July 14, 2009
Enforcement of Chinese-foreign contracts: some counterintuitive views
Here's a nicely paired set of posts from the China Law Blog:
1. Foreigners can often ignore their contractual obligations to Chinese companies, because Chinese companies (at least in some circumstances - read the post) have a strange reluctance to sue even where they'd almost certainly win.
2. Chinese companies can not ignore their contractual obligations to foreigners (or others), because Chinese courts really will enforce, with reasonable effectiveness, well written and not-too-complicated contracts.
I'm simplifying, of course; read the posts.
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As an interesting corollary to this, a recent survey by the French consulting firm Coface of outside firms doing business in China found that "91.2% of firms contacted said that they had problems getting paid" sometime during 2008 (accounting for 7.7% of all invoices, with private Chinese firms being considered the "most risky" to do business with. This comes from an article by Andrew Main entitled "Chinese Overdue Accounts Increase", which appeared in The Australian on July 15th. See http://www.theaustralian.news.com.au/business/story/0,28124,25783061-36418,00.html
Posted by: Mike Dowdle | Jul 15, 2009 7:29:58 PM