Comments to the MOFCOM on Measures for Work on Complaints from Foreign-invested Enterprises (Draft for Comment)

2020-04-22 | Beijing, Shanghai

Since the Reform and Opening up, foreign investment has always been an important engine of China’s economic growth. The Chinese government insists on expanding opening-up and has adopted a series of measures to stabilize foreign investment. The central government has taken the complaint mechanism for foreign investment as an important measure to continuously improve and optimize the foreign investment environment. It does not hesitate to spend huge manpower and material resources to introduce the Foreign Investment Law (FIL) and its Implementation Regulations; and provides legal protection for the continuous improvement of the business environment and the protection of the legal rights of foreign-invested enterprises (FIEs). Complaints by FIEs are an important window for the country to implement rule by law; and provide a direct and targeted area for the relevant national authorities to further improve the business environment. It also helps national authorities understand demands of enterprises and industry, coordinate and solve problems, establish a good international reputation, and attract more foreign investment so that more investment opportunities are created for China. In this regard, it deserves special attention from relevant national authorities.

The Draft for Commentswill greatly promote the implementation of the Foreign Investment Law and the Implementing Regulations of the Foreign Investment Law. At the same time, it also provides a "sponge" in front of administrative reconsideration and administrative litigation, to help both parties resolve disputes in a gentler manner, and save costs. The European Chamber is very pleased to see that the Draft for Commentsattach great importance and pay high attention to the investment environment as well as policies/measures, which will lead to the perfection and development of Chinese administrative law system. The Draft for Comment clarifies the content of the materials to be submitted to the complaint, making the complaint procedure fairer and more transparent. The option of settlement agreement has been newly added, which will help the complaint handling organs to handle complaints more flexibly and effectively.

The Draft for Comments is based on Document No.2 issued by MOFCOM in 2006, which was entitled Temporary Measures of Foreign Investment Complaints (herein under referred to as the Temporary Measures).  The European Chamber believe that many of the amendments and revisions related to the Draft for Comments are necessary and beneficial; however, the European Chamber have also noticed parts in the Draft that needs further improvement, such as opaque and missing definitions of some key concepts, narrow definition of the Complainant, unchanged mandated complaints handling organization and unclear roles and responsibilities of them; all these factors, if remained untouched or unimproved, may dim the desired positive changes this new Draft for Comments may bring to foreign investors in the areas of complaints of their issues. In order to better implement the Measures, and incentivize enterprises to use this mechanism, recommend improving the operability of certain specific provisions, effectively protecting the legitimate rights and interests of foreign-invested enterprises, to make the original intention of legislation a reality.