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A lawyer's Reading: Law of the People's Republic of China on Application of Law in Foreign-related Civil Relations


This law adopted recently is a useful source for those who are to enter into business, commercial or personal relationship with China entities or natural person, such as trading, contract, family law, divorce, adoption, conflicts of laws, and dispute resolution.

Law of the People's Republic of China on Application of Law in Foreign-related Civil Relations

Order of the President of the People's Republic of China No. 36

October 28, 2010

The Law of the People's Republic of China on Application of Law in Foreign-related Civil Relations, which was adopted at the 17th Session of the Standing Committee of the Eleventh National People's Congress on October 28, 2010, is hereby promulgated and shall come into effect as of April 1, 2011.

President of the People's Republic of China: Hu Jintao

Law of the People's Republic of China on Application of Law in Foreign-related Civil Relations

(Adopted at the 17th Session of the Standing Committee of the Eleventh National People's Congress on October 28, 2010)

Table of Contents

Chapter I General Provisions

Chapter II Civil Subjects

Chapter III Marriage and Family

Chapter IV Succession

Chapter V Property Rights

Chapter VI Obligatory Rights

Chapter VII Intellectual Property Rights

Chapter VIII Supplementary Provisions

Chapter I General Provisions

Article 1 This law is formulated for the purpose of resolving problems in relation to the application of law in foreign-related civil relations, reasonably settling foreign-related civil disputes and maintaining the legitimate rights and interests of parties concerned.

Article 2 The application of law in foreign-related civil relations shall be determined in accordance with this law. Where there are special provisions in respect of the application of law in foreign-related civil relations in other laws, such provisions shall prevail.

Where this law and other laws do not contain any provision with respect to the application of law in foreign-related civil relations, laws having the most significant contact with the foreign-related civil relations shall apply.

Article 3 Parties concerned may explicitly select laws applicable to a foreign-related civil relation in accordance with the provisions of law.

Article 4 Where the laws of the People's Republic of China contain mandatory provisions in relation to foreign-related civil relations, such provisions shall apply.

Article 5 Where the application of foreign laws will impair the social and public interests of the People's Republic of China, relevant laws of the People's Republic of China shall prevail.

Article 6 Where a foreign-related civil relation is governed by the laws of a foreign country, if different areas of this country are governed by differing laws, the law of the area that has the most significant contact with such foreign-related relation shall apply.

Article 7 Limitation of action shall be governed by a law that is applicable to a specific foreign-related civil relation.

Article 8 The nature of foreign-related civil relations shall be determined in accordance with the law of the forum.

Article 9 Foreign laws applicable to a foreign-related civil relation shall not include the law of a foreign country on the application of laws.

Article 10 Foreign laws applicable to a foreign-related civil relation shall be ascertained by the people's courts, the arbitration institutions or the administrative organs. Where parties concerned select applicable laws of a foreign county, they shall provide relevant laws of such country.

Where the foreign laws are unable to be ascertained or where laws of the foreign country have no relevant provisions, the laws of the People's Republic of China shall apply.


A Sales Agreement or Contract For Sale to Be Used In China


A contract of sale is a legal contract an exchange of goods, services or property to be exchanged from seller (or vendor) to buyer (or purchaser) for an agreed upon value in money (or money equivalent) paid or the promise to pay same. It is a specific type of legal contract.

An obvious ancient practice of exchange in many common-law jurisdictions it is now governed by statutory law that is designed to make transactions among merchants and consumers straightforward and easy to understand. See commercial law.

Contracts for sale involving goods are governed by Article 2 of the Uniform Commercial Code in most United States and Canadian jurisdictions, however in Quebec such contracts are governed by the Civil Code of Quebec as a nominate contract in the book on the law of obligations. Here is a sample contract for sale:


Legal Analyses and Theories on Offensive and Defensive Measures in Air Products & Chemicals, Inc. v. Airgas Inc. Takeover

Effectiveness and legality of takeover and anti-takeover measures are sometimes uncertain due to imperfect legislation in China. This paper is an attempt to find and suggest practical takeover and anti-takeover strategies under Chinese law through analyzing a case between Air Products & Chemicals, Inc. (“Air Products”) and the target company Airgas Inc. (“Airgas”).
Airgas had a nine-member, three-class staggered board according to Article 1, Section one of its charter. Each class of the board served a term of three years. “The term of office of a director shall be stipulated by the company’s articles of association, but each term of office shall not exceed three years.” Article 46, Company Law of the People's Republic of China (“Company Law”).   Clearly, Company Law does not prohibit a staggered board and the mere requirement on the board is its term. Here, the term of each class of the Airgas board was three years. Therefore, Airgas’s staggered board complied with Company Law. This means that even if Air Products could acquire the majority shares of Airgas, Air Products had to wait two years before it could actually control the board. Accordingly, staggered board is an effective way to make a hostile takeover attempt more difficult in China. 
Airgas’s charter required an affirmative vote of at least 67% of the voting power of all shares to change the staggered board provision in the charter, or to adopt any bylaw inconsistent with that provision. It was unlikely for Air Products to change the charter, so they proposed a bylaw in Airgas’s annual meeting in September 2009, in an attempt to reschedule Airgas's next annual meeting on January 2010 and reduce the full term of incumbent directors by eight months. “The annual meeting of the shareholders general assembly shall be convened once a year.” Article 101, Company Law.  Rules for the General Meetings of Shareholders of Listed Company Article 4 more specifically provides: “[t]he sessions of the general meeting of shareholders can be divided into annual sessions and temporary sessions. The former shall be held once every year within 6 months upon conclusion of the previous accounting year.”  Here, since its fiscal year ended on March 31, Airgas’s 2010 annual general meeting must be held between April 1 and September 31, 2010. Air Products’ proposal of the annual general meeting was on January 2010, three month earlier than the mandatory range of time. As a result, a court would probably find Air Products’ bylaw proposal invalid.


The impact of United States' possible new visa policy to China investors

Two United States Senators are preparing to introduce a bipartisan bill Thursday that would give residence visas to foreigners who spend at least $500,000 to buy houses in the U.S. This will give a great opportunity for Chinese investors. The idea has some high-profile supporters, including Warren Buffett, who this summer floated the idea of encouraging more "rich immigrants" to buy homes.

Foreigners immigrating to the U.S. with the new visa wouldn't be able to work here unless they obtained a regular work visa through the normal process. They'd be allowed to bring a spouse and any children under the age of 18 but they wouldn't be able to stay in the country legally on the new visa once they sold their properties.

Over the past year, Canadians accounted for one quarter of foreign home buyers, and buyers from China, Mexico, Great Britain, and India accounted for another quarter, according to the National Association of Realtors. For buyers from China, restrictive immigration rules are a deterrent to purchase.

The measure may have a more targeted effect in exclusive markets like San Marino, Calif., that have become popular with foreigners. Easier immigration rules could be "tremendous" because of the difficulty many Chinese buyers have in obtaining visas, says Maggie Navarro, a local real-estate agent.

Ms. Navarro recently sold a home for $1.67 million, around 8% above the asking price, to a Chinese national who works in the mining industry. She says nearly every listing she's put on the market in San Marino "has had at least one full price cash offer from a buyer from mainland China."

It is well known that now China nationals become rich. Those who have strong political background or energy mine owners are so rich that can afford to buy a house and get a visa. It's a good channel for those investment from unclear source. However, it may be subject to Chinese foreign currency control and foreign investment control. If the new visa policy comes into law, I am sure China government will enact new policy to face the United States' new law.


A Memo on Fiduciary Duty and Liability of Employee under Chinese Law

To:     Senior Partner
From:   Senior Associate Bo Zhu
Re:     Singer’s Fiduciary Duty and Liability under Chinese Law
Date:   September 21, 2011
On March 1953, John Singer was hired by General Automotive Manufacturing Company (”Automotive”) as general manager of its business and affairs. They signed an employment contract, where Singer agreed not to engage in other business or disclose business information to third party.
Singer was experienced at machine work and bolstering business credit. His high reputation attracted large volume of orders, among which were some orders that either Singer deemed as could not be done by Automotive for lack of suitable equipment or Automotive could not do at a competitive price. Without informing Automotive of this situation, Singer forwarded the orders to other competitors and retained secret profits.
Singer finally set up a business of his own, doing the same products with Automotive, while he was still Automotive’s employee and without informing Automotive of it.
The profits of his side line business accrued to $64,088.08 so far.
Issue Presented
1. Whether Singer was liable for breach of fiduciary duty owed to Automotive.
2. What liability Singer would bear if he breached fiduciary duty.
Brief Answer
1. Under Chinese law, Singer was liable for breach of fiduciary duty because he competed with Automotive and appropriated Automotive’s business opportunities.
2. Singer must account for the profits he obtained and render the profits to Automotive.

How to draft a marital separation agreement in China

A marital separation agreement, also known as a property settlement agreement, is a written contract dividing your property, spelling out your rights, and settling problems such as alimony and custody. A marital separation agreement may be drawn before or after you have filed for divorce - even while you and your spouse are still living together.

Generally, a separation agreement is the result of much discussion and negotiation surrounding divisions of assets and liabilities and any support, maintenance, custody or visitation issues. If you are going through a divorce or separation, the sample separation agreement below will help you to start thinking about and preparing for these discussions and negotiations. Your attorney may choose to use the sample agreement as a resource, but will want to draft an agreement specifically tailored to your situation.


How to enter into an international sales agreement with Chinese supplier

The start-up of export or import operation requires the consent of the two parties (buyer and seller). This agreement takes shape generally by means of a sale contract, which aims at dividing the expenses and risks between the seller and the buyer. The drafting of this contract is of prime importance, for, it facilitates the trade and exchange and especially avoids disputes. The international sale contract is governed by different rules having the objective of harmonizing and facilitating international trade and exchange.

Drafting an international contract can be a risky business, especially the one to be signed with Chinese supplier, yet with the increasing globalization of markets, these cross-border contracts are becoming a common practice for most companies. At the same time, international contracts remain a difficult and mysterious subject for companies.


How to find a employment lawyer in China

Workplace discrimination, wage and hour disputes and other employment issues can sometimes escalate into legal disputes. Hiring an employment lawyer to protect your interests can take some homework. Here are some tips to help you choose a China employment lawyer who will meet your needs.
When legal issues arise at work, it can be difficult to know what to do and where to turn for advice and assistance. A competent employment attorney will help you know how to proceed with your legal issue and protect your rights in court. Finding the right attorney in your community is the first step to resolving your employment issue.
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I am a licensed China lawyer. Most clients are foreign nationals and companies. China Lawyer Blog have associates in Beijing, Shanghai, Tianjin, Guangzhou, Suzhou, Nanjing, Qingdao, Fuzhou, Hainan, Hefei, Wuhan, Xian, Changsha, Xiamen and Hangzhou. Learn More

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China Lawyer BLog AuthorPeter Zhu, an experienced China attorney licensed to practice law for more than ten years, the author of this China Lawyer blog, welcomes any enquiry or consultation related to Chinese law.