China - MOFCOM Amends And Releases FIE Complaint Measures.

Legal News & Analysis - Asia Pacific - China - Regulatory & Compliance

China - MOFCOM Amends And Releases FIE Complaint Measures.

 

16 September 2020

 

Asia Pacific Legal Updates

 

In recent years, foreign investment laws and regulations have undergone sweeping reform of which the complaint mechanism introduced under the new Foreign Investment Law and its implementing regulations for foreign invested enterprises (FIEs) is particularly noteworthy.

 

Although the PRC Ministry of Commerce (MOFCOM) has already issued the Tentative Measures for Work on Complaints from Foreign Invested Enterprises (Tentative Measures) in 2006, with the support of the aforesaid higher-level laws, MOFCOM conducted a comprehensive and systematic overhaul of the Tentative Measures and reissued the Measures for Work on Complaints from Foreign Invested Enterprises (Measures) on 25 August 2020. The Measures will take effect from 1 October 2020.

 

Compared to the Tentative Measures, the Measures have been improved by broadening the scope of complainants/complaint matters, improving the complaint working mechanism, clarifying the complaint working rules and enhancing the protection of rights and interest. Set forth below is a brief summary of some of the highlights in the Measures.
 

Item

Tentative Measures

Measures

Brief Comments

Complainant

FIEs and their investors

FIEs, foreign investors, chambers of commerce, industrial associations
 

Foreign investors are no longer limited to those of FIEs

Respondent

Administrative organs

Administrative organs (including organisations legally authorised and charged with the responsibility to manage public affairs) and their staff
 

Scope of respondents expanded to include those staff who are responsible for detailed implementation

Complaint matters 

Infringement of lawful rights, reporting of problems, and putting forward suggestions, opinions or requests 

Infringement of lawful rights, reporting of problems in the investment environment and proposing improvements on policies and measures 
 

Complaint matters further clarified

Complaint handling agency

National Complaint Centre for FIE, local complaint handling agencies

Ministerial Joint Conference System and Office, National Complaint Centre for FIE, local complaint handling agencies

Establishing permanent ministerial joint conference system is conducive to resolving national foreign investment issues across different ministries
 

Complaint materials

Materials not specified, to be written in Chinese

Materials specified, can be written in foreign language and submitted with Chinese translation

Increased transparency on complaint materials and flexibility  on language requirement to better suit the needs of foreign investors
 

Entrusted complaint

Not specified

Can entrust an agent to lodge complaints

Entrusted complaints offer convenience to foreign investors
 

Complaint handling

Issuance of opinion, coordinate with relevant departments, transfer to relevant departments for handling, other appropriate means

Facilitating the reaching of a mutual understanding between the complainant and the respondent (including settlement agreement), coordinating with the respondent, proposing policy improvement suggestion to relevant departments, and other appropriate means
 

Conferring binding legal effect on the result of conciliation through settlement agreement facilitates its due execution and observance. Whether or not a settlement agreement can be reached is subject to the wishes of the parties involved

Termination of complaint

Termination of the handling of a complaint does not require the complainant’s consent

Termination of the handling of a complaint requires the complainant’s consent (other than termination attributable to the complainant’s conduct). Complaints not concluded within 1 year from inception ought to be reported to the government of the same level

Requirement for consent of the complainant to terminate a complaint may to a certain extent avoid the evasion of responsibility on the handling of complaint processing work, and reporting of long-outstanding complaint to the government can facilitate the resolution of some of the complicated problems
 

Appeal of complaint

Not specified

Complainant dissatisfied with non-acceptance of the complaint or the handling  result may lodge an appeal to the higher-level complaint handling agency
 

The appeal system may help to resolve certain problems which could not be settled because of local political constraints or protectionism

Protection of the complainant’s rights 

Complaint handling agencies shall keep confidential the trade secrets of the complainant, except for special circumstances prescribed by law

The launching of a complaint shall not prejudice the right to seek for administrative review, administrative and other legal proceedings; complaint handling agencies shall keep in confidence the trade secrets, confidential business information and personal privacy of the complainant; complainant shall not be suppressed or retaliated
 

Providing more robust protection to safeguard the complainant’s right to complain

Management of complaint handling

No specific stipulation

Complaints to be archived; complaint handling work to be reported to higher-level complaint handling agencies every other month, common and non-compliance issues to be reported to ministerial joint conference office through National Complaint Centre for FIE, annual FIE rights and interests protection proposal to be submitted
 

A nationwide system of feedback and summary is conducive to overseeing the work of complaint handling agencies at all levels, gaining a fuller picture of the issues in practice and facilitating the resolution of different complaints

 

While enhancing the protection of the rights and interests of the complainants, the Measures also clarify their obligations. For instance, the complaint process may terminate if the complainant, after being contacted by the complaint handling agency, fails to participate in the complaint process for 30 consecutive days without justifiable reasons.
 

Vitality of the law depends on its effective implementation while attraction of foreign investment depends on a sound investment environment. The Measures undoubtedly provide a way to enhance both.

For further information, please contact:

 

Myles Seto, Partner, Deacons
[email protected]