Resolving Commercial Disputes in China: Foreign Firms and the Role of Contract Law

Grow, Roy F. | January 1, 1993

It is not my intention to explicate China’s Foreign Economic Contract Law (FECL), the Joint Venture Law (JVL), or the Foreign Enterprise Income Tax Law (FEITL). The analysis of these codes has been done in great detail by others.’ Instead, I will examine the actual behavior of the most important actors governed by this set of laws-the Chinese and foreign enterprises that work with one another and which must find ways to resolve their competing claims. In this study, I will examine the tension between Chinese and foreign firms by focusing on several specific and limited questions having to do with actual practice: How do Chinese enterprises form contractual relationships with one another? How useful is China’s relatively young and underdeveloped body of commercial law and precedent in resolving disputes between Chinese enterprises? How much can this body of law and regulation be relied upon by foreign firms who interact with Chinese enterprises?