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The Standing Committee of the National People’s Congress
Order of the President of the People’s Republic of China
No.60
The Electric Power Law of the People’s Republic of China, adopted at the 17th Meeting of the Standing Committee of the Eighth National
People’s Congress on December 28, 1995, is promulgated now, and shall enter into force as of April 1, 1996.
President of the People’s Republic of China: Jiang Zemin
December 28, 1995
Electric Power Law of the People’s Republic of China ContentsChapter I General Provisions
Chapter II Construction of Electric Power
Chapter III Production of Electric Power and Management of Power Networks
Chapter IV Supply and Utilization of Electric Power
Chapter V Electricity Price and Electricity Fee
Chapter VI Rural Electric Power Construction and Agricultural Use of Electricity
Chapter VII Protection of Electric Facilities
Chapter VIII Supervision and Inspection
Chapter IX Legal Responsibility
Chapter X Supplementary Provisions
Attachment: Related Articles in the Criminal Law
Chapter I General Provisions
Article 1
This Law is formulated for the purposes of guaranteeing and promoting the development of the electric power industry, safeguarding
the legitimate rights and interests of investors, operators and users of electric power and guaranteeing the safe operation of electric
power.
Article 2
This Law applies to the construction, production, supply, and utilization in relation to electric power within the territory of the
People’s Republic of China.
Article 3
The electric power industry shall satisfy the needs of the national economy and social development, and shall develop slightly ahead
of the actual needs. The state encourages and guides economic organizations or individuals from home or abroad to invest according
to law in the development of electric sources and the establishment of power-producing enterprises.
The investment in the electric power industry shall be in conformity to the principle of “whoever invests will benefit therefrom”.
Article 4
Electric facilities shall be under the protection of the state.
Any unit or person shall be forbidden to endanger the electric facilities or illegally appropriate or use electric energy.
Article 5
The construction, production, supply, and utilization in relation to electric power shall abide by the principles of protecting the
environment according to law, adopting new technology, decreasing the discharge of harmful substances, and preventing pollution and
other public hazards.
The state encourages and supports the use of renewable and clean energy resources for electricity generation.
Article 6
The administrative department of electric power under the State Council shall be responsible for the supervision and control of the
electric power industry in the whole country. The departments concerned under the State Council shall be responsible for the supervision
and control of the electric power industry within their own limits of authorities.
The competent comprehensive administrative department of economy under the local people’s government at county level or above is the
administrative department of electric power within its own administrative region, and shall be responsible for the supervision and
control of the electric power industry. The departments concerned under the local people’s government at county level or above shall
be responsible for the supervision and control of electric power industry within their own limits of authorities.
Article 7
Enterprises engaged in the electric power construction, electric power production or electric network operation shall operate independently
and be responsible for their own profits and losses according to law, and shall subject themselves to the supervision of the administrative
departments of electric power.
Article 8
The state assists and supports minority nationality regions, remote border areas, and poverty-stricken areas to develop their electric
power industries.
Article 9
The state encourages the adoption of advanced science and technology and management methods in the construction, production, supply,
and utilization in relation to electric power, and shall give awards to those units and persons that achieve remarkable successes
in such respects as research, development, and adoption of advanced science and technology and management methods.
Chapter II Construction of Electric Power
Article 10
The planning for electric power development shall be drawn up according to the requirements of the national economy and social development,
and shall be incorporated into the national economic and social development plan.
The planning for electric power development shall reflect the principles of rational use of energy resources, coordinated development
of electric sources and electric networks, improvement of economic results, and being conducive to environmental protection.
Article 11
The planning for the construction and rebuilding of urban electric networks shall be incorporated into the overall urban planning.
People’s governments of cities shall, in accordance with the planning, arrange the land for current transformation facilities, transmission
line corridors, and electric cable channels.
No unit or person may illegally occupy the land for current transformation facilities, transmission line corridors, or electric cable
channels.
Article 12
The state supports and promotes electric power construction by formulating relevant policies.
Local people’s governments shall, in accordance with the planning for electric power development and in the light of their local conditions,
take various measures to develop electric sources and promote electric power construction.
Article 13
Investors in the electric power shall enjoy statutory rights and interests on electric power produced from their investment. Where
the electric power thus produced is hooked up with the electric network, the investor shall have the priority in utilization; where
a self-supply power plant is not hooked up with the electric network, the investor shall have the authority over its control and
use on his own.
Article 14
An electric power construction project shall be in conformity to the planning for electric power development as well as the state
policy on the electric power industry.
No electric equipment or technology declared expressly by the state to be eliminated may be used for any electric power construction
project.
Article 15
Such auxiliary projects for electric networks as transmission and transformation projects, automatic dispatch and communication projects,
as well as environmental protection projects shall be designed, constructed, checked and accepted, and put into operation together
with the electricity-generating projects.
Article 16
The use of land for electric power construction projects shall be handled in accordance with relevant laws and administrative regulations.
Where the land is requisitioned according to law, land compensation and settlement subsidies shall be paid therefor according to
law, and the residents concerned shall be well relocated and resettled.
Electric power construction shall be in conformity to the principles of giving practical protection to cultivated land and economizing
on land.
Local people’s governments shall give support and assistance to the electric power industry in using land and relocating the residents
concerned according to law.
Article 17
Local people’s governments shall give support to electric power enterprises in prospecting water sources, drawing and using water
according to law for the electricity-generating projects. Electric power enterprises shall economize on water.
Chapter III Production of Electric Power and Management of Power Networks
Article 18
The production of electric power and the operation of electric networks shall be in conformity to the principles of safety, high quality,
and economy.
The operation of electric networks shall be maintained in a continuous and stable way, and shall guarantee the reliability of electricity
supply.
Article 19
Electric power enterprises shall strengthen the management of safe production, adhere to the policy of safety first and prevention
foremost, and institute and amplify the responsibility system of safe production.
Electric power enterprises shall regularly examine and maintain their electric facilities in order to guarantee their normal operation.
Article 20
Enterprises engaged in the supply or transportation of electricity-generating fuels and power-producing enterprises shall supply,
transport, and unload and take delivery of such fuels in accordance with the relevant regulations of the State Council or as agreed
upon in their contracts.
Article 21
Centralized dispatch and level-by-level management shall be implemented in the operation of electric networks. No unit or person may
illegally intervene in the dispatch of electric networks.
Article 22
The state encourages the hookup between power-producing enterprises and electric networks and among electric networks. Where a power-producing
enterprise qualified as an independent legal person requests for the hookup of electric power it has produced with an electric network,
the electric network operating enterprise shall accept it.
The hookup shall be in conformity to the national or industrial standards of electric power.
Both parties to the hookup shall sign a hookup agreement to stipulate for the rights and obligations of each party under the principles
of centralized dispatch, level-by-level management, equality, mutual benefit, and achieving agreement through consultation; where
the two parties fail to reach such an agreement, the administrative department of electric power at provincial level or above shall
coordinate and make a decision.
Article 23
The measures for the dispatch of electric networks shall be formulated by the State Council in accordance with the provisions in this
Law.
Chapter IV Supply and Utilization of Electric Power
Article 24
The state carries out the principle of safety, economy, and planning in the supply and utilization of electric power.
The measures for the supply and utilization of electric power shall be formulated by the State Council in accordance with the provisions
in this Law.
Article 25
Power-supplying enterprises shall supply electricity to the users within their approved service areas.
The division of electricity service areas shall take into account such factors as the structure of electric networks and the rationality
of the electricity supply. Only one power-supplying institution may be established in each of electricity service areas.
An application for the establishment or alteration of an electricity service area within a province, autonomous region or municipality
directly under the central government shall be made by the power-supplying enterprise, and be examined by the administrative department
of electric power under the people’s government of the province, autonomous region, or municipality directly under the central government
in consultation with relevant departments concerned at the same level. Upon examination and approval, the said administrative department
of electric power shall issue an Electricity Supply Permit thereto. The establishment or alteration of an electricity service area
involving two or more provinces, autonomous regions and municipalities directly under the central government shall be examined by
the administrative department of electric power under the State Council, which, upon examination and approval, shall issue an Electricity
Supply Permit thereto. The power-supplying institution shall, on the strength of the Electricity Supply Permit, apply to the administrative
department for industry and commerce for the business licence before it may start operation.
Article 26
The power-supplying institution of an electricity service area shall be obligated to supply electricity, according to the regulations
of the state, to the users within its service area, and may not, in violation of the regulations of the state, refuse to supply electricity
to any unit or person applying for electricity within its service area.
Applications for new use, temporary use, increases in electricity capacity, and alteration and termination of electricity use shall
be required to go through stipulated procedures.
Power-supplying enterprises shall, at their places of business, promulgate procedures, rules and charge standards for electricity
use, and shall provide the users with any other necessary information.
Article 27
The supplier and user of electric power shall sign a contract for the supply and use of electricity to stipulate for the rights and
obligations of each party under the principles of equality, voluntariness and achieving agreement through consultation and in accordance
with the measures for the supply and use of electricity formulated by the State Council.
Article 28
Power-supplying enterprises shall guarantee that the quality of electricity supplied to the users is in conformity with the national
standards. Problems of electricity quality caused by public facilities of electricity supply shall be solved promptly.
If the user has special requirement of the electricity quality, the power-supplying enterprise shall, according to its necessity and
the possibility of the electric network, supply electricity correspondingly.
Article 29
Power-supplying enterprises shall supply electricity continuously without shut-off if the electricity generating and supply systems
function normally. In the event of shut-off due to such reasons as checking and repairing the electricity supply facilities, restricting
consumption of electricity according to law, and illegal use of electricity by the user, the power-supplying enterprise shall notify
users in advance according to relevant regulations of the state.
Any user having disagreements with a power shut-off by a power-supplying enterprise may file a complaint to the administrative department
of electric power; the administrative department of electric power accepting the filing of a complaint shall handle it according
to law.
Article 30
In the event of emergency electricity supplies for rescue and relief work, the power-supplying enterprise shall arrange the electricity
supplies with all possible speed. The expenses for electricity supply engineering and the electricity fees payable shall be handled
according to the relevant regulations of the state.
Article 31
Any user shall install metering apparatus on electricity use. The quantity of electricity consumed by the user shall be calculated
according to the records of the apparatus certified by the metrological inspection agency according to law.
The designing, construction, installation, and operation management of electricity receiving apparatus of the user shall be in conformity
with national or industrial standards of electric power.
Article 32
Any user shall be forbidden to endanger the safety or disturb the order of electricity supply and consumption.
Power-supplying enterprises shall have the authority to stop anyone from endangering the safety or disturbing the order of electricity
supply and consumption.
Article 33
Power-supplying enterprises shall calculate and collect the electricity fees from users according to the electricity price approved
by the state and the records of the electricity metering apparatus.
Safety inspectors, meter-readers, and fee collectors of power-supplying enterprises shall present proper identifications when entering
into the houses of users to conduct safety inspections, read the meters, or collect fees.
Users shall pay electricity fees on time according to the electricity price approved by the state and the records of electricity metering
apparatus, and shall provide convenience to the safety inspectors, meter-readers, and fee collectors of power-supplying enterprises
in fulfilling their duties according to law.
Article 34
Power-supplying enterprises and users shall observe the relevant regulations of the state, and adopt effective measures to achieve
the safe, economical, and planned use of electricity.
Chapter V Electricity Price and Electricity Fee
Article 35
The “electricity price” mentioned in this Law refers to the price of electricity hooked up with the electric network by the power-producing
enterprises, the inter-supply electricity price among electric networks, and the sale price of electricity of the electric network.
The electricity price shall be based on the principle of unified policy and unified pricing, and be managed at different levels.
Article 36
The formulation of electricity price shall be based on the principles of reasonable compensation for the costs, reasonably setting
profits, counting taxes according to law, fairly shared burdens, and promotion of electric power construction.
Article 37
The price of electricity hooked up with the electric network shall follow the principle of equal price and equal quality for electricity
on the same electric network. The specific measures and implementation procedures shall be provided by the State Council.
For those power-producing enterprises with special situations, the State Council shall provide specific measures for the formulation
of a separate price of electricity for hookup with the electric network.
Article 38
The price of electricity hooked up with the electric network involving two or more provinces, autonomous regions, or municipalities
directly under the central government, as well as at provincial level, shall be proposed through consultation by the power-producing
enterprise and the electric network operating enterprise, and be reported to the administrative department of price under the State
Council for approval.
The price of electricity hooked up with the independent electric network shall be proposed through consultation by the power-producing
enterprise and the electric network operating enterprise, and be reported to the authoritative price administrative department for
approval.
The price of electricity produced by locally funded power-producing enterprises, if forming an independent electric network within
the regions of the province or being generated for self-use, may be controlled by the people’s government of the province, autonomous
region or municipality directly under the central government.
Article 39
The price of inter-supply electricity between the electric network involving two or more provinces, autonomous regions, or municipalities
directly under the central government and the independent electric network, or between the electric network at provincial level and
the independent electric network, shall be proposed through consultation by the two parties, and be reported to the administrative
department of price under the State Council or its authorized department for approval.
The price of inter-supply electricity among independent electric networks shall be proposed through consultation by the two parties
and be reported to the authoritative price administrative department for approval.
Article 40
The sale price of electricity of electric networks involving two or more provinces, autonomous regions, or municipalities directly
under the central government as well as at provincial level, shall be proposed by the electric network operating enterprise and be
reported to the administrative department of price under the State Council or its authorized department for approval.
The sale price of electricity of the independent power networks shall be proposed by the electric network operating enterprise and
be reported to the authoritative price administrative department for approval.
Article 41
The state adopts two systems of electricity price according to the classifications of electricity utilization and divisions of the
time period that the electricity is in use. The classification standard and the method for division of the time period shall be stipulated
by the State Council.
Within the same electric network, the standard for electricity price shall be the same to users of electricity at the same voltage
level and in the same classification of utilization.
Article 42
The charge standard for capacity expansion of the users shall be stipulated by the administrative department of price in consultation
with the administrative department of electric power under the State Council.
Article 43
No unit may set the electricity price beyond its authority over electricity price control. No power-supplying enterprise may change
the electricity price without authorization.
Article 44
Any unit or person is forbidden to levy surcharges in addition to the electricity price; however, if otherwise provided in laws and
administrative regulations, such provisions shall apply.
For surcharges in addition to the electricity price on electricity produced by locally funded power enterprises, the people’s governments
of the provinces, autonomous regions, or municipalities directly under the central government shall formulate measures therefor in
accordance with the relevant regulations of the State Council.
Any power-supplying enterprise is forbidden to collect surcharges in addition to the electricity price on other’s behalf.
Article 45
The State Council shall formulate measures for control of the electricity price in accordance with the provisions of this Law.
Chapter VI Rural Electric Power Construction and Agricultural Use of Electricity
Article 46
The people’s governments of the provinces, autonomous regions, and municipalities directly under the central government shall formulate
the planning for the development of rural electrification, and shall incorporate such planning into the planning for their respective
local electric power development and the planning for the national economic and social development.
Article 47
The state adopts preferential policies for rural electrification, and provides special support to rural electric power construction
in minority nationality regions, remote border areas, and poverty-stricken areas.
Article 48
The state advocates the development of hydroelectric resources in rural areas and the construction of medium- and small-sized hydropower
stations to promote rural electrification.
The state encourages and supports the rural electric power source construction through the utilization of solar energy, wind energy,
geothermal energy, biomass energy and other energy resources to increase the rural electricity supply.
Article 49
The local people’s governments at county level or above and their competent comprehensive economic departments, when distributing
electricity quotas, shall guarantee a proper proportion of electricity for agriculture and rural uses, and give priority to the electricity
for rural floodwater drainage, combat of drought and seasonal agricultural production.
Electric power enterprises shall comply with the arrangements of electricity as set forth in the preceding paragraph, and may not
reduce the quotas of electricity for agriculture and rural uses.
Article 50
The price of electricity for agriculture shall be set under the principles of “breaking even” and “marginal profit”.
The price of electricity for peasants’ household shall be gradually unified with that for the local urban residents household.
Article 51
The State Council shall, in accordance with the provisions in this Law, formulate measures for the management of electricity for agriculture
and rural uses.
Chapter VII Protection of Electric Facilities
Article 52
No unit or person may damage electricity-generating, current transformation and electric power line facilities, or other relevant
auxiliary facilities.
If any explosion or other operation that might endanger the safety of electric facilities is to be conducted in the surrounding area
of electric facilities, approval shall be obtained and measures for ensuring the safety of electric facilities shall be taken in
accordance with the regulations of the State Council concerning the protection of electric facilities before such an operation may
be started.
Article 53
The administrative departments of electric power shall, in accordance with the regulations of the State Council concerning the protection
of electric facilities, set up signs in the protective zones of electric facilities.
Within the protective zones of electric facilities demarcated according to law, no unit or person may erect buildings or other constructions,
plant vegetation, or stockpile articles and objects, which might endanger the safety of electric facilities.
Vegetation already planted before the demarcation of the protective zone of electric facilities according to law shall be trimmed
or chopped if such vegetation imperils the safety of electric facilities.
Article 54
Any unit or person that needs to carry out an operation within the protective zone of electric facilities demarcated according to
law, which might endanger the safety of electric facilities, shall obtain approval from the administrative department of electric
power and shall take safety measures before such an operation may be started.
Article 55
If the construction, reconstruction or expansion of electric facilities interferes with that of public service projects, afforestation
projects, or other projects, the units involved shall negotiate according to relevant regulations of the state and may start the
construction only after an agreement is reached through negotiation.
Chapter VIII Supervision and Inspection
Article 56
The administrative departments of electric power shall, according to law, supervise and inspect the implementation of electric power
laws and administrative regulations by electric power enterprises and users.
Article 57
The administrative departments of electric power may have electric power supervisors and inspectors if required in the work.
Electric power supervisors and inspectors shall be fair and honest, enforce laws impartially, be familiar with electric power laws
and administrative regulations, and be versed in related professional electrical power skills.
Article 58
When carrying out supervision and inspection, electric power supervisors and inspectors shall have the rights to ascertain the implementation
of electric power laws and administrative regulations by electric power enterprises and users, to consult relevant materials, and
to enter into the sites to carry out inspection.
Electric power enterprises and users shall provide all convenience for electric power supervisors and inspectors who are carrying
out their tasks of supervision and inspection.
When carrying out supervision and inspection, electric power supervisors and inspectors shall produce proper identification.
Chapter IX Legal Responsibility
Article 59
The electric power enterprise or user that breaks a contract for the supply and use of electricity and thereby causes a loss to the
other party shall bear compensation liability according to law.
An electric power enterprise which, in violation of the provisions of Article 28 or the first paragraph of Article 29 of this Law,
fails to maintain the quality of electricity or interrupts the electricity supply without prior notice and thereby causes a loss
to the user, shall bear compensation liability according to law.
Article 60
An electric power enterprise which causes damage to the user or a third party due to an electric power operation accident shall bear
compensation liability according to law.
The electric power enterprise is exempt from compensation liability if an electric power operation accident is caused by one of the
following factors:
(1)
force majeure; or
(2)
fault of a user.
If damage to the electric power enterprise or other users is caused by the fault of a user or a third party, the user or the third
party shall bear compensation liability according to law.
Article 61
If anyone, in violation of the provisions of the second paragraph of Article 11 of this Law, illegally occupies the land for current
transformation facilities, the transmission line corridor, or the cable channel, the local people’s government at county level or
above shall order him to make correction within a prescribed time period; if no correction is made within the time period, the obstacles
shall be forcefully obliterated.
Article 62
If, in violation of the provisions of Article 14 of this Law, an electric power construction project is not in conformity to the
electric power development planning and industrial policy, the administrative department of electric power shall order a stop to
the construction of the project.
If, in violation of the provisions of Article 14 of this Law, the electric equipment or technology declared expressly by the state
to be eliminated is used for an electric power construction project, the administrative department of electric power shall order
a stop to the use of such equipment or technology, confiscate the electric equipment declared expressly by the state to be eliminated,
and impose a fine of not more that 50,000 yuan concurrently.
Article 63
If anyone, in violation of the provisions of Article 25 of this Law, engages in electricity supply or changes the electricity service
area without permission, the administrative department of electric power shall order him to make correction, confiscate any illegal
gain, and may concurrently impose a fine of not more than five times the amount of his illegal gains.
Article 64
If anyone, in violation of the provisions of Article 26 or 29 of this Law, refuses to supply electricity or interrupts electricity
supply, the administrative department of electric power shall order him to make correction and issue a warning; if the circumstances
are serious, disciplinary sanction shall be imposed upon the involved person in charge and the persons directly responsible.
Article 65
If anyone, in violation of the provisions of Article 32 of this Law, endangers the safety of electricity supply or electricity use,
or disturbs the order of electricity supply or electricity use, the administrative department of electric power shall order him to
make correction and issue a warning; if the circumstances are serious or in case of refusal to make correction, the administrative
department of electric power may suspend the electricity supply and impose a fine of not more than 50,000 yuan concurrently.
Article 66
If anyone, in violation of the provisions of Article 33 , 43 or 44 of this Law, fails to calculate and collect the electricity fees
from users according to the electricity price approved by the state and the records of the electricity metering apparatus, or sets
the electricity price beyond his authority over electricity price control, or levies surcharges in addition to the electricity price,
the competent administrative department of price shall issue a warning, order the return of any fee or charge collected illegally,
and may concurrently impose a fine of not more than five times the amount of such fee or charge collected illegally; if the circumstances
are serious, disciplinary sanction shall be imposed upon the involved person in charge and the persons directly responsible.
Article 67
If anyone, in violation of the provisions of the second paragraph of Article 49 of this Law, reduces the quotas of electricity for
agriculture or rural uses, the administrative department of electric power shall order him to make correction; if the circumstances
are serious, disciplinary sanction shall be imposed upon the involved person in charge and the persons directly responsible; in case
of a loss caused thereby, the offender shall be ordered to make compensation.
Article 68
If anyone, in violation
Rules of Arbitration of the China Maritime Arbitration Commission
CHAPTER I GENERAL PROVISIONS SECTION I JURISDICTION SECTION II ORGANIZATION CHAPTER II PROCEDURES OF ARBITRATION SECTION I APPLICATION
FOR, DEFENCE OF AND COUNTERPLEA AGAINST ARBITRATION SECTION II COMPOSITION OF THE ARBITRATION TRIBUNAL SECTION III HEARING SECTION
IV RULING CHAPTER III SUMMARY PROCEDURES CHAPTER IV SUPPLEMENTARY RULES
Article 1 These Rules of Arbitration are hereby formulated in line with stipulations in the Arbitration Law of the People’s Republic of China
and other relevant laws and regulations as well as the Decision, Notice and Written Reply of the State Council.
Article 2 The China Maritime Arbitration Commission (originally the Maritime Arbitration Commission of the China Council for the Promotion
of International Trade and hereinafter referred to as the Arbitration Commission) shall settle, through arbitration and in an independent
and impartial way, all contractual and non-contractual maritime disputes that may arise from transportation, production and navigation
in offshore and coastal waters as well as waters connected with seas so as to protect the legitimate rights and interests of parties
concerned and promote the development of overseas and domestic shipping industries, economic construction, and trade.
The Arbitration Commission shall assume jurisdiction over the following cases of maritime disputes:
(1) Disputes over the rescue of ships and common sea losses.
(2) Disputes over collision of ships and damages caused by ships to structures or facilities on the sea, on waters joining rivers
and seas, in ports, under sea, or under water.
(3) Disputes over the management, operation, leasing, mortgaging, commissioning, towing, salvaging, trading, repairing, building,
dissembling of ships on the sea or river or over sea or river transportation businesses carried out according to transportation contracts,
billing of lading or other documents, or sea or river insurance.
(4) Disputes over the development or utilization of sea resources or pollution of sea environment.
(5) Disputes over contracts on agency shipping, contracts on material supply to ships, contracts on labour services of foreign-related
sailors, or contracts on fishery or fishing.
(6) Other maritime disputes to be arbitrated according to agreements reached between the parties.
Article 3 The Arbitration Commission shall accept cases according to the agreements of arbitration reached between the parties before or after
the rise of disputes to handle their disputes to the Arbitration Commission for arbitration and the written application submitted
by the one of the parties.
The agreement of arbitration refers to the clauses of arbitration included by the parties into their contract, or other written agreements
on arbitration reached in other forms.
Article 4 The Arbitration Commission has the right to make decisions on the existence and, effect of any agreements of arbitration and the
jurisdiction of cases of arbitration. If the parties have any doubts about the effect of an agreement of arbitration and one of them
requests the Arbitration Commission to make a decision while the other party asks the people’s court to make a ruling, the people’s
court shall rule.
Article 5 The clauses of arbitration in a contract shall be taken as separate and independent from other clauses of this contract, and the
agreement of arbitration attached to a contract shall be regarded as a part separate and independent from other clauses of this contract.
The alteration, termination, expiration, and nullity and the existence or non-existence of this contract shall not affect the effect
of the clauses of arbitration or the agreement of arbitration.
Article 6 Counterpleas against an agreement of arbitration or the power of jurisdiction over cases of arbitration shall be raised before the
first sitting of an arbitration tribunal, and counterpleas against the power of jurisdiction over cases to be heard in written form
shall be raised before the first substantive defence.
Article 7 Parties that agree to handle their disputes over to the Arbitration Commission for arbitration shall be regarded as having agreed
to arbitration in accordance with these Rules of Arbitration.
Article 8 The Arbitration Commission shall have one honorary president and several advisors.
Article 9 The Arbitration Commission shall be composed of one president, several vice-presidents, and commission members. The president shall
perform duties as assigned in these Rules, while any of the vice- presidents can perform the duties of the president, if entrusted
to.
The Arbitration Commission shall have a secretariat to take charge of the daily routines of the Arbitration Commission under the leadership
of the secretary general of the Arbitration Commission.
Article 10 The Arbitration Commission shall set up a panel of arbitrators. The arbitrators shall be engaged by the Arbitration Commission from
among Chinese and foreigners with specialized knowledge about and practical experiences in navigation, sea transportation, foreign
trade, insurance, and law.
Article 11 The Arbitration Commission shall be headquartered in Beijing. To meet the need of the development of arbitration businesses, the
Arbitration Commission can set up branches in other parts of China.
CHAPTER II PROCEDURES OF ARBITRATION
SECTION I APPLICATION FOR, DEFENCE OF AND COUNTERPLEA AGAINST ARBITRATION
Article 12 The procedures of arbitration shall begin on the day when the Arbitration Commission sends out its notice of arbitration.
Article 13 When filing an application for arbitration, the applicant shall
(1) Submit an application of arbitration which shall contain:
1) The names and addresses of the applicant and the respondent (and their post codes, telephone numbers, telex numbers, facsimile
numbers, and cables if there are any).
2) Agreement of arbitration the applicant uses as a support.
3) Description of the case and key issues under dispute.
4) The request of the applicant and the facts and evidences supporting this request.
Applications of arbitration shall be signed by and/or affixed with the seals of the applicants and/or their authorized representatives.
(2) Attach documents certifing the facts supporting the requests of the applicant to the application of arbitration filed.
(3) Pay arbitration expenses in advance according to the tables of arbitration expenses worked out by the Arbitration Commission.
Article 14 After receiving and examining the application of arbitration and the documents attached to it submitted by the applicant, the secretariat
of the Arbitration Commission shall ask the applicant to complete procedures of application for arbitration if it regards these procedures
as incomplete. If it concludes that the procedures are complete, the secretariat shall immediately send out to the respondent a notice
of arbitration together with a copy of the application of arbitration submitted by the applicant and its appendixes and the Rules
of Arbitration, panel of arbitrators, and table of arbitration expenses of the Arbitration Commission. A copy of the notice of arbitration,
Rules of Arbitration, panel of arbitrators, and table of arbitration expenses shall also be sent to the applicant.
After sending out notices of arbitration to the applicant and the respondent, the Arbitration Commission shall appoint a member of
the secretariat to take charge of the procedural management of the case of arbitration.
Article 15 Both the applicant and the respondent shall choose on their own accord an arbitrator from the panel of arbitrators of the Arbitration
Commission within 20 days after receiving the notice of arbitration, or ask the president of the Arbitration Commission to appoint
one for them.
Article 16 The respondent shall submit to the secretariat of the Arbitration Commission answering statements and relevant documents of certification
within 45 days after receiving the notice of arbitration.
Article 17 If the respondent has a counterplea to make, it shall submit it to the Arbitration Commission in written form within 60 days after
receiving the notice of arbitration at the latest. This limit of time can be extended if the arbitration tribunal deems it justified.
If the respondent makes a counterplea, it shall list in its counterplea in detail its counterpleas, its justification of these counterpleas,
the supporting facts and evidences, and attach other documents of certification.
If the respondent makes a counterplea, it shall pay arbitration expenses in advance according to the table of arbitration expenses
worked out by the Arbitration Commission.
Article 18 The applicant can apply for revision of its application of arbitration, and the respondent can apply for revision of its counterplea.
If the arbitration tribunal rules that such applications are filed too late that they hinder the normal implementation of arbitration
procedures, however, it can turn them down.
Article 19 Applications of arbitration, answering statements, counterpleas, relevant evidences, and other documents submitted by the parties
shall appear in five copies. If there are more than two parties involved, the number of copies shall be increased accordingly. If
the arbitration tribunal is composed of only one person, however, the number of copies can be reduced by two.
Article 20 Failure on the part of the respondent to submit written answering statements and/or failure on the part of the applicant to submit
written statements answering the counterpleas of the respondent shall not affect the proceeding of arbitration procedures.
Article 21 The parties can entrust arbitration agents to go through relevant procedures of arbitration. The entrusted arbitration agents shall
submit letters of authorization to the Arbitration Commission. Both Chinese and foreign citizens can accept trusts to become arbitration
agents.
Article 22 If a party applies for the taking of measures to protect its properties, the Arbitration Commission shall relay the application for
ruling by the maritime court in the place where the respondent resides or where the properties stand.
If a party applies for the taking of measures to protect evidences, the Arbitration Commission shall rely the application for ruling
by the maritime court in the place where these evidences stay.
SECTION II COMPOSITION OF THE ARBITRATION TRIBUNAL
Article 23 Each of the parties shall choose on their own accord one arbitrator from the panel of arbitrators of the Arbitration Commission or
entrust the president of the Arbitration Commission to appoint one. The third arbitrator shall be chosen jointly by the parties or
appointed by the president of the Arbitration Committee in the joint trust of the parties.
If the parties fail to jointly choose or jointly entrust the president of the Arbitration Commission to appoint the third arbitrator
within 20 days after the respondent receives the notice of arbitration, this arbitrator shall be appointed by the president of the
Arbitration Commission. The third arbitrator shall serve as the chief arbitrator.
The chief arbitrator and the other two arbitrators chosen or appointed shall form an arbitration tribunal to jointly hear cases.
Article 24 The parties can jointly choose or jointly entrust the president of the Arbitration Commission to appoint one arbitrator from the
panel of arbitrators of the Arbitration Commission to take up the post of arbitrator alone and form an arbitration tribunal to hear
cases.
If the parties reach agreement on having one arbitrator to hear their case but fail to agree on the choice of the arbitrator within
20 days after the respondent receives the notice of arbitration, the arbitrator shall be appointed by the president of the Arbitration
Commission.
Article 25 If the applicant or the respondent fails to choose or entrust the president of the Arbitration Commission to appoint its arbitrator
as prescribed in Article 15 of these Rules of Arbitration, the president of the Arbitration Commission shall appoint one for the
respondent.
Article 26 If a case of arbitration involves two or more than two applicants and/or respondents, the applicants and/or the respondents shall
jointly choose, through consultation, their arbitrator from the panel of arbitrators of the Arbitration Commission or jointly entrust
the president of the Arbitration Commission to appoint one for them.
If the applicants and/or the respondents fail to jointly choose their arbitrator or jointly entrust the president of the Arbitration
Commission to appoint one for them within 20 days after receiving the notice of arbitration, the president of the Arbitration Commission
shall make the appointment.
Article 27 If the chosen or appointed arbitrator has any personal interests involved in the case, he or she shall tell the Arbitration Commission
of such involvement and ask for withdrawal.
Article 28 If the parties have good reasons to doubt the impartiality and independence of the chosen or appointed arbitrator, they can file
a written application to the Arbitration Commission for the withdrawal of this arbitrator. They shall produce, however, specific
facts and reasons supporting their request for such a withdrawal and give evidences.
The request for the withdrawal of an arbitrator shall be raised in written form before the first hearing. If the reasons for requesting
such withdrawal have taken place or become known only after the first hearing, the request can be made before the conclusion of the
last hearing.
Article 29 The president of the Arbitration Commission shall decide whether an arbitrator shall be withdrawn or not.
Article 30 If an arbitrator can not perform his or her duties due to withdrawal, death, dismissal or any other reasons, a replacement shall
be made according to the original procedures followed in the choosing or appointment of this arbitrator.
After the replacement is chosen or appointed, the arbitration tribunal shall decide whether to repeat all or part of the procedures
that have already been gone through.
Article 31 The arbitration tribunal shall open court in its hearing of cases. If applied for agreed upon by the parties and the arbitration
tribunal deems it unnecessary, however, the arbitration tribunal can hear a case and make a ruling simply with reference to written
documents.
Article 32 The secretariat shall notify the parties of the date of the first hearing of a case of arbitration 30 days before the sitting of
the arbitration tribunal after the date has been fixed by the arbitration tribunal and the secretariat of the Arbitration Commission
through consultation. If justified, the parties can ask for postponement. The requestment shall be made, however, in written form
to the secretariat two days before the sitting of the arbitration tribunal. Whether or not the date shall be postponed shall be decided
by the arbitration tribunal.
Article 33 The notice of the date of following sittings after the first open hearing shall not be subject to the time limit set in the preceding
article.
Article 34 Cases accepted by the Arbitration Commission shall be heard in Beijing. With agreement from the secretary general of the Arbitration
Commission, however, they can also be heard in other places.
Article 35 The arbitration tribunal shall not open its hearing of cases to the public. If both of the parties ask for opening hearings to the
public, the decision shall be made by the arbitration tribunal.
Article 36 If the hearing of a case is not opened to the public, neither the parties nor their arbitration agents, witnesses, arbitrators, the
consulting experts of the arbitration tribunal, the appointed appraiser, and the relevant staffs of the secretariat of the Arbitration
Commission shall disclose the substance or the progress of the case to outsiders.
Article 37 The parties shall produce evidences for the facts supporting their applications, answering statements, and counterpleas. If deeming
it necessary, the arbitration tribunal can conduct investigations of these facts and collect evidences on its own accord.
If the arbitration tribunal deems it necessary to ask for the presence of the parties during its investigation of facts or collection
of evidences, it shall timely inform the parties so that they will be present. If one or both of the parties fail to be present after
they have been notified, the fact-finding and evidence-collecting acts of the arbitration tribunal shall not be affected.
Article 38 The arbitration tribunal can seek consulting from experts on specific issues of a case or appoint appraisers to make appraisal. The
experts and appraisers can be Chinese or foreign organizations or citizens.
The arbitration tribunal has the right to ask the parties and the parties are obliged to provide or produce datas, documents, properties,
or goods to the experts/appraisers for them to examine, inspect and/or appraise.
Article 39 Copies of the reports by the experts and the appraisers shall be sent to the parties so that they shall have an opportunity to air
their opinions on these reports. Should any of the parties requests the participation of experts/appraisers in court hearings, the
experts/appraisers can, after agreement from the arbitration tribunal, participate and make explanations on their reports if deemed
as necessary and appropriate by the arbitration tribunal.
Article 40 The evidences produced by the parties shall be examined by the arbitration tribunal, and the arbitration tribunal shall decide whether
to accept the reports by the experts and the appraisers.
Article 41 If one party fails to be present when the arbitration tribunal sits, the arbitration tribunal can hear the case and make a ruling
by default.
Article 42 When sitting to hear a case, the arbitration tribunal can take notes and/or make recordings of the hearings. If deeming it necessary,
the arbitration tribunal can produce a synopsis of the hearings and ask the parties and/or their representatives, witnesses and/or
other persons concerned to sign or affix their seals on the synopsis.
Court notes and recordings shall be used for consulting by the arbitration tribunal only.
Article 43 If the parties reach on their own accord agreement of conciliation over a case of arbitration outside the arbitration tribunal, they
can ask the arbitration tribunal to conclude the case by making a ruling in line with the contents of their agreement of conciliation,
or apply for the withdrawal of their case. If application for the withdrawal of a case is filed before the formation of the arbitration
tribunal, the secretary general shall made the decision; if the application is filed after the formation of the arbitration tribunal,
the arbitration tribunal shall made the decision.
If the parties apply once again for arbitration of a case that has been withdrawn, the president of the Arbitration Commission shall
decide whether to accept the case or not.
Article 44 If one party knows or should know that any of the clauses or items of these Rules of Arbitration or an agreement of arbitration are
not observed and continues to participate in or carry on the procedures of arbitration without timely and clearly raising written
objections against such disobedience, it shall be taken as having given up the right to raise objections.
Article 45 If both the parties have the wish for mediation, or one of them has the wish for mediation and agreement is won by the arbitration
tribunal from the other, the arbitration tribunal can mediate in the case under hearing during the progress of the procedures of
arbitration.
Article 46 The arbitration tribunal can mediate in any form it deems appropriate.
Article 47 Should any of the parties ask for stop of mediation during the process of mediation by the arbitration tribunal or the arbitration
tribunal deems it impossible to achieve success in mediation, the mediation shall be stopped.
Article 48 If the parties reach agreement of conciliation outside the arbitration tribunal during the process of mediation by the arbitration
tribunal, the conciliation shall be regarded as having been achieved through mediation by the arbitration tribunal.
Article 49 If conciliation is achieved through mediation by the arbitration tribunal, the parties shall sign a written agreement of conciliation.
Unless otherwise agreed upon between the parties, the arbitration tribunal shall conclude the case with a ruling in line with the
contents of the written agreement of conciliation reached between the parties.
Article 50 If mediation fails, neither of the parties shall use any of the statements, opinions, views or suggestions made, put forward, acknowledged,
or agreed to accept by the other party during the process of mediation by the arbitration tribunal as supports for its requests,
answering statements and/or counterpleas during future arbitral, judicial or other proceedings.
Article 51 An arbitrational tribunal shall make a ruling within nine months of its formation. If requested by the arbitration tribunal and deemed
as necessary and well justified by the secretary general, this period of time can be extended.
Article 52 An arbitrational tribunal shall make rulings independently and impartially on the basis of facts, in accordance with laws and contractual
terms, with reference to common international practices, and in line with the principle of impartiality and rationalness.
Article 53 On cases handled by an arbitration tribunal composed of three arbitrators, the rulings shall be made according to the opinion of
the majority of the arbitrators. The opinions of the minority arbitrator can be recorded as attachments to these rulings.
If an arbitration tribunal can not reach majority agreement, the ruling shall be made according to the opinion of the chief arbitrator.
Article 54 The rulings made by an arbitrational tribunal shall list the arbitration request, facts under dispute, reasons for ruling, results
of ruling, sharing of arbitration expenses, and the date and venue of arbitration. If the parties agree not to list the facts under
dispute and the reasons for arbitration, or if a ruling is made according to the contents of the agreement of conciliation reached
between the parties, the facts under dispute and the reasons for arbitration can be left out from a ruling.
Article 55 Unless it is made according to the opinion of the chief arbitrator or that of an exclusive arbitrator, an arbitration ruling shall
be signed by the majority of arbitrators. Arbitrators with different opinions may and may not sign the ruling.
Arbitrators shall submit draft rulings to the Arbitration Commission before signing them. Under the precondition of not affecting
the independent ruling by arbitrators, the Arbitration Commission can call arbitrators’ attention to the form of ruling.
Rulings shall be affixed with the seal of the Arbitration Commission.
The date of the making of a ruling shall be the date of the effectuation of this ruling.
Article 56 If deemed as necessary or requested by the parties and agreed by the arbitration tribunal, intermediate or partial rulings can be
made on any of the issues of a case at any time during the progress of arbitration and before the making of the final ruling. The
refusal by any of the parties to implement these intermediate rulings shall not affect the progress of arbitration procedures or
affect the making of the final ruling by the arbitration tribunal.
Article 57 The arbitration tribunal is empowered to decide in its ruling upon the amount of arbitration expenses and other costs to be finally
paid by the parties to the Arbitration Commission.
Article 58 The arbitration tribunal is empowered to decide upon the compensation by the losing party of the rational amount of expenses spent
by the winning party for the handling of a case. The amount of compensation shall not exceed, however, 10 per cent at the maximum,
of the winning sum of the winning party.
Article 59 Arbitration rulings are final and are binding to both parties. Neither of the parties shall raise a lawsuit to a court, or ask any
other organizations to revise arbitration rulings.
Article 60 Any of the parties can, within 30 days after receiving an arbitration ruling, point out the writing, printing, calculating, or other
mistakes in the ruling and submit a written application to the arbitration tribunal for their correction. If these mistakes do exist,
the arbitration tribunal shall make written corrections within 30 days after receiving these written applications. The arbitration
tribunal can also make written corrections on their own accord within 30 days after sending out an arbitration ruling. These written
corrections shall be a component part of a ruling.
Article 61 If any items are left out in an arbitration ruling, any of the parties can file a written application, within 30 days after receiving
the arbitration ruling, to the arbitration tribunal requesting it to make a supplementary ruling on the items left out in the arbitration
ruling.
If such commissions do exist, the arbitration tribunal shall make, within 30 days after receiving the written application as mentioned
above, a supplementary ruling on the items that have been left out. The arbitration tribunal can also make a supplementary ruling
on its own accord within 30 days after sending out an arbitration ruling. The supplementary ruling shall constitute a part of the
original ruling.
Article 62 The parties shall implement the ruling on their own accord in line with the term prescribed in an arbitration ruling. If no specific
term is written into a ruling, this ruling shall be implemented immediately.
If one party fails to implement a ruling, the other party can ask, in accordance with stipulations of Chinese laws, a Chinese court
to force implementation, or apply for implementation to a foreign court with the power of jurisdiction in accordance with the 1958
Convention on Acknowledging and Implementing Foreign Arbitration Rulings or other international conventions China has signed or participated
in.
Article 63 Unless otherwise agreed to between the parties, these summary procedures shall be applicable to disputes involving funds of no more
than 500,000 Renminbi yuan, and disputes involving funds of more than 500,000 Renminbi yuan but with written application from one
party and written agreement from the other party.
Article 64 The secretariat of the Arbitration Commission shall, upon deciding after examination that the arbitration application filed by an
applicant to the Arbitration Commission can be accepted and it is suitable to apply the summary procedures, immediately send out
notices of arbitration to both parties.
Unless the parties have jointly chosen their independent arbitrator from the panel of arbitrators provided by the Arbitration Commission,
the parties shall, within 15 days after the respondent receives the notice of arbitration, jointly choose from the panel of arbitrators
provided by the Arbitration Commission or jointly entrust the president of the Arbitration Commission to appoint an independent arbitrator.
Should the parties fail to jointly choose or jointly entrust the president of the Arbitration Commission to appoint an independent
arbitrator after the expiration of the time limit, the president of the Arbitration Commission shall immediately appoint an independent
arbitrator to form an arbitration tribunal to hear the case.
Article 65 The respondent shall, within 30 days after receiving the notice of arbitration, submit a reply and other relevant documents of certification
to the Arbitration Commission. It shall also raise counterpleas, if there are any, within this prescribed time limit and provide
relevant documents of certification.
Article 66 The arbitration tribunal can hear cases in the form it deems as appropriate. It can decide to hear a case simply with the written
materials and evidences provided by the parties, or open a tribunal session to hear a case.
Article 67 The parties shall submit written materials and evidences necessary for arbitration according to the requirements raised and the time
limit set by the arbitration tribunal.
Article 68 For cases to be heard with the sitting of the arbitration tribunal, the secretariat of the Arbitration Commission shall notify, after
the determination of the dates of the sittings by the arbitration tribunal, the parties of these dates of sittings 15 days before
the sitting of the tribunal.
Article 69 If the arbitration tribunal decides to hear a case with a sitting, it will sit only once. If necessary, it may decide to sit again.
Article 70 During the implementation of summary procedures, the failure by any of the parties to behave in line with these summary procedures
shall not affect their implementation or the right of the arbitration tribunal to make a ruling.
Article 71 Alteration of arbitration requests and the raising of counterpleas shall not affect the continuous implementation of summary procedures.
Article 72 For cases to be heard with the sitting of the arbitration tribunal, the arbitration tribunal shall make arbitration rulings within
30 days after the sitting of the tribunal or the second sitting. As for cases to be heard in the written form, the arbitration tribunal
shall make arbitration rulings within 90 days after its formation. These time limits can be extended if requested by the arbitration
tribunal and deemed as necessary and well justified by the secretary general of the Arbitration Commission.
Article 73 Matters left out in this chapter shall be handled in accordance with stipulations in other chapters of these Rules.
Article 74 The Arbitration Commission shall use Chinese as its official language. If otherwise agreed
Detailed Rules for the Implementation of the Law of the PRC on Sino-Foreign Contractual Joint Ventures
(Approved by the State Council of the People’s Republic of China on August 7, 1995 and Promulgated by the Ministry of Foreign Trade
and Economic Cooperation on September 4, 1995)
Chapter I
General Provisions
Article 1
This detailed rules are formulated in accordance with the Law of the People’s Republic of China on Sino-Foreign Contractual Joint
Ventures.
Article 2
The establishment of a Sino-foreign contractual joint venture (hereinafter referred to as contractual JV) within the Chinese territory
shall conform to the national development policy and industrial policy, and abide by the State instructive directory on foreign investment.
Article 3
Contractual JVs shall independently carry out its business activities and management the scope stipulated in the contractual JV agreement,
and contract and articles of association, and are not subject to interference from any organization or individual.
Article 4
A contractual JV may be one with or without the Chinese legal person status. Those without shall follow relevant special regulations
stipulated in Chapter IX of this detailed rules.
Article 5
Unless otherwise regulated by laws and decrees, the administrative authority of a contractual JV is the administrative department
of the Chinese party. In case there are more than two Chinese parties, one administrative department shall be appointed through consultations
between the examination and approval authorities and the departments concerned. The administrative department shall coordinate relevant
affairs of the venture and provide assistance according to law.
Chapter II Establishment of a Contractual JV
Article 6
The establishment of a contractual JV is subject to examination and approval by the Ministry of Foreign Trade and Economic Cooperation
(Moftec), or authorized departments of the State Council and local people’s governments.
The establishment of contractual JVs shall be examined and approved by authorized departments of the State Council and local people’s
governments if the joint ventures are of the following conditions:
(1) The total amount of investment falls within the limit set by the State Council for examination by authorized departments of the
State Council and local people’s governments.
(2) The investment fund is raised independently, and contraction and production conditions of the venture dose not need State balance.
(3) The venture’s export dose not need to obtain export quotas or licenses issued by relevant State administrative departments; or
if export quotas and licenses are needed, it has been granted approval by State administrative departments prior to filing the project
proposal.
(4) Other cases where the establishment of a contractual JV shall be examined and approved by authorized departments of the State
Council and local people’s governments.
Article 7
To establish a contractual JV, the Chinese party shall submit the following documents to the examination and approval authorities:
(1)Project proposal for establishing a contractual JV, together with the documents of approval handed out by the administrative departments;
(2) Feasibility report jointly prepared by all parties, together with the documents of approval handed out by the administrative departments;
(3) Contractual JV agreement, contract and articles of association signed by the legal representatives venture, or their proxies,
of all parties of the venture;
(4) Business licenses of all parties of the venture, their registration certificates, credit certificates and valid certificates of
the legal representatives; in case the foreign party is a natural person, valid certificates of identification, curriculum vitae
and credit conditions;
(5) List of candidates for the chairman, deputy-chairman, directors of the board of the contractual JV, or the director, deputy director
and members of the joint management committee;
(6) Other documents required by the examination and approval authorities.
Except for documents listed in item (4) that need to be submitted by the foreign parties, the aforesaid documents must be submitted
in the Chinese language; Documents listed in items(2),(3) and (5) may be simultaneously submitted in foreign language agreed upon
by all parties of venture.
The examination and approval authorities shall decide whether to approve the application or not within 45 days from receipt of all
required documents. The authorities have the right to demand mending and revision of the submitted documents within a set time if
they think the documents are incomplete or have inappropriate parts.
Article 8
Morftec shall issue approval certificates to the contractual JVs approved for establishment by it and government departments authorized
by the State Council.
Local people’s governments authorized by the State Council shall issue approval certificates to the ventures it has approved for establishment,
and shall put relevant approval documents on the record of Moftec within 30 days from the approval date.
Approved contractual JVs shall apply for registration with the administrative authorities for industry and commerce, and obtain business
licenses according to law.
Article 9
Applications for the establishment of contractual JVs shall not be approval on any one of the following conditions:
(1) Detrimental to national sovereignty and public interests;
(2) Hazardous to national security;
(3) Causing pollution on environment;
(4) Other conditions that run against laws, decrees or the national industrial policy.
Article 10
The contractual JV agreement mentioned in this detailed rules refers to the written document whose principles and major points governing
the JV establishment are agreed upon and concluded by all parties.
The contractual JV contract mentioned in this detailed rules refers to the written document agreed upon and concluded by all parties
on their rights and obligations for establishing the venture.
The contractual JV articles of association mentioned in this detailed rules refers to the written document drafted according to the
joint venture contract and agreed upon by all parties on matters including the organizational principles, operation and management
methods.
In case the contractual JV agreement and the articles of association contradict with the contractual JV, the contract shall prevail.
It is not absolutely necessary for cooperative parties to formulate contractual JV agreement.
Article 11
The contractual JV agreement, contract, articles of association take effect upon the issuing date of approval certificate handed out
by the examination and approval authorities. Consent of the examination and approval authorities shall be obtained to make any major
change to the agreement, contract, articles of association within the term of cooperation.
Article 12
The contractual JV contract shall include the following items:
(1) Names, registration localities, and addresses of all parties, as well as names, professions and nationalities of the legal representatives(
or name, nationality, and address, in case the foreign party is a natural person).
(2) Name, address, and business scope of the contractual JV.
(3) Total amount of investment, registered capital of the venture, ways and time limit for all parties to contribute investment or
provide cooperation input.
(4) Assignment of the investment contributed by all parties or conditions for transfer.
(5) Distribution of earnings or products between all parties and ways to share risks and losses.
(6) Composition of the board of directors or joint management committee, and distribution of the number of directors of the board
or committee members between the parties, and duties, appointment and dismissal of the general manager and other high-ranking managerial
personnel.
(7) Main production facilities and technologies adopted, and their sources of supply.
(8) Arrangement for product sales in and outside China.
(9) Arrangement for the venture’s foreign exchange income and expenditure.
(10) The venture’s duration, dissolution and liquidation.
(11) Other obligations of all parties and their liabilities for breach of contract.
(12) Principles for handling finance, accounting and auditing.
(13) Settlement of disputes between the parties.
(14) Procedures for modifying the JV contract.
Article 13
The contractual JV articles of association shall include the following items:
(1) Names and address of the venture;
(2) Business scope and cooperation term;
(3) Names, registration localities and addresses of all parties, as well as names, professions and nationalities of the legal representatives
( or name, nationality and address in case the foreign participant is a natural person);
(4) Total amount of investment, registered capital of the venture, ways and time limit for each party to contribute investment or
provide cooperation input;
(5) Distribution of earnings or products between all parties and ways to share risks and losses;
(6) Composition, duties and powers, and rules of procedures for the board of directors or the joint management committee, term of
office for the directors of the board or committee members, and duties of the chairman, deputy-chairman of the board or the director,
deputy-director of the joint management committee;
(7) Formation, duties and powers, and rules of procedures for the operation and management organization, and duties, appointment and
dismissal of the general manager and other high-ranking managerial personnel;
(8) Labor management regulations on employment, training, labor contract, salaries, social insurance, welfare and labor protection;
(9) Rules for finance, accounting and auditing;
(10) Ways for dissolution and liquidation;
(11) Procedures for modifying the articles of association.
Chapter III Organizational Formation & Registered Capital
Article 14
The contractual JV that is accorded Chinese legal person status by law is a limited liability company. Unless otherwise stipulated
in the contractual JV contract, each party is responsible for the venture within the limit of the investments or cooperation conditions
it contributes.
The contractual JV is liable to the venture’s debts with all its assets.
Article 15
The total amount of investment of a contractual JV refers to the total sum of capital required by the production and operation scale
regulated in the JV contract and articles of association.
Article 16
The registered capital of a contractual JV refers to the total sum of capital agreed to be contributed by all parties and registered
with the administrative authorities for industry and commerce for establishing the venture. The registered capital can be presented
either in RMB or in one freely convertible foreign currency agreed upon by all parties.
The registered capital of a contractual JV shall not be decreased within the term of cooperation. In case it is absolutely necessary
to decrease the registered capital because of changes in the total amount of investment and production and operation scale, approval
shall be obtained from examination and approval authorities.
Chapter IV Investment & Conditions for Cooperation
Article 17
Each party shall contribute its investment or cooperation input to the contractual JV according to laws, decrees and contractual JV
contract.
Article 18
The investment or cooperation input contributed by all parties may be provided in cash or in kind or other property rights such as
industrial property rights, technical know-how, land-use rights, etc.
Asset appraisal shall be conducted according to relevant laws and decrees if the investment or cooperation input of the Chinese party
is State-owned assets. In a contractual JV that is accorded by law the status of a Chinese legal person, the foreign party’s investment
shall generally be no less than 25 percent of the venture’s registered capital.
In a contractual JV without the status of a Chinese legal person, specific requirements for investment or cooperation input contributed
by each party shall be regulated by Moftec.
Article 19
The investment or cooperation input contributed by each party shall be the property or property right under its ownership, and shall
not be mortgaged or set as any other from of guarantee.
Article 20
The contractual JV contract shall set down time limit for all parties to contribute investment or cooperation input according to laws
and decrees to meet the venture’s operation and production requirements.
In case a party fails to contribute the investment or cooperation input according to the contractual JV contract, the administrative
authorities for industry and commerce shall set a time limit for it to fulfill its obligations; if the aforesaid party still fails
to fulfill its obligations upon expiration of the time limit, the examination and approval authorities shall withdraw and nullify
the venture’s approval certificate, and the administrative authorities for industry and commerce shall revoke the business license
and make an annunciation.
Article 21
The party that fails to contribute investment or cooperation input according to the contract JV contract shall be liable for breach
of contract to the other party that has made the contribution according the contract.
Article 22
An accountant registered in China shall verify the investment or cooperation input contributed by the parties and issue a verification
certificate by which the contractual JV shall issue investment certificates to all parties. The investment certificates shall include
the following items:
(1) Name of the contractual JV;
(2) Establishment date of the JV;
(3) Name or each party;
(4) Contents of the investment or cooperation input contributed by each party;
(5) Dates of contribution of the investment or cooperation input by each party;
(6) Serial number and issuing date of the investment certificate.
Copies of the investment certificates shall be put on the record of the examination and approval authorities, and administrative authorities
for industry and commerce.
Article 23
In case one party intends to transfer all or part of its rights with the venture to the other party or to the third party, written
consent shall be obtained from the other party of the venture, and application shall be filed with the examination and approval authorities.
The examination and approval authorities shall decide whether to approve the application or not within 30 days after receiving transfer
documents.
Chapter V Organizational Institution
Article 24
A contractual JV shall set up a board of directors or a joint management committee, which is the power organ of the venture and shall
make decisions on major issues pertaining to the venture according to the articles of association.
Article 25
The board of directors or joint management committee shall consist of no fewer than three members. Distribution of the number of directors
of the board or members of the committee shall be decided upon through consultation by all parties with reference to the proportion
of investment or cooperation input.
Article 26
Appointment and replacement of the directors of the board or members of the committee shall be made separately by respective parties
of the venture. Ways of appointing the chairman, deputy-chairman of the board or the director, deputy-director of the committee shall
be regulated in the articles of association. Where the Chinese or foreign party is appointed as the chairman of the board or director
of the committee, the other party shall be the deputy-chairman or deputy-director.
Article 27
Term of office for the director of the board or the member of the committee shall be regulated in the articles of association, each
term shall not exceed three years. Upon expiration of a term, the director of board or committee member may renew his or her term
provided his/her party continues the appointment.
Article 28
The board of directors or joint management committee shall convene at least one meeting each year, called and presided over by the
chairman of the board or the director of the committee. In case the chairman or the director is unable to call the meting due to
special reasons, he or she shall authorize the deputy-chairman of the board or deputy-director of the committee or other director
of the board or committee member to call and preside over the meeting. A meeting of the board of directors or joint management committee
may be convened upon a proposal by more than one-third of the directors of the board or the committee members.
A meeting of the board of directors or joint management committee should be participated by more than two-thirds of the directors
of the board or committee members. In case a director of the board or committee member is unable to attend the meeting, a proxy shall
be appointed in writing to participate and vote. A resolution of the meeting shall be passed by at least half or the total members
of the board or committee. The director of the board or committee member who fails to attend the meeting either in person or through
a proxy without a reasonable excuse shall be regarded as having attended the meeting and abstained from voting.
Notice shall be given to all members of the board or the joint management committee 10 days prior to a meeting of the board of directors
or joint management committee. A resolution of the board of directors of joint management committee may also be made in the form
of correspondence.
Article 29
Unanimous agreement is required of all the members of the board of directors or joint management committee for making any resolution
on the following matters:
(1) Modification of the articles of association;
(2) Increase or decrease of the registered capital;
(3) Dissolution of the JV;
(4) Assets mortgage of the JV;
(5) Merger, split-up or change of organization from of the JV;
(6) Other matters that require unanimous agreement of the meeting of the board or joint management committee for a resolution.
Article 30
Rules of procedure and voting procedures of the meeting of board or joint management committee shall be regulated in the venture’s
articles of association except for the those regulated in this detailed rules.
Article 31
The chairman of the board or the director of the committee is the legal representative of the venture. In case the chairman or director
is unable to exercise the duty under certain circumstances, the deputy-chairman or deputy-director or other member of the board or
joint management committee shall be authorized to represent the venture in external affairs.
Article 32
The contractual JV shall appoint the general manager, to be in charge of the daily operation and management of the venture and accountable
to the board of directors or joint management committee.
The general manager shall be appointed and dismissed by the board of directors or joint management committee.
Article 33
The general manager and other high-ranking management personnel may be Chinese or foreign citizens.
Members of the board of directors or joint management committee may concurrently hold the positions general manager and other high-ranking
personnel of the venture upon appointment of the board of directors or joint management committee.
Article 34
In case of incompetence, graft or serious dereliction of duty on the part of the general manager or other high-ranking management
personnel, the board of directors or joint management committee may resolute to dismiss them. If any loss is incurred to the venture,
the person concerned shall be liable to the loss according to law.
Article 35
If a contractual JV chooses to entrust a third party to operate and manage the venture after its establishment, unanimous agreement
of the board of directors or joint management committee is needed, and an entrustment operation and management contract with the
entrusted party needs to be signed.
The JV shall then report for approval to the examination and approval authorities the resolution of the board or committee, the signed
entrustment operation and management agreement, together with credit certificate of the entrusted party. The relevant authorities
shall decide whether to approve the entrustment or not within 30 days from receiving relevant documents.
Chapter VI
Material Purchase & Product Sales
Article 36
A contractual JV makes the production and operation plans by itself according to the approved business scope and operation scale.
The government authorities shall not force a venture to carry out any production and operation plan worked out by any governmental
authority.
Article 37
A contractual JV may decide by itself, from in or outside the Chinese territory, the purchase of machinery, equipment, raw materials,
fuel, parts, accessories, components, means of transportation and office facilities, etc. (hereinafter referred to as materials)
for its own use.
Article 38
The State encourages a contractual JV to sell its products on the world market. A JV may either sell the products on the world market
by itself or entrust foreign sales agencies or foreign trade companies in China to sell on commission.
The product prices of a contractual JV are subject to the venture’s own decision according to law.
Article 39
Customs duty and import intermediary tax shall be exempted on the import of machinery, equipment, parts and other materials serving
as the contribution of the foreign party, and machinery, equipment, parts and other materials for production and operation requirements
with fund allocated from the total amount of investment of the venture. In case the aforesaid duty -free materials are approved to
be resold within China or put on sale on the domestic market, relevant taxes shall be levied or made up according to law.
Article 40
A contractual JV shall not export products at prices notably lower than the reasonable prices of similar products on the world market,
nor import at prices notably higher than that of similar products on the world market.
Article 41
Product sales of a contractual JV shall abide by the stipulations of the approved contractual JV contract.
Article 42
To import or export products that are subject to license and quota control, a contractual JV shall go through the application formalities
for license and quota in accordance with relevant State regulations.
Chapter VII Income Distribution and Investment Recovery Article 43
The foreign and Chinese parties may distribute their income by distributing the profits, products or by other methods agreed upon
by all parties.
In case of income distribution by distributing the products or by other methods, the amount of taxes due shall be calculated according
to relevant tax laws.
Article 44
If the ownership of all fixed assets of a contractual JV is to be given to the Chinese party upon expiration of the term of cooperation
as agreed upon by the Chinese and foreign parties in the contract, the foreign party may recover its investment during the term of
cooperation in the following ways:
(1) Based on the distributing according to investment or cooperation input, the contractual JV contract may regulate an enlarged ratio
of income distribution in favor of the foreign party;
(2) Upon examination and approval of the finance and tax authorities according to State taxation regulations, the foreign party may
recover its investment before the venture has paid its income tax:
(3) Other investment recovery methods approved by the finance and tax authorities, and examination and approval authorities.
In case the foreign party recovers its investment within the term of cooperation according to the above paragraphs, the foreign and
Chinese parties shall be liable to the debts of the venture in accordance with laws and the contractual JV contract.
Article 45
The application that is put forward by the foreign party that chooses to first recover the investment according to (2), (3) of Article
44 shall state in details the total amount of investment to be recovered, recovery period and method, which shall be reported to
the examination and approval authorities for approval after being approved by the finance and tax authorities. The foreign party
shall not first recover its investment before the venture has covered all of its losses.
Article 46
A contractual JV shall appoint an accountant registered in China to check and examine the accounts and certificates according to relevant
State regulations. The parties may jointly or individually appoint such an accountant, with the expense borne by the appointing party
or parties.
Chapter VIII Term and Dissolution Article 47
The term of cooperation of a contractual JV shall be decided upon through consultation of the foreign and Chinese parties and regulated
in the JV contract.
If all parties agree to extend the term upon its expiration, an application for extension shall be filed with the examination and
approval authorities 180 days prior to the expiration date, stating how the current contractual JV contract is carried out and reasons
for extending the term, together with an agreement by all parties on issues such as rights and obligations of each party during the
extension period. The examination and approval authorities shall decide whether to approve the extension or not within 30 days from
receiving the application.
Upon approval to extend the cooperation term, the JV shall go through registration formalities for the alteration with the approval
documents. The extension term starts from the first day after the expiration date.
If the contractual JV has stipulated that the foreign party first recovers its investment, and the investment recovery has been completed,
the term of the venture shall not be extended upon expiration. But in case the foreign party has increased its investment, application
for extending the cooperation term may be filed with the examination and approval authorities according to the second paragraph of
this article after consultation between the parties.
Article 48
A contractual JV shall dissolve under one of the following situations:
(1) Expiration of the cooperation term;
(2) Inability to continue operation due to heavy losses, or heavy losses caused by irresistible force;
(3) Inability to continue operation due to the failure of one or more than one of the foreign and Chinese parties to fulfill the obligations
put down in the JV contract and articles of association;
(4) Occurrence of other reasons for dissolution described in the JV contract and articles of association;
(5) The JV is ordered to close by law for having violated laws and decrees.
In cases described in (2) and (4), the board of directors or joint management committee of the JV shall make an dissolution application
to the examination and approval authorities. In cases described in (3), one or more than one of the foreign and Chinese parties that
fails to fulfill the obligations described by the agreement, contract and articles of association shall be liable to the losses suffered
by the other party or parties that has or have fulfilled the obligations. The latter has the rights to apply for dissolution of the
venture to the examination and approval authorities.
Article 49
The liquidation of a contractual JV shall be carried out in accordance with laws, decrees and stipulations of the contractual JV agreement,
contract and articles of association.
Chapter IX Special Regulations on
a Contractual JV Without the Legal Person Status
Article 50
A contractual JV without the legal person status together with all of its parties shall bear civil liabilities according to regulations
of the civil laws of China.
Article 51
A contractual JV without the legal person status shall be register with the administrative authorities for industry and commerce the
investment or cooperation input contributed by each of its party.
Article 52
The investment or cooperation input contributed by each party of a JV without the legal person status shall be separately owned by
each party. Upon agreement by all parties, the investment or coopperation input may be jointly possessed by all the parties or part
of which jointly possessed, part separately. Properties accumulated by the venture in its operation process shall be jointly owned
by all the parties.
The investment or cooperation input contributed by each party of a JV without the legal person status shall be jointly managed and
put to use, no party shall dispose it on its own without the consent of the other party.
Article 53
A contractual JV without the legal person status shall set up a joint management body, which shall consist of delegates appointed
by each party to collectively manage the venture on behalf of itself.
All major issues pertaining to the venture shall be decided by the joint management body.
Article 54
A contractual JV without the legal person status shall set up unified account books at its location; each party shall set up separately
its own account books.
Chapter X Supplement Article 55
Laws of the PRC shall be applied to contractual JV contract on its draft, powers, explanation, implementation and settlement of disputes.
Article 56
Relevant regulations of the laws, decrees shall be applied to the matters of a venture that are not stipulated in this detailed rules
such as finance, accounting, auditing, foreign exchange, taxation, labor management, trade union, etc.
Article 57
Establishment of a contractual JV by companies, enterprises and other economic organizations or individuals from Hong Kong, Macao
and Taiwan, and by Chinese citizens living abroad shall be handled with reference to this detailed rules.
Article 58
The detailed rules shall come into effect from the data of promulgation.
(English Translations are for Reference Only)
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