Administration of Foreign Enterprises Engaging in Construction Project Design Activities in the People's Republic of China Tentative Provisions

(Promulgated by the Ministry of Construction on May 10 2004 and effective 30 days after the date of promulgation.)

Article 1: These Provisions are formulated in accordance with the PRC Construction Law, Administration of Construction Survey and Design Regulations, Administration of the Quality of Construction Works Regulations, Invitation and Submission of Bids for Survey and Design of Construction Projects Procedures and other laws, regulations and rules, in order to standardize the administration of foreign enterprises engaging in construction project design activities in the People's Republic of China.

Article 2: For the purposes of these Provisions, “foreign enterprises” means enterprises registered outside of the People's Republic of China and engaged in construction project design activities.

Article 3: Foreign enterprises that provide construction project design services within the People's Republic of China, such as drawing up construction project preliminary design documents (basic designs) or working drawing design documents (detailed designs) by means of cross-border delivery, shall abide by these Provisions.

These Provisions shall not apply to the provision of design plans prior to the provision of construction project preliminary designs (basic designs).

Article 4: A foreign enterprise undertaking construction project design works in the People's Republic of China must select at least one Chinese design enterprise that possesses the construction project design qualification granted by the administrative department in charge of construction (hereafter, Chinese Design Enterprise) to engage in Sino-foreign cooperative design (hereafter, Cooperative Design), and undertake design business within the scope of the qualification permit of the selected Chinese Design Enterprise.

Article 5: The project design contract for a Cooperative Design project shall be entered into by the Chinese Design Enterprise of the Cooperative Design project or jointly entered into by both the Chinese and foreign design enterprises with the construction work unit. The contract shall define the rights and obligations of each party. A project design contract shall be in the Chinese language.

Article 6: A construction work unit shall be responsible for the preliminary examination of qualifications respecting whether a foreign enterprise possesses the design capability, and only foreign enterprises meeting conditions of the preliminary examination of qualifications may participate in Cooperative Design works.

Article 7: When a construction work unit undertakes a preliminary examination of design qualifications of a foreign enterprise, it may require the foreign enterprise to provide the following valid evidentiary materials that satisfy the needs of a construction project, the evidentiary materials are required to be submitted in both the official language of the country in which the foreign enterprise is located as well as in a Chinese translation:

(1) an enterprise registration certificate issued, after approval, by the competent government department from the country in which the enterprise is located;

(2) a certificate of creditworthiness and the enterprise insurance certificate issued by a financial institution of the country in which the enterprise is located;

(3) a document proving the enterprise's project design performance issued by the competent government department or relevant industry organization or notary office of the country in which the enterprise is located;

(4) a design permit issued, after approval, by the competent government department or relevant industry organization of the country in which the enterprise is located;

(5) a certificate authenticating the quality standard of IS09000 series, issued by an international institution;

(6) résumés, identification certificates, certificates for the highest level of education and practice registration certificates for all technical personnel participating in the Chinese design project;

(7) a letter of intent for the undertaking of Cooperative Design works with a Chinese Design Enterprise; and

(8) other relevant materials.

Article 8: When a foreign enterprise along with its selected Chinese Design Enterprise undertakes a Cooperative Design work, they must enter into a Cooperative Design agreement in accordance with relevant Chinese laws and regulations. The agreement shall define the rights and obligations of each party and shall have a Chinese language version.

The Cooperative Design agreement shall include the following:

(1) enterprise names, places of registration, as well as names, nationalities, identification certificate registration numbers, domiciles and contact information for the enterprise legal representatives, of each party to the Cooperative Design;

(2) name, location and scale of the construction project;

(3) scope, term and method of the Cooperative Design, as well as requirements respecting content, depth, quality and schedule for the completion of the design;

(4) division of tasks, rights and obligations of the design between parties to the Cooperative Design;

(5) fee structure, distribution method and tax payment liability with respect to undertaking the Cooperative Design;

(6) liability for breach of the agreement and settlement measures in case a dispute arises relating to the agreement;

(7) conditions for effecting the agreement as well as the date and location upon entering into the agreement; and

(8) other matters agreed to by the parties.

Article 9: The project design contract (duplicate), the Cooperative Design agreement (duplicate) and other materials (copies) as stipulated in Article 7 hereof shall be submitted to the provincial administrative department in charge of construction at the place where the project is located for the record.

Article 10: A foreign design enterprise undertaking construction project design works in China must meet the mandatory standards for construction works issued by the Chinese government as well as requirements provided on the drawing up of construction design documents.

In instances in which there are no corresponding mandatory standards for construction works, it shall undertake construction design works in accordance with Article 5 of the Supervision of the Implementation of Mandatory Standards for Construction Works Provisions (Order No. 81 of the Ministry of Construction).

Article 11: In accordance with the PRC Construction Law, PRC Urban Planning Law and other relevant laws and regulations, Sino-foreign cooperative design documents that are required to be submitted to relevant departments of the Chinese government for examination must meet the following requirements:

(1) provision of Chinese language versions;

(2) conformity with PRC provisions related to drawing up construction project design documents;

(3) adoption of PRC statutory measures units;

(4) project name and enterprise names of the parties to the cooperative project shall be indicated on the front cover of the preliminary design document (basic design); enterprise names and names, signatures and seals of legal representatives, main persons in charge of technology and persons in charge of the project of the parties to the cooperative project, shall be indicated on the first page;

(5) the signature of the working drawing design (detailed design) shall indicate the enterprise names of the parties to the Cooperative Design and shall include the signatures of the design personnel of the project, other matters shall be handled in accordance with PRC provisions related to project design document drawings;

(6) a preliminary design (basic design) document and working drawing design (detailed design) document shall be examined and confirmed, and signed and fixed with a seal, by an architect or engineer registered in China, or a person who possesses the registered practice qualification, and will only take effect after it is fixed with the official seal of the Chinese Design Enterprise;

In the case of a profession where the registered practice system for project designs has not been implemented, a design document shall be examined, confirmed and signed by the person in charge of the professional technology in the Chinese Design Enterprise, and only take effect after fixed with the official seal of the Chinese Design Enterprise.

Article 12: When undertaking construction project design works in China, foreign design enterprises shall charge design fees in accordance with Chinese design fee standards, and shall pay taxes to the Chinese government in accordance with relevant laws of China.

With respect to a design document provided by a foreign enterprise and required to be examined and signed with a confirmation opinion by a Chinese Design Enterprise in accordance with state standards, fees for examination and confirmation shall be determined by both parties through consultation and in accordance with the international general practice or the volume of work actually involved.

Article 13: Design institutions from the Hong Kong and Macao Special Administrative Regions and the Taiwan region engaging in construction project design activities in Mainland China shall, mutatis mutandis, be handled in accordance with these Provisions.

Article 14: Foreign enterprises violating these Provisions shall be punished by relevant departments of the Chinese government in accordance with relevant laws, regulations and rules, and their records of violation shall be published in the relevant media as well as reported to the governments and relevant industrial organizations in the countries where they are located.

Article 15: Foreign enterprises shall be prohibited from participating in design works related to confidential projects, emergency and relief projects, as well as other projects that China has not yet made any commitment to open to foreign investment.

Article 16: These Provisions shall take effect 30 days from the date of promulgation.

1 Translation provided by Freshfields Bruckhaus Deringer.