CHINA 7. Dispute resolution
7.1. How efficient are local courts’ enforcement and dispute resolution proceedings, and are there any procedural idiosyncrasies foreign investors must be aware of? The use of litigation to protect commercial entities is affected by many factors, including limitations on the right to sue, the use of other means to achieve similar ends, conflicting policy goals, and the strength and independence of the courts. These factors affect certain areas of law and types of cases more than others.
Some investors continue to be concerned about party or government interference in particular cases involving key state-owned enterprises or industrial sectors, where the amount at stake is high or the legal issue particularly significant to national or local interests.
7.2. Do the courts of the FDI jurisdiction respect foreign judgments and are arbitration awards enforceable in the jurisdiction? PRC law provides for the enforcement of foreign court judgments in accordance with international treaties or the principle of reciprocity, as long as they do not violate basic principles of Chinese law, state sovereignty and security or the public interest. Reciprocity is interpreted as willingness by a
Lu Yi Partner, Paul Hastings
Shanghai, China T: +86 21 6103 2927 E:
yilu@paulhastings.com W:
www.paulhastings.com
foreign court to enforce a judgment issued by a Chinese people’s court, which is generally difficult to establish.
Accordingly, foreign judgments are generally not enforceable in China given the lack of a treaty. It should be noted that mainland China and Hong Kong have made arrangements to mutually recognise and enforce judgments in civil and commercial matters in limited situations.
In contrast, foreign arbitration awards are generally enforceable in China because China is one of the contracting countries of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention).
7.3. Are judgments and arbitration awards from the FDI jurisdiction generally enforceable in other jurisdictions? Judgments from China are generally not enforceable in other jurisdiction given the lack of a treaty. That being said, there are sporadic cases where other jurisdictions, such as Singapore and California, US, have enforced Chinese judgments.
Chinese arbitration awards are generally enforceable in the territory of another contracting country of the New York Convention.
About the author Lu Yi is a partner in the corporate practice of Paul Hastings and is based in the firm’s Shanghai office. Her practice focuses on M&A, private equity financing and venture capital investments, real-estate acquisitions, and foreign direct investment.
Before joining the firm, Lu spent several years as senior counsel at Siemens China, and before that practiced in a leading PRC law firm and a German law firm.
Lu passed the bar in China in 1998 but does not hold a current practicing certificate. She is also admitted in the State of New York.
Lu is fluent in English, Mandarin Chinese, and the Shanghai dialect.
Sophie Han Associate, Paul Hastings
Shanghai, China T: +86 21 6103 2727 E:
sophiehan@paulhastings.com W:
www.paulhastings.com
About the author Sophie Han is an associate in Paul Hastings’ corporate department and is based in the Shanghai office. She focuses her practice on corporate and commercial law, investment management, foreign direct investment, and M&A in China.
She advises multinational clients on their transactions and operations in China, including M&A, foreign direct investment, corporate compliance and employment matters.
Han received her LLB from Shanghai International Studies University in 2007 and her Masters of laws from Stanford Law School in 2012.
She passed the bar China in 2007 but does not hold a current practicing certificate. She is fluent in Mandarin, English and Cantonese.
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