Legal Developments China: Courting investment
US and Chinese entities in Beijing have launched the US-China Business Mediation Centre to cut reliance on the courts for foreign investors involved in disputes in China. John Savage, a partner at Shearman & Sterling in Singapore, evaluates its impact.
One of the concerns of many non-Chinese parties doing business in China is how disputes with their Chinese partners will be resolved. Litigation before the Chinese courts holds little appeal for foreign companies, given the inefficiency of the court system and the hometown advantage that Chinese parties enjoy. Arbitration – preferably offshore – is considered a better choice for non-Chinese parties, but even then an arbitral award in favour of the foreign party will need to be enforced in the Chinese courts if the Chinese party refuses to comply with the award. Arbitration is also a costly and lengthy process.
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