As China’s economy gains steam, its global trade activities are increasing and business contracts between Chinese and foreign companies are on the rise, often making it a contentious issue for the two sides to agree on governing law when they ink a contract.
Whether a contract is signed between two domestic parties or between a domestic party and a foreign party, autonomy of the will is generally considered a fundamental principle to conclude a contract. The parties can draft the contract terms at their will as long as the terms are not against the law.
According to the Law of the Application of Law for Foreign-related Civil Relations, the parties to a contract may explicitly choose the laws applicable to foreign-related civil relations in accordance with the principle of autonomy of the will, as long as the application of foreign laws will not damage the social and public interests of China.
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Author: Craig Zhou is an associate at Martin Hu & Partners