On September 29, 2013, the China (Shanghai) Pilot Free Trade Zone (FTZ) was established in the Pudong New Area, covering 120,72 km 2 . It is a regional free trade zone founded by the government of China. By the end of 2019, (i) more than 12.000 foreign-invested enterprises had been established in the FTZ, and (ii) more than 2.800 overseas investment projects had been completed, with investment exceeding US$90.000 billion. by China.
Recently, on September 21, 2022, the Main People's Court of Pudong New Area of Shanghai Municipality ("Shanghai Pudong Court") published the document "White Paper on Commercial Trials of Foreign and Foreign-Equited Enterprises" », which collects key information on the commercial lawsuits in which foreign-related companies and companies with foreign capital have been involved since the publication of the «Opinions of the Central Committee of the PCC and the State Council on support for the reform of high-level and the opening of the Pudong New Area and the construction of Pudong as a pioneer area for socialist modernization" in July 2022.
From August 2021 to July 2022, the Shanghai Pudong Court has admitted 1.301 cases involving foreign-invested and foreign-related companies (excluding intellectual property and financial cases) and resolved 1.305. The White Paper reveals the following:
- 361 foreign entities had been involved in the litigation accepted by the Court that year, among which the number of companies with totally foreign capital (54,59%) was slightly higher than that of companies with mixed capital (45,41%). .
- The litigation involved nationals from more than 20 countries and regions, with the United States and the United Kingdom standing out in number, although a growing impact can be seen from the countries that are part of the "Belt and Road Initiative" (or New Road). Silk) and the member states of the Regional Comprehensive Economic Partnership (RCEP).
- The three most important commercial matters are those relating to goods, services and processing, which give rise, for example, to claims on sales contracts, service contracts and processing contracts.
- The number of cases resolved through mediation, and/or withdrawn after its development, was greater than the number of cases resolved through trial.
The cases analyzed in the White Paper show the following trends:
Trade disputes are increasing regarding innovative industrial groups, such as new electric vehicles, mobile energy, semiconductor chips and technology related to Artificial Intelligence
Different types of disputes arise regarding the internal management of companies: investments, validity of shareholders' or board of directors' agreements, mergers, spin-offs and withdrawal of companies, and disputes between investors.
Litigation over equity incentives is increasing considerably, arising over the legal nature, understanding, application and determination of the value of such incentives;
Litigations related to new business models within the framework of the digital economy are increasing.
The Digital Economy gives rise to the emergence of numerous new business models, such as digital marketing, advertising in new media, online education and training, commissioning of account operations, promotion of traffic customers through e-commerce, etc. Since no optimized rules have been established in this area, the Shanghai Pudong Court listed some key issues for the resolution of disputes in this field: determining the validity of new types of contractual clauses, such as "exclusive agent", "means of exclusive communication", "non-competition", "valuation adjustment mechanism"; convert the digital result into consideration and distinguish the real effect of traffic in the virtual world, etc.
Together with the White Paper, 7 typical cases were published involving issues such as the application of foreign laws to determine the validity of the arbitration clause, the application of international conventions on assistance to foreign courts for investigation and the collection of evidence , and determining the legal attributes of pro forma invoices in cross-border trade, etc., which, on the one hand, allows the public to get an idea of foreign-related disputes accepted by the Shanghai Pudong Court, and, On the other hand, they are cases that have a certain reference value for future similar litigation.
Author Dan liu
Visit our web page
