When an American business encounters a dispute with a Chinese company, the procedures for resolving the dispute are different than if they simply wanted to sue another organization in the U.S. Today, we cover the basics of resolving disputes in China.
The basic options for dispute resolution in China are the same as we find here in the United States: negotiate, arbitrate, or litigate. Below, we focus on arbitration and litigation in China.
The China International Economic and Trade Arbitration Commission
The most popular venue for disputes with Chinese businesses, the CIETAC provides “foreign-related” arbitration rules for cases where one company does not operate in China. If American and Chinese businesses enter into a contractual relationship, they can designate CEITAC as the venue for disputes. They can also specify the nationality of the members of the arbitration panel if they wish.
Under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, arbitration awards in one country are enforceable in other signatory states.
Litigation in Chinese courts
In the past, many observers have lamented the state of China’s judicial system. However, the implementation of China’s new International Commercial Court may signal a move toward better litigation in the country. Originally intended to only deal with “belt and road” cases, the International Commercial court can now take on disputes involving large foreign businesses.
Disputes in China can also be resolved through mediation, rather than going to trial, similarly to the system in the United States. If a business finds itself facing a dispute in China, it often helps to consult an attorney experienced in the laws of both systems.