Advisory Board

  • Cai Hongbin
  • Peking University Guanghua School of Management
  • Peter Clarke
  • Barry Diller
  • IAC/InterActiveCorp
  • Fu Chengyu
  • China National Petrochemical Corporation (Sinopec Group)
  • Richard J. Gnodde
  • Goldman Sachs International
  • Lodewijk Hijmans van den Bergh
  • De Brauw Blackstone Westbroek N.V.
  • Jiang Jianqing
  • Industrial and Commercial Bank of China, Ltd. (ICBC)
  • Handel Lee
  • King & Wood Mallesons
  • Richard Li
  • PCCW Limited
  • Pacific Century Group
  • Liew Mun Leong
  • CapitaLand Limited
  • Martin Lipton
  • New York University
  • Wachtell, Lipton, Rosen & Katz
  • Liu Mingkang
  • China Banking Regulatory Commission (CBRC)
  • Dinesh C. Paliwal
  • Harman International Industries
  • Leon Pasternak
  • Bank of America Merrill Lynch
  • Tim Payne
  • Brunswick Group
  • Joseph R. Perella
  • Perella Weinberg Partners
  • Baron David de Rothschild
  • N M Rothschild & Sons Limited
  • Dilhan Pillay Sandrasegara
  • Temasek Holdings
  • Shao Ning
  • State-owned Assets Supervision and Administration Commission of the State Council of China (SASAC)
  • John W. Snow
  • Cerberus Capital Management, L.P.
  • Former U.S. Secretary of Treasury
  • Bharat Vasani
  • Tata Group
  • Wang Junfeng
  • King & Wood Mallesons
  • Wang Kejin
  • China Banking Regulatory Commission (CBRC)
  • Wei Jiafu
  • China Ocean Shipping Group Company (COSCO)
  • Yang Chao
  • China Life Insurance Co. Ltd.
  • Zhu Min
  • International Monetary Fund

Legal Roundtable

  • Dimitry Afanasiev
  • Egorov Puginsky Afanasiev and Partners (Moscow)
  • William T. Allen
  • NYU Stern School of Business
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Johan Aalto
  • Hannes Snellman Attorneys Ltd (Finland)
  • Nigel P. G. Boardman
  • Slaughter and May (London)
  • Willem J.L. Calkoen
  • NautaDutilh N.V. (Rotterdam)
  • Peter Callens
  • Loyens & Loeff (Brussels)
  • Bertrand Cardi
  • Darrois Villey Maillot & Brochier (Paris)
  • Santiago Carregal
  • Marval, O’Farrell & Mairal (Buenos Aires)
  • Martín Carrizosa
  • Philippi Prietocarrizosa & Uría (Bogotá)
  • Carlos G. Cordero G.
  • Aleman, Cordero, Galindo & Lee (Panama)
  • Ewen Crouch
  • Allens (Sydney)
  • Adam O. Emmerich
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Rachel Eng
  • WongPartnership (Singapore)
  • Sergio Erede
  • BonelliErede (Milan)
  • Kenichi Fujinawa
  • Nagashima Ohno & Tsunematsu (Tokyo)
  • Manuel Galicia Romero
  • Galicia Abogados (Mexico City)
  • Danny Gilbert
  • Gilbert + Tobin (Sydney)
  • Vladimíra Glatzová
  • Glatzová & Co. (Prague)
  • Juan Miguel Goenechea
  • Uría Menéndez (Madrid)
  • Andrey A. Goltsblat
  • Goltsblat BLP (Moscow)
  • Juan Francisco Gutiérrez I.
  • Philippi Prietocarrizosa & Uría (Santiago)
  • Fang He
  • Jun He Law Offices (Beijing)
  • Christian Herbst
  • Schönherr (Vienna)
  • Lodewijk Hijmans van den Bergh
  • Royal Ahold (Amsterdam)
  • Hein Hooghoudt
  • NautaDutilh N.V. (Amsterdam)
  • Sameer Huda
  • Hadef & Partners (Dubai)
  • Masakazu Iwakura
  • Nishimura & Asahi (Tokyo)
  • Christof Jäckle
  • Hengeler Mueller (Frankfurt)
  • Michael Mervyn Katz
  • Edward Nathan Sonnenbergs (Johannesburg)
  • Handel Lee
  • King & Wood Mallesons (Beijing)
  • Martin Lipton
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Alain Maillot
  • Darrois Villey Maillot Brochier (Paris)
  • Antônio Corrêa Meyer
  • Machado, Meyer, Sendacz e Opice (São Paulo)
  • Sergio Michelsen Jaramillo
  • Brigard & Urrutia (Bogotá)
  • Zia Mody
  • AZB & Partners (Mumbai)
  • Christopher Murray
  • Osler (Toronto)
  • Francisco Antunes Maciel Müssnich
  • Barbosa, Müssnich & Aragão (Rio de Janeiro)
  • I. Berl Nadler
  • Davies Ward Phillips & Vineberg LLP (Toronto)
  • Umberto Nicodano
  • BonelliErede (Milan)
  • Brian O'Gorman
  • Arthur Cox (Dublin)
  • Robin Panovka
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Sang-Yeol Park
  • Park & Partners (Seoul)
  • José Antonio Payet Puccio
  • Payet Rey Cauvi (Lima)
  • Kees Peijster
  • COFRA Holding AG (Zug)
  • Juan Martín Perrotto
  • Uría & Menéndez (Madrid/Beijing)
  • Philip Podzebenko
  • Herbert Smith Freehills (Sydney)
  • Geert Potjewijd
  • De Brauw Blackstone Westbroek (Amsterdam/Beijing)
  • Qi Adam Li
  • Jun He Law Offices (Shanghai)
  • Biörn Riese
  • Mannheimer Swartling (Stockholm)
  • Mark Rigotti
  • Herbert Smith Freehills (Sydney)
  • Rafael Robles Miaja
  • Robles Miaja (Mexico City)
  • Alberto Saravalle
  • BonelliErede (Milan)
  • Maximilian Schiessl
  • Hengeler Mueller (Düsseldorf)
  • Cyril S. Shroff
  • Cyril Amarchand Mangaldas (Mumbai)
  • Shardul S. Shroff
  • Shardul Amarchand Mangaldas & Co.(New Delhi)
  • Klaus Søgaard
  • Gorrissen Federspiel (Denmark)
  • Ezekiel Solomon
  • Allens (Sydney)
  • Emanuel P. Strehle
  • Hengeler Mueller (Munich)
  • David E. Tadmor
  • Tadmor & Co. (Tel Aviv)
  • Kevin J. Thomson
  • Barrick Gold Corporation (Toronto)
  • Yu Wakae
  • Nagashima Ohno & Tsunematsu (Tokyo)
  • Wang Junfeng
  • King & Wood Mallesons (Beijing)
  • Tomasz Wardynski
  • Wardynski & Partners (Warsaw)
  • Rolf Watter
  • Bär & Karrer AG (Zürich)
  • Xiao Wei
  • Jun He Law Offices (Beijing)
  • Xu Ping
  • King & Wood Mallesons (Beijing)
  • Shuji Yanase
  • OK Corporation (Tokyo)
  • Alvin Yeo
  • WongPartnership LLP (Singapore)

Founding Directors

  • William T. Allen
  • NYU Stern School of Business
  • Wachtell, Lipton, Rosen & Katz
  • Nigel P.G. Boardman
  • Slaughter and May
  • Cai Hongbin
  • Peking University Guanghua School of Management
  • Adam O. Emmerich
  • Wachtell, Lipton, Rosen & Katz
  • Robin Panovka
  • Wachtell, Lipton, Rosen & Katz
  • Peter Williamson
  • Cambridge Judge Business School
  • Franny Yao
  • Ernst & Young

CHINESE UPDATE — China Adopted Cybersecurity Law

Editors’ Note: Contributed by Fang He, a partner at JunHe’s Beijing headquarters, and by Adam Li, a partner at JunHe’s Shanghai office; both are members of XBMA’s Legal Roundtable. Ms. He specializes in M&A, foreign direct investment and outbound investment from China. Mr. Li is a leading expert in international mergers & acquisitions, capital markets and international financial transactions involving Chinese companies. This article was authored by Ms. Dong Xiao, a partner in JunHe’s Beijing headquarters who specializes in the areas of foreign direct investment, mergers and acquisitions, Internet, high-tech, and data privacy and information law.  Associates, Mr. Cai Kemeng and Ms. Guo Jinghe helped with this article.

Highlights:

After deliberations over more than a year’s time, the Standing Committee of the National People’s Congress (“NPC Standing Committee”) finally adopted the Cyber Security Law (“CSL”) on November 7, 2016.  The CSL is the first omnibus law in China governing cyber security issues and has incorporated a number of new legal concepts and requirements that may impact companies with business operations in China.

Main Article

Below we will briefly introduce the CLS in terms of its background, applicable scope and legislative purpose, major requirements, and potential practical impact.

Introduction

Background

This legislation includes provisions relating to information and technology security. Meanwhile, as China has not enacted a unified data protection law, the CSL also incorporates several provisions related to the protection of personal information, which is also an issue of wide concern.

Application Scope and Purpose

The CSL applies to the construction, operation, maintenance and use of networks as well as the supervision and administration of cyber security within the territory of the PRC. “Networks” include networks and systems that are composed of computers and other information terminals and the relevant facilities and used for purposes of collecting, storing, transmitting, exchanging and processing information in accordance with certain rules and procedures (Article 76).  “Network operators”, an important subject of legal obligations under the CSL, is broadly defined as “owners and administrator of networks and network service providers (Article 76)”.

The CSL provides for “safeguarding the national cyberspace sovereignty” as a fundamental principle, and, for that purpose, includes provisions on, inter alia, the strategy, plan and promotion of cyber security, network operation security, network information security, and alarm and emergency response systems.

Responsible Authority

The national cyberspace administration authority, namely the Cyberspace Administration of China (“CAC”), is responsible for the coordination of cyber security protection activities and the relevant supervision and administration activities on a national level.  It further provides that the Ministry of Industry and Information Technology, the Ministry of Public Security and other relevant government departments shall be responsible for the protection and supervision of cyber security within their respective authorities.

Transition Period

The CSL will become effective on June 1, 2017.  Therefore, nearly a half year is provided as a transition period before its implementation.

Major Legal Requirements

Strengthened Network Operation Security Obligations

The CSL provides various security protection obligations for network operators, including, inter alia:

  • the compliance with a series of requirements of tiered cyber protection systems (Article 21);
  • the verification of users’ real identity (an obligation for certain network operators) (Article 24);
  • the formulation of cyber security emergency response plans (Article 25); and
  • the assistance and support necessary to investigative authorities where necessary for protecting national security and investigating crimes (Article 28).

In addition, network products and service providers shall inform users about and report to the relevant authorities any known security defects and bugs, and furthermore shall provide constant security maintenance services for their products and services, not install malware with their products, and clearly inform users and obtain their consent if their products or services collect users’ information (Article 22).

Key network facilities and special products used for protecting network security shall comply with the relevant national standards and compulsory certification requirements, and may only be offered for sale after being certified by the qualified security certification organization or passing the relevant security tests (Article 23).

It is notable that some requirements for network operators, such as retention of user logs for at least six months (Article 21) and regulations on the publication of cyber security information regarding system loopholes, computer viruses, cyber-attacks, cyber invasions, etc. (Article 26), are prescribed for the first time under PRC laws.

Heightened Protection of Critical Information Infrastructure

The CSL, for the first time under PRC law, clearly imposes a series of heighted security obligations for operators of critical information infrastructure (“CII”), including:

  • internal organization, training, data backup and emergency response requirements (Article 34);
  • storage of personal information and other important data must in principle be secured within the PRC territory (Article 37);
  • procurement of network products and services which may affect national security shall pass the security inspection of the relevant authorities (Article 35); and
  • conducting annual assessments of cyber security risks and reporting the result of those assessments and improvement measures to the relevant authority (Article 38).

Protection of Personal Information

The CSL reiterates the obligations of network operators regarding the protection of personal information which appear across existing laws and regulations, including the mandate to observe the principle of lawfulness, necessity and appropriateness in the collection and use of personal information and to observe “the notification and consent requirements” (Article 41), to use personal information only for the purpose agreed upon by the relevant individual (Article 41), to adopt security protection measures for personal information (Article 42), and to protect the individual’s right to access and correct personal information (Article 43).  In addition, the CSL also incorporates some new rules on personal information protection, including data breach notification requirements (Article 42), and data anonymization as an exception for notification and consent requirements (Article 42), and the individual’s right to request the network operators make corrections to or delete their personal information in case the information is wrong or used beyond the agreed purpose (Article 43).

Practical Impacts

The CSL is the first law in the PRC specially focused on cyber security matters. When the CSL takes effect on June 1, 2017, internet companies and other industries in China will be subject to stricter and more comprehensive obligations and face more severe punishments for violations.  As an omnibus law on cyber security issues, many provisions of the CSL are still very general and abstract, and the detailed requirements for implementation and enforcement depend on subsequent and more specific implementation regulations as well as the opinion of the relevant authorities. We may expect that the relevant regulatory authorities may promulgate a series of implementation regulations to clarify certain requirements under the CSL, such as the regulations on tiered cyber security protection systems, the specific scope and protection measures of CII, the protection of minors on networks, the mandatory security certification and the test requirements for key network devices and special cyber security products, national security review on the network products and services procured by CII operators, etc.  For example, as for the protection of minors on the internet, the CAC published a draft of Regulations on Protection of Minors Online for public comment last month.

Nearly half a year remains before the formal implementation of the CSL and companies may use this transition period to improve their understanding of the potential impacts of the CSL on their business.  In particular, if companies are deemed operators of CII, the CSL may have a significant impact on its network security framework, procurement of security products, and data storage. Companies may consider whether they need to adjust their business and operation practices in these aforementioned aspects and enhance their cyber security protections so as to ensure fully compliance with the CSL.  Given the specific implementation of the requirements in the CSL are not entirely clear, companies will also need to closely follow any subsequently released regulations and opinions of the relevant governmental authorities.

The views expressed herein are solely those of the author and have not been endorsed, confirmed, or approved by XBMA or any of the editors of XBMA Forum, nor by XBMA’s founders, members, contributors, academic partners, advisory board members, or others. No inference to the contrary should be drawn.

Comments are closed.

Subscribe to Newsletter

Enter your Email

Preview Newsletter