On 21st. Oct 2019, Shanghai Municipal Bureau of Justice issued “Administrative Measures for Business Offices Established by Overseas Arbitration Institutions in Lin-Gang Special Area of China (Shanghai) Pilot Free Trade Zone”（《境外仲裁机构在中国（上海）自由贸易试验区临港新片区设立业务机构管理办法》）.
In a previous post on CJO, our contributor Mr. Jian Zhang introduced the stipulation issued by the State Council of China in July 2019, [1] which provides that foreign well-known arbitration and dispute settlement institutions should be allowed to establish business organizations in the new area to conduct arbitration business in respect of civil and commercial disputes.
There have been some updates to the aforementioned situation.
On 21st. Oct 2019, Shanghai Municipal Bureau of Justice promulgated a new stipulation, which specified how foreign arbitration institutions should set their business organization. This official document will come into effect on the 1st. Jan 2020. “Wonbanglaw”(万邦法律), an official account on Wechat, has provided the English version of this provision, which is officially translated by Shanghai Municipal Bureau of Justice.
The stipulation is full as follows:
Administrative Measures for Business Offices Established by Overseas Arbitration Institutions in Lin-Gang Special Area of China (Shanghai) Pilot Free Trade Zone
Article 1 These Administrative Measures are hereby formulated in accordance with the Overall Plan for Lin-gang Special Area of China (Shanghai) Pilot Free Trade Zone, the Administrative Measures for Lin-gang Special Area of China (Shanghai) Pilot Free Trade Zone and other relevant regulations in conjunction with the actual circumstances, for the purposes of regulating the registration of business offices (hereinafter referred to as the “Business Offices”) to be established by Overseas Arbitration Institutions in Lin-gang Special Area of China (Shanghai) Pilot Free Trade Zone (hereinafter referred to as the“Lin-gang Special Area”) and the business activities thereof.
Article 2 These Administrative Measures shall apply to the establishment of a Business Office by an Overseas Arbitration Institution in the Lin-gang Special Area, foreign-related arbitration activities conducted by such Business Office and relevant management activities conducted by Shanghai Municipal Bureau of Justice.
Article 3 The term“Overseas Arbitration Institution” referenced herein shall mean any non-profit arbitration institution legally established in foreign countries and the Hong Kong Special Administrative Region, the Macao Special Administrative Region and Taiwan Region of China, as well as arbitration institutions established by international organizations that China has joined.
Article 4 Shanghai Municipal Bureau of Justice shall be in charge of the registration for establishing such Business Offices, and shall be responsible for supervising and administering their foreign-related arbitration activities.
Article 5 A Business Office and its principal, staff, and arbitrators shall abide by the PRC laws, regulations and rules, adhere to the professional ethics and discipline of arbitration and shall not harm China’s national and social public interests when they conduct foreign-related arbitration activities.
Article 6 An Overseas Arbitration Institution, which applies for establishing a Business Office in the Lin-gang Special Area, shall meet the following conditions:
(Ⅰ) It has been legally established and duly existing overseas for more than five (5) years;
(Ⅱ) It has conducted substantial arbitration activities overseas, and has high international reputation; and
(Ⅲ) The principal of the Business Office has not been subjected to any criminal penalty for any willful offense.
Article 7 An Overseas Arbitration Institution, which applies for establishing a Business Office in the Lin-gang Special Area, shall file an application with Shanghai Municipal Bureau of Justice and submit the following materials:
(Ⅰ) An application for the establishment of a Business Office;
(Ⅱ) Documents to support information specified in Article 6 hereof;
(Ⅲ) The articles of association, arbitration rules, charging standard and list of members of the decision-making body of the Overseas Arbitration Institution;
(Ⅳ) The list of panel of arbitrators or recommended panel of arbitrators, if any;
(Ⅴ) The certificate of the domicile of the Business Office;
(Ⅵ) Registration form and personal ID materials of the principal and staff of the Business Office;
(Ⅶ) Other materials as stipulated by laws, regulations and rules.
The materials listed in the preceding paragraph submitted by arbitration institutions in the Hong Kong Special Administrative Region, the Macao Special Administrative Region and Taiwan Region of China shall be handled according to the relevant legalization procedures recognized by the Ministry of Justice. The materials listed in the preceding paragraph submitted by other Overseas Arbitration Institutions shall be notarized by the public notarial office or notary public in the countries where such arbitration institutions are located and shall be authenticated by China’s embassies or consulates in such countries.
The application materials shall be made in triplicate. Any material in a foreign language shall be attached with the Chinese translation, and the Chinese version shall prevail.
Article 8 Shanghai Municipal Bureau of Justice shall accept in a timely manner an application that is supported by all the required materials and conforms to the statutory form, and shall issue a notice of acceptance; if the application fails to include all the required materials or fails to conform to the statutory form, Shanghai Municipal Bureau of Justice shall, either on the spot or within five (5) working days upon receipt of the application materials, inform the applicant all at once of all the materials that are required be supplemented and corrected; if no notice is given within the time limit, the application shall be deemed to have been accepted as of the date of the receipt thereof.
Shanghai Municipal Bureau of Justice shall complete the review and decide whether to grant a registration within two (2) months from the date of acceptance of an application.
Shanghai Municipal Bureau of Justice shall report to the Ministry of Justice for record-filing purpose within ten (10) working days from the date of the decision to grant the registration, and shall issue the registration certificate after the Ministry of Justice assigns a unified social credit code thereto.
Article 9 The items under registration of a Business Office shall include its name, domicile, principal, business scope, etc.
Article 10 A Business Office shall submit a copy of its tax registration certificate, a specimen of seal, bank account, certificate of business address, and proof of funds, etc. to Shanghai Municipal Bureau of Justice for record-filing.
Article 11 Where a Business Office intends to change its name, domicile, principal, business scope or any other registered item, it shall submit an application for changing the registration and other relevant materials to Shanghai Municipal Bureau of Justice. If the application is determined to be in compliance with the provisions hereof, Shanghai Municipal Bureau of Justice shall proceed with the procedures for changing the registration according to law.
Article 12 Shanghai Municipal Bureau of Justice shall deregister a Business Office and report to the Ministry of Justice for record-filing in the following events:
(Ⅰ) The Overseas Arbitration Institution applies for the termination of the Business Office;
(Ⅱ) The Overseas Arbitration Institution that establishes the Business Office is terminated;
(Ⅲ) The establishment registration of the Business Office is revoked according to law; or
(Ⅳ) Other circumstances as stipulated by laws, regulations and rules.
A Business Office that is deregistered in accordance with the preceding paragraph shall undergo liquidation in accordance with the law before deregistration.
Article 13 The information regarding the establishment, change and deregistration of a Business Office shall be disclosed to the public by Shanghai Municipal Bureau of Justice via its official website or other proper channels.
Article 14 A Business Office may perform the following foreign-related arbitration services with respect to civil and commercial disputes arising in the fields of international commercial affairs, maritime affairs, and investment, etc.:
(Ⅰ) Acceptance, trial, hearing and awarding of cases;
(Ⅱ) Case management and services; and
(Ⅲ) Consultancy, guidance, training and seminars.
Article 15 Shanghai Municipal Bureau of Justice will encourage and guide the Business Offices to operate and conduct foreign-related arbitration activities in a centralized way in the administrative region of the Shanghai municipality.
Article 16 Shanghai Municipal Bureau of Justice will encourage and support the following exchange and cooperation activities between the Business Offices and local arbitration institutions:
(Ⅰ) Entering into cooperation agreements;
(Ⅱ) Recommending to each other arbitrators and mediators;
(Ⅲ) Providing to each other internship and exchange posts;
(Ⅳ)Facilitating each other’s arbitration activities such as trials and hearings; and
(Ⅴ)Jointly organizing training sessions, conferences, seminars and promotional activities.
Article 17 The principal of a Business Office shall work fulltime, and neither the principal nor the staff may hold posts in two or more Business Offices at the same time.
Article 18 A Business Office shall not conduct the arbitration for any dispute case that is without any foreign element. A Business Office shall not further establish any branch or dispatched office.
Article 19 A Business Office shall submit an annual work report for the previous year to Shanghai Municipal Bureau of Justice before March 31 of each year. An annual work report should include:
(Ⅰ)Overview of business activities;
(Ⅱ)Changes in the list of panel of arbitrators or recommended panel of arbitrators, staff and business address;
(Ⅲ)Any circumstances under which the arbitral awards are revoked or not enforced, or not recognized and enforced by a court;
(Ⅳ) Audited financial reports; and
(Ⅴ) Other circumstances that should be reported.
Article 20 In the event of significant matters concerning the relevant arbitration institution such as amendments to its articles of association and arbitration rules and changes of members of its decision-making body, the Business Office shall report to Shanghai Municipal Bureau of Justice within ten (10) working days upon occurrence thereof.
Article 21 If a Business Office violates any of the provisions of Articles 17 to 20 hereof, Shanghai Municipal Bureau of Justice shall order such Business Office to make rectification within a time limit; if the Business Office refuses to make rectification within the time limit or if it still fails to meet the requirements after the rectification, Shanghai Municipal Bureau of Justice may notify the relevant people’s courts, public security authorities and other departments and disclose the matter to the public, and may share such information with the municipal public credit information service platform according to law.
If a Business Office violates Subparagraph (III) of Paragraph 1 of Article 6 hereof, Shanghai Municipal Bureau of Justice shall order it to make rectification within a time limit; if the Business Office refuses to make rectification accordingly within the time limit or if it still fails to meet the requirements after rectification, its registration may be revoked by Shanghai Municipal Bureau of Justice.
If a Business Office obtains its registration certificate by means of fraud or bribery or other improper means, its registration shall be revoked by Shanghai Municipal Bureau of Justice.
Article 22 If a Business Office, its principal and staff violate the provisions of the PRC laws, regulations and rules, and of the Administrative Measures in the process of conducting foreign-related arbitrations, Shanghai Municipal Bureau of Justice shall handle it according to law or transfer the case to the relevant authority for handling.
Article 23 Any staff member of Shanghai Municipal Bureau of Justice who violates the provisions of laws, regulations, rules or of the Administrative Measures in the registration and administration of the Business Offices shall be pursued and shall bear legal liability according to law.
Article 24 The“foreign-related arbitration” referenced herein shall mean the arbitration of disputes containing foreign elements as stipulated by the PRC laws.
Article 25 These Administrative Measures shall come into force on January 1, 2020, and shall be valid for three years until December 31, 2022.
References:
[1] The State Council of China issued the General Plan for Lin’gang New Area of China (Shanghai) Pilot Free Trade Zone (中国(上海)自由贸易试验区临港新片区总体方案), Article 4 of which put forward that after registering with the judicial administrative department of the Shanghai Municipal People’s Government and reporting to the judicial administrative department of the State Council for the record, foreign well-known arbitration and dispute settlement institutions shall be allowed to establish business organizations in the new area to conduct arbitration business in respect of civil and commercial disputes arising in the fields of international commerce, maritime affairs and investment; the application and enforcement of interim measures such as property preservation, evidence preservation and act preservation prior to and during the arbitration by both Chinese and foreign parties shall be supported and guaranteed.
Contributors: Xinzhu Li 李欣烛
