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TABLE OF CONTENTS CHAPTER I GENERAL PROVISIONS CHAPTER II JURISDICTION CHAPTER III LIABILITY SUBJECTS CHPATER IV LIABILITIES FOR INVALID CONTRACTS CHAPTER V LIABILITIES FOR TRANSACTION ACTS CHPATER VI LIABILITIES FOR OVERDRAFT TRANSACTIONS CHPATER VII LIABILITIES FOR MANDATORY LIQUIDATION OF POSITIONS CHAPTER VIII LIABILITIES FOR DELIVERY OF MATERIAL GOODS CHAPTER IX LIABILITIES FOR GUARANTEEING THE PERFORMANCE OF CONTRACTS CHAPTER X LIABILITIES FOR INFRINGEMENT CHAPTER XI BURDEN OF PROOF CHAPTER XII PRESERVATION AND EXECUTION CHAPTER XIII MISCELLANEOUS In order to correctly try the futures dispute cases, the present Provisions on several issues concerning the trial of futures dispute cases are enacted in accordance with the relevant laws and regulations, such as the General Principles of Civil Law of the People's Republic of China, the Contract Law of the People's Republic of China and the Civil Procedure Law of the People's Republic of China, and in light of the trial practice experience. CHAPTER I GENERAL PROVISIONS Article 1. In the trial of futures dispute cases, the people's courts shall, according to law, protect the legitimate rights and interests of the parties concerned, correctly determine their risks and liabilities, and maintain the order of the futures market. Article 2. In the trial of futures dispute cases, the people's courts shall determine the liabilities of the delinquent party strictly in accordance with the stipulations in the contract agreed upon by the parties, except that such stipulations go against the compulsory provisions of the laws and administrative regulations. Article 3. In the trial of the cases concerning disputes over futures infringement and invalid futures transaction contracts, the people's courts shall determine the civil liabilities of the wrongdoer on the basis of whether the parties have faults, and the natures and seriousness of the faults, and the causality between the fault and the loss. CHAPTER II JURISDICTION Article 4. The people's courts shall determine the jurisdictions over futures dispute cases in accordance with Articles 24, 25, and 29 of the Civil Procedure Law. Article 5. Where the futures transaction takes place in the branch, such as branch company or business department, of a futures company, the domicile of the said branch shall be the loci solutionis. Where any dispute arises from the delivery of material goods, the domicile of the futures exchange shall be the loci solutionis. Article 6. With respect to a futures dispute case in which infringement and breach of contract are concurrent, the jurisdiction shall be determined according to the cause of action selected by the party concerned. Where the party files the action for both the breach of contract and the infringement, the jurisdiction shall be determined according to the claim stands first in the bill of complaint. Article 7. Futures dispute cases shall be under the jurisdiction of intermediate people's courts. The higher people's courts may determine that some basic-level people's courts accept the futures dispute cases where necessary. CHAPTER III LIABILITY SUBJECTS Article 8. A futures company shall bear the civil liabilities arising from the futures transaction acts conducted by its employees within the business scope of the company. Article 9. Where a futures company authorizes any person who is not its staff member to conduct any futures transaction act in the company's name, that futures company shall bear the civil liabilities arising therefrom; and where the futures transaction act conducted by any person who is not a staff member of the futures company meets the conditions for apparent representation specified in Article 49 of the Contract Law, that futures company shall bear the civil liabilities arising therefrom. Article 10. Where a citizen or corporation, upon the entrustment of a futures company or client, provides as an intermediary the company or client with intermediary services of contract opportunities or of concluding futures brokerage contracts, the futures company or client shall pay remuneration to the intermediary according to the agreement. And the intermediary shall independently bear the civil liabilities arising from the intermediary brokerage relationship. Article 11. Where any entity or individual engages in futures transactions with falsified identity and the transaction acts meet the trading rules of the futures exchange, that entity or individual shall accept the transaction results by itself/himself/herself. Article 12. Where the branch, such as branch company or business department, that was set up by a futures company and has obtained the business license and operation license is unable to bear the civil liabilities arising from the business activities carried out beyond the business scope, that futures company shall bear the said liabilities. A client with fault shall bear the corresponding civil liabilities. CHAPTER IV LIABILITIES FOR INVALID CONTRACTS Article 13. Under any of the following circumstances, a futures brokerage contract shall be determined as invalid: (1) A futures company engages in futures brokerage services without the qualification as the subject to provide futures brokerage services; (2) A client engages in futures transactions without the qualification as the subject to engage in futures transactions; or (3) Violation of the prohibitive provisions of laws and regulations. Article 14. If any economic loss is caused to a client as the result of invalidity of a futures brokerage contract, the bearing of liabilities shall be determined according to the causality between the invalid act and the loss. If the loss of one party is caused by the other party's act, the other party shall compensate for the loss; where both parties to the contract have faults, they shall bear their corresponding civil liabilities according to the seriousness of their respective faults. Article 15. Where a futures brokerage contract is invalidated as the result of the providing of futures brokerage services by a business institution without the subject qualification, if that institution makes transactions on the market according to the client's instructions, it shall return the collected commissions to the client, and the client shall accept the transactions results. If that institution hasn't followed the client's instructions and made no transaction on the market, and the client has no fault, the institution shall refund the margin to the client and compensate for the client's losses. The compensation includes the transaction handling charges, the taxes and the interest. CHAPTER V LIABILITIES FOR TRANSACTION ACTS Article 16. Where a futures company, when concluding the futures brokerage contract with a client, fails to remind the client to pay attention to the Instructions for Futures Transaction Risks, and the client signs or affixes stamp on the contract, the futures company shall bear the corresponding liabilities for compensation for the losses of the client in the transactions according to Item (3) of Article 42 of the Contract Law. However, if it can be proved according to the records of previous transaction results that the client has transaction experience, the futures company shall be relieved from the liabilities. Article 17. Where a futures company makes futures transactions upon full authorization of the client, it shall bear the major liabilities for compensation for the losses in the transactions, but the amount of compensations shall not exceed 80% of the losses, except the laws and administrative regulations have otherwise provisions. Article 18. Where there is no stipulation on the method of giving instructions or such stipulations are unclear in the futures brokerage contract concluded by a futures company and a client, and when the futures company is unable to prove that it made the transaction on the basis of the client's instructions, it shall bear the liabilities for compensation for the losses caused to the client by that transaction, but the case that the client subsequently confirms the transaction shall be excluded. Article 19. Where a futures company causes any loss to a client as the result of execution of the instructions of a non-trustee, the futures company shall bear the liabilities for compensation, and the non-trustee shall bear joint and several liabilities thereupon, but the case that the clients makes subsequent confirmation shall be excluded. Article 20. Where the instructions given by a client contain no type, quantity, and trading direction, and the futures company makes the transaction without refusing such instructions and thus causes any loss to the client, the futures company shall bear the liabilities for compensation, but the case that the clients makes subsequent confirmation shall be excluded. Article 21. If the instructions given by a client contain definite quantity and trading direction, but no valid term, such instructions shall be regarded as valid on the current day; if there is no dealing price, the transaction shall be regarded as made at the market price, if there is no direction of opening or closing, the transaction shall be regarded as opening transaction. Article 22. Where a futures company wrongly executes a client's instructions, it shall accept the transaction results except those confirmed by the client, and the case shall be handled respectively in the following ways: (1) With respect to any mistake in the transaction quantity, the futures company shall bear the part exceeding the instructed quantity, or make up the lacking part or compensate for the direct loss; (2) Where the transaction price exceeds the price range instructed by the client, the futures company shall bear the loss of price difference or accept the transaction results. Article 23. A futures company that improperly delays the execution of a client's instructions and causes losses to the client shall bear the liabilities for compensation, but shall bear no liability if the failure to completely or partially fulfill the client's instructions is due to market reasons. Article 24. Where a futures company sells at a higher price or buys at a lower price than that instructed by a client, and takes the proceeds arising from the price margin as its own, if the client requests that futures company to refund such proceeds, the people's court shall support the client, except when the futures company and the client have otherwise agreements. Article 25. Where a futures exchange fails to comply with the time limits and methods specified in the trading rules when notifying the futures company of the settlement results of the transactions or positions, and thus causes any loss to the futures company, the futures exchange shall bear the liabilities for compensation. Where a futures company fails to comply with the time limits and methods specified in the futures brokerage contract when notifying the client of the settlement results of the transactions or positions, and thus causes any loss to the client, the futures company shall bear the liabilities for compensation. Article 26. Where a futures company and the client haven't agreed upon the method of notification of the transaction settlement results or the agreement on that is unclear, and if the futures company is unable to provide the evidence to prove that it has already sent out the aforesaid notification, it shall bear the major liabilities for compensation for the losses expanded as a result of the client's continual holding of position, but the compensation shall not exceed 80% of the losses. Article 27. The confirmation made by a client in respect of the transaction settlement result of the current day shall be regarded as the confirmation of all the position and transaction settlement results prior to that day, and the client shall accept by itself the transaction results thus generated. Article 28. Where a futures company raises any objection to the transaction settlement result, but the futures exchange fails to take timely measures and thus causes expansion of the losses, the futures exchange shall bear the liabilities for compensation for the expanded losses of the futures company. Where a client raises any objection to the transaction settlement result, but the futures company fails to take timely measures and thus causes expansion of the losses, the futures company shall bear the liabilities for compensation for the expanded losses of the client. Article 29. Where a futures company or a client has any objection to the transaction settlement result of the futures exchange or of the futures company, but the futures company or client fails to raise that objection within the period set forth by the trading rules of the futures exchange or agreed upon in the futures brokerage contract, the futures company or client shall be regarded as having confirmed the transaction settlement result. Article 30. Where a futures company uses one code for several clients in the transaction, the client shall bear no liability, however, if the futures company can provide the evidence to prove that it has made the transaction on the market according to the client's instructions, the client shall accept the corresponding transaction results. CHAPTER VI LIABILITIES FOR OVERDRAFT TRANSACTIONS Article 31. Where a futures exchange allows any futures company that has no margin or insufficient margin to make transactions or to continue to hold positions, the transactions involved shall be deemed as overdraft transactions. Where a futures company allows any client that has no margin or insufficient margin to make transactions or to continue to hold positions, the transactions involved shall be deemed as overdraft transactions. Whether a futures company or client has made an overdraft transaction shall be determined on the basis of the proportion of margin set forth by the futures exchange. Article 32. Where a futures exchange fails to notify a futures company which has insufficient margin to add the margin pursuant to the provisions, the futures exchange shall bear the major liabilities for compensation for the losses expanded due to the client's overdraft resulted from market changes adverse to the positions, but the compensation shall not exceed 60% of the losses. Where a futures company fails to notify any client which has insufficient margin to add the margin pursuant to the provisions, the futures company shall bear the major liabilities for compensation for the losses expanded due to the client's overdraft resulted from market changes adverse to the positions, but the compensation shall not exceed 80% of the losses. Article 33. Where a futures exchange has performed the notification obligation for a futures company which has insufficient margin, but the futures company fails to add the margin in a timely manner, and if the futures company requests to keep the positions and a written agreement is reached, the futures company shall bear the losses incurred in the period when the positions are kept; and the futures exchange shall bear the losses exceeding the margin. Where a futures company has performed the notification obligation for a client which has insufficient margin, but the client fails to add the margin in a timely manner, and if the client requests to keep the positions and a written agreement is reached, the client shall bear the losses incurred in the period when the positions are kept; and the futures company shall bear the losses exceeding the margin. Article 34. Where a futures exchange allows the futures company to make opening overdraft transactions, the futures exchange shall bear the major liabilities for compensation for the losses caused by such transactions, but the compensation shall not exceed 60% of the losses. Where a futures company allows the client to make opening overdraft transaction, the futures company shall bear the major liabilities for compensation for the losses caused by such transactions, but the compensation shall not exceed 80% of the losses. Article 35. Where a futures exchange allows the futures company to make overdraft transactions and agree with the company upon share of benefits and risks, the futures exchange shall bear the corresponding liabilities for compensation for the losses caused by the overdraft transactions. Where a futures company allows the client to make overdraft transactions and agree with the client upon share of benefits and risks, the futures company shall bear the corresponding liabilities for compensation for the losses caused by the overdraft transactions. CHAPTER VII LIABILITIES FOR MANDATORY LIQUIDATION OF POSITIONS Article 36. Where a futures company has insufficient margin and fails to add the margin within the period set forth by the futures exchange, it shall be dealt with pursuant to the trading rules; where the rules are unclear, the futures exchange shall have the right to liquidate the positions on a mandatory basis with respect to the company's unliquidated futures contracts, and the losses caused thereby shall be borne by the futures company. Where a client has insufficient margin and fails to add the margin within the period set forth by the futures exchange, it shall be dealt with pursuant to the stipulations of the futures brokerage contract; where the stipulations are unclear, the futures company shall have the right to liquidate the positions on a mandatory basis with respect to the client's unliquidated futures contracts, and the losses caused thereby shall be borne by the client. Article 37. Where a futures exchange must make mandatory liquidation due to the futures company's holding excessive positions against the rules or any other rule-breaking act, the losses caused thereby shall be borne by the futures company. Where a futures company must make mandatory liquidation due to the client's holding excessive positions against the rules or any other rule-breaking act, the losses caused thereby shall be borne by the client. Article 38. Where the margin insufficiency of a futures company or client meets the conditions for mandatory liquidation of positions, the futures company or client shall bear the losses expanded from the failure to liquidate the positions that shall be liquidated by itself, except the laws and administrative regulations have otherwise provisions or the parties concerned have otherwise agreements. Article 39. The amount of positions liquidated by a futures exchange or futures company shall basically correspond to the amount of margin that the futures company or client shall add. The losses caused by excessive liquidation of positions shall be borne by the party making the mandatory liquidation. Article 40. Where a futures exchange or futures company fails to comply with the conditions, time, or methods of mandatory liquidation specified in the trading rules of the futures exchange or agreed upon in the futures brokerage contract when making mandatory liquidation against a futures company or client, and thus causes losses to the futures company or client, the futures exchange or futures company shall bear the liabilities for compensation. Article 41. The expenses incurred from the mandatory liquidation of positions by a futures exchange pursuant to law or the trading rules shall be borne by the futures company under liquidation; and the futures company shall have the right to recover the losses from the clients with faults after bearing the liabilities. The expenses incurred from the mandatory liquidation of positions by a futures company pursuant to law or agreement shall be borne by the client. CHAPTER VIII LIABILITIES FOR DELIVERY OF MATERIAL GOODS Article 42. Any party that causes any loss to the holder of a warehouse receipt due to the failure to perform the obligation of goods inspection and acceptance or due to improper keeping of the goods shall bear the liabilities for compensation. Article 43. A futures company that fails to perform the obligation of applying for delivery on behalf of the client shall bear the liabilities for breach of contract; and shall bear the liabilities for compensation if any loss is caused to the client. Article 44. Breach of delivery is constituted if the seller futures company fails to deliver the standard warehouse receipt to the futures exchange or the buyer futures company fails to pays the funds in full to the account of the futures exchange on the day of delivery. Where breach of delivery is constituted, the delinquent party shall bear the liabilities for breach of contract; under any of the circumstances specified in Item (4) of Article 94 of the Contract Law, the opposite party shall have the right to request termination of the delivery or request the delinquent party to continue the delivery. In case of failure in compulsory purchase or bidding, the delinquent party shall bear the liabilities for compensation pursuant to the provisions of the futures exchange on compensation methods. Article 45. Where the buyer or seller client breaches the contract during the delivery period fixed in the futures contract, the futures exchange or futures company shall, on behalf of the futures company or the client, be liable for the breach of contract to the opposite party. Article 46. Where a buyer client raises no objection to the quality or quantity of the goods within the period set forth in the transaction rulings of the futures exchange, that client shall be regarded as having no objection to the quantity or quality of the goods. Article 47. Where a delivery warehouse fails to deliver the goods in conformity with the requirements of the futures contract to the holder of the standard warehouse receipt within the period set forth in the trading rules of the futures exchange, and thus causes any loss to the said holder, the delivery warehouse shall bear the liabilities thereupon and the futures exchange shall bear joint and several liabilities thereupon. The futures exchange shall have the right to recover the losses from the delivery warehouse after bearing the liabilities. CHAPTER IX LIABILITIES FOR GUARANTEEING THE PERFORMANCE OF CONTRACTS Article 48. Where a futures company fails to perform the corresponding payment obligations according to the requirements of no-debt settlement, and the futures exchange fails to perform the said obligation on behalf of the futures company, and thus causes any loss to the opposite transaction party, the futures exchange shall bear the liabilities for compensation. The futures exchange that has performed the obligation or borne the liabilities for compensation on behalf of the futures company shall have the right to recover the losses from the party failing to perform the obligation. Article 49. Where a futures exchange fails to perform the futures contract on behalf of a futures company, the futures company shall claim against the futures exchange at the request of the client. Where the futures company refuses to claim against the futures exchange on behalf of the client, the client may directly file an action against the futures exchange, and the futures company may participate in the action as a third party. Article 50. Where any direct economic loss has been caused to a futures company or client due to any error in publicizing of information or handling of instructions resulted from the futures exchange's fault, the futures exchange shall bear the liabilities for compensation, except when it can prove that the error is resulted from force majeure. Article 51. Where any loss has been caused to the client due to the reasonable emergent measures taken by a futures exchange pursuant to the relevant provisions with respect to any abnormal situation of the futures market, the futures exchange shall bear no liability for compensation. Where any loss has been caused to the client due to a futures company's execution of the reasonable emergent measures of a futures exchange, the futures company shall bear no liability for compensation. CHAPTER X LIABILITIES FOR INFRINGEMENT Article 52. Where a futures exchange or futures company intentionally provides any falsified information to misguide the client to give orders, that futures exchange or futures company shall bear the economic losses caused to the client thereby. Article 53. A futures company's acts of not taking the client's instructions for transactions on the market, such as private offsets or bet with the client, shall be regarded as invalid, and the futures company shall compensate for the economic losses thus caused to the client; where both the futures company and the client have faults, they shall bear their corresponding liabilities for compensation according to the seriousness of their respective faults. Article 54. Where a futures company makes any transaction without authorization in the client's name, and the client refuses to confirm the transaction result, the losses thus caused shall be borne by the futures company. Article 55. Where a futures company misappropriates the client's margin or transfer the client's margin in violation of the relevant provisions, and thus causes any loss to the client, that futures company shall bear the liabilities for compensation. CHAPTER XI BURDEN OF PROOF Article 56. A futures company shall bear the burden of proof for whether the client's instructions are taken for transactions on the market. Confirmation of whether a futures company has taken the instructions given by a client for transactions on the market shall be based on whether the transaction records of the futures exchange and the transaction settlement results notified by the futures company are consistent with the types and transaction direction recorded in the client's instructions, and whether the prices and time of transaction are consistent, the instructed transaction quantity may be taken for reference. However, the case when the client has opposite evidence to show that its instructions have not been taken for the transactions on market shall be excluded. Article 57. Where a futures exchange has notified a futures company to add the margin and the futures company denies receipt of such notification, the futures exchange shall bear the burden of proof. Where a futures company has notified a client to add the margin and the client denies receipt of such notification, the futures company shall bear the burden of proof. CHAPTER XII PRESERVATION AND EXECUTION Article 58. Where a people' s court preserves the membership fee or transaction seat corresponding to the membership, the court shall rules that the said membership shall not be transferred, buy may not stop the use of the member transaction seat. The people's court shall have the right to take compulsory measures to transfer the transaction seat in the process of execution according to law. Article 59. Where a futures exchange or futures company is the debtor, the people's court may not freeze or allocate the funds in the margin account of that futures company in the future exchange or of that client in the futures company. If there is any evidence to prove that in the said margin account there are surplus funds exceeding the justified funds of the futures company or client, and if the futures exchange or futures company is unable to provide any opposite evidence within a reasonable period set forth by the people's court, the people's court may freeze or allocate the self-owned funds of the futures exchange or futures company in the said account according to law. Article 60. Where a futures company is the debtor, the people's court may not freeze or allocate the minimum amount of settlement reserve in the special settlement account that is not used for the futures contract and is used to guarantee the performance of the futures contract; if the futures company has liquidated all the positions and paid off the funds of the clients, the people's court may freeze or allocate the settlement reserve according to law. If the futures company has any other properties, the people's court shall freeze, seal, or execute such properties first according to law. Article 61. Where a client or a self-run member is the debtor, the people's court may take preservation and execution measures against that debtor's margin or positions according to law. CHAPTER XIII MISCELLANEOUS Article 62. The "futures company" mentioned in the present Provisions shall refer to the business institution that has been approved to act as an agent for the investors to undertake futures transactions according to law, and any branch thereof, such as the branch company or business department. The "client" shall refer to an investor that entrusts the futures company to undertake futures transactions. Article 63. The present Provisions shall come into force as of July 1, 2003. Any futures transaction act or infringing act occurred or occurring prior to July 1, 2003, shall be governed by the relevant provisions at that time; where such provisions are unclear, the case shall be dealt with by referring to the present Provisions. |
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