You are an American company expanding its business into China. You have just clinched a highly coveted multi-million-dollar deal, documented in a one hundred-page contract, that seems to have covered every conceivable hiccup. But that lucrative deal, which took months to close, may not be as airtight as you imagine. If a dispute arises between your company and your Chinese business partner, how can you resolve it?
You may think that disputes with your Chinese business partner are resolvable in the US courts, but if the Chinese business does not have assets in America, you will find it very difficult to enforce even a US judgment there. The Chinese business may have assets in China, but again it is difficult to enforce a US judgment in China: the two superpowers do not yet have reciprocal arrangements to recognize judgments from each other’s courts.
In some contracts, the option to claim before the Chinese courts is simply not available. For example, those drafted for US. domestic use which provide that the US. court shall have “exclusive jurisdiction” to resolve any dispute. If such cases come before the Chinese courts, however, they can be rejected outright on the grounds that the Chinese courts are not the proper forum to hear the dispute.
This Guide explains how to manage and resolve such disputes, and where possible to avoid them altogether, by reference to a series of Frequently Asked Questions.