Handling foreign investment disputes
Last year, the PRC Supreme People’s Court adopted a consistent approach to conflicts involving the establishment and modification of foreign-invested enterprises. However, uncertainties remain on various issues of remedies and dormant shareholders
Issue: March 2011
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O'Melveny
Supreme People's Court
foreign investment
disputes
The Provisions on Several Issues Concerning the Trial of Disputes Involving Foreign-invested Enterprises (I) ( 关于审理外商投资企业纠纷案件若干问题的规定（一）) (the Provisions), which took effect on August 16 2010, reflects the Supreme People’s Court’s endeavour to make consistent rules for disputes involving foreign-invested enterprises (FIEs). The Provisions address issues concerning disputes arising during the course of the establishment and modification of FIEs, which basically include three aspects: the validity of contracts subject to approval by administrative authorities, remedies for the transferee under the equity transfer situation, and disputes concerning dormant investments.
Specific performance for submitting for approval clause and monetary remedies
i) The remedy of specific performance
Article 1 of the Provisions stipulates that if a contract is subject to relevant authorities’ approval but it has not been approved, such contract should be determined to be formed but not yet entered into effect. The people’s court will reject a party’s request to...
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