We are not unconditional advocates of arbitration. In most cases, the state court is faster, less expensive, and more predictable — and you retain the right to appeal. But as soon as your contracting partner is based in China, these arguments are reversed.
A Dutch judgment is often a paper victory in China
There is no treaty between the Netherlands and China on the recognition and enforcement of civil judgments. The 2019 Hague Judgments Convention, to which the European Union is a party, does not apply to China either. If you win a case against a Chinese party before a Dutch court, that judgment carries little weight in Shanghai or Shenzhen — unless the Chinese court is willing to enforce it on the basis of reciprocity. This route has become somewhat broader in recent years, under guidelines issued by the Chinese Supreme People’s Court and the amended Chinese Code of Civil Procedure (in force as of 1 January 2024). These guidelines adopt a legal — rather than purely factual — standard of reciprocity. Even so, this judicial route remains uncertain, time-consuming, and far from guaranteed.
Arbitration does work: the New York Convention
China has been a party to the New York Convention (1958) on the recognition and enforcement of foreign arbitral awards since 1987. An arbitral award rendered in the Netherlands is therefore, in principle, enforceable in China; a Chinese court can only refuse recognition on the limited grounds set out in Article V. There is also a practical advantage: a Chinese court that intends to refuse enforcement of a foreign arbitral award must first submit that intention for approval to the Supreme People’s Court in Beijing through a so-called “reporting system”. This internal check partly explains why arbitral awards have a noticeably better track record of enforcement in China than foreign court judgments.
In short: the very objection that normally makes us cautious about arbitration — giving up access to the state court — carries little or no weight here. That state court simply does not deliver much for you in China.
Dutch law can remain in place
The applicable law and the forum are two separate choices. You can perfectly well maintain Dutch law and combine it with arbitration; the arbitral tribunal will then apply Dutch law. Bear in mind, however, that the Vienna Convention on the International Sale of Goods (CISG) automatically forms part of Dutch law in international sales of movable goods — both the Netherlands and China are parties. If you do not want this, exclude it expressly.
What to look out for in the clause in agreements with Chinese parties
- Name an arbitral institution. Ad hoc arbitration is traditionally not recognised in China. Choose, for example, the NAI, ICC, HKIAC, or SIAC, and incorporate that institution’s model clause.
- Fix the seat of arbitration, as well as the language of the proceedings and the number of arbitrators.
- Consider Hong Kong as the seat. Under a separate arrangement between Hong Kong and mainland China (2019), you can obtain interim measures and asset preservation orders on the mainland in support of the arbitration — a possibility that does not exist with a Dutch seat.
- Be consistent. A contract that designates the Dutch courts in one place and arbitration in another is an open invitation to a year-long jurisdictional dispute.
- Think ahead about recovery. Where are the assets? Even a well-enforceable arbitral award is of no use if there is nothing to execute against.
In conclusion
A well-considered dispute resolution clause takes half an hour when the contract is signed and saves years if things go wrong. Do you have questions about the choice of law and dispute resolution provisions in your current contracts with Chinese parties? We would be glad to review them.
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