Recently, the Supreme People’s Court (“SPC”) has promulgated the Interpretation of the Supreme People’s Court on Several Issues concerning the Application of the Real Rights Law of the People’s Republic of China (I) (the “Interpretation”) for implementation as of March 1. The Interpretation consists of 22 articles in total.
The Interpretation focuses on six aspects, namely, disputes over immovable registration and real rights confirmation or primary relationship, the validity of pre-registration, “bona fide third party” in transfer of special movables, the scope of legal instruments issued by people’s courts or arbitration committees with effectiveness in respect of real rights change, the juridical protection of the preemptive right of divided co-owners, and the bona fide acquisition system.
The Interpretation provides specific provisions on the “bona fide third party” in a transfer of special movables. Specifically, Article 6 makes provisions based on the types of right conflicts frequently arising in practice, in compliance with the real rights rules on change in real rights of special movables and from the perspective of excluding the obligee of an assignor from being a “bona fide third party” as specified in Article 24 of the Real Rights Law. In addition, the Interpretation makes specific provisions on the application of the bona fide acquisition system. It specifies that “where an assignee is not aware of the fact that the assignor has no disposal right and has no gross negligence when accepting the immovable or movable, it shall be deemed that the assignee acts in good faith; and the actual obligee claiming that the assignee does not act in good faith shall bear the burden of proof.”
(Source: http://www.chinacourt.org/law/detail/2016/02/id/148640.shtml)
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