King & Wood Mallesons’ Zhang Shouzhi, Xu Xiaodan and Li Xiang explain some of the intricacies of Chinese law with regards to commercial contracts between local and foreign parties
Commercial contracts (especially international financing agreements) between Chinese parties and foreign parties often designate a foreign court outside of China as the forum in which to resolve potential disputes. Such a forum selection clause, often insisted upon by the financial institution due to its stronger bargaining position, has become a generally accepted practice in international financing transactions.
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