Evolution of dispute resolution clauses and mechanisms in the international business contracts of China’s enterprises—a forward look

As China’s role in international trade and finance continues to mature, the assumed preference to settle disputes bilaterally and informally will not be sufficient to deal with the disputes that inevitably arise in trading and investment. The dispute resolution provisions in contractual documentation provide the legal bases for resolution. A key difference between Chinese and other models is the role of the State in setting policy in China’s international commercial relations. This means that raised geopolitical tensions may produce increasingly unanticipated outcomes. The paper inquires as to how China’s international commercial dispute resolution mechanisms will evolve, and whether they will diverge from current models, or fall in line with current patterns. Such evolution could have a significant influence. The authors’ view, in summary, is that Chinese enterprises will continue to commit to current mechanisms, but seek to assert greater influence and a homeward trend to arbitration in China subject to Chinese Law. Additionally, over time, there may be a greater push for mediated settlements as is the case in domestic arbitration in China. The drive to use technology, particularly AI, is very likely to feed into the methodology preferred by Chinese enterprises in arbitration where it can be shown to increase efficiency.