Mar 16, 2023

Apostille Convention Adopted to Boost Ease of Doing Business in China

On 8 March 2023, China announced its accession to the Convention Abolishing the Requirement of Legalization for Foreign Public Documents (concluded on 5 October 1961, “Apostille Convention”), which will go into effect for Mainland China on 7 November 2023 (it is already in effect in the Hong Kong and Macau Special Administrative Regions). The Apostille Convention simplifies the process of certifying public documents for use in the over 120 acceding members. China’s accession to the Apostille Convention will be a welcomed change for many – foreign and domestic entities and individuals – needing to use foreign public documents within China.

For decades, the legalization of public documents has been required for many operating in China. Foreign certificates of incorporation (or their equivalent), documents notarized outside of China, birth and marriage certificates among others have all had to be legalized before acceptance by domestic Chinese officials and courts. Currently, the legalization process is complex. It often requires that certified or notarized public documents be obtained in the country of issuance, then legalized by a Chinese consulate or embassy in that country, and then ultimately submitted to relevant officials. Often, between initial issuance and legalization, one or more additional certifications are needed. Moreover, legalization processes differ from country to country, and even from state to state and region to region. It is time-consuming as well: if things go quickly, legalization can be done in a month, but more often than not, it takes at least twice that long (especially since the pandemic).

As you may imagine, for years Chinese officials such as the State Administration of Market Regulation (or the SAMR) have required that foreign public documents be legalized. The legalization process has been one of the most time-consuming and costly steps for foreign investors when establishing Wholly Foreign Owned Enterprises (“WFOE”), Joint Ventures (“JV”) or any other type of entity, making certain corporate changes, as well as completing many other transactions (e.g., the Real Property Exchange Registry has also been known to require legalized passport copies and powers of attorney). Chinese courts and other authorities often require the legalization of foreign documents to be used in litigation (including evidence), which can add additional time and complexity to legal proceedings in Mainland China.

Once the Apostille Convention takes effect on 7 November 2023, it is expected that many foreign public documents for use in China will only need to be apostilled, instead of legalized. If the Apostille Convention is implemented by Chinese government authorities as expected, it will eliminate the need to send public documents to a Chinese embassy or consulate (where legalization occurs), and in some cases, avoid additional certification steps along the way. The time needed to obtain and submit required documents should go from weeks to days, thereby cutting down the time and cost of establishing entities, completing certain corporate changes, completing transactions, and initiating legal proceedings, among other things. It is possible that these changes will reduce the time needed to establish a Chinese WFOE or JV by up to 50%.

The Apostille Convention is expected to significantly benefit businesses and individuals dealing with China, and technically it should apply upon effectiveness, as the Civil Procedure Law of the People’s Republic of China (“Civil Procedure Law”) stipulates that the provisions of international treaties (such as the Apostille Convention) should prevail over conflicting provisions in domestic law. In practice, however, Chinese courts and government authorities may be slow in implementation. Moreover, Article 271 of the Civil Procedure Law only requires Chinese courts to accept legalized (not apostilled) foreign-related powers of attorney. The same applies to evidence to be used in Chinese courts under Article 16 of the Several Provisions of the Supreme People’s Court on Evidence for Civil Actions. It remains to be seen if these laws will be modified to fully implement the Apostille Convention in the near future, and better clarify the scope of public documents that will require apostille or legalization.

In summary, China’s accession to the Apostille Convention is a welcomed change that is expected to help “grease the wheels” of a number of governmental processes in China. Moreover, it is one in a string of recent signals to the international community from China that it has resolved to further open its doors to international trade and investments and facilitate commercial exchange.

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