CHINA

China Publishes Draft Regulation on Standard Contract for Exporting Personal Information

On 30 June 2022, the Cyberspace Administration of China ("CAC") released for public comments the draft Regulations on Standard Contract for the Export of Personal Information ("Draft Regulation"), which incorporates a template for the Standard Contract for the Export of Personal Information ("Standard Contract"). The public consultation closes on 29 July 2022.

The Draft Regulation supplements Clause 38 of the Personal Information Protection Law ("PIPL") which requires a personal information processor ("PI Processor") to meet one of the three conditions before exporting personal information outside China which, includes the "signing [of] the standard contract formulated by the CAC with the overseas recipient".

Only a PI Processor who satisfies all of the following conditions may use the method of signing Standard Contract to export personal information:

1. He is not a critical information infrastructure operator.
2. He processes personal information of less than one million people.
3. He has exported personal information of fewer than 100,000 people since 1 January of the previous year.
4. He has exported sensitive personal information of fewer than 10,000 people since 1 January of the previous year.

If the above provision is read together with Clause 4 of the Data Export Security Assessment Measures issued by CAC on 7 July 2022, it can be construed that if a PI Processor does not satisfy any one of the above conditions, he shall go through the CAC security assessment procedures. 

The Draft Regulation mandates PI Processors to conduct a Personal Information Protection Impact Assessment ("PIPIA") before exporting the personal information, consistent with the requirements set out in Clauses 55 and 56 of the PIPL. In addition, PI Processors are required to assess the personal information protection policy and legislation of the country of the overseas recipients, and their impact on the enforceability of the Standard Contract. The PI Processors must file the signed Standard Contract and its corresponding PIPIA report with the local department of CAC within 10 working days from the effective date of the Standard Contract.

The Draft Regulation, together with the PIPL and its recent implementing rules, shows China's determination to enhance the protection of personal information. Notably, the newly-introduced filing requirement may significantly increase the burden on PI Processors, especially for multinational companies with globally-centralised systems.

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China Issues Specification for Security Certification of Cross-Border Processing of Personal Information

On 24 June 2022, China's National Information Security Standardization Technical Committee (TC260) released the Practice Guide for Cybersecurity Standards – Security Certification Specification for Cross-Border Processing Activities of Personal Information (网络安全标准实践指南—个人信息跨境处理活动安全认证规范, "Certification Specification"), which took effect immediately. The Certification Specification provides a basis for the implementation of personal information protection certification, which is one of the four cross-border transfer mechanisms permitted under Article 38 of China's Personal Information Protection Law ("PIPL"). 

Scope of Application. The security certification will not be applicable for all types of cross-border transfer of personal information. Instead, it is only applicable to (i) intra-group personal information processing activities within one multinational company, between subsidiaries of one business entity, or between affiliates; and (ii) offshore processing activities subject to extra-territorial jurisdiction of the PIPL (paragraph 2 of Article 3 of the PIPL). 

Applicant for Certification. The Chinese entity involved in intra-group cross-border processing, or the domestic institution or the representative established or appointed by the offshore personal information processor as required by the PIPL, may apply for the certification and will be liable for the relevant cross-border transfer activities. 

Criteria of Certification. The Certification Specification sets out the basic requirements for the following criteria for granting the certification:

1. Binding agreements between the exporters and importers of personal information;
2. Appointment of a data protection officer, establishment of a data protection organisation and compliance with the rules for cross-border processing of personal information;
3. Data protection impact assessments; and
4. Data subject rights and responsibilities of data exporters and data importers.

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China Eases Restrictions on Foreign Investment in Telecom Sector

The State Council of the PRC has issued the Decision of the State Council on Revising and Repealing Certain Administrative Regulations (国务院关于修改和废止部分行政法规的决定) ("Decision"), which came into effect on 1 May 2022.  The Decision revised the Administrative Provisions on Foreign-Invested Telecommunications Enterprises (2016 Revision) (外商投资电信企业管理规定) ("Provisions on FITE 2016") to lift relevant requirements imposed on foreign investment in the telecom sector in China. Some of the key amendments are set out below. 

1. The Provisions on FITE 2016 required that the main foreign investor should have "good track record and operational experience", meaning that holding companies or financial investors which have not participated in the operation of telecom businesses might not be eligible to invest in such industry. The Decision has since removed this track record requirement, reducing barriers for foreign investment and further expanding the opening of China's telecom sector.
2. The cap of foreign ownership ratio in an FITE operating basic telecom services ("BTS") (except radio paging services) remains at 49% and the cap of foreign ownership ratio in an FITE operating value-added services (including the radio paging business in BTS) remains at 50%. However, the Decision adds an exception to allow the State to adjust these ratios, providing a legal basis for the Government to further relax and lift the foreign ownership ratio cap.
3. The Decision has simplified the procedure for obtaining a licence for telecom business and shortened the Government's processing time for granting a license for telecom business.

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Draft Law Makes Substantive Amendments to the Rules in Connection with Interim Measures in Arbitration

Under the current law in China, the power to grant interim measures (known as "preservation measures") is vested in the courts. A party seeking preservation measures must submit an application to the arbitral institution, not the tribunal, and if the institution is of the view that the application should be allowed, it shall then forward the application to the appropriate court for final decision. A party seeking pre-arbitration preservation measures must submit an application to the appropriate court directly.

On 30 July 2021, the Arbitration Law of the People’s Republic of China (Amended Version) (Draft for Comments) (“Draft Arbitration Law”) was published for public consultation. The Draft Arbitration Law proposes substantive amendments to the current regime concerning interim measures in arbitration and introduces, for the first time, the regime of “emergency arbitrators”.

Under the Draft Arbitration Law, for arbitrations seated in China, arbitral tribunals for both institutional and ad hoc arbitrations are, for the first time, given the power to order interim measures upon application by a party to the arbitration. However, this new rule does not affect a party’s right to apply to the court for preservation measures.

The Draft Arbitration Law also provides that prior to the constitution of the tribunal, the parties may appoint an emergency arbitrator "in accordance with the arbitration rules" to grant interim measures.

In addition, the Draft Arbitration Law provides that a tribunal may issue "behaviour preservation measures" as a form of interim measure. In practice, the Chinese courts have rarely issued such orders to prohibit parties from continuing with foreign actions. It remains to be seen whether tribunals will show a more positive attitude towards issuing the equivalent of an anti-suit injunction order.

We look forward to seeing the final version of the Draft Arbitration Law.

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