Mainland China launches long-awaited civil code

The Civil Code (“Code”) has been passed at the Two Sessions of the National People’s Congress in 2020 after an extensive effort undertaken over a period of several years to re-compile the PRC laws it will replace.

The Code, which will come into effect from 1 January 2021, is largely a consolidation of the existing law. However, it is estimated that around 20% of the Code’s provisions will change the existing law in a substantive way.

This alert summarises some of the key changes, starting with a focus on the additional rights of termination and third party rights, which will affect to some degree all contracts governed by PRC law and then covers other issues which are more specific to financing contracts.

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