prior to Defendant’s use. The Court found TCTTC’s marks well known, the “Yellow Crane Tower” word mark and the “Yellow Crane Tower” design mark, both of which were used by Defendant in his website. In finding these marks well-known, the Court looked to the scope and expenses of advertisement for the marks, and it cited the reputation of products bearing the marks.

Upon finding the marks in question well-known, which is the prerequisite to prevail in a domain name cancellation dispute, the Court also found infringement in Defendant’s unauthorized use of the marks in question. It reasoned that both domain names and trademarks have the quality to help consumers relate to the source of goods and services.Given that shared quality of trademarks and domain names, Defendant’s use of TCTTC’s word mark could confuse consumers, despite the unrelated nature of the parties’ trades, one in restaurant while the other in tobacco.Further, the Court disagreed with Defendant’s argument that he did not have the intent to ride on TCTTC’s trademarks to gain economic advantages, because, as the Court stated it is obvious that Defendant’s use of a well-known mark as the core for his domain names was to obtain more economic opportunities, and such use was marked with commercial intentions.

This is easy win for TCTTC here. Of course, Plaintiff had an obvious home court advantage. The “Yellow Crane Tower” brand is very well-known in Wuhan, because it is a local trademark. Even though I am not a smoker, I knew that brand while I lived inWuhan. There was advertisement everywhere in the city. Though the Court may be suspected of local protectionism, I still think it just applied the black letter law. I do not see the Court straining to protect a local player while “screwing” an outsider. Another thing noteworthy here is that Plaintiff can get either the infringing domain names canceled or transferred. I would want a transfer.

So, with a win for the local player, the “Yellow Cranes” should be able to return toWuhan upon a transfer. And that should make TCTTC happy.

But, will the “real” yellow cranes return after millennia of absence? Poets wait on…

Minimum Wages; Big Differences (Republish)

On my blog, I see a lot of searches for minimum wage standards in China, and I have been waiting for a compiled chart, detailing the wage standards. Given the size of China and the huge variance of economic development, minimum wage standards vary considerably. I need to wait no more as China Herald just posted a piece, in which Fons Tuinstra stated that a team from the Renmin University of China had prepared and made available minimum wage standards of all the provinces and regions. And this work resulted from China’s joining the Global Wage Indicator.

With respect to minimum wage variance, the standards range pretty wildly. For example,

Beijing———– 730.00 Yuan/month; 8.7 Yuan/hour

Shanghai——– 840.00 Yuan/month; 7.5 Yuan/hour

Shaanxi——— 540.00 Yuan/month for Xi’an CBD, and wage standards decrease gradually for less developed areas. In my home town (Chenggu County), the minimum wage is 460.00 Yuan/month.

This is just a sampling of the significant differences in minimum wage standards in China. So, to those who want to know the “minimum wage standard in China,” I will remind them that there is no uniform minimum wage. Luckily, they can go here to view all of the minimum wage standards, broken down to provinces, cities/districts, and counties (in some instances).

Amount in Controversy and Jurisdiction Redefined by the SPC (Republish)

On March 31, 2008, the Supreme People promulgated a new set of judicial rules, redefining first-instance jurisdiction of higher and intermediate people’s courts in civil matters across the country.

In these extremely detailed rules, the SPC lays out the required amount in controversy in order for higher or intermediate people’s courts to exercise first-instance jurisdiction over civil cases. What is really amazing is that the rules do not generalize; rather, they detail the exact minimum amount required for each province, autonomous region, and municipality.

For example:

A. Beijing

Beijing Higher People Court as first instance court:

The amount in controversy must exceed 2,000,000,000.00 200,000,000.00 Yuan, or

the amount in controversy must exceed 1,000,000,000.00 100,000,000.00 Yuan and one of the parties in dispute must be domiciled outside this jurisdiction (outside Beijing, parties from Hong Kong, Macau, or other countries).

Beijing intermediate courts (including Railway Intermediate) as first instance courts:

The amount in controversy must exceed 50,000,000.00 Yuan, or

the amount in controversy must exceed 50,000,000.00 20,000,000.00 Yuan and one of the parties in dispute must be domiciled outside this jurisdiction (outside Beijing, parties from Hong Kong, Macau, or other countries).

B. Shanghai

Same as Beijing

C. Guangdong Province

Higher People’s Court as first instance court:

The amount in controversy must exceed 3,000,000,000.00 300,000,000.00 Yuan;

the amount in controversy must exceed 2,000,000,000.00 200,000,000.00 Yuan and one of the parties in dispute must be domiciled outside this jurisdiction (outside Beijing, parties from Hong Kong, Macau, or other countries);

Cases with substantial impact on the entire province; or

Any cases that the Court deems it should exercise first-instance jurisdiction.

Intermediate courts:

1. Guangzhou, Shenzhen, Foshan, and Dongguan Intermediate courts:

The amount in controversy should be between 3,000,000,000.00300,000,000.00 and 50,000,000.00 Yuan; or

The amount in controversy should be between 2,000,000,000.00200,000,000.00 and 40,000,000.00 Yuan and one of the parties in dispute must be domiciled outside this jurisdiction (outside Beijing, parties from Hong Kong, Macau, or other countries).

2. Zhuhai, Zhongshan, Jiangmen, and Huizhou intermediate courts:

The amount in controversy should be between 3,000,000,000.00300,000,000.00 and 30,000,000.00 Yuan; or

The amount in controversy should be between 2,000,000,000.00200,000,000.00 and 20,000,000.00 Yuan and one of the parties in dispute must be domiciled outside this jurisdiction (outside Beijing, parties from Hong Kong, Macau, or other countries).

3. All of the rest intermediate courts in Guangdong:

The amount in controversy should be between 3,000,000,000.00300,000,000.00 and 20,000,000.00 Yuan; or

The amount in controversy should be between 2,000,000,000.00200,000,000.00 and 10,000,000.00 Yuan and one of the parties in dispute must be domiciled outside this jurisdiction (outside Beijing, parties from Hong Kong, Macau, or other countries).

As indicated above, these rules cover all the higher and intermediate courts inChina with like details on amount in controversy. And the amounts vary significantly from province to province, city to city, district to district in some instances. Parties in dispute should refer to these rules to find the court of competent jurisdiction.

Personally, I am very surprised to see rules that detailed on jurisdiction inChina since many rules are intentionally vague for civil law jurisdictions. As a result of these rules, there would be, presumably, less uncertainty with respect to finding the right court to sue in China. But, I am wondering what prompted the promulgation of these rules. I also wonder what these rules would have on forum shopping in China. Does anyone out there know?

Go here for the entirety of the rules in Chinese.

Summary Judgment/Procedure in China (Republish)

Having been working on summary judgment motions at work for three consecutive weeks, I kept thinking whetherChina has something similar to summary judgment in its civil trials. With limited knowledge on Chinese procedural laws, I disclaim that what I write here is really subject to future corrections from readers.

In the United States, summary judgments are available in federal and state courts. The purpose of summary judgments is to “eliminate patently unmeritorious claims and untenable defenses, not to deny a party its right to a full hearing on the merits of any real issue of fact.”Ramirez v. The Pecan Deluxe Candy Co., 839 S.W.2d 101, 105 (Tex. App.-Dallas 1992, writ denied). As to federal rules, the Federal Rules of Civil Procedure, Rule 56, governs. In the State of Texas, parties can file a conventional motion for summary judgment under Tex. R. Civ. P. 166a or a no-evidence motion for summary judgment under Tex. R. Civ. P. 166a(i).

In a traditional summary judgment motion, in order to prevail, the movant must present enough evidence to show that there are no issues of material fact, and that no reasonable jury would find for the non-movant. The key is that the movant must present evidence showing that the other party could not possibly win. On the other hand, in a no-evidence motion for summary judgment under 166 a(i), the movant does not need to submit summary judgment evidence; instead it only needs to raise specifically the issues for which the non-movant lacks supporting evidence, and argue that no reasonable jury would find for the non-movant.

In response to a traditional motion for summary judgment, the non-movant does not have the burden of proof. It only needs to present evidence contradicting the movant’s evidence, showing that issues of material fact exist.

Responding to a no-evidence motion for summary judgment, the non-movant, however, has the burden of proof; as such, it must present summary judgment evidence on each issue raised by the movant. If the non-movant in its response, presents more than a scintilla of evidence on the elements challenged by the movant, the court should deny the movant’s motion and the nonmovant is entitled to a trial on merits.

Summary judgment practice is a routine in many courts.As far as I know, it is very much alive in DallasCounty. Due to shifting political winds, the landscape of summary judgment changes with election results. Pro-plaintiff judges will probably not grant a summary judgment for anything; however, pro-defendant judges will do it more frequently. So, summary judgment is both technical and politically volatile (in Texas, at least).

After consulting a Chinese lawyer, here is what I got from an e-mail response on summary judgment, or the lack there of in China:

The concept in Chinese legal system most similar to summary judgment in the common law system is called “Summary Procedure” in Chinese civil procedural law. I attach the bilingual law for your information, as well as the excerpt below:

Chapter 13 Summary Procedure

Article 142 When adjudicating simple civil cases in which facts are clear, the relations of rights and obligations are definite, and disputes are minor, the basic people’s courts or their dispatched tribunals may apply the summary procedure stipulated in this Chapter.

Article 143 For simple civil cases, their plaintiffs may file their complaints orally.
Both parties may appear at the same time in a basic people’s court or its dispatched tribunal for a solution of their dispute. The basic people’s court or its dispatched tribunal may adjudicate the case immediately or set a date for the trial.

Article 144 When adjudicating a simple civil case, the basic people’s court or its dispatched tribunal may, at any time, use simplified methods to summon the parties and witnesses.

Article 145 A simple civil case shall be tried by one judge alone and the trial of such cases shall not be restricted by the provisions of Articles 123, 125, and 128 of this Law.

Article 146 The people’s court shall complete the adjudication of a case to which the summary procedure is applied within three months after the case is accepted.

Without real trial experience in China, I can only say that “summary Procedure” practice seems very different from summary judgment in the United States. Summary judgment, as a pre-trial practice, is a pretty evolved creature, with features like voluminous motions, persuasive affidavits, piles of records sometimes, and a hearing in a court room. I wonder how a summary procedure is played out in China.