07 August 2020

Pharmaceuticals and Healthcare in the Civil Code

By:Jianwen Huang、Yu Zhang、Changyao Ding、Vicky Yao

The world will be in order if good laws are established.  China’s first Civil Code was approved at the third session of the 13th National People's Congress and will come into force on January 1, 2021.  As a fundamental body of law with a solid foundation, stable expectations and long-term benefits, its compilation is a significant milestone for the rule of law in China.  The Civil Code consists of seven parts: general provisions, real property, contracts, personality rights, marriage and family, inheritance and tort liability and covers all aspects of individuals’ personal and property relationships.  In this article, we aim to highlight the most significant parts of the Civil Code that directly relate to pharmaceuticals and healthcare by comparing those parts with legal provisions that were previously scattered through a variety of pharmaceuticals and healthcare legislation.

  1. The Part on Personality Rights: Pharmaceutical and Healthcare Provisions

The independent compilation of personality rights is a pioneering initiative of the Civil Code.  It embodies the concept of “people-oriented” and responds to the challenges of protecting personality rights in the information age.  Personality rights[1] are primarily the rights of natural persons that are based on personal freedom and human dignity.  However, personality rights are not unique to natural persons.  Legal persons also have personality rights.  According to the Civil Code, the main personality rights of natural persons and legal persons are as follows:

Type of Civil Subject

Tpye of Personality Rights

Natural person

The rights of life, body, health, name, likeness, privacy and protection of personal information

Legal person / unincorporated associations

The right of name

All categories of civil subjects

The rights of reputation and honor

From this it is evident that the protection of natural persons’ personality rights, especially the protection of life, body, health, privacy and personal information, will be closely related to the field of pharmaceuticals and healthcare.

(1)  Ethical Review and the Right of Informed Consent in Clinical Trials

The provisions concerning clinical trials of drugs and medical devices in China are scattered throughout sector-based or departmental legislation. This legislation incudes, for example, the Good Clinical Practice for Medical Device Trials (effective as June 1, 2016), the Good Practice for Clinical Trials of Drugs (effective as July 1, 2020), and the Law on Promotion of Basic Medical Care and Health (effective as June 1, 2020).  The revision of the Civil Code contains provisions dealing with clinical trials on human beings, which are based on the relevant sector-based legislation, and summarizes the basic principles concerning such trials.  It also reflects the importance attached in China to the rights of all people to life, body and health, and helps to promote the norms for, and healthy development of, clinical trials in the new drugs and medical devices fields.  To illustrate, the table below compares the relevant sector-based regulations with the applicable provisions of the Civil Code.

Good Clinical Practice for Medical Device Trials

Article 14  Ethical review and informed consent are the main measures to protect the rights and interests of human subjects.

Article 65  An investigator shall ensure that the medical device being tested is only used on those human subjects taking part in the clinical trial, and that no fees are charged.

Good Practice for Clinical Trials of Drugs

Article 3  Clinical trials of drugs shall conform to the principles and related ethical requirements set out in the World Medical Association Declaration of Helsinki. The rights, interests and safety of human subjects are the primary considerations, taking precedence over the benefits to science and society. Ethical review and informed consent are important measures to protect the rights and interests of human subjects.

Article 39  The sponsor shall provide human subjects with the investigational products free of charge, and pay the medical testing fees related to the clinical trial.

Law on Promotion of Basic Medical Care and Health

Article 32  Clinical trials of drugs, medical devices and other medical research shall comply with the code of medical ethics, pass ethical review in accordance with the law and be subject to informed consent.

Civil Code

Article 1008  Where clinical trials are required for the research and development of new drugs, medical devices or new prevention and treatment methods, such clinical trials shall be subject to approval by the relevant competent government departments in accordance with the law and examination and approval of the ethics committee.  The human subjects or their guardians shall be informed of details such as the purpose, use and possible risks of the trials, and their written consent shall be obtained.  Where a clinical trial is conducted, no trial fee may be charged to human subjects.

(2)  Establishment of the Basic Rules for Donating Human Cells, Tissue, Organs and Corpses

Before the Civil Code was promulgated, the Regulations on Human Organs Transplantation (effective as of May 1, 2007), and the Regulations on Acquisition and Distribution of Human Donated Organs (effective as of March 1, 2019) regulated "human organs" donations and transplantations, but did not cover human cells or human tissues.

On July 10, 2008, the PRC Ministry of Health (this Ministry was dissolved in March 2013) issued the WHO Guidelines for Human Cell, Tissue and Organ Transplantation (Draft) (the draft was revised by the 62nd World Health Assembly on March 26, 2009 and reviewed and approved by the 63rd World Health Assembly on May 21, 2010). These Guidelines are used by hospitals in China that are qualified to perform human organs transplantations for reference in clinical practice.  However, domestic legislation in China has not officially incorporated the WHO Guidelines for Human Cell, Tissue and Organ Transplantation.

The Regulations on Administration of Human Genetic Resources (effective as of July 1, 2017) prohibit the trading of organs, tissues and cells containing human genome, genes or any other genetic materials.  However, there are no provisions regarding the donation of such organs, tissues or cells.

Hence, the compilation of the Civil Code not only establishes the basic principles underpinning the altruistic donation of human cells, tissues, organs and corpses, but also expressly prohibits the trading of human cells, tissues, organs and corpses in any form.  This is one of the highlights of the revisions.  It is expected that, after the promulgation of the Civil Code, rules governing the donation of human cells and tissues other than human organs may also be implemented and refined through sector-based or departmental legislation.  The table below compares the relevant provisions contained in sector-based legislation and the relevant articles of the Civil Code.

Regulations on Human Organs Transplantation

Article 3  No organization or individual may, in any way, trade in human organs or engage in any activities related to such trade.

Article 8  A citizen who donates his organ shall have full capacity for civil conduct.  For donation of his organ, a citizen shall give written consent to the donation and he shall have the right to withdraw such expressed consent.  Where a citizen, during his lifetime, expresses an objection to the donation of his organ, no organization or individual may donate or remove his organ.  Where a citizen, during his lifetime, does not express an objection to the donation of his organ, his spouse, children of full age and parents may, after his death, jointly give consent to the donation of his organ in written form.

Regulations on Administration of Human Genetic Resources

Article 2  Human genetic resources materials refer to genetic materials such as organs, tissues and cells that contain genetic substances such as human genomes and genes.

Article 10  Trading in human genetic resources shall be prohibited.  Supply or use of human genetic resources legally for purposes of scientific research and payment or collection of reasonable costs and expenses shall not be deemed as trading.

Civil Code

Article 1006  Persons with full civil capacity shall be entitled to decide to donate their human cells, human tissues, human organs and corpses free of charge pursuant to the law based on their free will.  No organization or individual may force or induce such persons to donate or deceive them into donating.  Where a person with full civil capacity agrees to donate in accordance with the preceding paragraph, the said person shall indicate his/her consent in writing, or make a will.  If a natural person had not expressed his/her objection to donation while he/she was alive, after the natural person has died, his/her spouse, adult children and parents may jointly decide on such donation, provided that the decision to donate shall be in writing.

Article 1007  Purchase and sale of human cells, human tissues, human organs and corpses in any form shall be prohibited.  Any purchase or sale that violates the preceding paragraph shall be invalid.

(3)  Compliance regarding Medical Research in the Field of Human Genes and Embryos

Article 1009 of the Civil Code provides that persons engaged in medical and scientific research activities related to human genes, human embryos, etc. shall abide by laws, administrative regulations and relevant provisions of the State, and shall not endanger human health, violate ethics and morals or undermine public interests.

The Civil Code specifically provides for the legality and compliance of medical and scientific research activities in the field of human genes and human embryos, and emphasizes that such activities shall not contravene ethics or damage public interests.  These provisions in the Civil Code appear to be a legislative response to He Jiankui’s case[2] on gene-edited babies in 2018.  Applying gene editing technology to human embryos is not only a fundamental breach of ethics, but also a violation of laws and regulations.  In addition to the Civil Code, the Technical Specifications for Human Assisted Reproduction effective as of October 1, 2003 also expressly state that “genetic manipulation of human gametes, zygotes and embryos for the purpose of reproduction is prohibited”.

Furthermore, the Regulations on Administration of Human Genetic Resources, which came into force just one year ago (July 1, 2019), also contain detailed provisions on the collection, preservation and use of genetic materials containing human genes and other genetic materials.  In this way, China’s codified Civil Code keeps pace with the times, incorporates the latest legislative developments, and reflects the public interest and welfare needs.

(4)  Enhance the Protection of Patients' Privacy and Personal Information

The protection of privacy and personal information in the Civil Code is provided for in Chapter Six (Right of Privacy and Personal Information Protection) of Part Four (Personality Rights).  This is also an important part of the Civil Code.

Privacy refers to a natural person's peaceful private life and his/her private space, private activities and private information that he/she does not wish to be known to others.  Personal Information refers to various types of information recorded electronically or otherwise that can identify a specific natural person either alone or in combination with other information, including the natural person’s name, date of birth, identity document number, biometric information, residential address, phone number, e-mail address, health information, location information, etc.

As one type of personal information, health information such as personal medical records and diagnostic data is usually private and not wishing to be known to others.  With respect to personal information of a private nature, according to Paragraph 3 of Article 1034 of the Civil Code, personal information of a private nature shall be governed by the provisions on the right of privacy, and in the absence of applicable provisions thereof, by the provisions on personal information protection.

Under the Provisions for the Administration of Medical Records of Medical Institutions (effective as of January 1, 2014) (the “Provisions”), China has established strict requirements for the preservation of medical records.  Article 6 of the Provisions states that medical institutions and their medical staff shall strictly protect the privacy of patients, and are strictly prohibited from disclosing patients’ medical records for any purpose other than medical treatment, teaching or research.

In addition, Article 1226 of Chapter VI (Medical Damage Liability) of Part Seven (Tort Liability) of the Civil Code provides that medical institutions and their medical personnel shall keep confidential the privacy and personal data of their patients, and that they shall bear tort liability if divulging their patients' privacy and personal data or medical records without the patients' consent.    

  1. The Part on Contracts: Improve Electronic Contract Rules, and Support the Standardized Development of the Internet, and Pharmaceuticals and Healthcare

Electronic contracts play an increasingly important role in the development of the market economy in China.  This is also the case in the pharmaceuticals and healthcare industry.  Paragraph 3 of Article 5 of the Guiding Opinions on Improving the Centralized Drug Procurement for Public Hospitals (Guo Ban Fa [2015] No. 7) specifies that, where conditions permit, eligible places are encouraged to conduct electronic transactions and to adopt various methods, such as signing electronic contracts and using online payments through a centralized drug procurement platform to save transaction costs and improve the transparency of transactions.  Furthermore, it is inevitable that electronic contracts will be more widely used in Internet diagnosis and treatment, remote consultation, online sales of drugs and medical devices and other related activities.  The Civil Code reflects the needs of the market and of the times, and includes pioneering provisions concerning the signing and performing electronic contracts.

(1)  The Time and Place of the Conclusion of Electronic Contracts

The Civil Code confirms in Chapter II (Conclusion of Contract) of Part III (Contract) that an electronic contract is a written contract (Article 469[3]).  The rules governing the date[4] (Article 491) and place (Article 492[5]) of the conclusion of the electronic contract are set forth in the general provisions, as shown in the table below. These rules may be excluded by agreement of the parties.

Time of Formation of  Contract

Where the parties concerned conclude a contract in the form of a letter or electronic data etc. and request execution of a letter of confirmation, the contract shall be concluded at the time of execution of the letter of confirmation.

Where the information of any commodity or service released by one party via the internet or any other information network satisfies the conditions of an offer, the contract shall be concluded when the other party successfully selects the commodity or service and submits an order.

Place of Formation of Contract

If a contract is concluded in the form of electronic messages, the principal place of business of the recipient shall be the place of the conclusion of the contract.  If there is no principal place of business, the domicile of the recipient shall be the place of the conclusion of the contract.

(2)  Delivery Time of the Subject Matter of Electronic Contracts

Chapter IV (Performance of the Contract) in Part III (Contract) sets forth general provisions concerning the delivery time of the subject matter of an electronic contract (Article 512[6]), which depends on the subject matter and delivery method.  Where the parties do not agree in the electronic contract on specific arrangements for delivery, the delivery time shall be determined in accordance with the rules in the table below.  These rules may also be excluded by agreement of the parties.

Subject Matter and its Delivery Method

Delivery Time

Application to the Pharmaceuticals and Healthcare Industry

The subject matter of the contract is goods and the specified delivery method is express courier

Time of receipt by consignee

Online drugs sale, etc.

The subject matter of the contract is the provision of services

The date shown on the generated electronic voucher or physical voucher (if the date shown on such voucher is missing or inconsistent with the actual date of provision of services, the actual date of provision of services shall prevail)

Online registration, appointment of physical examination, etc.

The subject matter of the contract shall be delivered by online transmission

The date when the subject matter enters a particular system designated by the other party and can be retrieved and identified

Internet diagnosis and treatment, remote consultation, etc.

(3)  Specifying the Rules for the Signing and Performance of Electronic Contracts to Support the Standardized Development of the Internet and the Pharmaceuticals and Healthcare

Following the promulgation of the Measures for the Administration of Internet Drug Information Services (on November 17, 2017), the Measures for the Administration of Internet Diagnosis and Treatment (for Trial Implementation) (on July 17, 2018), the Specifications for the Administration of Remote Medical Services (for Trial Implementation) (on July 17, 2018), and the relevant provisions on “building an integrated online and offline medical service mode” in the Law on Promotion of Basic Medical and Health (on June 1, 2020), the concept of "Internet plus Pharmaceuticals and Healthcare" has become something of a trend.

According to the Opinions on Promoting the Development of "Internet Plus Pharmaceuticals and Healthcare" issued by the General Office of the State Council on April 25, 2018, the "Internet Plus Pharmaceuticals and Healthcare" service system includes "Internet Plus Public Health Services", "Internet Plus Family Doctor Contractual Services", "Internet Plus Medicine Supply Guarantee Services" and "Internet Plus Medical Insurance Settlement Services". The implementation of detailed rules in the Civil Code for the signing and performance of electronic contracts is without doubt beneficial to the healthy development of China's Internet-based healthcare industry. Specifically, when conducting online drugs sales, Internet diagnosis and treatment, remote consultation or other electronic transactions, if the parties concerned have no clear agreement on the date and place of formation of the contract and the delivery time of the subject matter, the relevant provisions of the Civil Code may be directly applied.  This will help avoid unnecessary disputes and will facilitate consistent and healthy development of "Internet Plus Pharmaceutical and Healthcare".

  1. The Part on Tort Liability: Changes to Liability for Medical Malpractice

Chapter VI (Medical Malpractice Liability) of Part VII (Tort Liability) of the Civil Code provides for “liability for medical malpractice”. This chapter consists of eleven articles and has been revised for consistency with the Tort Liability Law.  Below, based on a comparison of the Civil Code and the Tort Liability Law (effective as of July 1, 2010), we highlight the three main amendments to Chapter VI.

(1)  Broadening the Notification Methods for Medical Personnel and Imposing Higher Requirements

Article 55 of the Tort Liability Law

Article 1219 of the Civil Code

Medical personnel shall explain to the patients in the course of diagnosis and treatment their conditions and medical measures. If surgery, special examination or special treatment is required, medical personnel shall explain to their patients, inter alia, the medical risks and alternative treatment in a timely manner and obtain their written consent.  If it is inadvisable to explain the same to the patients, medical persons shall do so with the immediate relatives of the patients and obtain their written consent.

Where a medical person fails to fulfill his or her obligations stated in the preceding paragraph and causes damage to his or her patient, the medical institution shall be liable for compensation.

Medical personnel shall explain to the patients in the course of diagnosis and treatment their conditions and medical measures. If surgery, special examination or special treatment is required, medical personnel shall explain in detail to their patients, inter alia, the medical risks and alternative treatment in a timely manner and obtain their express consents. If it is impossible or inadvisable to explain the same to the patients, medical persons shall do so with the immediate relatives of the patients and obtain their express consent.

If a medical person fails to fulfill his or her obligations stated in the preceding paragraph and causes damage to his or her patient, the medical institution shall be liable for compensation.

As indicated in the Civil Code, the method required for medical personnel to notify a patient of information concerning diagnosis and treatment is elevated from "written consent" to "express consent". Formally, this expands the method by which medical personnel perform the obligation of notification.  That is, it is not limited to a written form.  However, the requirement for notification by medical personnel is elevated from “explain” to “explain in detail”.  In essence, this enhances the standard and requirement of “explanation”, which is helpful to put the notification obligation of the medical personnel into effect and not become a mere formality.

(2)  Clarifying the Circumstances of the Presumption of Fault of Medical Institutions

Article 58 of the Tort Liability Law

Article 1222 of the Civil Code

The medical institution shall be presumed to be at fault if damage is inflicted on patients under any of the following circumstances: (1) violation of the provisions of laws, administrative regulations, rules, etc., relating to diagnostic and treatment practices; (2) concealment of or refusal to provide medical records related to the dispute; and (3) forgery, falsification or destruction of medical records.

The medical institution shall be presumed to be at fault if damage is inflicted on patients during diagnosis and treatment under any of the following circumstances: (1) violation of the provisions of laws, administrative regulations, rules, etc., relating to diagnostic and treatment practices; (2) concealment of or refusal to provide medical records related to the dispute; and (3) loss, forgery, falsification or illegal destruction of medical records.

First, the Civil Code limits the application of the presumption of fault by medical institutions to diagnosis and treatment activities only and defines in greater detail the scope of tort liability.

       Second, the Civil Code includes the "loss of medical records" as a circumstance resulting in the presumption of fault, and increases the responsibility for medical record management by medical institutions. It also revises the "destruction of medical records" to "illegal destruction of medical records", reflecting obligations contained in the Provisions on the Administration of Medical Records of Medical Institutions.  The Provisions on the Administration of Medical Records of Medical Institutions state that the minimum preservation time for medical records will depend on whether the records concern outpatient (emergency) treatment or hospitalization[7]. In any event, the preservation time for medical records is not indefinite.  Consequently, the presumption of tort liability of medical institutions does not apply to lawful putting in order and destruction of medical records. 

(3)  Adding the Marketing Authorization Holder as the Party Bearing De Facto Joint and Several Liability for Medical Products

Article 59 of the Tort Liability Law

Article 1223 of the Civil Code

If a patient suffers damage due to defective drugs, medical disinfectants and medical devices or transfusion of blood that does not meet the standards, he or she may seek compensation from the manufacturer or blood-supplying organization as well as from the medical institution. If the said patient seeks compensation from the medical institution, the medical institution is entitled to, after compensation, claim reimbursement from the manufacturer or blood-supplying organization liable for the damage.

If a patient suffers damage due to defective drugs, disinfection products and medical devices or transfusion of blood that does not meet the standards, he or she may seek compensation from the marketing authorization holder, manufacturer or blood-supplying organization as well as from the medical institution. If the said patient seeks compensation from the medical institution, the medical institution is entitled to, after compensation, claim reimbursement from the marketing authorization holder, the manufacturer or the blood-supplying organization liable for the damage.

First, the Civil Code now includes the "marketing authorization holder" as a party bearing de facto joint and several liability for medical products, reflecting similar provisions in the Drug Administration Law (which came into effect on December 1, 2019).  The Drug Administration Law added a new chapter containing a system to manage market authorization holders.  It also provides in Article 6 of the General Provisions for the State to implement a drug marketing authorization holder system for drug administration, with the marketing authorization holder being responsible for the safety, effectiveness and quality controllability of the drug during the whole process of drug research, production, distribution and use according to law.  As a result, the provisions of the Civil Code are consistent with industry legislation, paving the way for the convergence and streamlined application of different laws and regulations.

Second, the Civil Code changes the scope of medical products to which de facto joint and several liability can attach, from "medical disinfectants" to "disinfection products", which is consistent with the Measures for the Administration of Disinfection (which took effect on December 26, 2017).  Article 45 of the Measures for the Administration of Disinfection contains a specific definition of "disinfection products" which includes disinfectants, disinfection apparatus (including biological indicators, chemical indicators and sterilized goods packaging), sanitary supplies and disposable medical supplies. As a result, this codification of the Civil Code reflects changes in industry legislation.

Summary

The Civil Code is an encyclopedia for social life and a manifesto of civil rights, which has constructed a comprehensive system for civil rights protection.  Not only is it important for the national economy and individuals’ livelihood, the Civil Code also introduces basic provisions on many subjects in the field of pharmaceuticals and healthcare, such as protecting the right of informed consent of patients, strengthening the protection of patients' privacy and personal information, establishing basic rules for donation of human organs and human tissues and specifying the scope of application for medical malpractice liability.  Law is the most important instrument for governing a country.  A code that evolves with the times is beneficial not only to the protection of individuals’ well-being but also to their fundamental interests.



[1] Article 990 of the Civil Code: Personality rights are the rights of life, body, health, name, likeness, reputation, honor, privacy and other rights enjoyed by civil subjects.  In addition to the personality rights provided in the preceding paragraph, natural persons shall enjoy other personality rights and interests based on personal freedom and human dignity.

[2] According to the report of People's Daily on December 31, 2019, He Jiankui, former associate professor of Southern University of Science and Technology, announced the birth of a pair of gene-edited babies on November 26, 2018, triggering widespread shock and strong condemnation in China’s medical and scientific research circles.  The Shenzhen Nanshan People’s Court publicly announced the first instance judgment on December 30, 2019.  Upon trial, the court held that three defendants including He Jiankui adopted deceptive and fraudulent means to maliciously evade the supervision of the competent department of the State under circumstances that laws do not permit, ethics do not support and risks are not controllable. The Court also held that applying gene editing technology to assisted reproductive medicine on many occasions, resulting in the birth of many gene-edited babies, and has seriously disturbed the order and good management of medical treatment generally.

[3] Article 469 of the Civil Code: The parties concerned may conclude a contract in written form, verbal form or any other forms. "Written form" shall refer to any form that serves to reflect the information contained therein in a tangible form, such as a written instrument, a letter, a telegram, a telex, a facsimile, etc. Electronic messages in the forms of electronic data interchange, e-mail etc. which serve to reflect the information contained therein in a tangible form and can be obtained and used in any time shall be deemed as written form.

[4] Article 491 of the Civil Code:  Where the parties concerned enter into a contract in the form of a letter, data messages, etc., and require a confirmation instrument be signed, the contract shall be established at the time when the confirmation instrument is signed.  Where the information on goods or services published by one party via Internet or other information network meets the conditions of an offer, the contract shall be established at the time when the other party chooses such goods or service and successfully places the order, unless otherwise agreed by the parties.

[5] Article 492 of the Civil Code: The place where an acceptance becomes effective shall be the place where a contract is established.  Where a contract is concluded in the form of data messages, the receiver's principal place of business shall be the place where the contract is established; and, in the absence of any principal place of business, the receiver's residence shall be the place where the contract is established.  The agreements, if any, otherwise reached by and between the parties concerned shall prevail.

[6] Article 512 of the Civil Code: Where the subject matter of an electronic contract concluded through an information network such as the Internet is delivery of goods and the delivery is made via express courier, the consignee’s sign-off time shall be the time of delivery.  Where the subject matter of an electronic contract is provision of services, the time specified in the generated electronic or physical voucher shall be the time of provision of those services; if a time is not specified in the foresaid voucher or the time specified in the foresaid voucher is inconsistent with the time of actual provision of the services, the time of actual provision of the services shall prevail.  Where the subject matter of an electronic contract is delivered by online transmission, the delivery time shall be the time when the subject matter enters the specific system designated by the other party while can be retrieved and identified.  Where the parties to an electronic contract have agreed otherwise on the method and time for delivery of goods or provision of services, such agreement shall prevail.

[7] Article 29 of the Provisions on the Administration of Medical Records of Medical Institutions: Medical records for outpatient (emergency) services shall be kept by medical institutions for no less than 15 years from the date when patients last seek consultation and treatment.  Medical records for inpatient services shall be kept for no less than 30 years from the date when patients are last discharged from the hospital.


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