INTERIM PROVISIONS CONCERNING CHINESE-FOREIGN COOPERATION IN THEDESIGNING OF ENGINEERING PROJECTS

INTERIM PROVISIONS CONCERNING CHINESE-FOREIGN COOPERATION IN THEDESIGNING OF ENGINEERING PROJECTS This English document is coming from "LAWS AND REGULATIONS OF THE PEOPLE'S REPUBLIC OF CHINA GOVERNING FOREIGN-RELATED MATTERS" (1991.7) which is compiled by the Brueau of Legislative Affairs of the State Council of the People's Republic of China, and is published by the China Legal System Publishing House.

In case of discrepancy, the original version in Chinese shall prevail.

Whole Document INTERIM PROVISIONS CONCERNING CHINESE-FOREIGN COOPERATION IN THE DESIGNING OF ENGINEERING PROJECTS (Approved by the State Council on March 27, 1986 and promulgated by the State Planning Commission and the Ministry of Foreign Economic Relations and Trade on June 5, 1986) Article 1 These Provisions are formulated to strengthen the administration of the cooperation between Chinese designing institutions and foreign designing institutions in the designing of engineering projects (hereinafter referred to as "cooperative designing") and to promote the development of cooperative designing activities.

Article 2 As regards engineering projects to be financed by Chinese investment or Chinese-foreign joint investment, or by foreign loans, when their designing is to be entrusted to foreign designing institutions, cooperative designing shall be carried out with the participation of Chinese designing institutions.

As regards engineering projects to be financed by Chinese investment, if the designing can be undertaken by Chinese designing institutions, the task shall not be entrusted to any foreign designing institution, but part of the designing technology pertinent to the engineering project may be introduced or foreign designing institutions may be approached for consultancy on technological and economic matters.

As regards engineering projects to be constructed within the territory of China and financed by foreign investment, the designing shall, in principle, be also undertaken by Chinese designing institutions; if the investors request that the designing be done by foreign designing institutions, cooperative designing shall be carried out with the participation of Chinese designing institutions.

Article 3 In cases where engineering projects call for cooperative designing (including the foreign exchange needed for the cooperative designing), the competent authorities or the units undertaking the construction project shall, in accordance with the limits of authority for the administration of construction projects, make an application while submitting a written engineering project proposal or a written designing task report for examination and approval; and only after obtaining approval can they begin to peck for foreign cooperation. For small-scale engineering projects, the matter shall be approved by the competent authorities or by the planning commissions of the provinces, autonomous regions, or municipalities directly under the Central Government in accordance with the respective subordinative relationships. For large and medium-sized engineering projects, the matter shall, in accordance with the respective subordinative relationships, be examined by the competent authorities or by the provinces, autonomous regions, or municipalities directly under the Central Government, which shall then submit a report with their opinions to the State Planning Commission for examination and approval. As to extra-large engineering projects, the State Planning Commission shall organize preliminary examination and submit a report with its opinions concerning the examination to the State Council for approval.

The competent authorities or the units undertaking the construction projects, while selecting the most qualified foreign designing institutions, shall also select domestic designing institutions for the cooperative designing.

Article 4 Only after passing an examination of designing qualifications can a foreign designing institution be entrusted with the task of designing an engineering project in China. The competent authorities for the engineering project shall be responsible for examining the qualifications of the foreign designing institution.

The examination of designing qualifications covers the following main items: (1) a certificate of registered designing qualifications issued by the country or region where the foreign designing institution is located; (2) the technical level, technical force, and the state of its technological equipment; (3) the record of its experiences in undertaking project designing and the state of its operations and management; (4) its reputation in society.

Article 5 A contract for cooperative designing shall be concluded between the two parties in cooperation, stipulating explicitly the rights and obligations of the two parties. The contract of cooperative designing shall include the following main items: (1) the names of the two institutions in cooperation, their nationality, their head offices, and the names, positions, nationality and addresses of their respective legal representatives; (2) the purpose, scope and period of cooperation; (3) the form of cooperation, and the requirements for the contents, depth and quality of designs, and for work progress; (4) the mix of currencies in which the two cooperating parties wish to be paid for their designing fees, and the methods and the proportions of distribution; (5) the ways of business communication between the two parties in cooperation; (6) liabilities for the breach of contract; (7) the ways of settling disputes over the contract; (8) the conditions for the contract to be effective; (9) the date and place for signing the contract.

Article 6 At the time when the contract for cooperative designing is signed, the chief designing party selected shall sign a contract for project designing with the entrusting party of the engineering project.

Article 7 The cooperative designing may either cover the whole process of an engineering project, i.e., from prospecting to the designing of the project, or just involve a particular phase of the project.

Article 8 With respect to the selection of the main types of equipment as well as that of materials, the proposal in the matter shall, after consultation between the two parties in cooperation, be put forward by the chief designing party. Equipment and materials originating in China shall be given priority in selection, on condition that they satisfy the requirements of production in terms of technology and use.

Article 9 Advanced and appropriate standards and norms shall be adopted in cooperative designing and the two parties in cooperation shall provide each other with the models they plan to adopt.

Article 10 The two parties in cooperation shall have a joint check up on the designing conditions, and both parties shall be jointly responsible for the quality of the designs. As soon as the two parties have completed their designing in accordance with the stipulations of the contract, they shall submit the designs to the entrusting party for examination and approval.

Article 11 In the course of cooperative designing, in case the foreign designing institution requires basic data concerning the topography, geology, hydrology, meteorology, and environment in the location of the project, the entrusting party of the engineering project shall apply to the related competent authorities for examination and approval in accordance with the different categories of data, and the provision of such data is non- gratuitous. The users of such data are not permitted to transfer the data to a third party.

Article 12 In the course of cooperative designing, the two parties in cooperation shall, in accordance with the stipulations of the contract, fulfil their respective obligations to the letter; if one party fails to meet the requirements of the contract, it shall take the liabilities stipulated in the contract.

Article 13 The two parties in cooperation shall, in accordance with the provisions of the tax law of China, pay taxes on the income accruing to them from the designing work.

Article 14 Cooperative designing, undertaken by designing institutions in Hong Kong and Macao with the designing institutions in the mainland, shall be handled with reference to these Provisions.

Article 15 The right to interpret these Provisions resides in the State Planning Commission.

Article 16 These Provisions shall go into effect as of July 1, 1986.