China is a flourishing platform for international business expansion. As it opens its doors to foreign investors and businesses, domestic and multinational companies are starting to plan and strategize on how to seize opportunities  presented by this marketplace. This article provides an overview of options for dispute resolution in China along with strategy and timeline considerations.  

Dispute resolution strategies are similar to those in the United States. Dependent on the circumstance and stage of dispute, it typically follows the steps of negotiation, arbitration, and lawsuit in court.

Negotiation / Mediation

The first step in resolving a dispute with a Chinese counterpart is mediation or negotiation. This is an informal step as parties work towards a peaceful resolution. Unlike the formal mediation process in the United States, this option does not require a mediator and parties typically focus on negotiation strategy to achieve a mutual resolution. Though, to ensure parties carry out the actions and tasks agreed during this process and such result has legal effect, the resolution agreement should be in writing and signed by both parties.

Legal Demand Letter

The second step is the issuance of a demand letter, often written by an attorney. This step precedes formal dispute resolution steps and lays out the issuer’s intent and demands. Such letter serves as a warning letter for the pending arbitration or litigation.

Arbitration

The third step, often an alternative to litigation in court, is arbitration. Similar to arbitrations in United States, in order to have the results binding, both parties need to agree in writing. Such binding effect is often reflected in the contract at issue, or separately agreed in writing prior to arbitration. Arbitration is not suitable for all types of dispute, such as where intellectual property is involved. It is essential to consult an attorney when drafting dispute resolution processes in an international contract.

Lawsuit / Litigation in Court

The last step is litigation in court. Trial in China typically takes place within six months. During this first six months, briefs and evidences are submitted to the court. Parties may apply for a six months extension under special situation, and another three months if approved. During this process, parties may also choose to have the court as a mediator to settle the dispute prior to trial.

It is essential to seek competent counsel when handling dispute resolution in China. Contact Alpine Law for a free consultation.