China Newsletter August 2009

NEW INTERPRETATIONS OF THE PRC CONTRACT LAW

On April 24, 2009 the Supreme People’s Court has issued a wide-ranging new judicial interpretation of the PRC Contract Law which is directly relevant to any business in China including to foreign investors. The Interpretation on Several Issues Concerning the Application of the People’s Republic of China Contract Law (II) took effect on May 13, 2009 (Interpretation). 

Judicial interpretations by the Supreme People’s Court play an important role in China’s legal system. They provide guidance to the other people’s courts throughout the country on the application and interpretation of existing laws which are often vague and ambiguous. Issued in response to a perceived practical need of the courts rather than judging a concrete case, judicial interpretations function almost as legislation, clarifying questions and ambiguities, filling loopholes in the law and improving legal certainty.

Lawyers Ingo Vinck