China Releases Implementing Rules of the Administrative Regulations on Human Genetic Resources (Draft for Comments)
The People's Republic of China ("PRC") Ministry of Science and Technology ("MOST") issued the Implementing Rules of the Administrative Regulations on Human Genetic Resources (Draft for Comments) (人类遗传资源管理条例实施细则(征求意见稿), "Draft HGR Rules") on 22 March 2022 for public comments. The Draft HGR Rules contain seven chapters and 122 articles, covering the detailed requirements on the collection, preservation, utilisation, international cooperation and cross-border transfer of human genetic resources ("HGR"), as well as provisions regarding the relevant workflow, supervision, inspection and administrative penalties. The Draft HGR Rules intend to provide detailed rules for relevant parties to comply with the Regulation on Human Genetic Resources (人类遗传资源管理条例) which took effect in 2019.
Based on the Draft HGR Rules, HGR includes HGR materials (such as organs, tissues and cells which contain human genomes, genes and other genetic substances) and HGR information generated from the utilisation of HGR materials.
Article 11 of the Draft HGR Rules provide that "foreign parties" are prohibited from collecting, preserving or transferring Chinese HGR to a foreign country or place. If they do need to make use of China's HGR to carry out scientific research activities, they shall cooperate with qualified Chinese partners, which will be subject to review, approval or filing by MOST's HGR Office.
It is noteworthy that the determination of a "foreign party" is not only based on its domicile / place of establishment, but also whether it is established or actually controlled by a foreign organisation or individual. Based on the definition of "actual control" under the Draft HGR Rules, even if a foreign organisation or individual does not hold equity interests in a PRC-domiciled entity, it may still be deemed as a "foreign party" if a foreign organisation or individual can, through contractual arrangements, exert control or decisive influence over its major matters, such as decision-making, operation and management. This means that a PRC-domiciled company adopting the VIE (variable interest entity) structure may be deemed as a foreign entity and cannot avoid the relevant restrictions under the Draft HGR Rules.
We would like to highlight that there are some overlaps between HGR information and "important data" and "personal information" under the PRC Cybersecurity Law, the PRC Data Security Law and the PRC Personal Information Protection Law. Accordingly, any provision of the HGR information to foreign entities shall also be subject to the relevant requirements under such laws and regulations on the cross-border transfer of personal information and important data. However, it is subject to further clarity from the authority whether the cross-border transfer of HGR data needs to fulfil the cross-border data transfer security assessment procedures of both MOST and the Cyberspace Administration of China.
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PRC Supreme People's Court Issues the Interpretations on Relevant Issues Concerning the Application of the PRC Anti-Unfair Competition Law
On 17 March 2022, the PRC Supreme People's Court ("SPC") issued the Interpretations on Relevant Issues Concerning the Application of the PRC Anti-Unfair Competition Law (关于适用《中华人民共和国反不正当竞争法》若干问题的解释, "Judicial Interpretations"), which has come into force on 20 March 2022. It replaces the Interpretations on Relevant Issues Concerning the Application of Law in the Trial of Civil Cases Involving Unfair Competition (关于审理不正当竞争民事案件应用法律若干问题的解释) issued in 2007. The Judicial Interpretations consist of 29 articles, including:
- a further clarification of Article 2 of the PRC Anti-Unfair Competition Law ("AUCL");
- relevant definitions of "business operators" and "business ethics"; and
- detailed provisions about unfair-competition practices such as counterfeiting, false advertising, unfair competition on the Internet and other important issues related to the implementation of the AUCL.
Clarification of Article 2 of the AUCL
Article 2 of the AUCL is a catch-all general clause to regulate various unfair competition acts that are not explicitly stipulated in the AUCL. Clause 1 of the Judicial Interpretations clarifies that Article 2 of the AUCL can apply to an act that "disrupts market competition order, infringes the legitimate rights and interests of other business operators or consumers" but is not listed in Chapter II (Acts of Unfair Competition) of the AUCL or in the provisions of other intellectual property ("IP") laws. This clause distinguishes the circumstances of applying AUCL from other IP laws.
Definition of "Business Operators" and "Business Ethics"
Clause 2 of the Judicial Interpretations defines "other business operators" as entities in the market who may potentially compete for trading opportunities with and cause damage to the competitive advantages of a business operator during production or commercial activities.
Clause 3 of the Judicial Interpretations defines "business ethics" in the AUCL as a code of conduct that is commonly followed and recognised in a specific business field. Clause 3 also stipulates relevant factors to be considered by courts in determining whether a business operator violates business ethics, including the:
- specific circumstances of the case;
- industry rules or commercial practices;
- subjective state of the business operator;
- willingness of the counterparty to choose to enter into the transaction;
- impact on the rights and interests of consumers;
- order of market competition; and
- social public interests.
Recognition of "Imitation and Confusion"
Clauses 4 to 15 of the Judicial Interpretations elaborate on the act of "Imitation and Confusion" (which will lead people to mistakenly believe that certain commodity is another business operator’s commodity or has a specific connection with another business operator) in the AUCL. The clauses cover, among others, the definition, scope and criteria of "signs with certain influence", the exclusion of certain signs from the protection by the AUCL, and the scope of market entities whose names can be protected.
Unfair Competition on the Internet
Clauses 21 and 22 of the Judicial Interpretations further explain and define two kinds of unfair competition acts on the Internet, including forcing a URL forwarding with inserted link without the consent of the user or other business operators, and maliciously interfering with or destroying the network products or services provided by other business operators.
According to a press conference held by the Third Civil Division of the SPC, the issuance of the Judicial Interpretations is a response to the new types of disputes arising from the rapid economic development, the substantial expansion of market entities and the accelerated integration of online and offline markets, and the profound changes of the competitive relationship of business operators. It has great significance for the in-depth implementation of the country's fair competition policy, the improvement of the fair competition system and the promotion of the construction of a high standard market system.
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Draft Regulations on Pop-up Push Notifications
On 2 March 2022, the Cyberspace Administration of China ("CAC") issued the draft Administrative Regulations on Internet Pop-up Push Notifications (互联网弹窗信息推送服务管理规定(征求意见稿) ("Draft Regulations"), signalling the further tightening of regulations on the Internet content in China.
The Draft Regulations apply to the provision of push notification services through operating systems, terminal devices, application software, websites and such other services within the territory of the People's Republic of China. The application scope is broad enough to cover almost all electronic devices that can access the Internet.
With an intention to build a healthy and positive network, the Draft Regulations set out some restrictions on the content of push notifications in Article 5, such as:
- prohibition on illegal and negative information as defined in the Provisions on Governance of Network Information Content Ecology (网络信息内容生态治理规定);
- prohibition on push notifications containing news reports without Internet news information services licenses;
- requiring push notifications containing news reports to adhere to additional rules, including a requirement for the source of news to come from the list of government-approved news sources published by CAC in October 2021;
- prohibition on using algorithm models that violate laws and regulations or violate ethics by inducing users to become addicted and consume excessively;
- prohibition on abusing algorithms to profile minor users and pushing information to minor users that may affect their physical and mental health; and
- push notifications containing advertisements should be conspicuously marked "Advertisement" and can be turned off with one click.
In the event of non-compliance with the Draft Regulations, the push notification service providers will be subject to warnings, fines, suspension of capacity to supply push notification services, and even suspension of business operations.
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Bills of Lading Signed by or on Behalf of the Master – Owner's Bill or Charterer's Bill?
The Supreme People's Court of the People's Republic of China ("PRC Supreme Court") has issued a judgment (2016 Supreme Court Civil Application No. 530) in which it held that a bill of lading issued for and on behalf of the master, but which did not otherwise identify the carrier, should be treated as having been issued on behalf of the time charterers (instead of the owners) of the vessel.
To date, there has not been any PRC decision in which the reasoning in the abovesaid judgment has been applied. While the uncertainty persists, it may be prudent for cargo interests to take steps to ensure that bills of lading in respect of cargoes for import into or expert from China should expressly identify who is the carrier. In the alternative, the bills of lading may include an express governing law and arbitration clause in favour of a jurisdiction where a bill of lading issued by the ship master would typically be viewed as an owners' bill.
For more information, click here to read our Legal Update.
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Draft Law Potentially Lifts Prohibition on Ad Hoc Arbitrations in China
In China, the current Arbitration Law does not recognise the concept of ad hoc arbitration. The current Arbitration Law expressly provides that an arbitration agreement must designate an arbitral institution, failing which it is invalid. However, on 30 July 2021, the Ministry of Justice of the People's Republic of China published the Arbitration Law of the People's Republic of China (Amended Version) (Draft for Comments) ("Draft Arbitration Law") for public consultation. The Draft Arbitration Law introduces for the first time the rules of ad hoc arbitration into the Chinese arbitration regime. Nonetheless, this is not the final version and is subject to further amendments.
In the Draft Arbitration Law, there are three new articles which set out the rules of ad hoc arbitration in Chinese arbitration regime, namely, Articles 91, 92 and 93. According to these articles, the application of ad hoc arbitration in China is limited to disputes that have a foreign element and are commercial in nature. The original arbitral award issued by an ad hoc arbitration tribunal must be submitted to an intermediate people's court for recording purpose. Given that the new rules are very brief and lack details, the parties who wish to refer their disputes to ad hoc arbitration in China should specify as many details as possible in the arbitration agreement, so as to avoid any uncertainty.
Click here to read the full article on Arbitration Asia, Rajah & Tann Asia's website covering insights from our thought leaders across Asia concerning arbitration and other alternative dispute resolution mechanisms, ranging from legal and case law developments to market updates and many more.
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Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only
intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.