NEW YORK INTERNATIONAL LAW REVIEW Summer 2001 Vol
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NEW YORK INTERNATIONAL LAW REVIEW Summer 2001 Vol. 14, No. 2 Articles 1 The Development of China’s Securities Regulatory Framework and the Insider Trading Provisions of the New Securities Law Sharon M. Lee 43 Welcome to the City of Bytes? An Assessment of the Traditional Methods Employed in the International Application of Jurisdiction over Internet Activities—Including a Critique of Suggested Approaches Asaad Siddiqi 105 The Convention on International Trade in Endangered Species: The Difficulty in Enforcing CITES and the United States Solution to Hindering the Illegal Trade of Endangered Species Randi E. Alarcón 129 The Hague Convention on the Civil Aspect of International Child Abduction: An Analysis of the Grave Risk of Harm Defense Theresa A. Spinillo Recent Decisions 153 Wiwa v. Royal Dutch Petroleum Co. The United States Court of Appeals for the Second Circuit held that jurisdiction is properly exercised over defendants, because they have sufficient contacts with New York, and they are not entitled to dismissal on forum non conveniens grounds based on policy interests. 159 Blondin v. Dubois The District Court properly considered whether under Article 12 of the Hague Child Abduction Convention the children were “settled” in their new environment and properly considered the view of one child on the possibility of returning to France. 165 Group Josi Reinsurance Company SA v. Universal General Insurance Company The European Court of Justice determined that the special rules of jurisdiction contained in the 1968 Brussels Convention are not applicable to contracts between reinsurance and insurance companies. 169 Proust-Bonnin v. Bonnin The New York Supreme Court, determining that it did not have jurisdiction over this child custody proceeding between two French citizens, was unwilling to exercise in personam jurisdiction over the defendant in the related divorce action and dismissed the case on straight forum non conveniens grounds. 173 Bodner v. Banque Paribas The United States District Court for the Eastern District of New York held in favor of French victims’ claims for relief for injustices committed during the Holocaust, and thereby denied the French banks’ motion to dismiss. NEW YORK STATE BAR ASSOCIATION INTERNATIONAL LAW & PRACTICE SECTION Published with the assistance of St. John’s University School of Law Summer 2001] China’s Securities Regulations 1 The Development of China’s Securities Regulatory Framework and the Insider Trading Provisions of the New Securities Law Sharon M. Lee* Introduction China demonstrated a commitment to converge its developing stock markets with inter- national norms by passing a long overdue piece of national legislation, the Securities Law of the People’s Republic of China (hereinafter “Securities Law”), on December 29, 1998, and imple- mented on July 1, 1999.1 After six years and five drafts, the new Securities Law was welcomed by investors as the savior to the master plan of the late Chairman of the Chinese Central Mili- tary Committee, Deng Xiaoping, to erect a “social market economy,”2 a plan that was losing momentum as China’s markets were plagued with insider trading, corruption and abuses of government office.3 China’s economy has doubled since China opened its doors to foreign investment in 1978, and the stock markets in 1996 had a daily trading volume approximately U.S.$2 billion,4 with over 20 million Chinese participants, growing at a rate of 10,000 per 1. See Securities Law of the People’s Republic of China, adopted and promulgated Dec. 29, 1998 at the 6th Sess. of the Standing Committee of the 9th National People’s Congress (visited Mar. 26, 2001) <http://www.csrc.gov.cn/ csrcsite/flfgk/securitiesml.htm> and (visited Mar. 26, 2001) <http://peopledaily.com.cn>, and translated in CHINA LAWS FOR FOREIGN BUSINESS ¶ 8-699 (Dr. J. Chen and Dr. L. Hong, eds., Commerce Clearing House Asia Pacific, 1999). This Law entered into force on July 1, 1999. 2. See infra note 13 and accompanying text. 3. See Xian Chu Zhang, The Old Problems, the New Law, and the Developing Market—A Preliminary Examination of the First Securities Law of the People’s Republic of China, 33 INT’L LAW. 983, 989 (1999) (stating the government entanglement with the market has resulted in corruption and violations, compounded with uncertain procedures and guanxi); Christine Chan, S. CHINA MORNING POST, May 28, 1994, at 1 (1994) (asserting widespread secu- rities violations by brokers, bankers and regulators and analysts comment that insider trading is a large concern because companies and brokerage houses are all state-owned); Investors See Red Over Grey Shares, S. CHINA MORNING POST, April 30, 1995, at 8 (reporting on investors’ outcry over unfairness of insider trading during a period of depressed stock prices). 4. See generally Li Yining, Foreign Listings Appear to be a Necessary Evil, S. CHINA MORNING POST, Feb. 21, 1994, at 3 (discussing foreign interest in the 1994 Securities Markets); Chinese Enterprises Raise Over 460 Billion Yuan From Securities Markets, XINHUA GEN. NEWS SERV., May 8, 2000, (noting that the Chinese securities markets have developed rapidly, and the stock exchanges have reached over 3 trillion yuan); China Vows to Protect Interests of Securities Investors, XINHUA ECON. NEWS SERV., Dec. 18, 2000, at Economic (“The opening of the stock exchanges in Shanghai and Shenzhen in 1990 marked the launch of China’s securities market. By the end of November this year, the total value of stocks amounted to 4,600 billion yuan.”). * J.D., 2001, St. John’s University School of Law. B.A. and M.A. in East Asian Studies, St. John’s University. The author is sincerely grateful to Professor Jianming Shen, formerly Kenneth Wang Research Professor of Law and Adjunct Professor of Law, St. John’s University School of Law. Professor Shen is now with the New York office of Jun He Law Offices. 2 New York International Law Review [Vol. 14 No. 2 day.5 However, insider trading continues to cause heavy losses and impedes market growth.6 The new Securities Law aims to preserve the unprecedented economic growth and cultivate investor confidence and maintain the integrity of the financial markets.7 The new law also serves as another progressive step toward fulfilling the transparency, efficiency and liquidity con- ditions of acceding to World Trade Organization membership.8 Although a framework has been provided to decontaminate China’s markets of insider trading by emphasizing shareholder protection, there are gaps within the new law regarding private remedies and damages.9 Fur- ther, in the case of an aggrieved foreign investor, the Chinese court system provides little assur- 5. See Minkang Gu & Robert C. Art, Securitization of State Ownership: Chinese Securities Law, 18 MICH. J. INT’L L. 115, 117 (1996) (noting that there are “over 20 million Chinese participants in the securities markets, a number that grows by more than 10,000 people per day.”); China's Securities Market Valued At US$556.44B, CHINAON- LINE, Dec. 15, 2000 (noting that the current statistics on the Chinese securities market reflect that “there are 1,063 public companies, and the amount of registered investors number more than 55 million”). See generally Leontine D. Chuang, Comment, Investing in China's Telecommunications Market: Reflections on the Rule of Law and Foreign Investment in China, 20 J. INT’L. L. BUS. 509, 510 (2000) (“From 1978 to 1993, [the Chinese] economy grew between US$ 2,000 and $ 4,000 per capita and in the early 90s its economic growth was unprec- edented at 13% a year.”). 6. See CHENGXI YAO, STOCK MARKET AND FUTURES MARKET IN THE PEOPLE’S REPUBLIC OF CHINA xvii (1998) (asserting that China’s gross national product nearly doubled in the mid-1980s); Gu & Art, supra note 5, at 116 (describing the booming growth of China’s markets). See generally Vice-Premier Says Securities Market “Integral” to Socialist Economy, THE BRIT. BROADCASTING CORP., June 29, 1999 at part 3 (noting Wen Jiabao’s position that “interests of investors need to be protected to keep the securities market running safely and efficiently"). 7. See Shirley C. Y. Wong, Chinese Law: The Law of Guarantee in China and Hong Kong, 26 HONG KONG L.J. 369, 369 (1996) (noting that the goals of the Security Law are to: “(i) promote financing and circulation of commod- ities; (ii) safeguard fulfillment of obligations; and (iii) develop the socialist market economy.”); see also Chinese Firms Raise Record Capital From Securities Market, XINHUA GEN. NEWS SERV., Jan. 15, 2001 (discussing that fact that although China’s security market has been quite successful over the last ten years, there are still many problems which require greater regulation and punishments); CSRC Official Says Securities Market Will Need Time To Fully Mature, CHINAONLINE, Nov. 8, 2000 (noting that the CSRC aims to improve regulation and investigation of securities fraud). See generally Li, supra note 4, at 2 (noting that “the Securities Law mainly deals with matters relating to the secondary [securities] market.”). 8. See Michael E. Burke, IV, China’s Stock Markets and the World Trade Organization, 30 L. & POL’Y INT’L BUS. 321, 321 (1999) (stating the WTO membership mandates China to improve the efficiency, transparency and liquidity of its markets in order to liberalize competition); Lawrence L. C. Lee, Integration of International Finan- cial Regulatory Standards for the Chinese Economic Area: The Challenge for China, Hong Kong, and Taiwan, 20 J. INT’L L. BUS. 1, 6-10 (1999) (stating that, as a prerequisite to joining the WTO, China must adhere to the Gen- eral Agreement on Trade in Services (GATS) which prescribes non-discriminatory treatment of foreign financial institutions); Lam, supra note 8, at 11 (stating that China must converge with international standards).