The feasibility of parties' choice of the PICC in Sino-European commercial contracts: an overview of the Chinese legal framework

Abstract

If agreements on choice of law are seen as a means for dispute settlement, then the parties’ choice of law may help to considerably reduce costs in Sino-European dispute resolution. Therefore, the parties’ freedom to choose the law applicable to their contracts is highly valued in Chinese law. Yet the boundaries of such autonomy are not clear. A striking issue in this respect is whether and to what extent the parties may designate non-State legal rules to govern their contracts. This issue is of particular interest, not only to Chinese and European traders, but also to the practical significance of the UNIDROIT Principles of International Commercial Contracts (hereinafter “PICC”) which are widely considered as non-State legal rules. On the one hand, parties to Sino-European contracts may often wish to compromise on a set of neutral rules such as the PICC; on the other, the practical use of the PICC is closely related to the permissibility of the parties’ choice of non-State law. This paper briefly explores the Chinese legal framework regarding the feasibility of parties’ choice of non-State legal rules including and especially the PICC as the applicable law in their own right.