China Outlaws Bribery Overseas (Excerpts)

• Author: Sherry Yin et al

On February 25, 2011, the Standing Committee of the National People’s Congress passed the Eighth Amendment to the PRC Criminal Law (the “Eighth Amendment”), which took effect on May 1, 2011. Article 29 of the Eighth Amendment criminalizes, for the first time under PRC law, paying bribes to foreign government officials and to officials of international public organizations (the “Foreign Bribery Provision”). The Foreign Bribery Provision brings China’s anticorruption laws into closer alignment with those in other countries, most notably the United States Foreign Corrupt Practices Act (“FCPA”).

INTERPRETATION

The Foreign Bribery Provision is brief and lacks definitions of a number of key terms. The provision’s impact will, therefore, depend heavily on interpretive guidance to be issued by the Supreme People's Court and the Supreme People's Procuratorate in the future.

Improper Commercial Benefit

For example, payments are only prohibited if they are in exchange for “an improper commercial benefit.” The Foreign Bribery Provision appears on its face to supplement the existing provision of Article 164 prohibiting commercial bribery. The existing provision prohibits “giving money or property” for the purpose of “seeking an improper benefit.” In contrast, the Foreign Bribery Provision prohibits “giving money or property” for the purpose of seeking “an improper commercial benefit.” Whether there is any substantive difference between “a benefit” and “a commercial benefit” remains to be seen. In cases where the existing prohibition against commercial bribery has applied, “benefit” has been interpreted broadly, and the term “improper benefit” has been interpreted to include any benefit obtained through a violation of any law, administrative regulation or rule, or policy or by requiring the opposite party to provide aid or convenience in violation of any law, administrative regulation or rule, policy, or industrial norm. Generally speaking, in commercial dealings such as public tenders and government procurements, giving money or property to a person in charge of such activities in violation of the principle of fairness so as to secure a competitive advantage is also interpreted to be within the meaning of “for any improper benefit.”

This broad reading is similar to case law interpreting analogous elements under the FCPA. Although the FCPA only prohibits payments intended to “obtain or retain business,” the courts have essentially held that securing any...