International Trade Disputes: A Guide for Global Clients

Introduction

Most cross-border trade disputes are not won in the hearing room; they are won in the contract. The governing law, the dispute-resolution clause, and the choice of institution decide the terrain before the first argument is made. This guide explains how each layer works when one side is a Chinese party.

The CISG: The Default Law of International Sales

The United Nations Convention on Contracts for the International Sale of Goods (CISG) is the invisible default in most China-related sales contracts. China deposited its instrument of approval on 11 December 1986, and the CISG entered into force for China on 1 January 1988.

The CISG applies automatically to contracts for the international sale of goods when both parties' places of business are in Contracting States (Article 1(1)(a)). It covers the sale of goods only — not services, and not consumer sales. Parties may exclude or derogate from it under Article 6, which is why an explicit choice-of-law clause matters.

China made two declarations at accession:

Article 95 reservation — China is not bound by Article 1(1)(b), so the CISG does not reach a contract through the private-international-law route where neither party is in a Contracting State. This reservation remains in force.
Article 96 (written-form) reservation — China declared itself not bound by the form-freedom provisions; this reservation was withdrawn by notification on 16 January 2013, effective 1 August 2013.

A common misconception is that both reservations lapsed in 2013. Only the written-form reservation was withdrawn; the Article 95 reservation still stands.

Arbitration: The Preferred Route

For most China-related trade disputes, arbitration is preferable to litigation, primarily because of enforceability. China acceded to the 1958 New York Convention — the Standing Committee of the NPC decided on 2 December 1986, the instrument was deposited on 22 January 1987, and the Convention entered into force for China on 22 April 1987 — subject to two reservations:

Reciprocity — the Convention applies only to awards made in another Contracting State;
Commercial — only "commercial" disputes as defined under Chinese law qualify.

The institutions most used for China-related disputes are CIETAC (seated in mainland China), HKIAC, SIAC and the ICC. Enforcement routes differ slightly:

SIAC and ICC awards — enforced in China under the New York Convention;
HKIAC awards — enforced under the New York Convention as it continues to apply to Hong Kong, plus the dedicated Mainland–Hong Kong mutual-enforcement arrangements;
CIETAC awards — enforced in China as domestic foreign-related awards under the PRC Arbitration Law (not via the Convention, since the seat is in China).

Institution rules are updated frequently — CIETAC Rules 2024 (1 January 2024), HKIAC 2024 Rules (1 June 2024) and SIAC Rules 2025 (1 January 2025) are current as of writing, with the ICC Rules 2021 subject to any later revision. Confirm the applicable edition when drafting.

Choice of Law and Forum

Choice of law in foreign-related contracts is governed by the Law on the Application of Law to Foreign-related Civil Relations (2010, effective 1 April 2011):

Article 3 — general party autonomy: parties may choose the applicable law;
Article 41 — for contracts, the parties may agree the governing law; absent a choice, the law of the habitual residence of the party whose performance is characteristic, or the most closely connected law, applies. The chosen law need not have an actual connection to the transaction;
Article 4 — PRC mandatory provisions apply directly regardless of the chosen law; Article 5 — a public-interest override.

On forum, Article 277 of the 2023 Civil Procedure Law respects a written agreement choosing a Chinese court, and the 2023 amendment relaxed the former "actual connection" requirement — though the precise scope is still being clarified, so confirm against the latest official rules. Note also that China is not a party to the 2005 Hague Choice of Court Convention or the 2019 Hague Judgments Convention, which is part of why arbitration remains the safer enforcement path.

Litigation in Chinese Courts: Recognition and Enforcement

If the dispute is litigated, foreign-related commercial cases are generally heard at the intermediate people's court level. For a foreign judgment:

recognition and enforcement is sought from the intermediate court where the respondent is domiciled or has assets (2023 Civil Procedure Law, Article 298);
the basis is a treaty or reciprocity (Article 299), with refusal grounds in Articles 300–301 and a reconsideration remedy within 10 days (Article 303);
the application must be made within two years of the judgment taking effect, and enforcement applications run on the same two-year period (Article 250).

China has been moving from strict de facto reciprocity toward a more accommodating de jure / presumed reciprocity approach (see SPC Guiding Case No. 235 of 2024), which makes foreign judgments more enforceable than they once were.

What Changed in 2024–2026

The 2023 amendment to the Civil Procedure Law (effective 1 January 2024) overhauled the foreign-related part — expanded jurisdiction (Articles 276–277) and foreign judgment recognition/enforcement (Articles 298–303).
The Mainland–Hong Kong reciprocal enforcement arrangement (2019) took effect 29 January 2024, broadening enforcement between the two jurisdictions.
A new PRC Arbitration Law was adopted in September 2025 and took effect 1 March 2026. Notable changes include the concept of the seat of arbitration (Article 81), online arbitration (Article 11), limited ad hoc arbitration in free-trade zones and Hainan (Article 82), foreign arbitration institutions operating in free-trade zones (Article 86), a shortened set-aside window of three months (Article 72), and a framework for investment arbitration under treaties (Article 94). Specific implementing details should be checked against the latest official rules.

A Drafting Checklist

Choose the governing law expressly — do not leave the CISG or Article 41 to fill the gap by accident.
Specify arbitration with a precise institution and the applicable rules edition.
For enforcement ease, prefer a New York Convention seat (or confirm the Mainland–HK route for HKIAC).
If you must litigate, weigh the forum clause and the two-year enforcement window.
Revisit legacy clauses — the 2026 Arbitration Law and the 2023 Civil Procedure Law changed several mechanics.

How Tianni Law Firm Can Help

Tianni Law Firm (江苏天倪律师事务所), based in Nanjing, Jiangsu, advises global clients on cross-border trade disputes from contract drafting through resolution. Our work includes choice-of-law and dispute-clause drafting, CISG advice, arbitration before CIETAC, HKIAC, SIAC and the ICC, recognition and enforcement of foreign awards and judgments before Chinese courts, and asset preservation to secure recovery.