This is important but cannot be covered in a short item. Therefore if it has any possible application to you, go to the link provided and read the whole of the lengthy but readable and informative Mondaq message.

Basically what it is saying is the number of foreign-related contractual disputes is growing in China and laws and regulations in China concerning the application of laws to disputes arising from foreign-related contract disputes are quite limited. There have been recent developments in the application of choice of law provisions to foreign-related contracts and the lengthy article examines there.

Under the current Chinese legal system, the Civil Code and Contract Law governs all civil and commercial contracts. While the Contract Law permits parties to a contract involving foreign interests to choose the contract’s governing law, there are certain exceptions to the rule requiring application of Chinese law:

Sino-foreign equity joint venture contracts.
Sino-foreign cooperative joint venture contracts.
Contracts for Sino-foreign cooperative exploration and development of natural resources.

According to an official spokesperson for the Supreme People’s Court the Exceptions have lagged behind legal and practical developments in the current economic environment.

On June 11 the Supreme People’s Court passed a series of new provisions which became effective on August 8, 2007. The provisions have broadened the scope of the statutory application of PRC law to contracts and further clarified the application of laws under the principle of proximate connection to the disputes arising from foreign-related civil and commercial contracts. If any of this does or could apply to you then click on the Mondaq link where it is clearly and comprehensively explained.
Source: Mondaq