China: China Adopted New Provisions on the Administration of Foreign Investment in International Maritime Transportation

Last Updated: 28 July 2004

Article by Peter Müller and Werner Meier

Introduction

On March 2, 2004, the Provisions on Administration of Foreign Investment in International Maritime Transportation (hereinafter referred to as "the Provisions") were promulgated by Decree No. 1 of the Ministry of Commerce and the Ministry of Communication of the People’s Republic of China. It is effective as of June 1, 2004.

Background

The Regulations of the People’s Republic of China on International Maritime Transportation (hereinafter referred to as "the Regulations"), which were adopted by the State Council and came into force as of January 1, 2002 is the first administrative regulation on administration of international maritime transportation in China.

Chapter 4 of the Regulations on International Maritime Transportation describes the special provisions on foreign-fund international maritime transportation. It states that foreign merchants may, according to the relevant laws, regulations and other relevant provisions of the State, invest to operate businesses of international maritime transportation in China upon the approval of the department in charge of transportation under the State Council. This is in accordance with the Chinese WTO Commitments , but a stipulation of the procedure for examination and approval is still lacking.

The Ministry of Communications of China adopted the Implementation Rules for the Regulations of the People’s Republic of China on International Maritime Transaction (hereinafter referred to as "the Implementation Rules") in January 2003. It only stipulates the Ministry of Communications’ administrative responsibility for examination and approval, but does not regulate the administrative department in charge of the foreign investment’s responsibility of the examination and approval.

Therefore, after negotiations, the Ministry of Communications and the Ministry of Commerce promulgated the Provisions. The Provisions, besides the Regulations and the Implementation Rules, constitute an integrated management system of foreign investment in international maritime transportation in China.

Main Content

These Provisions are applicable to the investment in and operation of international maritime transportation business and auxiliary businesses relating thereto by foreign investors within the territory of China.

The Provisions state that within the approval of the Ministry of Communications and the Ministry of Commerce, a foreign investor may invest in and operate international maritime transportation in the following ways:

  • By establishing a Chinese-foreign equity joint venture or a Chinese-foreign contractual joint venture to engage in international shipping services, international shipping agency services, international ship management services, loading and unloading of international shipments and international maritime container freight station and container yard services;
  • By establishing a Chinese-foreign equity joint venture, a Chinese-foreign contractual joint venture or a wholly foreign-owned enterprise to engage in international maritime cargo warehousing services;
  • By establishing a Chinese-foreign equity joint venture, a Chinese-foreign contractual joint venture or a wholly foreign-owned enterprise to offer routine services for the vessels owned or operated by the investor.

The Provisions also indicate that the Ministry of Communications and the Ministry of Commerce as well as their authori ed agencies are responsible for the approval and administration of the establishment of foreign-funded enterprises engaged in international maritime transportation within the territory of China.

The Provisions explain in detail the procedure of the establishment of a foreign-funded international shipping enterprise, a foreign-funded international shipping agency enterprise and a foreign-funded international ship management enterprise.

The Provisions say that a foreign company engaged in shipping may establish a Chinese-foreign equity joint venture, Chinese-foreign contractual joint venture or wholly foreign-owned enterprise to offer such routine services as canvassing of cargos, issuance of bills of lading, settlement of freight and signing of service contracts for the vessels owned or operated by investors. The application procedures to establish such an enterprise shall be governed by the relevant provisions on the approval of establishments of wholly foreign-owned shipping companies jointly issued by the Ministry of Communications and the Ministry of Commerce.

An applicant making an application to the Ministry of Commerce or its authori ed agencies shall submit the following documents:

  • Letter of application;
  • Feasibility study report;
  • Contract of the joint venture and the company’s articles of association (in case of a wholly foreignowned company, the articles of association suffice);
  • Registration certificate and credit-standing certificate of investors;
  • Identity certification of the board of directors’ chairperson and the general manager of the enterprise to be established; �� Other documents required by laws or administrative regulations.

The Provisions are applicable to the establishment of enterprises engaged in international maritime transportation and auxiliary services relating thereto in other provinces, autonomous regions or municipalities under direct control of the Central Government as well as to investors from the Hong Kong Special Administrative Region, Macao Special Administrative Region or Taiwan region.

Furthermore, article 20 of the Provisions expressly points out that, in accordance with the relevant provisions on the Mainland and Hong Kong Closer Economic Partnership Arrangement, the Mainland and Macao Closer Economic Partner ship Arrangement and their Annexes, from January 1st, 2004, service suppliers from Hong Kong or Macao may establish a wholly Hong Kong or Macao-owned enterprise in Chinese mainland to engage in international ship management services, international maritime cargo warehousing, international maritime container freight station and container yard services, and non-vessel-operating services; they may also establish a wholly Hong Kong or Macao-owned shipping company in Chinese mainland to offer such routine services as canvassing of cargoes, issuance of bills of lading, settlement of freight and signing of service contracts for their owned or operated vessels.

Comments

The Provisions set out the criteria for the establishment of various businesses related to international maritime transportation. Generally, establishment applications should be made to the Ministry of Communication. Once the approval from the Ministry of Transportation is obtained, investors may proceed with the process by filing the application documents to the Ministry of Commerce for getting the appropriate approval of foreign investment. The fact that the approval and application procedures involve two administrative departments reveals this Provisions’ serious and unshakable legal status.

Article 5 stipulates in detail the conditions for establishing a foreign-funded international shipping enterprise. In case of establishing a Chinese-foreign equity joint venture or a Chinese-foreign contractual joint venture, the proportion of investment made by foreign investors shall not exceed 49% and the Chinese party shall appoint the chairperson of the board of directors and the general manager after consultation between the both sides, which are not regulated in the previous regulations.

The conditions needed to establish a foreign-funded international shipping agency enterprise are still very strict. For example, the enterprise shall have at least two senior executives with no less than three years experience in international maritime transportation business operations. The term "senior executives" refers to Chinese citi ens having secondary or higher technical or academic titles and serve as department managers or even higher positions in enterprises engaged in international maritime transportation business or auxiliary business related thereto. In addition, in case of establishing a Chinese-foreign equity joint venture or a Chinese-foreign contractual joint venture, the proportion of investment made by foreign investors shall not exceed 49%.

The Provisions identify the content of the Mainland and Hong Kong Closer Economic Partnership Arrangement, the Mainland and Macao Closer Economic Partnership Arrangement and their Annexes (CEPA) regarding the maritime service, which the State Council has approved to be effective as of January 1st, 2004.

In a word, these new Provisions stipulate not only the approval procedure, but also the scope of the approval and approval conditions. As a part and a significant supplement of the management system of foreign investment in international maritime transportation in China, they play a very important role.

This publication is intended to provide accurate information in regard to the subject matter covered. Readers entering into transaction on the basis of such information should seek additional, in-depth services of a competent professional advisor. Wenger vieli belser, the author, consultant or general editor of this publication expressly disclaim all and any liability and responsibility to any person, whether a future client or mere reader of this publication or not, in respect of anything and of the consequences of anything, done or omitted to be done by any such person in reliance, whether wholly or partially, upon the whole or any part of the contents of this publication.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions