Recovery of Overseas Construction Payments: Should One Sue in a Foreign Court? — A Discussion of Jurisdictional Disputes Arising from a Foreign-Related Construction Contract Dispute

2026/10/14

Introduction: A project located overseas, a contract between two Chinese citizens, and a construction payment that has long gone unpaid. When the contractor brings suit against the employer before a domestic court, the other side argues: the project is abroad, so the case should be governed by a foreign court. Does the domestic court have jurisdiction at all? This jurisdictional dispute reflects a key issue in foreign-related construction project disputes.

I. Adapted Facts

In 2021, Chinese citizen A, as employer, entered into a Construction Subcontract with B, agreeing to subcontract to B the water and electricity portion of a construction project located in a certain foreign country. After the contract was signed, B organized personnel to go abroad and completed the construction. However, after the project was completed, A delayed in paying the corresponding construction payment. After repeated unsuccessful demands, B filed suit before a basic-level domestic court in the place of B's own domicile, seeking payment of the construction price and interest.

After the case was accepted, A raised a jurisdictional objection. A's core argument was: the project involved is located overseas, and a dispute over a construction project contract is subject to exclusive jurisdiction, which should be exercised by the court of the place where the project is located; the domestic court therefore has no power to hear the case. This objection plunged the case into a dispute over "whether the domestic court should hear it."

II. Issue in Dispute: Can a Domestic Court Exercise Jurisdiction over an Overseas Project?

A's position appears plausible: a dispute over a construction project contract is governed by the rules on real property disputes, and real property disputes are subject to the exclusive jurisdiction of the court of the place where the real property is located. Since the project is overseas, it seems that it should fall to a foreign court.

Upon review, however, the court held that this understanding confuses the boundary between "domestic exclusive jurisdiction" and "jurisdiction over foreign-related cases." The Civil Procedure Law provision treating construction project contract disputes as real property disputes for purposes of exclusive jurisdiction applies to situations where the subject matter is within the territory of our country. Where the project is located overseas, that provision cannot be relied upon to exclude the jurisdiction of our courts.

At the same time, both the plaintiff and the defendant in this case are Chinese citizens. Although the subject matter is overseas, the interests of our citizens are involved. Under the "doctrine of forum non conveniens" as provided in the Judicial Interpretation on the Civil Procedure Law, only where six conditions are simultaneously satisfied may a court rule to dismiss the suit and advise the parties to sue in a foreign court. Because this case involves the interests of Chinese citizens, it does not satisfy the condition that "the case does not involve the interests of the People's Republic of China, its citizens, legal persons, or other organizations," and therefore cannot be transferred to a foreign court.

Ultimately, the court held that this case should be treated as an ordinary contract dispute for purposes of determining jurisdiction, to be heard by the court of the defendant's domicile or the place of contract performance. Since both the defendant's registered residence and the plaintiff's habitual residence are within the jurisdiction of that court, the court had jurisdiction over the case and ruled to dismiss A's jurisdictional objection.

III. Counsel's Views

1. In foreign-related construction disputes, exclusive jurisdiction does not necessarily mean jurisdiction must lie with a foreign court. Construction project contract disputes are governed by the rules on real property disputes for jurisdictional purposes, but that rule primarily allocates authority among domestic courts. Where the project is located overseas, it cannot automatically be concluded that our courts lack jurisdiction.

2. Jurisdiction of our courts is the principle, and jurisdiction of foreign courts is the exception. For foreign-related civil cases brought before our courts, our courts should exercise jurisdiction in accordance with law unless all six conditions of the "doctrine of forum non conveniens" are simultaneously satisfied. Here, both parties are Chinese citizens and the interests of our citizens are involved, so the conditions for transferring jurisdiction to a foreign court are plainly not met.

3. The general rules on contractual jurisdiction remain applicable. Where exclusive jurisdiction does not apply to an overseas project, jurisdiction should be determined as in an ordinary contract dispute, that is, by the court of the defendant's domicile or the place of contract performance. This provides a clear basis for parties to choose a domestic court to vindicate their rights.

IV. Counsel's Recommendations

First, expressly agree on the court with jurisdiction at the time of contracting. In foreign-related construction contracts, the parties should, so far as possible, agree that our courts shall have jurisdiction and specify the precise connecting factors, so as to avoid consuming time on jurisdictional issues later.

Second, consult a professional lawyer promptly once a dispute arises. The jurisdictional rules for foreign-related cases are complex, involving exclusive jurisdiction, the doctrine of forum non conveniens, judicial sovereignty, and multiple other factors. A professional lawyer can help determine the optimal litigation strategy.

Third, pay attention to preserving evidence and to the identity of the parties. If both parties are Chinese citizens or have domiciles within the territory, this can strengthen the connecting factors supporting the exercise of jurisdiction by our courts. A lawyer can assist in sorting out key facts such as party capacity and the place of contract performance.

Fourth, do not be easily deterred by the fact that "the project is overseas." An overseas project does not mean that suit must be brought in a foreign court. So long as the conditions are met, a domestic court may likewise exercise jurisdiction. The involvement of a professional lawyer often enables a party to seize the initiative at the jurisdictional stage.

Conclusion: Jurisdiction over foreign-related construction project contract disputes concerns both judicial sovereignty and the litigation convenience of the parties. When the other side raises a jurisdictional objection, one should not lightly abandon the domestic litigation route. Only by promptly seeking the assistance of a professional lawyer can one find the most favorable path for vindicating one's rights within the complex rules governing foreign-related jurisdiction.