When California businesses make agreements with Chinese companies, enforcing those agreements can be tricky. Since China has its own legal system, it’s important to know how contracts work in that system. Understanding how to enforce contracts helps protect your business and keeps relationships with foreign partners strong.
Know the Chinese legal system
Chinese law is different from U.S. law, so it’s important to understand how contracts are treated in China. While China has made progress in developing business laws, the system is still growing. Businesses in California need to pay close attention to key contract details, like where disputes will be handled and which laws will apply. These choices can affect how easy it is to enforce a contract.
Pick the right way to solve disputes
One of the most important parts of a contract with a Chinese company is deciding how to handle disagreements. Many companies choose arbitration over going to court because it’s faster and fairer for both sides. Arbitration takes place in a neutral location, like Hong Kong or Singapore, which helps avoid biases. By including an arbitration clause in a contract, businesses can make the dispute process clearer and less risky.
Use international agreements
California businesses can also rely on international agreements to enforce contracts. The Hague Convention on the Choice of Court Agreements helps businesses enforce judgments across countries. While the U.S. and China aren’t part of this agreement yet, there are other treaties that can help enforce decisions made in foreign courts or arbitration.
Enforcing contracts with Chinese companies can be challenging, but California businesses can take steps to protect their interests. By understanding China’s legal system, choosing the right dispute resolution method, and using international agreements, businesses can improve their chances of enforcing contracts and keeping their deals secure.