Interpretation of the Supreme People's Court on Several Issues concerning the Application of the Foreign Investment Law of the People's Republic of China

〔2019〕Fashi No.20

(Adopted at the 1787th meeting of the Judicial Committee of the Supreme People's Court on December 16, 2019, and coming into force on January 1, 2020)

For the purposes of correctly applying the Foreign Investment Law of the People's Republic of China, equally protecting the lawful rights and interests of domestic and foreign investors according to the law, and creating a stable, fair and transparent business environment governed by law, in accordance with trial practices, the interpretation on the application of law for the people's courts in hearing cases of investment contract disputes between equal parties is hereby made as follows.

Article 1 For the purpose of this Interpretation, the term "investment contracts" means the relevant agreements arising from direct or indirect investment by foreign investors such as foreign natural persons, enterprises, and other organizations in China, including contracts for forming a foreign-funded enterprise, contracts on the transfer of shares, equity transfer contracts, contracts on the transfer of property shares or other similar rights and interests, contracts for new construction projects, and other agreements.

This Interpretation shall apply to contract disputes arising from the relevant rights and interests obtained by foreign investors in the forms of gift, property division, combination and division of enterprises, among others.

Article 2 Where a party to an investment contract formed in a field outside of the foreign investment access negative list as prescribed in Article 4 of the Foreign Investment Law claims that the contract is void or has not become effective on the ground that the contract has not been approved by or registered with the relevant administrative department, the people's court shall not sustain such claim.

Where an investment contract prescribed in the preceding paragraph is signed before the implementation of the Foreign Investment Law but the people's court has not rendered an effective judgment during the implementation of the Foreign Investment Law, the validity of the contract shall be determined according to the provisions of the preceding paragraph.

Article 3 Where a foreign investor invests in a field where investment is prohibited by the foreign investment access negative list, and a party claims that the investment contract is void, the people's court shall sustain such claim.

Article 4 Where a foreign investor invests in a field where investment is restricted by the foreign investment access negative list, and a party claims that the investment contract is void on the ground that it has violated the special administrative measures for restrictive access, the people's court shall sustain such claim.

Where a party who has taken necessary measures to meet the requirements of the special administrative measures for access before the people's court renders an effective judgment claims that the investment contract as set out in the preceding paragraph is valid, the people's court shall sustain such claim.

Article 5 Where a foreign investor invests in a field where investment is no longer prohibited or restricted due to the adjustments to the foreign investment access negative list before the people's court renders an effective judgment, and a party claims that the investment contract is valid, the people's court shall sustain such claim. 

Article 6 Where the people's court tries the relevant cases of disputes over investment made in the Chinese mainland by investors from the Hong Kong Special Administrative Region, the Macao Special Administrative Region, Chinese citizens residing overseas, or investors from the Taiwan Region, this Interpretation may apply mutatis mutandis to the cases.

Article 7 This Interpretation shall come into force on January 1, 2020.

In the case of any discrepancy between this Interpretation and the relevant judicial interpretations issued by the Supreme People's Court before this Interpretation comes into force, this Interpretation shall prevail.