China issues judicial interpretation to better protect foreign investors' interests

BEIJING -- China's Supreme People's Court (SPC) on Dec 27 issued a judicial interpretation applicable to the Foreign Investment Law, aiming to better protect the legitimate rights and interests of foreign investors in the country.

People's courts around the country will not support contracted parties who claim that investment contracts formed in areas not on China's negative list of foreign investment are void because the contracts have not been approved or registered by administrative authorities, according to the interpretation.

Investment contracts formed in areas where foreign investment is restricted by the negative list can still take effect as long as the parties concerned take necessary corrective measures before courts make effective judgments, said Luo Dongchuan, vice president of the SPC.

Investment contracts that did not meet the requirements of the negative list when they were signed can still be deemed effective if the negative list loosens restrictions before court judgments take effect, said Luo.

"These designs are aimed at guaranteeing the legitimate rights and interests of investors to the largest extent under the prerequisite of safeguarding the stability of foreign capital management," he said.

The interpretation will take effect on Jan. 1, 2020.

The SPC on Friday also issued guidelines for courts around the country to provide judicial services and guarantees for Belt and Road (B&R) construction and the Lingang area, a newly launched section of the Shanghai pilot free-trade zone.

Regarding B&R construction, the guideline asked courts to advance the building of a rules-based business environment governed by the rule of law, further improve the legal mechanisms and rules for handling cases relating to the B&R, continuously innovate the international commercial dispute settlement mechanism, and strengthen the credibility of the China International Commercial Court.

The other guideline specifies tasks and requirements for courts to serve and guarantee the construction of the Lingang area, improve the diversified dispute settlement system and create a business environment based on the rule of law to facilitate investment and trade liberalization in the new section of the Shanghai pilot free trade zone.