Good afternoon,

I am Zhang Ruidi, you are watching Jin Hangmu-Rui Zhong legal team internet telestudio. For start lets looking at today’s headline--what legal risk preventions China-invested enterprises should take?

It is reported that China’s government decided to dispatch a headquarter to evacuate Chinese immigrants away from Libya right after China’s governmental meeting on the night of the 21st February this year dealing with the situation in Libya— the ever biggest immigrant evacuation during 60 years is therefore launched. From the 22nd Feb to the 5th Mar the Ministry of Foreign Affairs, Department of Commerce, Ministry of National Defense, SASAC, CAAC and the Ministry of Public Security made an joint operation under the headquarter that successfully evacuated 35,860 citizens of China’s mainland and 2.,100 more people of foreign nationality. This action is effected by China’s land and water and air forces with the help of Libyan local embassies and consulates.

Compared with other evacuation actions of other countries, China’s operation’s success conquered all nations, and its adapt ability also won a great appreciation from the main media of the world. However, for 75 state owned corporations that undertook construction jobs in Libya had no mood for these appreciations, because the evacuation meant a massive loss of their great invest.

From the above it can be seen that the Libyan civil war beat Chinese corporations in Libyan hugely, and whether those corporations bought Political Risk Insurance before the war has become a highly focused topic recently.

Many reports for this Libyan war claim that Libya has always been stable, but this time is just a risk out of people’s regular expectation. It is reasonable that normal people cannot easily predict such unexpected risks that are not within their control, but people should pay more attention on effective defensive measures just for such inadequate prediction.

It is also reported that many Chinese corporations did bought insurances for their contracts, but people find their loss is very hard to be remedied after an analysis of the remedy regulations, because China’s previous insurance items did not cover any Political Risk Insurance.

Political Risk Insurance includes government breach of contract, wars and inner riots, government collection and ruin of sovereignty debts. Some related materials show that as the leader of the world’s insurance and finance industries and also the top international insurance service agency, AIG’s application for the sale of a product of the Political Risk Insurance to China Insurance Regulatory Commission was rejected. MIGA, a multilateral investment guarantee launched by the World Bank, held a lecture in China on overseas political risk insurance, but received little attention. Form these examples we can see that Chinese people and government have little knowledge on the necessity of investing on such insurances.

Overseas Investment Management was issued on March, 16th. 2009 by the Department of Commerce of the People’s Republic of China, and has been put into practice since May 1st.

It is subscribed in 11th Article in the second Section of the Management that China’s embassies should submit suggestions in the aspects of security circumstance in host countries and the effect of bilateral relationships in politics and trade. Besides, they should reply in ten working days after receiving additional request.

It is subscribed in 23rd Article that enterprises should implement every item in personnel and property security precaution, establish emergency warning system and emergency plan, and accept the guidance of emergency precautions and personnel security protection from embassies.

In addition, when there is an emergence happening oversea, enterprises should adopt prompt and proper measures and immediately report it to overseas embassies and domestic competent authorities.

It is subscribed in 28th Article in the fifth Section that the Department of Commerce is supposed to establish information service system aimed at foreign investment and cooperation, supplying information services concerning accounting, investing opportunities and obstacles and precautions for enterprises carrying out oversea investment.

On Feb. 26th, the Department of Commerce issued the Guidance on the Work of the 2010 National Foreign Investment Cooperation. But, unfortunately, this Guidance, as the aforementioned Management dose not mention “covering insurance” or “insurance”, though it is obvious that the sense of fear involved in this Guidance has been strengthen.

Thankfully, Chinese Insurance and CITIC have already accepted insurance concerning “political risk insurance”. After all, it is never too late to do that.

At last, audience, enterprises and individuals who decide to invest overseas or have invested are reminded to always pay attention to the website of the Department of Commerce and Going Abroad Service Network in order to promptly take precautious and emergency measures. Meanwhile, we also advice departments concerned including the Department of Commerce revise the Overseas Investment Management and other relevant provisions, adding insurance articles or adopting other measures to make precautions, which are all aimed at lowering down Chinese enterprises’ risk of investing overseas.

The saying goes well, “In nature there are unexpected storms, and in life unpredictable vicissitudes.” So though we cannot accurately predict misfortunes, we may avoid mistakes at the very beginning. Though we cannot change misfortunes, we can change ourselves and strengthen our sense of risk. Only through that way can Chinese enterprises reduce the risk of getting involved in legal disputes.


That’s all for today.






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