Forum Selection and Jurisdiction Clauses in China Cross-Border Contracts

Why the forum clause matters more than the governing-law clause

A governing-law clause says which country's law interprets the contract; a forum-selection clause says which court decides the dispute. The two are independent, and for a foreign party contracting with a Chinese counterparty the forum clause is often the more consequential: China's rules on recognizing and enforcing foreign judgments are narrow, so a foreign court judgment against a Chinese party can be hard to collect in China, while a Chinese court judgment against a Chinese party is enforced through the ordinary domestic enforcement machinery. A forum clause that routes a dispute to a court that cannot effectively reach the debtor's assets is a paper victory.

The framework: Part IV of the Civil Procedure Law

Jurisdiction over foreign-related civil cases is set out in Part IV of the Civil Procedure Law (2023 revision, effective 1 January 2024), which applies on top of the general jurisdictional rules of the law. The relevant provisions for a contract dispute are:

• Article 276 — special territorial jurisdiction: for a suit against a defendant with no domicile in China arising from a contract or other property dispute, a Chinese court has jurisdiction where the contract is signed or performed, where the subject matter is located, where the defendant has seizable property, where the defendant has a representative office, or where the defendant's domicile is located.
• Article 277 — written agreement on jurisdiction: parties to a foreign-related dispute may agree in writing to submit their dispute to a Chinese court at a place with actual connection to the dispute. The mainstream view is that for foreign-related cases this "actual connection" requirement is relaxed — the parties may choose a Chinese court more freely, such as a neutral forum or a place convenient to both.
• Article 278 — jurisdiction by appearance: a party that does not raise a jurisdiction objection and answers the merits submits to the court's jurisdiction.
• Article 279 — exclusive jurisdiction in three categories: Chinese courts have exclusive jurisdiction over disputes over Chinese-foreign joint venture or cooperative contracts and contracts for joint exploration of natural resources performed in China.
• Articles 280–281 — parallel proceedings: where parties bring parallel proceedings in Chinese and foreign courts, the Chinese court may proceed notwithstanding the foreign action, and China recognizes only a narrow window for suspending or declining jurisdiction.

General exclusive jurisdiction: Article 34

Outside the foreign-related part, Article 34 of the Civil Procedure Law gives Chinese courts exclusive jurisdiction over suits concerning immovable property (the court where the property is located), port operations, and inheritance (the court where the decedent was domiciled or where the main estate is located). These cannot be displaced by a forum-selection clause. For a contract touching real property or an inheritance, plan around them.

Arbitration versus litigation

Under Article 5 of the Arbitration Law, where the parties have a valid arbitration agreement, a party may not bring suit in court and the court must reject a suit brought in breach of the agreement. For cross-border contracts, arbitration has a decisive practical advantage: an arbitral award is enforceable in China under the New York Convention with far fewer grounds for refusal than a foreign court judgment faces. Where the parties prefer a neutral forum, a well-drafted arbitration clause is generally the more reliable route than a foreign court forum clause. See our guide to enforcing foreign arbitral awards in China.

Governing law as a separate axis

For foreign-related contracts, Article 41 of the Law on the Application of Law for Foreign-related Civil Relations lets the parties choose the governing law; absent a choice, the law of the place most closely connected with the contract applies. Article 4 of that Law and Article 8 of the Supreme People's Court's Interpretation (I) on the Application of that Law reserve cases where Chinese law applies mandatorily, and Article 36 covers situations where the parties have not chosen the law. Note that the old Article 126 of the since-repealed Contract Law, which many templates still cite, is no longer the governing text — the operative references are the Law on the Application of Law and its interpretation.

Drafting a clause that survives

• Be specific and exclusive. Name the court and state that it has exclusive jurisdiction; an ambiguous or "non-exclusive" clause invites a jurisdiction fight in two places.
• Match the forum to the assets. Where the debtor's assets are in China, a Chinese court forum (or a China-seated arbitration) keeps enforcement simple; a foreign forum only makes sense if the counterparty has reachable assets there or a foreign judgment is collectible.
• Do not conflict with exclusive jurisdiction. Real-property, port-operation and inheritance disputes, and the three foreign-related categories of Article 279, cannot be contracted away.
• Keep governing law and forum separate. State each explicitly and check that the chosen forum can and will apply the chosen law without the complication of mandatory Chinese rules.

The provisions summarized here are current as of the date of writing; the Civil Procedure Law and the Supreme People's Court's interpretations are amended periodically, so confirm the operative text and article numbers before relying on any single provision. Our international trade team drafts and litigates jurisdiction and arbitration clauses for cross-border contracts daily.