6379141150176296315678646.pdf

l  Our Firm’s Activities

Consultation on employment policies and events of force majeure in connection with COVID-19 lockdown

l  Latest Issues of General Concern

The “Catalogue of Encouraged Industries for Foreign Investment”, 2022 Edition is being revised

l  New Law Express

The Shanghai Notary Association announced the 'Notification on Issuing Event of Force Majeure Factual Notarization for Enterprises Related to ' Corona Virus Disease 2019 ' and the Resumption of Work and Production Notarization”

【Our Firm’s Activities】

Consultation on employment policies and event of force majeure 

in connection with COVID-19 lockdown

As we are all aware that COVID-19 has been affecting not only the production and business activities of many enterprises but also the daily livings of individuals in Shanghai. On the legal issues caused by or in connection with the prevailing pandemic, a series of related research have been conducted by us, which summarize and analyze the difficulties and crises encountered by enterprises and individuals, as well as providing consulting services relevant to these legal issues.

I. As Regards Employment policies

In light of the pandemic prevention and control situation in Shanghai and the specific characteristics relevant to labor relations, the Shanghai High People's Court and the Shanghai Human Resources and Social Security Bureau jointly formulated the “Answer to Various Questions on the Handling of Labor Disputes Related to Pandemic”, which clarifies the principles and specific provisions on the handling of labour disputes in a balanced and stable manner. Our advice for our clients in this regards is as follows:

Q: In view of the pandemic, how could the limitation period of arbitration or prosecution of labor and employment disputes be determined? What should the parties do if they could not normally participate in relevant arbitration or litigation proceedings?

A: According to the relevant provisions of the “Labor Dispute Mediation and Arbitration Law of the People's Republic of China”, the” Civil Procedure Law of the People's Republic of China”, and the ”Emergency Response Law of the People's Republic of China”, if the parties failed to apply for labor and employment dispute arbitration or filed a lawsuit within the limitation period due to the impact of the pandemic, the parties may invoke the relevant provision in the Law to the effect that the limitation period for arbitration would suspend to run and that the time during the affected period would not be counted towards the limitation period for prosecution and arbitration. If the parties failed to participate in arbitration or litigation proceedings due to the pandemic, the provisions on the suspension of arbitration or litigation procedures may be applied in accordance with the law, except as otherwise provided in other regulation.

Brief Comment: A party which demonstrates that its failure to apply for arbitration due to an event of force majeure or other objective reasons during the limitation period for arbitration application, and that the people's court consequentially determined that the period for arbitration application be suspended, the subject limitation period for arbitration application shall resume to run on the day in which the reason for the suspension extinguished. Accordingly, it is advisable for parties to pay due attention to claiming their rights in a timely manner.

Q: During the pandemic prevention and control period, can an employer terminate the labor contract in the event that its employee is being pursued for criminal liability or is subject to administrative punishment such as public security detention for failing to cooperate with the government's pandemic prevention and control measures?

A: During the pandemic prevention and control period, if an employee is pursued for criminal liability for reason of not cooperating with the pandemic prevention and control measures imposed by government, his/her employer may terminate the labor contract pursuant to Article 39(6) of the “Labor Contract Law of the People's Republic of China”. If an employee is subject to administrative punishment such as public security detention due to his/her failure to cooperate with the prevention and control measures of the government department, the employer may terminate the labor contract in accordance with the provisions of the rules and regulations formulated according to law.

Brief comment: in order to terminate the labor contract relationship effectively based on the provisions of the Labor Contract Law for reason that the subject employee is being held criminally responsible for not cooperating with the government's pandemic prevention and control measures, it is advisable for an employer to formulate a relevant management system stipulating specifically that such reason would constitute a cause for termination.

II. Applicability of an Event of Force Majeure 

By invoking a contractual force majeure provision, an affected party could be relieved of its legal liability in part or in whole, in accordance with Articles 180 and 590 of the Civil Code of the People's Republic of China. In order to successfully invoke a contractual force majeure provision, an affected party should pay attention to the following points. First, an event of force majeure should satisfy the elements of unforeseeably, unavoidably and insurmountably. Second, if either party is unable to perform the contract due to an event force majeure, it shall timely notify the unaffected party, actively take actions to mitigate the loss of the unaffected party, and to provide relevant evidence within a reasonable period of time. Third, the liability so relieved for cause of an event of force majeure shall be in line with the principle of fairness, and both parties shall fully communicate and negotiate to smoothly perform the original agreement, and to apportion the responsibility equally if an agreement could not be reached.

In addition, we also provide legal advice and litigation supporting services to our clients in relation to property disputes due to pandemic effect. We will do our utmost best to preserve the quality of living of our individual clients and to assist our corporate clients to smoothly resume their production and operation.

【Latest Issues of General Concern】

The “Catalogue of Encouraged Industries for Foreign Investment”, 2022 Edition is being revised

Pursuant to the Foreign Investment Law and the Regulations on the Implementation of the Foreign Investment Law, China has formulated a catalogue of encouraged industries for foreign investment with an objective of meeting national economic and social development need. The catalogue, purports to list out and guide foreign investors to invest on specific industries, fields and regions that are encouraged by the State for foreign investment. The current Catalogue is the 2020 edition.

In accordance with the spirit of President Xi Jinping's speech at the opening ceremony of the Fourth China International Import Expo and the deployment of the State Council, ,the National Development and Reform Commission and the Ministry of Commerce have, since November 2021, been widely soliciting opinions from local governments, relevant departments, business associations and enterprises, and on the basis of these opinions  formulated the Catalogue of Encouraged Industries for Foreign Investment (2022 Edition)(Solicitation of Comments).

The overall consideration on the current revisions is to make a 'total increase of encouraged items, and structural optimization.' Compared to the 2020 edition, the Catalogue of Encouraged Industries for Foreign Investment (2022 Edition) (Solicitation of Comment) increased 238 more items, with 114 amendments (mainly to expand the areas covered by the original items) and the deletion of 38 items. Amongst which, 50 items were added to the National Catalogue of Encouraged Industries for Foreign Investment (the “National Catalogue”), 62 items had been revised and 14 items deleted; The Catalogue of Foreign-invested Industries Having Competitive Advantage in the Central and Western Regions (the “Catalogue of Central and Western Regions) added 188 items, revised 52 items and deleted 24 items.

Major revisions: First, it is necessary to continue to encourage foreign investment in manufacturing industry. New or expanded items of original components, parts and components, equipment manufacturing and other items are added on the National Catalogue. Second, it is essential to continue to encourage foreign investment in production industry. New or expanded items of professional design, technical services and development are added on the National Catalogue. Third, to continue to encourage foreign investment in the Central, Western and Northeast Regions. The Catalogue of Central and Western China has added or expanded related items according to the competitive advantages of local labor forces and resources having special characteristics as well as the needs for attracting investment.

【New Law Express】

The Shanghai Notary Association announced the 'Notification on Issuing Event of Force Majeure Factual Notarization for Enterprises Related to ' Corona Virus Disease 2019 ' and the Resumption of Work and Production Notarization”

Due to the recent adverse effect of COVID-19, enterprises in Shanghai, especially import and export enterprises, have not been able to perform their contracts, including trading contracts, at all or on time. In order to assist these affected enterprises to resume work and production, safeguarding their legitimate rights and interests, and reducing the risk for breach of contract in accordance with the law, the Shanghai's notary profession provides enterprises with event of force majeure factual notarization related to the COVID-19 pandemic and notary services related to resumption of work and production.

When issuing factual notarizations related to the COVID-19 pandemic, it is necessary for a notary institution to take the pandemic prevention and control notices and regulations issued by different regional governments into consideration, and to analyze the actual impact of local prevention and control measures on subject contractual performance. Affected enterprises are required to submit supporting materials in their request for notarization services.

The relevant supporting materials that enterprises are required to submit for notarization of factual certificates related to the COVID-19 pandemic are as follows:

1. The applicant's main qualification certification materials, such as a copy of the enterprise's business license, a copy of the legal representative's ID card or relevant authorization documents

2. Materials supporting that the enterprises are unable to perform as scheduled or at all, such as trade contracts, cargo booking agreements, freight forwarding agreements, customs declarations, etc.

3. Pandemic prevention and control notices and regulations issued by relevant governments and institutions.

4. A statement bearing the official seal of the affected enterprise clearly setting out the logical relationship between the inability to perform the contract and the relevant pandemic prevention and control requirements; and.

5. Such other supporting materials as required for the issuance of factual certificates related to the COVID-19 pandemic.

For an application for force majeure factual notarization related to the COVID-19 pandemic and other related work and production resumption notarization, enterprises may utilize different means of contact such as Shanghai's notary public consultation hotline, WeChat public account, notary agency online certificate application applet, and other public announcements online consultation to learn more about related matters.

At the present moment, most of the notary institutions in Shanghai are still under lockdown. In case an enterprise wishing to apply for notarization of an event of force majeure related to the COVID-19 pandemic and notarization of work and production resumption certificates, the notary institution would, according to the requirements and the actual circumstances of the subject enterprise, issued an electronic version of the notarial certificate, and upon the notary office resuming normal service, informs the subject enterprise to come to collect the original notarization certificate. In the event that an electronic version of the notarization certificate can not be issued, the enterprise may submit the relevant materials first, to be processed by the notary office once it resumes external services. The subject enterprise will be notified to collect the original notary certificate as soon as the notary office resumes normal services.

About Veritas

Founded in 2007, Shanghai Veritas Law Corporation is a professional boutique Chinese law firm providing one-stop legal and corporate services to domestic and international clients. Veritas is particularly known for providing legal services on cross-border transactions, including foreign investment in China and overseas investment by Chinese enterprises. For nearly 15 years, Veritas has won customers with its excellent reputation and impeccable professionalism. 

More than 80% of Veritas's customers are foreign investors and foreign-invested enterprises from all over the world. They are recommended by law firms, accountants and tax agents, appraisal firms and industry research firms through the international platform that Veritas works with. The experienced team enables us to provide high quality and efficient professional services to our domestic and international clients in different areas of law to meet their requirements in direct investment, mergers and acquisitions, initial public offerings, international litigation/arbitration, contract processing and other legal matters.