Planning For Commercial Dispute Resolution In Mainland China - ARIA Vol. 16 No. 1 2005

Author(s):

Joseph T. McLaughlin

Kathleen M. Scanlon

Catherine X. Pan

Page Count:

24 pages

Published:

December, 2006

Jurisdictions:

China

Practice Areas:

Commercial Disputes,

Investment Disputes,

Dispute Resolution & Litigation

Author Detail:

Joseph T. McLaughlin is a shareholder in Heller Ehrman LLP, and is the Managing
Shareholder of the firm’s New York office. Mr. McLaughlin also is chairman of the
Executive Committee and a member of the Board of Directors of the International Institute
for Conflict Prevention and Resolution (“CPR Institute”).

Kathleen M. Scanlon is Special Counsel at Heller Ehrman in New York. She is a former CPR Institute Senior Vice President and has authored numerous publications in the ADR field, including the
Drafter’s Deskbook for Dispute Resolution Clauses (CPR Institute, 2002) and Mediator’s
Deskbook (CPR Institute, 1999).

Catherine X. Pan is an associate at Heller Ehrman and a graduate of Harvard Law School and Fudan University Law School (Shanghai, China), practicing corporate law and international arbitration in the firm’s New York office. The authors wish to express their appreciation to Bradley Gibbs and Josh Selig, Heller Ehrman associates who assisted in the preparation of this article.

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Originally from American Review of International Arbitration - ARIA

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I. U.S. - CHINESE CONSTRUCTION AND DEVELOPMENT CONTRACT
Assume that a U.S. company enters into a long-term construction and
development contract with a Chinese energy company, partly owned by the
Ministry of Coal, for the development and construction of a coal mining project in
China. The contract is expected to be performed over approximately a 10-year
period. The U.S. company has formed a Chinese subsidiary that is registered in
China as a foreign-invested enterprise (“FIE”) to conduct the business.
Assume further that in a separate distribution contract, the parties—along with
multiple other parties involved on the U.S side and China side—agree that the end
coal product will be transported via railway to Shanghai and exported on ships
leased from yet another Chinese agency (not a party to this contract). The product
will be sold in the world market by one of the U.S. parties to the distribution
contract, with a profit-sharing arrangement for the Chinese parties.
When a U.S. and a Chinese company enter into a business arrangement,
particularly one that is expected to be performed over 10 years, planning for
disputes that may arise is in the best interests of all parties. The parties realize
that it is likely some form of dispute will arise over the course of the
construction/development and distribution contracts ranging from
misunderstandings that can be corrected during discussions between the parties to
fundamental contract interpretation issues that will require some form of