China is Australia’s largest trading partner, buying AUD$90 billion of Australian exports in 2014-15. Given the significance of the Chinese market and the increase in China-Australia transactions, it is essential to be aware of ways to mitigate risk in your China-related transactions and more importantly, what to do in the event of a dispute.
Edwina Kwan, Senior Associate, King & Wood Mallesons, offers valuable insights from her seven years spent on the ground as a commercial disputes lawyer in China.
Speaking at the recent, CCPIT, ADC and ACICA Seminar, Edwina Kwan’s discussion focused on achieving the best commercial result for your client in disputes involving Australian and Chinese companies. This requires an awareness of the cultural differences in approach to dispute resolution, technical expertise and know-how relating to jurisdictional and governing law issues and familiarity with alternative forms of dispute resolution methods which will enable your client to successfully enforce an award or judgment against any counterparty.
For Australian companies involved in outbound transactions into China, there are a number of mandatory requirements under Chinese law that restricts both the choice of law and the types of dispute resolution mechanisms that can be adopted in China-related commercial contracts. In order to ensure that your transaction does not fall foul of the Chinese law requirements, it is essential to get the right legal advice to avoid a number of common misconceptions that may make your dispute resolution and governing law clause ineffective. Likewise, Chinese companies investing into Australia need to consider the implications of their dispute resolution clause up front to ensure that they are able to enforce against the assets of their counterparty in the event of a favourable award.
International arbitration offers the most advantages to a non-Chinese party when contracting with a Chinese party. It allows enforcement of an award against a Chinese party in China under the New York Convention, it is confidential and also give the parties a degree of control over the decision makers to the dispute. Arbitration is similarly advantageous to Chinese parties when contracting with Australian parties offering flexibility, neutrality and is generally a better dispute resolution mechanism for China-related contracts than litigation. However, it is important to be understand the implications of your agreements and to draft an effective arbitration clause. In the event a dispute arises, having an effective dispute resolution clause is imperative in managing your dispute and avoiding some of the more common pitfalls in China-related disputes as is having the right advisors that can guide you when negotiating China-related contracts.
Edwina Kwan, Senior Associate, King & Wood Mallesons