Dispute Resolution in the People's Republic of China

Litigation is not a preferable course of action in the PRC, especially when the above-mentioned avenues have not yet been exhausted. It must be emphasized that traditionally civil litigation is never a significant element in the Chinese legal system. The emphasis on social harmony and fulfillment of moral obligations tend to discourage civil litigation in favor of conciliation and mediation carried out informally. As mentioned previous, even if parties choose litigation, the parties are still …

…with the cultural and political preference in the PRC, the ideal means to handle dispute involving foreign investors, or anyone for that matter, is to carry out friendly negotiation. This informal approach tends to keep dispute from blowing out of proportion. Settling disputes or misunderstandings in private, has the additional advantage of saving the Chinese party's `face'. Effectively, the process strengthens the relationship between the parties, and thereby paving the way for future business deals.