Interpretation of the Supreme People's Court on Several Issuesconcerning the Application of the Foreign Investment Law of the People'sRepublic of China

The Interpretation of the Supreme People'sCourt on Several Issues concerning the Application of the Foreign InvestmentLaw of the People's Republic of China, adopted at the 1787th meeting of theJudicial Committee of the Supreme People's Court on December 16, 2019, ishereby promulgated and shall come into force as of January 1, 2020.

The Supreme People's Court

December 26, 2019

Fashi [2019] No.20

Supreme People's Court

Interpretation on Several IssuesConcerning the Application of the Foreign Investment Law of the People'sRepublic of China

(16 December 2019 Judicial Committee of theSupreme People's Court

Adopted at the 1787th meeting and effective asof January 1, 2020)



For the purposes of properly applying theForeign Investment Law of the People's Republic of China, equally protectingthe legitimate rights and interests of Chinese and foreign investors andcreating a stable, fair and transparent and legal business environment, theinterpretations on issues relating to application of the laws for the trial ofinvestment contract disputes between equal entities were promulgated byPeople's Courts on account of trial practice. 

Article 1 The term "investment contract"refers to the relevant agreement including the contract on the establishment ofa foreign-invested enterprise, the share transfer contract, the equity transfercontract, the contract on the transfer of property shares or other similarrights and interests transfer contract or new project contract etc. formed by aforeign investor, namely a foreign natural person, an enterprise or otherorganizations due to direct or indirect investment within the territory ofChina.

This Interpretation shall also be applied tocontractual disputes arising from gift, division of property, merger ofenterprises, spin-off of enterprise  etcconcerning the rights and interests of a foreign investor.

Article 2 For investment contracts formed in fieldsoutside  the negative list of foreigninvestment access referred to in Article 4 of the Foreign Investment Law, wherea party concerned asserts that the contract is void or invalid for the reasonthat the contract had not been approved by or registered with the relevantadministrative authorities, the People's Court shall not support the request.

Where the investment contract stipulated in thepreceding paragraph is executed prior to implementation of the ForeignInvestment Law but the People's Court has not made a ruling after the  implementation of the Foreign Investment Law,the provisions of the preceding paragraph shall be applied to determine thevalidity of the contract.

Article 3 Where a foreign investor invests in fields prohibitedby the Negative List for Foreign Investment Access and a party concerned claimsthat the investment contract is invalid, the people's court shall uphold suchclaim.

Article 4 Where a foreign investor invests in fieldsrestricted by the provisions of the Negative List for Foreign InvestmentAccess, and a party concerned claims that the investment contract is invalid onthe ground that the contract concerned violates the special administrativemeasures for restricted access, the people's court shall uphold such claim.

Where, before the people's court makes aneffective judgment, the parties concerned take necessary measures to meet therequirements of special access administrative measures and claim that theinvestment contract specified in the preceding paragraph is valid, such claimshall be upheld.

Article 5 Before the effective judgment is rendered,where the investment made by a foreign investor in a field is no longerprohibited or restricted for investment due to the adjustment to the negativelist for foreign investment access, and the party concerned claims that theinvestment contract is valid, the people's court shall uphold such claim.

Article 6 The people's court may refer to thisInterpretation in hearing relevant cases concerning disputes arising out ofinvestments in the Mainland China by investors from Hong Kong SpecialAdministrative Region and  Macao SpecialAdministrative Region and oversea's Chinese residing abroad.

Article 7 This Interpretation shall come into force as ofJanuary 1, 2020.

Where there is any discrepancy between theseInterpretations and the relevant judicial interpretations made by the SupremePeople's Court prior to implementation of these Interpretations, theseInterpretations shall prevail.


Original resources: 申玉峰(Shenlawyer)