Processing FIE Complaints

Complaint processing procedure

Before processing a complaint, MOFCOM requires the Complainants to meet the following conditions, by clearly: stating the request for complaint and specifying its objectives; establishing actual reasons for the complaint; including facts, reasons and relevant evidence of the case, and ensuring that the complaint falls within the scope of the complaint categories outlined in the Measures.

The government bodies handling the complaints are the National FIE Complaint Centre (Complaint Centre) and its local branches. In addition, MOFCOM's FIE Complaint Coordination Office oversees the coordination of complaint cases nationally and multilateral cases submitted by the Complaint Centre that require ministerial-level joint coordination.

According to the Measures, the complaints against an administrative authority must be submitted in writing in Chinese. The agencies must notify the Complainants within five days of receipt whether their complaints have been accepted. All accepted cases should be resolved within 30 days, except for those that involved complex facts or are unable to proceed because of a lack of cooperation among the involved parties, or other legitimate reasons.

The agency handling the complaint will issue a written suggestion to the Complainants and the government authority involved and coordinate with the relevant government authority, or transfer the case to a local complaint center or another relevant government authority.

Effectiveness of the Measures

Several provisions of the Measures call into question their practical effectiveness in addressing complaints.

The first issue concerns the authorities handling the complaints. These authorities are Complaint Centres under MOFCOM. Jurisdictional problems may arise in the event of complaints against government departments such as the State Administration of Taxation (SAT), the State Administration of Industry and Commerce (SAIC) and the General Administration of Customs (GAC), which have comparable levels of authority to that of MOFCOM. It is doubtful that Complaint Centres would have jurisdiction over such parallel entities, thus making the outcome of the complaint process difficult to enforce.

Another major issue is that the procedures for handling complaints lack mechanisms for enforcement and monitoring, without which the complaint procedure is effectively rendered worthless. According to the Measures, the FIE complaint centres may resolve complaints in three ways: (i) by issuing written suggestions; (ii) by "coordinating with government authorities", or (iii) by transferring the cases to relevant government departments. By issuance of written suggestions, the Measures do not specify how the Complainants can enforce the written suggestions or whether they will have a binding force over the involved government authorities. With respect to the "coordinating with government authorities" method, the Measures do not provide a timeline or mechanism for coordination. These omissions could subject the coordination process to endless delays. Moreover, the Measures do not explain clearly the follow-up procedure for the coordination and transfer of cases. Therefore, it is unclear which department should be responsible for obtaining a definitive result for the complaint.

Further, the Measures do not specify what specific damages the Complaint Centres may grant to the Complainants. This means that if a complainant wants to recover damages incurred from the acts of government departments it will have to resort to arbitration or litigation.

Interestingly, the Measures state that the procedural process for dealing with a complaint will be considered concluded if a case is submitted to arbitration, litigation or administrative review. Complainants may thus have to choose between formal dispute settlement mechanisms and the complaint processing procedure. Given its apparent lack of viable enforcement mechanisms, the new complaint processing procedure is unlikely to displace the traditional dispute settlement mechanisms as the primary route for FIEs and foreign investors to address their grievances against governmental authorities.

To implement the Measures effectively, two main issues need to be addressed. First, in order to properly coordinate among different government departments, the Complaint Centres should be established jointly by the various key government departments that have authority over the establishment and operations of FIEs. Second, the Measures should state clearly whether other government departments would be obliged to comply with the recommendations made pursuant to the process and what remedies Complainants may have if they fail to do so. Otherwise, the complaint processing procedure will be relegated to serving merely as a coordinating mechanism, without being able to effectively address unauthorized incursions on an FIE's rights.