Clearing up the Law: China's New Judicial Interpretation on the Sale of Commercial Premises

By Jiang Jiang and Zhu Yan Li Wen and Partners, Beijing

On April 28 2003, China's Supreme People's Court released the Several Issues Concerning the Application of Law to Trial of Disputes over Commodity Premises Sales and Purchase Contracts Interpretation(关于审理商品房买卖合同纠纷案件适用法律若干问题的解释) (the Interpretation), which is effective June 1 2003.

The release of the new Interpretation has attracted immediate public attention. Many applaud it as the latest step in China's ongoing efforts to foster growth of a healthy real estate market. With the rapid growth in recent years of the real estate industry in China, a large number of laws and regulations governing commercial real estate transactions have been adopted or amended, and considerable administrative and judicial efforts have been made to counter malpractice and irregularities in the market. Nevertheless, disputes related to the purchase of commercial properties have been on the rise. Despite hundreds of central and local statutes adopted to administer real estate development activities, many loopholes and ambiguities remain in the present legal regime governing real estate. It is against this background that the Interpretation has been promulgated.