On December 26, 2019, the Supreme People's Court of P.R.China (SPC) issued the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Foreign Investment Law, which takes effect alongside the Foreign Investment Law from January 1, 2020.
The Interpretation focuses on the determination of validity of the contract. This is mainly reflected in the following aspects:
first, where a party to an investment contract formed in a field not on the negative list claims that the contract is void or has not become effective on the ground that the contract has not been approved or registered by the relevant administrative department in charge, the people's court should not support it;
Second, even if a foreign investor invests in a field where investment is restricted by the negative list, as long as the parties have taken necessary additional and corrective measures prior to the people's court making an effective judgment, the investment contract may still be considered valid;
Third, even when the requirements of the negative list are not met when the investment contract is concluded, if the negative list is adjusted and relaxes the restrictive requirements before the effective judgement is made, the investment contract can also be considered valid.