To properly adjudicate cases involving disputes over foreign-related civil or commercial contracts and to ensure the accurate application of laws, these Provisions are formulated in accordance with relevant provisions such as the General Principles of Civil Law of the People’s Republic of China and the Contract Law of the People’s Republic of China.
Article 1: The law applicable to foreign-related civil or commercial contracts refers to the substantive law of the relevant country or region, excluding conflict-of-laws rules and procedural laws.
Article 2: The contract disputes referred to in these Regulations include disputes concerning the conclusion of contracts, the validity of contracts, the performance of contracts, the modification and assignment of contracts, the termination of contracts, and liability for breach of contract.
Article 3: Any party’s choice or change of the law applicable to a contractual dispute shall be made explicitly.
Article 4: If the parties, before the conclusion of the first-instance court debate, reach a consensus through negotiation and select or change their choice of the law applicable to the contract dispute, the people’s court shall approve such selection. If the parties have not selected the law applicable to the contract dispute but all invoke the law of the same country or region and do not raise any objection to the choice of law, it shall be deemed that the parties have already made a choice as to the law applicable to the contract dispute.
Article 5: If the parties have not chosen the law applicable to the contractual dispute, the law of the country or region with the closest connection to the contract shall apply. When determining the law applicable to a contractual dispute in accordance with the principle of the closest connection, the People’s Court shall, taking into account the specific nature of the contract as well as factors such as which party’s performance of its obligations best reflects the essential characteristics of the contract, identify the law of the country or region with the closest connection to the contract as the governing law of the contract.
(1) For sales contracts, the law of the seller’s domicile at the time the contract is concluded shall apply. However, if the contract is negotiated and concluded at the buyer’s domicile, or if the contract explicitly stipulates that the seller must perform the delivery obligation at the buyer’s domicile, then the law of the buyer’s domicile shall apply.
(2) For processing contracts involving incoming materials, assembly of incoming parts, and other various types of processing contracts, the law of the place where the processor is domiciled shall apply.
(3) For turnkey equipment supply contracts, the law of the place where the equipment is installed shall apply.
(4) Contracts for the sale, lease, or mortgage of real estate shall be governed by the law of the location of the real estate.
(5) For a chattel lease contract, the law of the lessor’s domicile shall apply.
(6) A pledge contract for movable property shall be governed by the law of the domicile of the pledgee.
(7) The loan contract shall be governed by the law of the borrower’s domicile.
(8) Insurance contracts shall be governed by the law of the insurer’s domicile.
(9) For finance lease contracts, the law of the lessee’s domicile shall apply.
(10) Construction project contracts shall be governed by the law of the place where the construction project is located.
(11) For warehousing and custody contracts, the law of the domicile of the warehousekeeper or custodian shall apply.
(12) The law of the guarantor’s domicile shall apply to guarantee contracts.
(13) For a contract of agency, the law of the place where the agent is domiciled shall apply.
(14) The laws governing the issuance, sale, and transfer of bonds shall respectively be the law of the place where the bonds are issued, the law of the place where the bonds are sold, and the law of the place where the bonds are transferred.
(15) The auction contract shall be governed by the law of the place where the auction is held.
(16) For agency contracts, the law of the agent’s domicile shall apply.
(17) For intermediary contracts, the law of the place where the intermediary resides shall apply. If the aforementioned contract is clearly more closely connected with another country or region, the law of that other country or region shall apply. Article 6: Any act by the parties aimed at circumventing the mandatory provisions of the laws and administrative regulations of the People’s Republic of China shall not give rise to the application of foreign law; instead, the dispute arising from such contract shall be governed by the laws of the People’s Republic of China. Article 7: If the application of foreign law would violate the public interest of the People’s Republic of China, such foreign law shall not be applied, and instead, the laws of the People’s Republic of China shall apply. Article 8: The following contracts performed within the territory of the People’s Republic of China shall be governed by the laws of the People’s Republic of China:
(1) Joint venture contract between Chinese and foreign parties;
(2) Contract for Sino-foreign joint venture enterprises;
(3) Contracts for the exploration and development of natural resources through Sino-foreign cooperation;
(4) Share transfer agreements for Sino-foreign joint ventures, Sino-foreign cooperative enterprises, and wholly foreign-owned enterprises;
(5) Contracts under which foreign natural persons, legal entities, or other organizations undertake the management and operation of Sino-foreign joint venture enterprises or Sino-foreign cooperative enterprise established within the territory of the People’s Republic of China;
(6) Contracts for foreign natural persons, legal entities, or other organizations acquiring equity interests in non-foreign-invested enterprises within the territory of the People’s Republic of China from shareholders of such enterprises;
(7) Contracts for foreign natural persons, legal entities, or other organizations subscribing to the capital increase of non-foreign-invested limited liability companies or joint-stock companies within the territory of the People’s Republic of China;
(8) Contracts for the purchase of assets of non-foreign-invested enterprises within the territory of the People’s Republic of China by foreign natural persons, legal entities, or other organizations;
(9) Other contracts for which the laws and administrative regulations of the People’s Republic of China stipulate that the laws of the People’s Republic of China shall apply.
Article 9: When the parties choose or change their choice of the law applicable to a contractual dispute and select a foreign law, the parties shall provide or substantiate the relevant content of that foreign law. If the People’s Court determines, in accordance with the principle of the closest connection, that a foreign law should apply to the contractual dispute, it may, on its own initiative, ascertain the contents of that foreign law, or it may request the parties to provide or substantiate such contents. If neither the parties nor the People’s Court can ascertain the contents of the foreign law through appropriate means, the People’s Court may apply the laws of the People’s Republic of China.
Article 10: If the parties do not raise any objection after cross-examination of the established contents of foreign law, the people’s court shall confirm such contents. If the parties do raise an objection, the people’s court shall review and determine the matter.
Article 11: The application of law to civil or commercial contracts involving the Hong Kong Special Administrative Region and the Macao Special Administrative Region shall be governed by these Provisions by analogy.
Article 12: In the event of any inconsistency between the provisions previously issued by this court and these provisions, these provisions shall prevail.