Legal clause essential for China contracts: experts

Experts on commercial law urged Taiwanese businesspeople based in China to include an arbitration clause in any contract that involves investment and trade with Chinese companies at a workshop yesterday.

An arbitration clause can ensure that any disputes are handled by the China International Economic and Trade Arbitration Commission (CIETAC), not China's district courts, which tend to lack impartiality, the experts said.

The workshop, hosted by the Bureau of Foreign Trade under the Ministry of Economic Affairs, drew hundreds of China-based Taiwanese businesspeople.

"The arbitration clause might save Taiwanese businesspeoples' lives, but unfortunately, many of them have no idea about it," said Chang Geng-ming (張耿銘), a professor in the Graduate Institute and Department of International Trade at Tamkang University.

Based on his experience in commercial litigation practice in China, Chang said that CIETAC is comprised of prestigious experts in China, and some world-reknowned professors and lawyers also serve as members.

"Generally speaking, the quality of China's district courts is very disappointing, except those in some big cities such as Beijing or Shanghai ... You can only trust in luck or fate if you file a lawsuit in China's district courts," Chang said.

Chang added that while foreign companies are supposed to have the right to file disputes with China's international institutions in charge of trade arbitration, Beijing will not allow Taiwanese businesspeople to use these institutions.

"Given that Taiwanese businesspeople are already in an inferior position compared with other foreigners, we should pay more attention to the contracts," Chang said.

Lee Yung-ran (李永然), a lawyer, said that there is a lack of law and order in China and its regulations related to investment and trade are long-winded.

"Taiwanese businesspeople should have a better understanding of China's laws ... before putting money in the market," Lee said.