Chinese Judicial Practice On The Validity Of "Either Arbitration Or Litigation" Clauses

The validity of an arbitration agreement directly determines whether arbitral proceedings can be commenced and whether an arbitral award can be recognized and enforced. Under Chinese law, an arbitration agreement that provides for "either arbitration or litigation" is invalid. In practice, however, whether a particular clause actually constitutes an "either arbitration or litigation" arrangement is often disputed. In making that determination, Chinese courts do not apply the statutory language mechanically. Instead, they conduct a holistic assessment in light of the transactional background, the specific contractual context, and the parties' true intentions. By systematically reviewing representative judicial decisions from recent years, this article analyzes the rules applied in Chinese judicial practice when determining the validity of "either arbitration or litigation" clauses, and on that basis summarizes the key points companies should bear in mind when drafting