Reconsideration of the dispute resolution clause in your OEM agreement with Chin思维导图

【正文】

“New York law and New York court jurisdiction”， or “New York law and Sigapore arbitration”， or even “Hong Kong law and Hong Kong arbitration”。 Is such U.S. style clause really helpful to protect your rights and interests under the OEM agreement which is executed with a Chinese supplier？

I have seen this too many times from my clients and frequently advise them to consider practical role such clause would play in the real life.

Legal implication： New York court jurisdiction makes no sense in general cases since foreign court judgement can not be enforced by Chinese court due to lack of reciprocal treaties. So， if the Chinese supplier， i.e.， the breaching party， have no property or interests in U.S.， the New York judgement is useless. Then， how about a foreign arbitration， which should get enforced by Chinese court thanks to the New York Convention.

My answer is to measure the costs and benefits of this arrangement. You should remember that you have to go to Chinese court， instead of the agreed arbitration institution， to seek security （freezing bank account etc.） and evidence preservation. If the injunctive relief applicable to your case， you also have to seek it from Chinese court. These preliminary reliefs sometimes are vital to prevent the breaching party （particulary the small and medium sized companies） from transfering its valuable assets during the arbitration proceedings. More worse is that the losing party may delay the enforcement proceeding over the arbitration award by virtue of civil procedures. Not surprisingly， the winning foreign party is often puzzled at little assest acquired from the losing party when the arbitration awards get enforeed in Chinese court.

Key point for enforcing your rights is doing it where it counts. Don't sue in a forum， and under a choice of law， which is distant from your prospective “defendant.” If you， as foreign company， are unaware of your rights as a prospective “plaintiff” under Chinese law， you may be equally unaware of your other rights and obligations as an operating entity under Chinese law. Dragging a Chinese company into a lawsuit or arbitration in a third forum， e.g. HK or London or NY， and applying that or another locale''s law， can have a useless psychological effect on the Chinese company， causing that company to ignore the problem.（上海元达律师事务所·马宁）

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