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12 March, 2018
Background
For the purpose of implementing the Planning Outline for Building the Social Credit System (2014-2020) and the Guiding Opinions on Establishing a Sound Joint Mechanism to Encourage Integrity and Punish Dishonesty and Accelerating the Building of the Social Credit System (the “Guiding Opinions”) promulgated by the State Council, Civil Aviation Administration of China (“CAAC”) promulgated the Measures for the Credit Administration of Civil Aviation Industry (the “Administrative Measures”) on November 6, 2017 with an aim to facilitate a culture of integrity in the aviation industry, safeguard orderly civil aviation activities, and promote the healthy development of civil aviation.
The Administration Measures became effective from January 1, 2018, with provisions applicable to minor dishonest conduct coming into force from January 1, 2020.
Due to the importance of the new regulations, officials from CAAC legal department unusually attended the 2018 IATA Legal Symposium, and gave a brief introduction about the Administration Measures in the session of China Update.
Overview of the Administrative Measures
Classification of Dishonest Conduct
Dishonest conduct is defined by laws, state council regulations, and ministry-level regulations, and shall be recorded into the credit administration system in accordance with laws. They are classified into two categories, minor dishonest conduct, which shall be recorded on the Gray List, and serious dishonest conduct, which shall be recorded on the Black List. Unless defined as serious dishonest misconduct, dishonest conduct shall generally be regarded as minor dishonest conduct.
Article 8 of the Administrative Measures list fifteen types of serious dishonest conduct, including,
(1)Conduct that would cause the doer to be listed in the “Black List of Safety Management Dishonest Entities” or the “Black List of Safety Management Dishonest Individuals” according to the Measures for the Administration of Dishonest Conduct Relating to Civil Aviation Safety Management (MD-AS-2016-01);
(2)Engaging in the transport of dangerous goods in violation of applicable regulations and thus causing an accident, and refusing to take rectification measures;
(3)Failure to implement security measures required by CAAC, thus resulting in hijacking, airplane explosion or other severe events of unlawful interference, or occurrence of violent terrorism events, or occurrence of unauthorized access to aircraft by unlawful incursion into airport controlled area;
(4)Very severe incidents in safety inspection which are attributable to human factors;
(5)Engaging in business operations without being duly licensed;
(6)Bid-rigging in the bidding for civil aviation construction and equipment;
(7)Severe violation of laws and regulations applicable to pricing administration, as defined by the Pricing Rules for Domestic Air Transport;
(8)Default in paying the development fund for civil aviation with severe circumstances;
(9)Severe infringement on consumer rights during air transport, causing group events of very negative social effects, and refusing to take corrective actions to rectify the negative effects or to improve service quality;
(10)Conduct subject to the administrative punishment of a fine equal to or greater than the amount of CNY 30,000, or the revocation of administrative permit, or a suspension of operations, or a cancellation of an administrative permit;
(11)Being capable to fulfill, but refusing or evading to fulfil administrative decisions by CAAC;
(12)Providing false materials or false testimony when applying for an administrative permit, or when receiving inspections, investigations and assessments of CAAC;
(13)Occurrence of the same minor dishonest conduct twice or more within one year;
(14)Conduct defined as serious dishonest conduct by the CAAC regulations with respect to other administrative matters; and
(15)Other serious dishonest conducts that are defined by laws, state council regulations, and ministry-level regulations applicable to the civil aviation industry.
Collection of the Information about Dishonest Conduct
There are two channels to collect information about dishonest conduct. One channel is through CAAC and its regional offices, each of which shall be responsible for (i) collecting the information about dishonest conduct that occurs in its own territorial jurisdiction, and (ii) after categorization, recording the same on the Gray or Black List in the credit administration system.
The other channel is through the public, which, guided by the principle of independence, impartiality, and objectiveness, is encouraged to provide information about dishonest conduct to CAAC and its regional offices for their reference.
The Application of the Information about Dishonest Conduct
Entities or individuals with a dishonest record on the Gray List will be subject to enhanced supervision by CAAC, and those with a dishonest record on the Black List will be subject to more frequent inspections, heavier punishments and the joint punishment mechanism.
As required by the Guiding Opinions, the joint punishment for dishonest conduct includes administrative restrictions, market restrictions, industry restrictions, and social restrictions.
(1)Administrative restrictions, implemented by CAAC or other administrative agencies, will restrict the concerned entities or individuals by resources allocation, permit approval, nomination for industry model, inspection, administrative punishment and other measures;
(2)Market restriction is implemented by encouraging other market players to adopt risk-based pricing, cease the provision of value-added services, or take other measures based on evaluation of the credit record of concern entities or individuals;
(3)Industry restriction is implemented by notifying the industry association of dishonest conduct, and the association shall further notify the same to all members, criticize the concerned entities or individuals within the industry, reprimand the concerned entities or individual publicly, limit member rights of the concerned entities or individuals, and even expel concerned entities or individual from the industry association; and
(4)Social restriction is implemented by deterring the concerned entities or individuals with public moral condemnation.
CAAC will, through widespread publishing, discretional notification and other effective means, ensure that other administrative agencies, industry associations, other market players and the public have the knowledge of dishonest conduct recorded in the Black List in a timely manner.
Removal of Record about Dishonest Conduct
The record of dishonest conduct will be valid for one year commencing from the date on which it is recorded except that the record for administrative punishments of fine equal to or greater than the amount of CNY 30,000, revocations of administrative permits, suspensions of operations, and cancellations of administrative permits will be valid for three years.
The record about minor dishonest conduct will be removed from the Gray List automatically upon expiration, while the record about serious dishonest conduct can be removed from the Black List after approval for removal is granted by CAAC upon application. The application for removal of records relating to serious conduct shall be made upon the expiration of the valid term of the record, or before the expiration if effective ratification has been implemented.
For further information, please contact:
YAN, Zhenfeng, Partner, Jun He
yanzhenfeng@junhe.com
