Too often we are seeing that one clause results in contracts
that effectively cannot be enforced against Chinese companies. The
clause in question is the choice of forum for resolving
disputes.
Once negotiation fails, your only way to enforce a contract is
to obtain an enforceable judgment in your favour. If a judgment is
ignored by the other party, you need to utilise court processes to
enforce the order. We are seeing that many contracts with Chinese
suppliers are drafted in a manner whereby a Chinese Court will not
enforce them.
Parties to a contract can nominate how disputes will be
resolved. This may be by arbitration or by a nominated court. If a
court is nominated, it is common for a party to nominate the court
of their home country as having exclusive jurisdiction to hear
disputes. This is understandable given that party is familiar with
their own legal system and it will be more convenient for them to
litigate in the country in which they are based.
