How are trade disputes handled in China?

Trade disputes in China are handled by both Chinese and foreign courts but the Foreign Trade Law of the People’s Republic of China (FTL) is the central legislation that dictates how foreign trade disputes are to be handled. The FTL is the cornerstone of business relationships between foreign and domestic entities in the Chinese market. It stipulates the procedures and rules for foreign-related commercial and economic activities. The FTL grants foreign companies the right to challenge any harm caused by Chinese entities in Chinese courts, and outlines the process for litigating disputes. Depending on the type of dispute, the parties may negotiate a resolution, seek mediation or arbitration, or go to court. The FTL stipulates that the parties involved must negotiate in good faith, exhaust all efforts to resolve the dispute before resorting to court proceedings, and take part in court-ordered mediation. The FTL also provides two levels of dispute resolution: local level, involving the Basic People’s Court, and the Supreme People’s Court at the higher level. The local court will be the first instance in any dispute, with an appeal option to the Court of Appeal for the local district and then to the Supreme People’s Court. Overall, the FTL is designed to facilitate trade between China and foreign entities and resolve any trade disputes that may arise between them. It provides a structured system that outlines the procedures to be followed in the event of a dispute, and specifies the parties’ rights and obligations.

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How are trade disputes handled in China?

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