On June 26, 2018, CFEC held a seminar to discuss draft proposals for factoring laws and legal interpretation. Dozens of experts and professionals attended the seminar.
With an increase of 16%, Chinas factoring volume returned to world No. 1 in 2017. As an effective financing solution, factoring industry will enhance the development of Chinas real economy and help small and micro business out.
Meanwhile, fabricated basic contracts, fake notification of accounts receivable assignment and over-expanded credit in financial innovation are on the increase. Statistics show that courts at all levels in China have received and concluded over 10000 factoring-related dispute cases since 2014.
To facilitate continuous and robust development of the factoring industry, it is essential to add a subtitle factoring contract into Chinese Civil Law Code and to get the legal interpretation of factoring introduced by the Supreme Court in China.
On March 15, 2018, the Supreme Court invited CFEC to introduce the status quo and difficulties of Chinas commercial factoring industry at a working meeting. Further, the Supreme court suggested that CFEC may draft judicial proposals for factoring law making and legal interpretation of factoring so as to guide the adjudication in factoring-related dispute cases.
In the following 2 months, CFECs legal consulting panel presided over drafting the proposal of adding subtitle factoring contract into Chinese Civil Law Code and judicial interpretation of factoring.
On June 26, 2018, CFEC invited law professionals from the Supreme Court, Beijing High Court, Tianjin High Court, Peoples Court of Shenzhen Qianhai Cooperation Zone, Hainan Arbitration Committee and relevant professionals from World Bank, China Banking and Insurance Regulatory Commission (CBIRC), Credit Reference Center of PBOC, Financial and Economic Committee of the National Peoples Congress of PRC and factoring institutions to discuss the proposal and legal interpretation.
At the conclusion of the seminar, experts agreed that 5 points should be emphasized in the proposal for factoring laws: the legality of assigning future account receivables; approval of assignment in spite of no-assigning stipulation in the basic contract; the valid sequence of assignees in multiple assignments; factors responsibility of investigating basic contracts and the validity and process of filing account receivables at Credit Reference Center of PBOC.
After compiling opinions from experts and professionals, CFECs legal consulting panel has delivered the proposal and legal interpretation draft to the Supreme Court on July 4th, 2018.
