In Which Country Should One File a Lawsuit for Disputes in International Trade Contracts?

An international trade contract refers to an agreement signed by enterprises from different countries for transactions, where both parties assume reciprocal rights and obligations. Different from ordinary domestic contracts, the question arises: in case of a dispute in an international trade contract, which country's court should have jurisdiction?

International Trade Contracts

If there is a trade dispute between a Chinese company and a foreign company, in which country's court should the lawsuit be filed?

According to Article 265 of the "Civil Procedure Law" of China, for a lawsuit filed against a defendant who has no domicile within the territory of China due to a contract dispute, it may be under the jurisdiction of the people's court at the place where the contract was signed, the place of contract performance, the place where the subject matter of the action is located, the place where the property available for seizure is located, or the place where the representative office is domiciled.

The Place Where the Contract Was Signed

The determination of the place where the contract was signed first depends on the agreement of the two parties. In the absence of an agreement, legal provisions shall apply. In practice, parties often have no such agreement, and when a dispute occurs, they can only resort to legal provisions. If the parties sign a written contract, the place where the last signature is affixed shall be the place where the contract was signed. If no written contract is concluded, for example, when the contract is concluded through email, fax, etc., in accordance with the provisions on offer and acceptance, the place where the acceptance becomes effective shall be the place where the contract was signed.

1. The Place of the Last Signature

   
   

   In practice, since the parties are located in two different countries, generally one party signs first and then mails it to the other party for signature. In this way, the place where the later - signing party is located is the place of the last signature. However, if the later - signing party does not indicate the date and place, or the date is the same as that of the other party, it may lead to a dispute over the place of the last signature. When filing a lawsuit, the party claiming the last signature needs to prove it.

2. The Place Where the Acceptance Becomes Effective

   
   

   The acceptance becomes effective when the notice of acceptance reaches the offeror. When a contract is concluded in the form of data messages, the main business place of the recipient shall be the place where the contract is established; if there is no main business place, its habitual residence shall be the place where the contract is established. In this case, the place where the acceptance is received is the main business place of the seller.

The Place of Contract Performance

The determination of the place of contract performance also first depends on the agreement, and in the absence of an agreement, legal provisions shall apply. However, in practice, the two parties often have no such agreement, and legal provisions still need to be referred to.

Article 19 of the "Opinions on Several Issues Concerning the Application of the 'Civil Procedure Law of China'" by the Supreme People's Court of China stipulates that for a sales contract, if the two parties have an agreement on the place of delivery in the contract, the agreed place of delivery shall be the place of contract performance; if there is no agreement, the place of contract performance shall be determined according to the method of delivery. For the delivery method, the place where the goods are delivered shall be the place of contract performance. If the actual place of performance of the sales contract is inconsistent with the agreed place of delivery in the contract, the actual place of performance shall be the place of contract performance.

The Place Where the Subject Matter of the Action Is Located

The subject matter of the action generally refers to the goods being traded. A common situation is that if there is a quality problem with the goods imported by a Chinese enterprise, a lawsuit can be filed in the court at the place where the goods are stored. This rule cannot be applied to disputes over arrears.

The Place Where the Property Available for Seizure Is Located

If a Chinese enterprise can discover the property of a foreign enterprise in China, it can file a lawsuit in the court at the place where the property is located and apply for taking preservation measures on the property. This is undoubtedly very beneficial to Chinese enterprises. However, in practice, it is often difficult for parties to obtain this property information. Even if they know it, it is also difficult to prove the ownership of the property. Therefore, cases in which jurisdiction is obtained based on this rule are very rare.

The Place Where the Representative Office Is Domiciled

In practice, foreign enterprises that can set up representative offices in China are often large enterprises, and this situation is not common. Some enterprises have permanent representatives in China but do not register as representative offices, so this rule cannot be applied either.

There are two principles in the jurisdiction of foreign - related civil litigation in China:

1. As long as there is a certain actual connection with the location of a Chinese court, the people's courts of China have jurisdiction.

2. Regardless of whether one party is a Chinese citizen, legal person, or other organization, without violating the jurisdiction of different levels and exclusive jurisdiction, the parties can choose a court at a place that has an actual connection with the dispute.

(1) If the contract is signed or performed within the territory of China, or the subject matter of the action is within the territory of China, or the defendant has property available for seizure within the territory of China, or the defendant has a representative office established within the territory of China, it may be under the jurisdiction of the people's court at the place where the contract was signed, the place of contract performance, the place where the subject matter of the action is located, the place where the property available for seizure is located, the place of the tort, or the place where the representative office is domiciled.

(2) The parties to a foreign - related contract or a foreign - related property rights and interests dispute can, by written agreement, choose a court at a place that has an actual connection with the dispute. That is to say, as long as there is an actual connection with the dispute, you can negotiate the jurisdiction court.

(3) If the defendant in a foreign - related civil lawsuit does not raise an objection to the jurisdiction of the people's court and responds to the lawsuit, it shall be regarded as an admission that the people's court has jurisdiction. That is to say, if you are the plaintiff and sue the other party in a Chinese court, if the defendant responds to the lawsuit, it is a tacit admission that the Chinese court has jurisdiction.

(4) Lawsuits arising from disputes over the performance of Sino - foreign equity joint venture contracts, Sino - foreign cooperative joint venture contracts, and Sino - foreign cooperative exploration and development of natural resources contracts within the territory of China shall definitely be under the jurisdiction of Chinese courts.