In his China Law Blog, Dan Harris writes that the dispute resolution provision in China contract may be the most important provision in the contract.
“If you put in a dispute resolution provision that makes sense, your Chinese company counter-party with whom you are contracting will be afraid to breach the contract. Conversely, if you put into the contract a dispute resolution provision that will not work, you are signaling to your Chinese company counter-party that it can breach its contract with you with impunity. Yes, it really is that important,” Harris writes in the blog post.
He explains why a provision calling for resolution in U.S. courts can sometimes be a hindrance, compared to a clause requiring dispute resolution to take place in Chinese courts.