NPCSC Adopts E-Commerce Law, Soil Pollution Prevention and Control Law & Amends Individual Income Tax Law – NPC Observer

NPCSC Adopts E-Commerce Law, Soil Pollution Prevention and Control Law & Amends Individual Income Tax Law – NPC Observer

The 13th NPC Standing Committee (NPCSC) concluded its fifth session last Friday and adopted the E-Commerce Law, the Soil Pollution Prevention and Control Law, and an amendment to the Individual Income Tax Law. All three laws will take effect on January 1, 2019. Due to competing offline commitments, we are able to discuss only two laws in relative detail below.

The E-Commerce Law [电子商务法] includes seven chapters with a total of 89 articles. “E-commerce” as defined and regulated by the Law refers to domestic “business activities that sell merchandise or provide services on information networks such as the internet” (art. 2, para. 2). Expressly excluded from the purview of the Law are “financial products and services, as well as services that use information networks to provide such content as news information, audio-visual programs, publications, and cultural products” (id. para. 3). “E-commerce operators” [电子商务经营者], or individuals and organizations that engage in e-commerce, are either “e-commerce platform operators” (like Taobao), “intra-platform operators” (like vendors on Taobao), and other e-commerce operators (for example, people who do business on WeChat) (art. 9).

The Law gives special attention to the duties and obligations of e-commerce operators. They are generally required to register with market regulatory authorities, except those exempted by statute or regulations and (among others) those who engage in “small sporadic transactions” [零星小额交易] (art. 10). They must also comply with various disclosure requirements on, for example, their licenses and merchandise- or services-related information (see arts. 15–17). In addition, among other prohibitions, e-commerce operators must not fabricate reviews to deceive or mislead consumers (art. 17); must not show consumers targeted ads without also showing them non-targeted ads (art. 18); and must not make tied [搭售] merchandise or services selected by default (art. 19).
Given the dominant role e-commerce platform operators play in China, the Law devotes an entire section to their specific duties and obligations (see Ch. 2, sec. 2). They are required to assist with real-name registrations of intra-platform operators (see art. 28), to ensure cybersecurity (see art. 30), to guard the safety of the person and property of consumers (see art. 38), and to protect intellectual property (see arts. 41–45), among others responsibilities. In particular, platform operators are subject to joint and several liability for certain torts committed by intra-platform operators, such as consumer rights or intellectual property infringement, if they “know or should have known of” the infringement but have failed to take necessary actions (see arts. 38, 42, 45). The failure to act additionally exposes platform operators to hefty fines of up to two million yuan (see arts. 83–84).

The Law supplements existing laws like the Contracts Law [合同法] and the Electronic Signatures Law [电子签名法] with special rules for the conclusion and fulfillment of e-commerce contracts (see Ch. 3). It also includes two other chapters on e-commerce dispute resolution and e-commerce promotion, respectively (see Chs. 4–5). The Law is being translated at China Law Translate.