The Applicable Law and Dispute Settlement in East-West Trade
CHUN GU
ABSTRACT
The recent expansion of east-west trade, and in particular trade between China and western nations, has seen a concomitant rise in the possibility of disputes between those involved in that trade. Therefore, dispute settlement in east-west trade is a topic of growing significance and concern. In this regard, the issue of applicable law is thought by many to be of special importance in contracts negotiated with eastern trading partners. Those in western nations tend to view the absence of a choice-of-law provision with apprehension, believing that this absence will result in disputes being settled by the application of the law of the eastern party.
The author argues, however, that the issue of applicable law is not of great importance in east-west trade, in which arbitration has been the only adjudicatory means of dispute settlement readily acceptable to both parties. Moreover, arbitration remains a largely untested mechanism in this trade, with most disputes being settled by negotiation and conciliation. So, the author argues, Canadian lawyers should not place under emphasis on the issue of applicable law or the choice-of-law provisions in contracts with eastern trading partners but should attempt to study and understand, in particular, Chinese trade practices in order to facilitate trading arrangements.
The analysis examines the general concept of the conflict of laws in international trade, and then the operation of the conflict of laws within the framework of trade between the Soviet Union and western nations and between China and western nations. The discussion of USSR-western trade serves to elucidate the problems of dispute settlements in China-western trade, as China's foreign trade system is modelled largely on that of the Soviet Union.
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Citation: (1988) 46(1) U.T. Fac. L. Rev. 96.
Copyright © 1988. University of Toronto Faculty of Law Review.
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