Judicial direction regarding dormant investment in FIEs

Investors have recently paid much attention to the issue of dormant investments following publication of a new judicial direction – Provisions of the Supreme Court of China Regarding Several Issues of Dispute Involving Foreign-Invested Enterprises (I) (the Provisions) – on August 5 2010. It is the first time in China that the authorities have specified the rules on dispute resolution towards dormant investments in foreign-invested enterprises (the FIEs). Neither the PRC Company Act 2005 nor related regulations on FIEs expressly clarified dormant investments in the field of foreign investment, although the issue has been there for a long period.