{"id":7810,"date":"2021-05-27T06:30:13","date_gmt":"2021-05-27T06:30:13","guid":{"rendered":"https:\/\/focus.cbbc.org\/?p=7810"},"modified":"2025-04-23T09:53:11","modified_gmt":"2025-04-23T09:53:11","slug":"chinas-arbitration-laws","status":"publish","type":"post","link":"https:\/\/focus.cbbc.org\/chinas-arbitration-laws\/","title":{"rendered":"In depth: China’s arbitration laws \u2013 and how they’re getting better"},"content":{"rendered":"

In this policy update, Joe Cash explains how UK firms selling into the China market from Hong Kong or the Greater Bay Area can take additional steps to improve the extent to which their business with Mainland China is protected under PRC law<\/span><\/h2>\n

Commercial dispute settlement in China is set to become (slightly) more \u2018foreign company-friendly,\u2019 following three important changes that China has made to its commercial arbitration framework. <\/span>The result of these changes is that foreign firms accessing the China market through Hong Kong or through the Shanghai Lingang Free Trade Zone can take steps to improve the extent to which any interactions with Mainland China are protected under the laws of the People\u2019s Republic of China (hereafter referred to as PRC law or the PRC legal system). <\/span><\/p>\n

Beijing made these changes to improve the scope of Chinese legal protection for investors exporting capital overseas, but the Ministry of Justice and the Supreme Court\u2019s push to internationalise the country\u2019s commercial arbitration frameworks have resulted in improvements in how foreign firms can interact with China\u2019s commercial arbitration systems, too.<\/span><\/p>\n

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Background<\/span><\/h4>\n

China\u2019s businesses are \u2018going out\u2019 and doing business overseas like never before. The value of trade<\/a> between China and the European Union alone is worth approximately \u20ac1 billion each day. More broadly, China is now the second-largest capital-exporting country in the world (behind the United States). As of 2018, over 27,000 Chinese enterprises have invested in 188 countries and established 43,000 Chinese-invested enterprises overseas. In the UK, there are 838 Chinese-owned companies currently trading, according to Grant Thornton\u2019s Tou Ying Tracker \u2013 an increase on the 795 companies identified in 2019. <\/span><\/p>\n

However, as the number of Chinese companies looking to engage with foreign markets increases, so too does the number of commercial disputes involving a Chinese party. As such, since the late 1990s, civil servants involved in China\u2019s judicial affairs have paid close attention to ensuring that adequate legal protections<\/a> exist under PRC law for Chinese firms as they invest greater amounts of capital overseas and conduct more cross-border business.<\/span><\/p>\n