Professional Documents
Culture Documents
The Chinese Practice of Private International Law
The Chinese Practice of Private International Law
CONTENTS
I Introduction
II Jurisdiction
A General Rule of Territorial Jurisdiction
B Exceptions to the General Rule of Territorial Jurisdiction
1 Exclusive Jurisdiction
2 Jurisdiction of the People’s Court of the Place in Which the Plaintiff
is Domiciled
3 Jurisdiction over Actions Concerning Contractual Disputes or Other
Disputes over Property Rights and Interests
4 Jurisdiction over Actions in Tort
C Choice of Forum
1 Recognition of Jurisdictional Agreement
2 Construed Jurisdiction
D Lis Alibi Pendens
E Effect of an Arbitration Agreement on the Jurisdiction of People’s Courts
1 Independence of Arbitration Clause
2 Approach of People’s Courts to Disputes Covered by Arbitration
Agreements
III Choice of Law
A Choice of Law in General
1 Characterisation
2 Renvoi
3 Proof of Foreign Law
4 The Time Factor in Applying Laws
5 Cases Where There is No Provision in Applicable Chinese Law
B Contracts
1 Choice of Law for Contracts
2 Applicable Law for Contracts in Cases Where No Law Has Been
Chosen
C Torts Involving Foreign Elements
D Marriage, Family and Succession
1 Marriage
2 Husband-Wife Relationships, Guardianship and Maintenance
Relationships
3 Application of Law Concerning Succession
IV Recognition and Enforcement of Foreign Judgments and Awards
A Recognition and Enforcement of Foreign Judgments
B Recognition and Enforcement of Foreign Arbitral Awards
* BSc (Nanjing), LLM (East China Institute of Politics and Law), PhD (Wuhan); Associate
Professor, Law Faculty, Hangzhou Institute of Commerce.
† LLB, LLM (Northwest Institute of Politics and Law); Lecturer, Law Faculty, Hangzhou
Institute of Commerce.
Melbourne Journal of International Law [Vol 3
I INTRODUCTION
With the development of China’s external economic cooperation and trade,
increasing numbers of disputes involving foreign factors arise and hence are
brought to People’s Courts. Private international law was introduced in China in
the early 1980s to assist in the resolution of these disputes. This aspect of the
Chinese legal system has developed so rapidly that it is a formidable task for
academic lawyers to keep abreast of its changes. In addition to this rapid
development are the difficulties associated with the limited accessibility of cases
where People’s Courts use private international law to resolve disputes.
Notwithstanding these difficulties, this paper intends to elaborate the practice of
private international law based on publicly accessible judicial precedents.
It should be noted at the outset that in China, judicial precedents, being not
among the official sources of law, are not binding on People’s Courts. However,
judicial practice reflects the development of legislation. Moreover, given the
under-developed state of private international law in China, judicial precedents
serve as a reference, and assist People’s Courts in identifying the applicable law.
This is particularly true when it comes to the judicial precedents of the Supreme
People’s Court.
II JURISDICTION
1 Supreme People’s Court, Selected Cases of People’s Courts (1996) 390–4 (Higher People’s
Court of Jilin Province, 1994).
2 Ibid 1135–41 (Higher People’s Court of Guangxi Zhuang Autonomous Region, 1993).
3 Lin Zhun (ed), Selected Cases of Private International Law (1996) 118–20 (Shanghai
Intermediate People’s Court, 1985).
2002] The Chinese Practice of Private International Law
1 Exclusive Jurisdiction
With regard to disputes involving immovable property, port handling,
performance of contracts for Chinese-foreign equity joint ventures, Chinese-
foreign contractual joint ventures or Chinese-foreign contractual explorations of
natural resources, People’s Courts may exclude the jurisdiction of foreign courts
and exercise jurisdiction where the immovable property or the ports are within
the territory of China, or where the contracts are performed within the territory
of China.4
2 Jurisdiction of the People’s Court of the Place in Which the Plaintiff is
Domiciled
In special circumstances, for the convenience of the plaintiff, the People’s
Court of the place in which the plaintiff is domiciled will hear actions. However,
such jurisdiction is limited to occasions where the action in personam is brought
against persons not residing within the territory of China, or against persons
whose whereabouts are unknown or who have been declared missing. The
proceeding for divorce that Zhang Yumou brought before the Zhengdong
District People’s Court, Haikou, against You Shi’an in 1991 is illustrative.5 The
plaintiff, Zhang Yumou, was a Chinese citizen who, with American national,
You Shi’an, registered for marriage with the Bureau of Civil Affairs of Haikou
City in July 1991. In August Zhang Yumou filed a divorce proceeding with the
Zhengdong District People’s Court, Haikou. The People’s Court accepted the
case and rendered a judgment in due course.
3 Jurisdiction over Actions Concerning Contractual Disputes or Other
Disputes over Property Rights and Interests
For actions concerning a contractual dispute or other dispute over proprietary
rights brought against a defendant who has no domicile within the territory of
China, the People’s Court may exercise jurisdiction if: the contract is concluded
or performed within the territory of China; the object of the action is located
within the territory of China; the defendant has distrainable property within the
territory of China; or the defendant has its representative office within the
territory of China.6 An example is Chamber of Japan in Shanghai v Huida Co
(Hong Kong),7 where the plaintiff was a firm registered in Osaka, Japan, and the
defendant, a Hong Kong-based company. Neither had an office in China. The
two parties reached an agreement on the joint investment of US$350 000 in a
4 Civil Procedural Law of the People’s Republic of China in Legislative Affairs Commission
of the Standing Committee of the National People’s Congress of the People’s Republic of
China, The Laws of the People’s Republic of China 1990–1992 (1993) 185, art 34 (‘CPL’).
5 Lin Zhun (ed), above n 3, 110–12 (Zhengdong District People’s Court, Haikou, Hainan
Province).
6 CPL, above n 4, art 243.
7 Lin Zhun (ed), above n 3, 89–92 (Higher People’s Court of Zhejiang Province, 1994).
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jurisdiction on the grounds that the tort was either committed, or caused harmful
effects, within the territory of China.
(a) Special Actions in Tort: Lawsuits Concerning Claims for Damages Caused
by a Railway, Road, Water Transport or Air Accident
With respect to lawsuits concerning claims for damages caused by a transport
accident, the People’s Court situated in any of the places where the accident
occurred, where the vehicle, ship or aircraft first arrived after the accident, or
where the defendant is domiciled, will have jurisdiction.14 With respect to
proceedings for damages arising out of the collision of ships or other maritime
accidents, the Special Maritime Procedures Law provides that if the place of
collision, the place where the colliding ships first arrive, the place of arrest of the
ship, the registration port of the ships, or the defendant’s domicile is within the
territory of China, People’s Courts may entertain actions arising from the
collision or other maritime torts.15 In Trade Quicker Inc v Golden Light
Overseas Management SA,16 two ships registered in Panama — MV Trade
Quicker and MV Yanan — collided on the high seas off the Chinese coast. The
plaintiff applied to Tianjin Maritime Court for the arrest of the defendant ship
and subsequently brought an action in that court. Although the place of collision,
the place where the colliding ships first arrived, and the domicile of the
defendant were all outside the territory of China, Tianjin Maritime Court seized
jurisdiction by arresting the ship.
C Choice of Forum
The principle of party autonomy gives parties the right to choose which court
exercises jurisdiction over disputes between them. Both Chinese law and
practice acknowledge this autonomy as a general rule.
1 Recognition of Jurisdictional Agreement
An examination of the approaches to jurisdictional agreements reveals that the
practice before the promulgation of the CPL in 1991 differed from the practice
thereafter. Before 1991, a jurisdictional agreement, even explicitly evidenced,
was not strictly recognised. In September 1988 Zhejiang Province Arts & Crafts
Import & Export Industrial and Trade Group entrusted Golden Fortune Shipping
Co Ltd, a Hong Kong carrier, to deliver skiing gloves to Pittsburgh in the United
States. The goods were lost in transit due to the negligence of Golden Fortune
Shipping. Zhejiang Province Arts and Craft brought a lawsuit before the
Shanghai Maritime Court, claiming damages from Golden Fortune Shipping.17
The defendant raised an objection to the jurisdiction of the Maritime Court,
arguing that since article 3(2) of the bill of lading provided that ‘any disputes in
relation to this bill of lading shall be handled by Hong Kong courts in
accordance with Hong Kong law’, the case should be heard in Hong Kong.18 The
Shanghai Maritime Court ruled that a choice of forum that has a real connection
with the carriage contract will generally be recognised. However, the Maritime
Court noticed that: the carriage agencies of both the plaintiff and defendant, the
place of issuance of the bill of lading, the port for loading, and the first carrier
were all in mainland China; the second carrier and the port of destination were in
the US; and only the issuer of the bill of lading (the defendant) was in Hong
Kong. Based on these factors, the Maritime Court held that staying the
proceeding and handing it over to a Hong Kong court would cause
inconvenience to the plaintiff and adversely affect its interests. It consequently
ruled against the defendant’s challenge.19 The reasons were twofold. First, the
then CPL did not cover jurisdictional agreements, although the Supreme
People’s Court, in its judicial interpretation, explained that ‘Chinese courts may
exercise jurisdiction where parties agree to proceed their action in Chinese
courts’.20 Second was the issue of reciprocity. A Hong Kong court had
previously ignored a jurisdictional provision in a bill of lading of a mainland
shipping company. The decision of the Shanghai Maritime Court appeared to be
revenge for the previous act of the Hong Kong judiciary. Third, the doctrine of
forum non conveniens may also account for the approach. It is worth noting that
refuting the effect of a forum choice in a jurisdictional agreement on the basis of
forum non conveniens is not common in the modern Chinese practice of private
international law.
The CPL, promulgated in 1991, recognises the parties’ choice of forum.
People’s Courts accordingly uphold the force of jurisdictional agreements. In
December 1993, Hong Kong based Yin Sen Shipping Company and Xiamen
based Shengli Economic and Trade Development Company signed a Charter
Party, in which both parties agreed either to settle (through amicable
consultation) the disputes that may arise from the performance of the contract, or
to arbitrate them in Hong Kong in accordance with Chinese law.21 On the same
date, the parties signed an Agreement on Payment of Freight (‘Freight
Agreement’), which provided that ‘the Hong Kong High Court has exclusive
jurisdiction over all the disputes arising under this agreement’. Subsequently, the
Overseas Chinese Bank, Xiamen Branch, issued a Letter of Guarantee against
Payment of Freight in favour of Yin Sen Company, providing a guarantee for the
obligations of Xiamen Shengli to pay freight under the Charter Party and the
Freight Agreement. Thereafter a dispute arose concerning payment of freight.
Yin Sen brought an action before the Xiamen Maritime Court against the
Overseas Chinese Bank, Xiamen Branch, after failing to procure the payment.
The Overseas Chinese Bank challenged the jurisdiction of the Maritime Court,
arguing that the Hong Kong High Court had exclusive jurisdiction over disputes
regarding payment of freight. Xiamen Maritime Court ruled against the validity
of the choice of forum provisions on the ground that the Charter Party and the
18 Ibid.
19 Ibid.
20 Ibid.
21 Supreme People’s Court, Selected Cases of People’s Courts (1996) 2015–19 (Higher
People’s Court of Fujian Province, 1994).
2002] The Chinese Practice of Private International Law
22 Ibid.
23 Ibid.
24 CPL, above n 4, art 245.
25 Supreme People’s Court, Selected Cases of People’s Courts (1996) 1707–10 (Shanghai
Maritime Court, 1991).
26 Ibid.
27 Ibid.
28 Jin Zhenjia, above n 10, 189–99 (Guangzhou Maritime Court, 1996).
29 Ibid.
30 Lis alibi pendens refers to situations where parallel actions involving the same parties and
the same cause are pending in two different courts at the same time.
31 Supreme People’s Court Opinions on Certain Questions Concerning the Application of the
Civil Procedural Law of the People’s Republic of China (1992) art 305 provides:
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In regard to cases over which the courts of both the People’s Republic of China and
foreign States have jurisdiction, the People’s Court may accept jurisdiction where one
party brings such a case before the foreign court whilst the other before the People’s
Court of the People’s Republic of China.
32 Lin Zhun (ed), above n 3, 64–8 (Tianjin Intermediate People’s Court, 1992) (‘Tianjin Native
Products Case’).
33 Ibid 118-20 (Shanghai Intermediate People’s Court, 1985).
34 Supreme People’s Court, Selected Cases of People’s Courts (1996) 1368–75 (Higher
People’s Court of Fujian Province, 1995).
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35 In 1984 China Technology Import & Export Company (‘CTIEC’) and Sunrise Development
Inc signed an agreement, in which the latter promised to sell 9000 tons of steel to the former.
Sunrise did not have the capacity to perform its obligations and therefore upon mutual
consent the seller was replaced by Industrial Resources Inc of Switzerland (‘IRC’). IRC sent
a telex to CTIEC on 14 March 1985, claiming that ‘[g]oods ready for shipment at the port of
shipment’ and ‘date of shipment 31 March 1985’ and requesting that a letter of credit be
issued in favour of IRC. On 26 May 1985 it again telexed that ‘the steel may be provided by
our Italian or Spanish manufacturer’. Upon the issuance of the letter of credit, IRC submitted
to CTIEC all the documents, including the bill of lading, the Certificate of Quality Control
and the Certificate of Weight. On 1 June 1985 the Bank of China, the issuing bank of the
letter of credit, effectuated the payment of US$2 290 000 under the terms of the letter of
credit. However, the contracted goods were never delivered. On 24 March 1986 CTIEC
brought an action before the Intermediate People’s Court of Shanghai Municipality, claiming
reimbursement for the payment and damages. The People’s Court of first instance delivered
a judgment in favour of the plaintiff. IRC appealed to the Higher People’s Court. One of its
pleadings was that the People’s Court did not have had jurisdiction because of an arbitration
clause in the contract between the parties: [1989] 1 Gazette of the Supreme People’s Court
of PRC 26–8.
36 Ibid.
37 Supreme People’s Court, Selected Cases of People’s Courts (1996) 1745–52 (Higher
People’s Court of Liaoning Province, 1993).
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arbitration clauses and arbitration agreements for the covered disputes falling
within the scope of the exclusive jurisdiction of our courts’.41
1 Characterisation
Courts in nearly all countries use the lex fori as the basis for characterisation,
and People’s Courts are no exception. Characterisation is the foundation for
applying the conflict rule and also in determining jurisdiction. In the
abovementioned China Technology Import & Export Company v Industrial
Resources Inc case, the act of IRC was characterised as tortious and therefore the
People’s Court of Appeal seized jurisdiction by ruling that ‘the dispute between
the parties is not a dispute arising from contract but that arising from tort …
[which is] not subject to the arbitration clause in the contract’.42
Chinese law and judicial interpretations do not cover characterisation, except
for the purposes of the statute of limitation.43 As a result, the practice of
characterisation by People’s Courts is inconsistent: in Yuehai Electronic Co Ltd
v China Merchants Warehouse & Transportation Co Ltd,44 the Supreme
People’s Court characterised the release of goods without presentation of the
original bill of lading as breach of contract and hence applied the applicable law
for contracts; in C Melchers GmbH & Co v Guangzhou Shipping Company and
China Merchants Containers Freighting Co,45 the People’s Courts of the first
and second instances characterised the same act as tortious and therefore applied
the applicable law for torts; in Wanbao Group Company Guangzhou Feida
Electronic Factory v America President Liners,46 while the People’s Court of
first instance characterised such acts as breach of contract, the People’s Court of
second instance saw them as tortious and reversed the classification.47 This
uncertainty resulting from characterisation is harmful both to the parties and to
the People’s Courts.
In interpreting the terms of the law to be applied, People’s Courts primarily
rely on the law of the country where the rule is sourced rather than lex fori. In
Far East (China) Flour Co Ltd v Liberia Meizi Shipping Company,48 the
People’s Court referred to the American law for ‘real loss’ after finding
American law to be the applicable law.
41 Supreme People’s Court, Memorandum of the National Symposium on the Judicial Work
Involving Hong Kong and Macau (1989).
42 [1989] 1 Gazette of the Supreme People’s Court of PRC 26–8.
43 Supreme People’s Court Opinions on Certain Questions on the Implementation of the
General Principles of Civil Law (1988) art 195 provides that ‘[t]ime limitation for action
shall be determined according to the applicable law governing the civil legal relation that are
determined pursuant to the rule of conflict of laws’. In view of this, time limitations for
actions are characterised as substantive issues.
44 Jin Zhenjia, above n 10, 291–311 (Supreme People’s Court, 1994).
45 Ibid 312–22 (Guangzhou Maritime Court, 1995).
46 Ibid 323–32 (Higher People’s Court of Guangdong Province, 1995).
47 Ibid.
48 Lin Zhun (ed), above n 3, 21–4 (Guangzhou Maritime Court, 1990).
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2 Renvoi
Chinese law is silent on renvoi. Although in judicial practice it is rarely used,
many private international lawyers argue for the adoption of renvoi, though
People’s Courts tend to ignore it.49 The only exception is Chancery plc (United
Kingdom) v Sukissed Marine Co Ltd (Greece).50 In that case the parties agreed to
be governed by Chinese law. However, the People’s Court concerned referred to
the law of Cyprus as the applicable law according to the Chinese conflict rule,
which provides that the ‘mortgage of a ship shall be determined by the law of the
flag State of the ship’.51
3 Proof of Foreign Law
49 Liu Weixiang et al, Chinese Theories and Practice of Private International Law (1995)
88–9; Yu Xianyu, Interstate (Intrastate) Civil and Commercial Law Conflicts (1995) 94;
Han Depei, New Version of Private International Law (1997) 187.
50 Jin Zhenjia, above n 10, 17–22.
51 Ibid.
52 Ibid 466–73 (Shanghai Maritime Court, 1993).
53 Ibid.
54 Supreme People’s Court, Selected Cases of People’s Courts (1996) 1135–41 (Higher
People’s Court of Guangxi Zhuang Autonomous Region, 1993).
2002] The Chinese Practice of Private International Law
and MV Yanan, the Tianjin Maritime Court held that since both the colliding
ships were registered in Panama, Panamian law should be applied. However,
since the parties failed to prove Panamian law and the Maritime Court was
unable to identify it, the Maritime Court applied Chinese law instead.55 In the
case of the collision between the ships Huayu and Coral Island,56 the Maritime
Court concerned was unable to identify the foreign law that the conflict rule in
the agreement between the parties directed, and applied Chinese law instead.57
4 The Time Factor in Applying Laws
Where a conflict rule refers to the law of a given state as the applicable law,
the alteration of that law should be taken into account. People’s Courts have held
that subsequent law does not have retroactive effect. For example, in the Notice
on Publicising and Implementing the Maritime Law of the People’s Republic of
China (‘Maritime Law’),58 the Supreme People’s Court pointed out that, in
relation to disputes that took place before the new Maritime Law came into
effect but brought to the court thereafter, or actions commenced before the new
law came into effect but which remained pending thereafter, the old law shall be
applied. In the Xian Ren case,59 the dispute arose before the Maritime Law came
into effect. Although the proceedings were instituted after the coming into effect
of the law, the Maritime Court applied the law as it stood when the dispute arose,
that is, the General Principles of the Civil Law of the People’s Republic of
China.60 However, if in such cases the old law fails to provide for rules which
govern the dispute, People’s Courts tend to apply the new law as a reference. In
SD International SRO (Czech Republic) v Zhejiang Province Second Light
Industry Enterprise Group, the People’s Court of first instance based its
judgment on the new Contract Law (1999).61 SD International SRO appealed,
arguing that the new Contract Law did not have retrospective effect. The
People’s Court of second instance rejected the appeal, holding that
subsequent law having no retrospective effect is a general rule governing the
application of law. Under certain circumstances, however, there exist exceptions
to the doctrine. Where there is no governing rule, the new rule in the new Contract
Law may apply.62
55 Supreme People’s Court, Selected Cases of People’s Courts (1996) 1896–1902 (Tianjin
Maritime Court, 1992).
56 Supreme People’s Court, Selected Cases of People’s Courts (1996) 1903–11 (Higher
People’s Court of Hubei Province, 1996).
57 According to the Supreme People’s Court Opinions on Certain Questions on the
Implementation of the General Principles of Civil Law (1988) art 193, errors of applying
foreign law may be corrected where parties appeal.
58 The Supreme People’s Court Notice on Publicising and Implementing the Maritime Law of
the People’s Republic of China (1992) art 4.
59 Min An (Hong Kong) Insurance Company v Eversall Shipping (St Vincent) Ltd in Jin
Zhenjia, above n 10, 246–62 (Higher People’s Court, 1997).
60 General Principles of the Civil Law of the People’s Republic of China in Legislative Affairs
Commission of the Standing Committee of the National People’s Congress of the People’s
Republic of China, The Laws of the People’s Republic of China 1983–86 (1987) 225
(‘GPCL’).
61 Civil Judgement of the Higher People’s Court of Zhejiang Province (2001) (Zhe Jing Yi
Zhong Zi) No 27.
62 Ibid 6–7.
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Similarly, in the Hong Kong Jin Chuan Shipping Group case,63 since the
Maritime Law had not come into effect, the People’s Court concerned applied
the GPCL.64 Given that the GPCL had no provision covering towage contracts,
the Maritime Law was applied as a reference.
5 Cases Where There is No Provision in Applicable Chinese Law
In China, international treaties constitute an integral part of the domestic legal
system, and even occupy a higher status than domestic law.65 Given this, where
Chinese law is referred to as the applicable law, People’s Courts apply the
relevant provisions of international treaties to which China is a party in two
circumstances: first, when Chinese law lacks a rule governing the matter in
question, while the international treaty provides a rule; and secondly, when an
international treaty differs from the applicable law. Where both the international
treaty and relevant Chinese law fail to provide a rule, People’s Courts may even
resort to customary international law. In The Shenzhen Branch of Hokkaido Bank
v Nanyou (Shenzhen) Commercial Services Company,66 the People’s Court
referred to Chinese law governing the collection of cheques as the applicable
law. Since Chinese law did not have rules governing collection of cheques at that
stage, the court applied the International Chamber of Commerce Uniform Rules
for Collections.67 In Shenzhen Moscow Industrial and Trade Co Ltd v Baltic
Shipping Company (‘AK Shohov’),68 the People’s Court concerned applied the
Hague Rules69 where Chinese law failed to provide relevant provisions.70
B Contracts
63 Supreme People’s Court, Selected Cases of People’s Courts (1996) 466–73 (Shanghai
Maritime Court, 1993).
64 GPCL, above n 60.
65 See, eg, CPL, above n 4, art 238; GPCL, above n 60, art 42; Maritime Code of the People’s
Republic of China in Legislative Affairs Commission of the Standing Committee of the
National People’s Congress of the People’s Republic of China, The Laws of the People’s
Republic of China 1990–1992 (1993) 413, art 268 (‘Maritime Code’).
66 Lin Zhun (ed), above n 3, 92–5 (Shenzhen Intermediate People’s Court, 1991).
67 [1978] URC 522.
68 Jin Zhenjia, above n 10, 333–9 (Guangzhou Maritime Court, 1994).
69 International Convention for the Unification of Certain Rules of Law Relating to Bills of
Lading [Hague Rules] and Protocol of Signature, opened for signature 25 August 1924, 120
LNTS 155 (entered into force 2 June 1931), amended by Protocol Amending the
International Convention for the Unification of Certain Rules of Law Relating to Bills of
Lading, opened for signature 23 February 1968, 1412 UNTS 127 (entered into force 23 June
1977).
70 See Maritime Code, above n 65.
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71 Supreme People’s Court, Selected Cases of People’s Courts (1996) 1051–4 (Guangzhou
Intermediate People’s Court, Guangdong Province, 1991).
72 Ibid 1707–10 (Shanghai Maritime Court, 1991). See also above n 28.
73 Lin Zhun (ed), above n 3, 21–4 (Guangzhou Maritime Court, 1990).
74 Pub L No 520, 49(1) Stat 1207 (1936).
75 Supreme People’s Court, Selected Cases of People’s Courts (1996) 987–92 (Jing’an District
People’s Court, Shanghai, 1995).
76 Convention for the Unification of Certain Rules Relating to International Carriage by Air,
opened for signature 12 October 1929, 137 LNTS 11 (entered into force 13 February 1933).
77 Jin Zhenjia, above n 10, 291–311 (Supreme People’s Court, 1992).
78 Ibid 246–62 (Higher People’s Court of Guangdong Province, 1995).
79 Supreme People’s Court Opinions on Certain Questions on the Application of the Foreign
Economic Contract Law (1987) art 2.
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parties and the form of the contracts.80 Thirdly, the choice shall not contravene
the public policy of China.81 Finally, choice of law provisions are not permitted
for contracts concerning Chinese-foreign equity joint ventures, Chinese-foreign
contractual joint ventures and Chinese-foreign exploration of natural resources,
which must all be subject to Chinese law.82
2 Applicable Law for Contracts in Cases Where No Law Has Been Chosen
In cases where no law has been chosen, People’s Courts may apply the law of
the country that is most closely connected with the contract. In determining this,
People’s Courts take into account the nationalities and domiciles of parties, the
place where the contract is concluded or performed, and the place where the
disputed object is situated.83 For example, in Ausdragon Products Company v
Jiangxi Province Import & Export Company,84 the relevant People’s Court was
presented with the following scenario: one party to the contract was a Chinese
legal person and was domiciled in China; the contract was drafted by the
Chinese party and then referred to the plaintiff for confirmation by signing; the
products were manufactured in China; and the parties agreed on the inspection of
the quality and quantity of the products by the Chinese Commodity Inspection
Authority. In view of this, the People’s Court ruled that China was the country
that was most closely connected with the contract and that the Chinese law
should therefore be applied. Similarly, in the Tianjin Native Products Case, the
Intermediate People’s Court of Tianjin Municipality held that, since both the
place where the contract was signed and the port of departure of the goods were
in China, the law of China was most closely connected with the contract.85 In Xu
Chengde v Taiwan Foliage Marine Inc, the People’s Court ruled that China was
the country most closely connected with the contract because it was the country
where the business of the agent was situated, where the service contract was
signed, and where the contract was to be performed.86 Chinese law was therefore
applied.
C Torts Involving Foreign Elements
For actions in tort, the Chinese conflict rule directs People’s Courts to apply
the law of the place where the tort was committed (lex loci delicti). The place
where the tort was committed may refer either to the place where the infringing
act was done or to the place where the harm of the act occurred. In situations
where these places differ, People’s Courts may choose either. In Hong Kong
Meridian Success International Ltd v Aslan Transmarin Shipping Trading &
Industry Co Ltd, the People’s Court concerned applied Chinese law for a tort
80 Ibid.
81 Ibid.
82 Ibid.
83 The Supreme People’s Court has issued judicial interpretations providing rules for
determining the applicable laws where parties fail to make the choice of law in 13 types of
contracts: Supreme People’s Court, Opinions on Certain Questions Regarding the
Application of the Law for Contracts with Foreign Elements (1987).
84 Lin Zhun (ed), above n 3, 61–4 (Higher People’s Court of Jiangxi Province, 1992).
85 Ibid 64–8 (Tianjin Intermediate People’s Court, 1992).
86 Jin Zhenjia, above n 10, 35–42 (Guangzhou Maritime Court, 1994).
2002] The Chinese Practice of Private International Law
1 Marriage
Chinese law provides that marriage between a Chinese citizen and a foreign
citizen shall be bound by the law of the place of marriage.92 It is silent on the
issue of which law governs a marriage between foreigners. In practice, People’s
Courts tend to apply to the marriage of two foreigners of the same nationality or
residency the law of their common country, subject to formality requirements
under Chinese law.93
As for divorce, the law of the place where the case is heard governs the
matter.94 In Qi Qingju v Cao Baoxin95 and Zhang Yumou v You Shi’an,96 the
People’s Court concerned applied Chinese law based on this doctrine.
2 Husband-Wife Relationships, Guardianship and Maintenance
Relationships
Chinese law is silent on the law governing marital relationships, and there is
no jurisprudence yet in place on this issue. With regard to guardianship
involving foreign elements, the law of the ward’s country or the law of the place
of the ward’s domicile, where appropriate, shall apply. In respect of
maintenance, the law of the country most closely connected to the matter shall
apply.97
3 Application of Law Concerning Succession
People’s Courts distinguish between movable and immovable property in
relation to the object of succession in order to determine the applicable law. With
regard to movable property, the law of the place where the deceased was
domiciled at the time of death applies. In respect of immovable property, the law
of the place where the property is located applies. In the Kansnov succession
case,98 the deceased, Kansnov, was a citizen of the former Soviet Union who left
movable property in China when he died. The People’s Court held that, at the
time of his death, the deceased was domiciled in China, and thus the court
applied Chinese law to the succession of his movable property in China.
97 GCPL, above n 60, art 148. Moreover, according to the Supreme People’s Court Opinions
on Certain Questions on the Implementation of the General Principles of Civil Law (1988)
art 189, the maintenance relationships here include parents’ bringing up of children, spousal
relations, and parents’ support of children. The nationality, domicile of the maintainer and
ward, and the location of the property on which the ward relies, are the important factors for
determining the country that is most closely connected with the ward.
98 Lin Zhun (ed), above n 3, 115–17 (Harbin Intermediate People’s Court of Helongjiang
Province, 1986).
99 Supreme People’s Court, Selected Cases of People’s Courts (1996) 2164–6 (Guangzhou
Intermediate People’s Court, Guangdong Province, 1991).
2002] The Chinese Practice of Private International Law
100 Ibid 2170–3 (Dalian Intermediate People’s Court, Liaoning Province, 1994).
101 Supreme People’s Court Opinions on Certain Questions Concerning the Application of the
Civil Procedural Law of the People’s Republic of China (1992) art 318.
102 Supreme People’s Court, Selected Cases of People’s Courts (1996) 1135–41 (Higher
People’s Court of Guangxi Zhuang Autonomous Region, 1998).
103 Opened for signature 10 June 1958, 330 UNTS 3 (entered into force 7 June 1959). China
acceded to the Convention on 22 January 1987. China made two reservations upon acceding
to the Convention, concerning reciprocity and commercial arbitral awards. These
reservations can be viewed at: <http://untreaty.un.org/ENGLISH/bible/englishinternetbible/
partI/chapterXXII/treaty1.asp> at 23 September 2002. The former declares that the New
York Convention would apply to China only in relation to those arbitral awards made within
the territory of any Contracting Party to the Convention. The latter declares that China will
implement the New York Convention in relation to those disputes arising from contractual or
non-contractual commercial legal relations, ie contract- or tort-related disputes, thereby
excluding disputes between foreign investors and host governments.
104 Supreme People’s Court, Selected Cases of People’s Courts (1996) 2030–4 (Guangzhou
Maritime Court, Guangdong Province, 1992).
Melbourne Journal of International Law [Vol 3
accordance with a provision in the parties’ charter contract. The tribunal found
against Marships Connecticut Ltd, but the award was only partially performed.
The applicant applied to Guangzhou Maritime Court for enforcement. The
Maritime Court examined the arbitral award in accordance with article 5 of the
New York Convention and ruled that the award met the requirements for
enforcement. It therefore issued a writ of enforcement.105 Norbok Cargo
Transport Services Co Ltd v China Navigation Technology Consultation &
Services Company106 and S & H Foodstuff Trading GmbH v Xiamen Lianfa
Import & Export Corporation107 are two further cases concerning the request for
enforcement of an arbitral award. After examining the awards in accordance with
the relevant provisions of the New York Convention, the People’s Courts
concerned recognised and enforced the awards. These cases are viewed as
examples of China honouring its obligations under international treaties.
After its accession to the New York Convention, China has recognised and
enforced some foreign arbitral awards. However, many are still in suspension
and await determination.108 This inefficiency is due to legislative defects in the
Chinese legal system. Under the New York Convention, recognition and
enforcement of foreign arbitral awards are subject to the procedures of the
recognising forum. But Chinese law does not set a time limit for the completion
of a foreign award. As a result, People’s Courts are inefficient in enforcing
foreign arbitral awards. In addition, local protectionism also acts as a hindrance
to their recognition and enforcement. In view of this the Supreme People’s Court
in 1995 issued a notice authorising the institution of a reporting system that aims
to solve the problems arising from the recognition and enforcement of foreign
arbitral awards.109 According to the notice, where a party submits an application
for enforcement of a foreign arbitral award, the People’s Court concerned shall
report the application to its supervising Higher People’s Court for re-
examination if it finds the award not in conformity with the conventions to which
China is a party or with the principle of reciprocity. If the Higher People’s Court
agrees with the reporting People’s Court, and refuses to recognise and enforce
105 To determine which People’s Court has the competence to accept requests for recognition
and enforcement of foreign arbitral awards, the following rules are applied: (1) where the
person against whom the request is made is a natural person, the Intermediate People’s Court
of the place of the domicile or residence of that person is competent; (2) where the person
against whom the request is made is a legal person, the Intermediate People’s Court of the
place where the principal business office is situated is competent; (3) where the person
against whom the request is made has no domicile or residence or principal business office
in China but has property within the territory of China, the Intermediate People’s Court of
the place of the property is located is competent: The Supreme People’s Court Circular on
Implementing the Convention on Recognition and Enforcement of Foreign Arbitral Awards
to Which China Has Acceded (1987) art 3.
106 Lin Zhun (ed), above n 3, 162–64. The dispute was arbitrated by the London Maritime
Arbitrators Association: Wang Sheng Chang, ‘The Practical Application of Multilateral
Conventions: Experience with Bilateral Treaties Enforcement of Foreign Arbitral Awards in
the People’s Republic of China’ International Council for Commercial Arbitration Congress
(1999) 9 <http://www.iccapublications.com/c/commentary/17647> at 23 September 2002.
107 Lin Zhun (ed), above n 3, 165–71. An arbitral tribunal of Hamburg Exchange Commodity
Association rendered the arbitral award: Wang Sheng Chang, above n 106.
108 Song Hang, Recognition and Enforcement of Commercial Arbitral Awards (2000) 245.
109 The Supreme People’s Court Notice on Certain Questions Regarding People’s Courts’
Handling Arbitration with Foreign Elements and Foreign Arbitration (1995) art 1.
2002] The Chinese Practice of Private International Law
the award, the Higher People’s Court shall report to the Supreme People’s Court
for re-examination; it may not refuse to enforce a foreign arbitral award until
receiving a reply from the Supreme People’s Court. This reporting system
undoubtedly endows the Supreme People’s Court with the final say over whether
to decline the recognition and enforcement of foreign arbitral awards, ruling out
the possibility of local courts declining such requests at will. This system also
facilitates the implementation of the New York Convention.
2 Recognition and Enforcement of Arbitral Awards of Non-Members to the
New York Convention
With regard to the recognition and enforcement of arbitral awards of non-
members of New York Convention, parties concerned may request enforcement
by a competent People’s Court. The People’s Court may deal with the request in
accordance with the agreement on judicial assistance between China and the
countries of the parties, or according to the principle of reciprocity.
3 Recognition and Enforcement of Hong Kong, Macau and Taiwan Arbitral
Awards
When Hong Kong was a British colony, the New York Convention applied to
the recognition and enforcement of Hong Kong arbitral awards in China because
of the memberships of China and the UK to the New York Convention. After its
handover to China on 1 July 1997, Hong Kong became a Special Administrative
Region of China. As such, the New York Convention no longer applies to the
recognition and enforcement of Hong Kong arbitral awards in China. In view of
this, the Supreme People’s Court and Hong Kong reached an agreement for
mutual recognition and enforcement of arbitral awards. Interestingly, the
agreement took the form of judicial directives: an Arrangement between
Mainland and Hong Kong Special Administrative Region on Mutual
Enforcement of Arbitral Awards.110 The Arrangement lays down provisions
concerning the competence of People’s Courts to accept requests, the conditions
for declining to recognise and enforce awards, and procedures for enforcement.
As regards the recognition and enforcement of arbitral awards of Macau and
Taiwan, no such arrangements have been made.
V CONCLUSION
While private international law in China is becoming increasingly important,
the sporadically released jurisprudence shows that the Chinese practice leaves
much to be desired. As the strength of private international law is dependent on
the extent to which it is upheld by People’s Courts, these problems are not only
crucial for foreigners and Chinese alike in the enforcement of rights involving
foreign elements, but central to the future development of private international
law.