B. Regulations of People?s High Court of Hunan Province on Protection of Foreign Investors? Legal Rights and Interests (issued on June 3, 1998)

In order to protect the legal rights of the foreign party in foreign-related cases (?foreign investors? for short), promote foreign economic and trade cooperation, and attract more foreign investment, with the consent of Hunan Provincial Party Committee, the People?s High Court of Hunan Province, on the basis of the Regulation on Protection of Foreign Investor?s Legal Rights and Interests promulgated on June 6, 1995, makes the following regulations:

1. Protect the legal rights and interests of foreign investors who do business in Hunan Province. If foreign investors don?t endanger national security and public interest, the laws will protect them. For their legal rights and interests given by China?s laws and regulations and local preferential policies, the People?s Court will punish any actions violating foreign investor?s legal rights.

2. Protect the legal contractual relationship with the foreign party. Once the foreign-related contract is the true intent of both parties, and it doesn?t violate China?s laws and regulations, national security and public interest, the People?s Court will admit its legal effect. For those who have no complete procedure or an incomplete approval process, the People?s court will admit its legal effect if they can renew their procedures before the first instance.

3. Respect foreign investor?s choices for law applicability and international practice applicability. Under the precondition of not violating national and social interests, the foreign-related party can choose to solve problems according to its own relevant laws or, in their absence, of those closely approximating it. If Chinese law is at odds with any international treaties China has signed, except where there are specific national exclusions, the People?s court will adopt the practice of the international treaties. International practice can be applicable for those areas that China?s laws and regulation do not specifically stipulate.

4. Crackdown on crimes against the foreign investor?s habeas corpus and property rights. For those violating a foreign investor?s personal rights and property rights, or disturb the operational order of foreign-funded enterprises, the People?s Court will punish them with a firm hand, and they will be jailed or fined. Victims who submit a civil action should be protected by the People?s Court. For those cases where there is a violation but no identifiable crime, the court should order the violations to cease; for these requiring compensation, the court should judge the compensation amount.

5. Legally and equally protect a foreign investor?s procedural rights. Foreign investors have rights to sue for the violation of their legal interests. For any executive actions violating their legal interests or interfering with their operational rights, the foreign investors can submit an administrative lawsuit to the People?s Court. Foreign investors who bring litigation in Hunan will enjoy the equal rights and obligations with Chinese. The People?s Court should arbitrate justly, and no local protectionism is permitted. If local protectionism is found, responsible cadres will be punished.

6. Foreign-related case is given priority. Foreign-related cases should take priority in registration, and the People?s Court should send registration notification in time, and hold the trial on the second day after registration. For those who have difficulties paying legal fees, the People?s Court can postpone payment if foreign investors apply. For those cases that don?t accord with the registration conditions, court should tell the litigants to return when the time is mature for action. For those contracts that have arbitration articles, or where both parties sign an arbitration deal after trial begins, the court should inform the arbitration committee for judgment.

7. Handle foreign-related cases openly and justly. In the trial, simple trial procedure is a priority. For the cases applicable to common trial procedure, the court should hear the cases openly. The concerned parties present evidence and ask and answer questions on any evidence, while the collegiate bench hears the evidence and gives a verdict quickly and justly. For those cases that can be solved through negotiation, the court should adopt such a course rather than adhering to fussy legal procedures. For cases where foreign investors seek a retrial and where a wrong judgment has been made, the court should correct the former judgment according to certain trial procedures. For cases where there is no cause for appeal, the court should reject the appeal without delay.

8. Cautiously implement property freezing and compulsion measures. When taking property freezing and compulsion measures, the court should follow strictly the conditions and scope the law stipulates, and should not wantonly freeze, seal or detain the property of foreign investors. Especially, there should be no property freezing exceeding the appealing and applicable scope. For a case requiring detention of foreign investors and the legal person of foreign-funded enterprises, or the removal of their licenses, the court should report to the People?s Court at a higher level, and implement measures after their approval. The court at a higher level should strengthen supervision of the lower court, and rectify mistakes once they appear.

9. Strengthen the enforcement of foreign-related verdicts. If foreign investors appeal verdict enforcement or second-instance verdict enforcement, the People?s Court should urge and supervise the concerned party to fulfill the verdict. For parties who have the ability but decline to fulfill, the court should carry out measures for enforcement; for those who have no ability to fulfill a judgment, the court should suspend implementation after explaining the position to the foreign investors, or stop implementation with the consent of the foreign investors. If foreign investors apply for enforcement of the judgment to which a foreign court gives enabling legal effect, this should be accepted by the Intermediate People?s Court having jurisdiction. If the country in which the court giving judgment is located has international treaties or reciprocal treaties with China, courts accepting an appeal should admit its legal effect and implement according to the judgment. Otherwise, the courts should implement according to the judgment of the Intermediate People?s Court having jurisdiction.

10. Deal with foreign-related cases with high efficiency, probity and politeness. The People?s Court should improve efficiency, and protect foreign investor?s legal rights. In the trial, judges must not accept foreign investor?s money and banquet invitations. Besides, judges must not be privileged and treat foreign investors harshly. If any violations are found, they will be seriously punished.

11. Set up special institutions to deal with foreign-related cases. In the People?s High Court of Hunan Province, cases are usually handled by different trial courts according to their attributes. Intermediate People?s Courts and courts at grassroots, which usually have lot of cases, should form a special court or collegiate bench to deal with cases promptly and correctly.

12. Offer foreign-related legal advice. The Judges Association under the People?s High Court of Hunan Province sets up a legal consultancy center on the protection of foreign investment, offering legal advice to foreign investors. It answers questions on China?s judiciary, judicial process, foreign-related laws, and the applicability of laws and regulations. Cases concerning Hong Kong Special Administrative Region (HKSAR) and Macao Special Administrative Region, and Taiwan Province are also covered by the above regulation.