Professional Interpretation

I. Is it appropriatefor international contract to be governed by Chinese laws?

For the legal protection of foreign contract, the first problem needs to be handled with is how to make right choice of the governing law. What we need to do is not only to find a law that is benefit the contract party but also to learn how to make full use of it to ensure the stability and conform ability of practical application. The ultimate difference between the common domestic contract and the governing law is that the law of application not only makes fully consideration the interests of both our parties and our country, meanwhile it also protect properly the legitimate rights and interests of foreign parties in maintaining of international economic and trade relations.

According to the Article 126 of Contract law of the people's Republic of China, parties to a foreign-related contract may select the applicable law for resolution of a contractual dispute, except as otherwise provided by law. If the two parties didn’t make choice, the laws in the country which most closely connected with the contract will be used as the governing law. Such types of contract performed within the territory of the People's Republic of China applicable to China’s laws as contract of Sino foreign joint venture enterprise, Sino foreign contractual joint venture contract and Sino foreign cooperative exploration and exploitation of natural resources contracts, but should note that the laws selected by the two parties should be of “good will” and “within the law”, i.e. shall not damage the social public interests. The foreign applicable law-to-be could be replaced by the laws of our country if it violates the basic principles of laws and the public interest of our country.

Chinese parities in contract often acquire to adopt Chinese laws because they familiar with it. However, in practice, it is fairer and easier to solve relevant disputes to select the foreign laws for handling with merge matters, namely, maritime matters. Therefore, law applicability depends on the specific situation.

II. It is appropriate for foreign contract to be governed by Chinese court?

Just as the former question, in which Chinese parties often considered that it is most appropriate for Chinese part to agree with the jurisdiction of Chinese court.

In fact, it’s not necessary to agree with the jurisdiction of Chinese court, as case of international dispute earlier handled by us, for example, in which the Chinese party, as the plaintiff ,need to lodge a lawsuit in China, but all of the property of the defendant located in Singapore. For Chinese court, there is no right to preserve the property outside the country in advance, which gave the defendant sufficient time to transfer the relevant property. If the parties chose a Singapore arbitration agency when they deal with the contact, the result may be totally different.

Therefore, DOCVIT International Business Team suggested clients to take such factors into account as location of property and relevant provisions of international treaties rather than select the most convenient Chinese court blindly when consider about the Jurisdiction.

III. How to avoid or eliminate the conflicts provisions of foreign contract to minimize the uncertainty of law?

For the foreign contract, the provision of governing law, the normal article shall be“this Agreement shall be governed by and construed in accordance with the laws of B.(Note: B is country name)”However, because the understand to the scale of governing law of different judges from different countries under different law are different, some countries holds that the designated foreign law also includes the conflict rules of that country(conflict rules of B), which may cause a conflict with other countries. Therefore, the provisions of application of law should be written in this way: “This Agreement shall be governed by and construed in accordance with the laws of B, excluding conflict of law’s provisions.”

IV. Recognition and enforcement of foreign adjudication in China and recognition and enforcement of Chinese adjudication on foreign soil

According with thearticle 282 of Civil Procedure Law of the People's Republic of China, for a judgment or ruling made by a foreign court which has come into legal effect for which ratification and enforcement is applied or requested, where a People's Court concludes, upon examination pursuant to the international treaty concluded or participated by the People's Republic of China or in accordance with the principle of reciprocity, that the basic principle of the laws of the People's Republic of China or the sovereignty, security or public interest of the State is not violated, the People's Court shall rule on ratification of the validity; where there is a need for enforcement, an enforcement order shall be issued and enforced pursuant to the relevant provisions of this Law. Where the People's Court deemed that the basic principle of the laws of the People's Republic of China or the sovereignty, security or public interest of the State is violated, the judgment or ruling made by the foreign court shall not be ratified and enforced.

Up to now, there is no applicable multilateral international treaty in our country, the main reference is bilateral judicial assistance treaty on Civil (business) matters concluded with foreign country. Supreme People’s court explained the reciprocal relationship as “factual reciprocity”, that is, between the two countries, there is a precedent to go by to mutual admit and execute the ruling of each other’s court.

China jointed Convention on the recognition and enforcement of Foreign Arbitral Awards in 1987, mutual admit and execute the ruling of each other’s court with 130 countries and regions. However, for the mutual admitting and executing the ruling of others country, China has not jointed Convention on the recognition and enforcement of foreign judgments in international civil and commercial cases signed in Hague, 1971 or other multilateral treaty. Moreover, Chinses court mostly disapproval the reciprocal relationship with other country except the 130 ones unless it will be proved by the parties. Therefore, in practice, if parties want to apply for recognition and enforcement of foreign adjudication in China, for the most part, then only can take the mutual treaty signed by China and the forum state as reference.

Therefore, DOCVIT international business team suggested the clients that the treaty and domestic law should be fully concerned when you are intent to sign foreign contract.