As Chinese firms expand overseas, legal spotlight turns on cross-border disputes

Chinese enterprises setting up overseas are navigating a minefield of legal challenges, making effective dispute resolution through arbitration more crucial than ever, according to legal experts.

The emerging frontier of international arbitration to mediate contract risk for Chinese companies – fuelled in part by Beijing’s Belt and Road Initiative – not only tests Chinese firms’ legal capacity but also requires Beijing to proactively safeguard China’s economic adventurers, they said.

International arbitration is a preferred method for resolving cross-border commercial disputes outside traditional court systems and involves parties from different jurisdictions submitting their conflicts to a neutral arbitration centre.

Its binding decisions are globally enforceable under treaties such as the New York Convention.

The convention – which has more than 170 contracting states, including China – ensures that an arbitration award made in one signatory country can be recognised and enforced in all others.

International arbitration is essential in resolving contract disputes in international business and protecting the interests of enterprises as they enter global markets, according to Zheng Zhihua, an associate professor specialising in maritime law at Shanghai Jiao Tong University.