Chinese contracts are usually simpler and shorter than contracts
used in the West. The specialized vocabulary taken for granted in
Western film contracts is still emerging in China contracts, so
commonly used expressions or concepts may be misunderstood or
simply inapplicable. A Chinese businessperson is less likely to
view a contract as a complete statement of a commercial
relationship and more likely to see it as a starting point for
further negotiations that may become necessary if andwhen
circumstances change. The Chinese approach to negotiations is more
personal. Western contracting parties may not always trust each
other, but they tend to trust the legal systems in which they
operate and this allows them to make reasonably accurate
predictions about the consequences of contractual breaches. For
Chinese contracting parties the reverse often applies —
interpersonal trust is more important.
The main thing to remember is that if you want your contracts
with Chinese nationals to be enforceable against them they usually
need to be written in Chinese and subject to Chinese law and
jurisdiction. This is equally true for China entertainment
contracts, especially those involving licensing deals.
Chinese law and jurisdiction are often more appropriate than
foreign law and jurisdiction, especially since Chinese courts do not enforce foreign
judgments. Blind insistence on the law and jurisdiction of your
home country can render your contracts unenforceable against
Chinese parties. In the event of a dispute, Chinese courts may well
be preferable to an international arbitration commission especially
given that, unlike arbitration commissions, Chinese courts can
issue asset-freezing orders and arbitral awards require enforcement
through courts in any event. Moreover, Chinese courts in the big
cities are increasingly capable of fairly resolving disputes
involving foreigners — especially when the parties are
"symmetrical", i.e. private companies of approximately
the same size. The point is that the Chinese system is not perfect
but there will be many times when you will need to be able to
access it to have any hope of settling a dispute with a Chinese
national who has no assets in your jurisdiction. Oftentimes the key
to a good relationship with your Chinese counter-party is picking
the right jurisdiction for disputes.
Finally, bear in mind that the enforceability of contracts in
China ranks high by world standards. According to the World
Bank's rankings of countries by enforceability of contracts,
China is number 35. The UK is number 36. The US comes in at 41 with
Singapore at no. 1. Sure, much of this ranking stems from the
rapidity by which Chinese courts rule on their cases, but it is out
there and it does at least show that contract enforceability in
Chinese courts is not nearly as bad as it is so often
Previously published on June 30th, 2015
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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