International Contract and Arbitration

2020/1/8

International contracts include international contracts for the sale of goods, international technology transfer contracts, international technology license contracts, international technology service contracts, international software license contracts, international trademark license contracts, international patent license contracts, international investment contracts, international merger and acquisition contracts, and international property sales, etc. 

When signing an international contract with a Chinese company or individual, you must understand the relevant situation in China, and you must not negotiate and sign a contract with a Chinese company or individual with foreign legal thinking, because Chinese companies or individual companies cannot understand the terms based on foreign legal thinking which is difficult for them to accept. 

If international contracts need to be implemented in China, then the actual situation in China and the relevant provisions of the Chinese government should be taken into account for the performance of the contract. Otherwise, the contract will not be operational in China and will not work. That means that the contractual objectives of the foreign party cannot be achieved at all. 

Chinese party should also fully consider the risks when signing a contract with a foreign enterprise or individual, and must attach great importance to taking practical measures to prevent risks. For example: the language of the contract, the law applicable to the contract, the dispute settlement method of the contract, the contract litigation or the jurisdiction of the arbitration. 

The issue of the application of international law and international jurisdiction of the courts are very complicated in practice. If these are not decided beforehand, Chinese party will be very passive in the event of a dispute. Chinese and foreign parties are often at loggerhead over which country's laws apply to a contract and where to go for arbitration or litigation. Therefore, in many cases, the parties will make concessions to the laws of the third country and the international arbitration institution of the third country. However, the Chinese parties to the contract may not understand the laws of the third country and arbitration in the third country at all, which is a terrible thing.