What is the Application Scope of Provisions Concerning the Trial of Disputes Over Foreign-Invested Enterprise Case?

2020/1/8

Many foreigners invest in China and find it difficult to understand the scope of Chinese law. The application of wrong laws will bring great trouble to the investment behavior of foreigners. In legal consultation, we find that the most common questions about the application scope of the law are about Provisions Concerning the Trial of Disputes Over Foreign-invested Enterprise Case. Is this regulation applicable to all kinds of foreign investment disputes? 

Actually it is not. This regulation is only applicable to the disputes over three types of foreign investment enterprises: the first is the Sino-foreign equity joint venture (simply called “EJV”), the second is the Sino-foreign cooperative joint venture (simply called “CJV”) and the third is the wholly foreign-owned enterprise (simply called “WFOE”), but not applicable to the disputes over foreign-invested joint stock company, foreign individually-owned business and foreign-invested partnership enterprise, even not applicable to other form of foreign investment, such as foreign-invested BOT and M&A of Domestic Enterprise by Foreign Investors and so on. All kinds of enterprises to be invested by foreign investor are called FIE collectively. In a word, this regulation is applicable for the dispute of FIE contract.

With the implementation of the foreign investment law, there will be more judicial interpretations and related laws in the future. We suggest that foreign investors should consult the Chinese lawyer before entering China, in order to master the relevant Chinese laws roughly, or employ Chinese lawyers for their investment behavior.