Published: July 8, 2020
Category: Business Litigation
By: David Cui
We often see that a clause leads to the fact that a foreign-related contract cannot be executed against a Chinese company. This clause is the choice of forum for dispute settlement.
Once the negotiation fails, the only way for you to enforce the contract is to get an executable judgment in your favor. If the judgment is ignored by the other party, you need to use the judicial process to enforce the court's judgment. We can see that many contracts signed with Chinese suppliers are drafted in a way that Chinese courts will not enforce them.
The parties to the contract may specify how the dispute shall be settled. This can be done by arbitration or by a designated court. If a court is designated, a party usually designates the home court with exclusive jurisdiction to hear the dispute. This is understandable, because the parties are familiar with the legal system of their own country, so it will be more convenient to litigate in their country.
The problem is that Chinese courts will not enforce the judgments of most other countries. If the judgment of a foreign court against a Chinese company cannot be enforced in the place where the Chinese company is located, then the judgment is meaningless. If all the assets of the Chinese company are in China, you need a Chinese court to recognize the judgment of the foreign court before you can get some money. The result may be that you have a verdict in your favor, but it's worthless. On the other hand, if the Chinese supplier wants to sue you, it can sue you in your home jurisdiction where all your assets are located.
Solution:
Require all disputes to be resolved by binding arbitration, most arbitral awards (including those made by arbitrators outside China) could be enforced by Chinese courts.
It is clear that disputes must be submitted to Chinese courts. Whether or not you adopt this method will depend on how you view your opportunities as a foreign company in the Chinese legal system, based on our experience, Chinese courts will side with foreign companies if the foreign party has solid and sufficient evidence against the Chinese counterparty, and therefore you can also consider choosing Chinese Courts instead of arbitration to settle disputes.
Other tips for signing contracts with Chinese companies:
Ensure that Chinese companies sign relevant agreements with their registered Chinese names (both in English and Chinese);
Ensure that the Chinese registered address of the Chinese company (both in Chinese and English) is recorded in the contract;
Ensure that the contract is signed by the registered legal representative or the person with clear authorization to sign the contract;
Contracts are sealed by Chinese companies, and contracts without seals may not be enforceable.
注意涉外合同中的管辖条款
我们经常看到，一个条款导致涉外合同实际上无法针对中国公司执行。这个条款就是解决争端的法院地的选择条款。
一旦谈判失败，你执行合同的唯一方法就是获得对你有利的可执行判决。如果判决被另一方忽视，你需要利用司法程序来执行法院的判决。我们看到，许多与中国供应商签订的合同都是以中国法院不会强制执行的方式起草的。
合同当事人可以指定如何解决争议。这可以通过仲裁或指定法院进行。如果指定了一个法院，一方当事人通常会指定其原籍国的法院具有审理争端的专属管辖权。这是可以理解的，因为当事人熟悉自己国家的法律制度，在其所在国诉讼会更方便。
问题是，中国法院不会执行大多数其他国家的法院判决。如果不能在中国公司所在地执行外国法院对中国公司的判决，那这个判决就没有什么意义了。如果这家中国公司的所有资产都在中国，你需要一家中国法院承认该外国法院的判决，然后才能拿到一些钱。结果可能是你有一个对你有利的判决，但它毫无价值。另一方面，如果中国供应商想起诉你，它可以在你所有资产所在地的你的本国司法管辖区起诉你。
解决方案：
要求通过有约束力的仲裁解决所有争议-中国法院执行大多数仲裁裁决（包括在中国境外的仲裁员作出的裁决）。
明确争议必须提交中国法院。你是否采用这种方法将取决于你如何看待你作为一家外国公司在中国法律体系中的机会, 如果外方当事人有充分确凿的证据，中国法院会作出有利于外国公司的判决，由此你也可以考虑选择中国法院而不是通过仲裁解决争议。
与中国公司签约的其他提示：
确保中国公司以其注册的中文名称（中英文）签署相关协议；
确保在合同中记录中国公司的中文注册地址（中英文）；
确保合同由注册法定代表人或明确有权签署合同的人签署；
合同由中国公司盖章，未盖章的合同可能是不可执行的。
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