There is a way to resolve a commercial dispute: Litigation
Provided that the parties do not submit to the exclusive jurisdiction of a particular court, litigation does not need to be limited to one court or one jurisdiction, so the parties have a degree of flexibility.
However, some domestic parties may insist on the exclusive jurisdiction of the courts in mainland China. If this is not the case, the parties will need to decide whether to pursue litigation through the courts in
mainland China or foreign courts.
The quality and reliability of courts in mainland China differs from location to location and there are concerns that some courts may not be as an effective dispute resolution mechanism for foreign commercial disputes as arbitration (although this is less of a concern in Beijing and Shanghai).
Moreover, complex commercial disputes have not typically been pursued through the courts in mainland China, which explains or evidences a reluctance on the part of foreign investors to pursue litigation through the Chinese courts. Nevertheless, mainland China remains committed to legal reform and significant progress has been made.
The advantage of referring a dispute to a court in mainland China in the first instance is that as compared with a foreign judgment,a favourable court judgment in mainland China will be easier to enforce directly against the defendant company and its assets.
The legal system of mainland China is also relatively straightforward and so can result in (by international standards at least) quicker litigation and lower costs. These advantages are balanced against the
concerns referred to above.
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