Interpretation on Several Issues Concerning the Application of the «PRC Law on the Application of Laws to Foreign-related Civil Relationships» (1)

(Promulgated by the Supreme People's Court on December 28 2012 and effective as of January 7 2013.)

Judicial Interpretation [2012] No.24

Pursuant to the PRC Law on the Application of Laws to Foreign-related Civil Relationships (the Law), the following interpretation on issues relevant to the application of the Law by people's courts are given in order to correctly try foreign-related civil cases:

Article 1: A people's court may find a civil relationship to be a foreign-related civil relationship if:

(1) either or both parties is/are (a) citizen(s), legal person(s) or other organisation(s), of a foreign country or stateless person(s);

(2) the normal place of residence of either or both parties is located outside the territory of the People's Republic of China;

(3) the subject matter is located outside the territory of the People's Republic of China;

(4) the legal fact that gives rise to, changes or extinguishes the civil relationship occurs outside the territory of the People's Republic of China; or

(5) another circumstance that can be found to be a foreign-related civil relationship applies.

Article 2: For a foreign-related civil relationship that arose prior to the implementation of the Law, the people's court shall determine the applicable laws pursuant to the relevant laws at the time the foreign-related civil relationship arose; if the laws of such time are silent on the issue, the people's court may make its determination with reference to the Law.

Article 3: Where there is a discrepancy between the Law and other laws on the application of laws to the same foreign-related civil relationship, the Law shall prevail, except in the case of the special provisions of the PRC Negotiable Instruments Law, the PRC Maritime Law, the PRC Civil Aviation Law and other such laws in the commercial field, or the special provisions of laws in the intellectual property field.

If the Law is silent on the application of laws to a foreign-related civil relationship and another law provides for the same, the provisions of the other law shall apply.

Article 4: If the application of laws to a foreign-related civil relationship involves the application of an international treaty, the people's court shall apply the same pursuant to the second paragraph of Article 142 of the PRC General Principles of the Civil Law, and the first paragraph of Article 95 of the PRC Negotiable Instruments Law, the first paragraph of Article 268 of the PRC Maritime Law, the first paragraph of Article 184 of the PRC Civil Aviation Law or other such provisions of laws, with the exception of international treaties in the intellectual property field that have been or need to be converted into domestic laws.

Article 5: If the application of laws to a foreign-related civil relationship involves the application of international practice, the people's court shall apply the same pursuant to the third paragraph of Article 142 of the PRC General Principles of the Civil Law, and the second paragraph of Article 95 of the PRC Negotiable Instruments Law, the second paragraph of Article 268 of the PRC Maritime Law, the second paragraph of Article 184 of the PRC Civil Aviation Law or other such provisions of laws.

Article 6: If the laws of the People's Republic of China do not expressly provide that parties may select the laws applicable to a foreign-related civil relationship and such parties make such a selection, the people's court shall find such selection to be invalid.

Article 7: If a party asserts that, on the grounds that there is no actual connection between the laws that the parties agreed to select and the foreign-related civil relationship in question, the selection made is invalid, the people's court shall reject such assertion.

Article 8: If the parties reach agreement on selecting or changing their selection of the applicable laws before the conclusion of arguments in the court of first instance, the people's court shall permit the same.

If the parties cite the laws of the same country and neither raises objections to the laws applied, the people's court may find that the parties have selected the laws applicable to their foreign-related civil relationship.

Article 9: If the parties cite in their contract an international treaty that has yet to enter into effect in the People's Republic of China, the people's court may determine the rights and obligations between the parties based on the provisions of said international treaty, unless the same violates the public interest in the People's Republic of China or the mandatory provisions of a law or a set of administrative regulations of the People's Republic of China.

Article 10: In any of the circumstances set forth below, if the provisions of a law or a set of administrative regulations involve the public interest in the People's Republic of China, applicability thereof may not be dispensed with by the parties through agreement, and they are directly applicable to a foreign-related civil relationship without recourse to the guidelines on conflict of laws, the people's court shall find them to be mandatory provisions as specified in Article 4 of the Law:

(1) protection of the rights and interests of workers is involved;

(2) food or public health and safety is involved;

(3) environmental safety is involved;

(4) financial security, such as foreign exchange control, is involved;

(5) anti-monopoly or anti-dumping is involved; or

(6) another circumstance where determination of a mandatory provision is called for applies.

Article 11: If a party deliberately creates a foreign-related civil relationship link to circumvent mandatory provisions of the laws and administrative regulations of the People's Republic of China, the people's court shall find that the validity of the applicability of foreign laws did not occur.

Article 12: Where the resolution of a foreign-related civil dispute is contingent on the confirmation of another foreign-related civil relationship, the people's court shall determine the laws that are applicable based on the nature of the predetermination issue itself.

Article 13: Where a case involves two or more foreign-related civil relationships, the people's court shall respectively determine the laws applicable to each.

Article 14: Where the parties have neither selected the laws governing a foreign-related arbitration agreement, nor specified the arbitration institution or place of arbitration, or their stipulations thereon are unclear, the people's court may apply the laws of the People's Republic of China in determining the validity of the arbitration agreement.

Article 15: The people's court may determine that the place where a natural person had been resident for at least one year and that had served as the centre of his/her life at the time a foreign-related civil relationship arose, changed or ended is the normal place of residence of a natural person as specified in the Law, except where the same is due to seeking medical treatment, performance of temporary work, official business, etc.

Article 16: A people's court shall determine that the place where a foreign legal person is established and registered is the place of registration of a legal person as specified in the Law.

Article 17: If a people's court is unable to obtain a foreign law by reasonable means such as provision by the parties, means specified in an international treaty that is effective in the People's Republic of China or provision by a Chinese or foreign legal expert, it may render a finding that the foreign law could not be consulted.

Pursuant to the first paragraph of Article 10 of the Law, a party is required to provide the foreign law, and if such party fails to provide the foreign law by the reasonable deadline specified by the people's court without a legitimate reason, the people's court may render a finding that the foreign law could not be consulted.

Article 18: The people's court shall listen to the opinions of the parties on the contents of the applicable foreign law and the understanding and application thereof. If the parties have no objections to the contents of the foreign law or the understanding or application thereof, the people's court may give its confirmation; if a party has an objection, the people's court shall conduct a review and render a finding.

Article 19: For issues concerning the application of laws to civil relationships involving the Hong Kong Special Administrative Region or Macao Special Administrative Region, these provisions shall apply mutatis mutandis.

Article 20: The Interpretation shall apply to foreign-related civil dispute cases that arose after the implementation of the Law, but have not reached final judgment after the implementation hereof. In cases where a final judgment was rendered prior to the implementation hereof and a party applies for retrial or a decision is made in accordance with the procedure for adjudication supervision to retry the case, the Interpretation shall not apply.

Article 21: In the event of a discrepancy between the Interpretation and judicial interpretations previously promulgated by this Court, the Interpretation shall prevail.