Application of Unidroit in China

ARTICLES
Downloaded from https://academic.oup.com/ulr/article/15/1/5/1648330 by La Trobe University user on 14 February 2023

Application of the UNIDROIT Principles in China :
Successes, Shortcomings and Implications
Chi Manjiao *
I. – INTRODUCTION
In recent decades, with the implementation of economic reform and an

open-door policy in China and ongoing economic globalisation, particularly after
China’s accession to the World Trade Organization (WTO) in 2001, there has
arisen an urgent need for China to accelerate its economic transition, develop a
modern market economy and align its laws on international standards. In this
process, Chinese contract law, as the cornerstone of its civil and commercial law,
has played and still plays an important and indispensable role.1
To modernise its contract law, China needs to learn from the existing
contract laws across the world. A readily accessible model for China is the
UNIDROIT Principles on International Commercial Contracts (hereinafter: the
Principles), which are widely regarded as an authoritative restatement and
manifestation of general principles of international contract law. In fact, after the
* BA, LL.M, Ph.D. of Law, Associate Professor of International Law, Law School, Xiamen
University (China). This article is the result of a research project sponsored by UNIDROIT. The author
is greatly indebted to Professor M. Joachim Bonell (Legal Consultant, UNIDROIT) for his insightful
comments and suggestions on the previous draft of this article. Special thanks are due to Professor
Herbert Kronke (Professor of International Law, Law School, University of Heidelberg (Germany)
and former Secretary-General of UNIDROIT) for his unfailing encouragement. I also thank the
colleagues at the UNIDROIT Library for their kind help in facilitating this research. The ideas
discussed in this article are the author’s alone and the author is solely responsible for any error or
mistake contained therein.
1 In using the term “Chinese law”, “law of China” or the like, the author refers only to the
laws of mainland China, while the laws of Hong Kong Special Administrative Region, Macao
Special Administrative Region and Taiwan are not considered for the purpose of this article.
Rev. dr. unif. 2010 5

Chi Manjiao
adoption of the Contract Law of the People’s Republic of China of 1999

(hereinafter: the CCL), several Chinese scholars have conducted timely
comparative studies of the CCL and the Principles.2 However, these studies
mainly dealt with the legislative impact of the Principles on the CCL and

focused on substantive issues, whereas the application of the Principles in
China has not been sufficiently explored up to now.
The purpose of this article, therefore, is to explore the application of the
Principles in China, based on the comparative study of the relevant Chinese law
provisions and a case study of reported judicial and arbitral practice. The article
first summarises several situations where the Principles may be applied as
suggested in the Preamble (Part II). It then discusses the impact of the Principles
on Chinese contract law and the application of the Principles in Chinese
legislative practice (Part III), party autonomy (Part IV), judicial practice (Part V)
and arbitral practice (Part VI). In the Conclusion (Part VII), the article observes
that, despite real achievements made by Chinese contract law, there still exist
various restrictions on the application of the Principles in China, which calls for
timely improvement of the relevant Chinese laws and practice, and in
particular, for a more autonomous arbitration regime.
II. – SITUATIONS IN WHICH THE PRINCIPLES MAY BE APPLIED
In the Preamble of the Principles, the visionary drafters suggest several

situations where the Principles may be applied.3 At the outset, it should be
noted that these grounds are in no way exhaustive since there are other possible
2 See, e.g., ZHANG Yuqing / HUANG Danhan, “The New Contract Law in the People’s
Republic of China and the UNIDROIT Principles of International Commercial Contracts: A Brief
Comparison”, Unif. L. Rev. / Rev. dr. unif. (2000), 429 at 429-440; HUANG Danhan, “The UNIDROIT
Principles and Their Influence in the Modernization of Contract Law in the People’s Republic of
China”, Unif. L. Rev. / Rev. dr. unif. (2003), 107 at 107-117; JING Xi, “The Impact of the UNIDROIT
Principles on Chinese Legislation”, in Eleanor CASHIN RITAINE & Eva LEIN (Eds.), The UNIDROIT
Principles 2004: Their Impact on Contractual Practice, Jurisprudence and Codification, Schultess
(2007), at 107-118.
3 According to the Preamble of the Principles, the Principles shall or may be applied in the
following situations, among others: (1) when the parties have agreed that their contract be governed
by them; (2) when the parties have agreed that their contract be governed by general principles of
law, the lex mercatoria or the like; (3) when the parties have not chosen any law to govern their
contract; (4) in interpreting or supplementing uniform international instruments; (5) in interpreting
or supplementing domestic law; and (6) as a model for national and international legislation.
6 Unif. L. Rev. 2010

Application of the UNIDROIT Principles in China: Successes, Shortcomings and Implications
ways of using the Principles in practice.4 For instance, the Principles may be
applied to “provide a solution to an issue raised when it proves impossible to
establish the relevant rule of an applicable law.” 5

1. Application by virtue of party autonomy
Considering that the principle of party autonomy has been globally recognised
in private international law, particularly in the field of contract law, it seems
self-evident that the Principles may be applied pursuant to the choice of the
parties. According to the Preamble, parties may either explicitly choose the
Principles to govern their contract 6 or subject the contract to “general
principles of law or lex mercatoria or the like”.7 The latter situation usually
leads to the application of the Principles by “implicit choice” since “the
contents of the Principles as a general part of transnational contract law” is
widely acknowledged.8
Professors Vogenauer and Kleinheisterkamp propose three different
situations where the Principles may be applied by virtue of party autonomy
depending on their legal status within the domestic legal order: (1) the Principles
as applicable law under the choice of law; (2) the Principles as incorporated into
the contract under substantive law; and (3) the Principles as agreed rules under
procedural freedom of disposal (meaning parties may request the courts to apply
the Principles to the same extent that they could ask an arbitrator).9
Yet, when parties choose the Principles by virtue of party autonomy, all is
not necessarily plain sailing. This is particularly true when their choice is made
implicitly. A typical concern stems from the status of the Principles in domestic
legal orders. Usually, States do not allow parties to choose supranational or
a-national rules as the law governing their contracts, on various grounds.
Typically, such grounds include (1) the “traditional and prevailing view on
conflict of laws rules applicable to international contracts” usually directs to the
4 See M. Joachim BONELL (Ed.), The UNIDROIT Principles in Practice (2nd ed.), Transnational
Publishers (2006), at 47; M. Joachim BONELL, An International Restatement of Contract Law (3rd ed.),
Transnational Publishers (2005), at 248-261.
5 See Stefan VOGENAUER / Jan KLEINHEISTERKAMP (Eds.), Commentary on the UNIDROIT
Principles of International Commercial Contracts (PICC), Oxford University Press (2009), at 55.
6 Principles, Preamble, para. 2.
8 See VOGENAUER / KLEINHEISTERKAMP, supra note 5, at 29.
9 See, e.g., VOGENAUER / KLEINHEISTERKAMP, supra note 5, at 39-40.

Chi Manjiao
laws of certain States;10 (2) the inherent notion that State courts are obligated to
apply their own national laws; and (3) the vagueness of the concepts of “general
principles of law or the like” and the uncertainty in using them.11 For these
reasons, domestic courts incline to view parties’ choice of the Principles as

“incorporation of contract terms” instead of “choice of governing law”.12 The
difference between these two concepts mainly lies in that, as a contract term,
the Principles do not replace the otherwise applicable law but become
applicable within the framework and limits set by that law.13 This is typically
shown by the fact that the Principles as “incorporation of contract terms” are
subject to the mandatory rules of the applicable law.14
In fact, almost all State legal orders reject application of the Principles as
law by confining the status of applicable law to State law, whether as selected
law within the scope of party autonomy or as objectively applicable law in the
absence of a choice.15 Particularly, Asian countries appear to be unanimous in
refusing to recognise the Principles as applicable law.16 But in the meantime, it
is interesting to note that regardless of whether the Principles are deemed to be
“applicable law” or “incorporation of contract terms” in the domestic legal
orders, their application is “largely unproblematic”.17
2. Application by adjudicators (courts or arbitral tribunals)
The Preamble of the Principles provides that they may be applied as governing
law if the parties have made no choice of law to govern their contract. 18
10 BONELL, An International Restatement …, supra note 4, at 181.

11 BONELL, The UNIDROIT Principles in Practice …, supra note 4, at 45-46.
12 See, e.g., Fabio BORTOLOTTI, “The UNIDROIT Principles and the Arbitral Tribunals”, Unif.
L. Rev. / Rev. dr. unif. (2000-1), 141 at 147.
13 VOGENAUER / KLEINHEISTERKAMP, supra note 5 at 37; Stefan VOGENAUER, “Interpretation of
the UNIDROIT Principles of International Commercial Contracts by National Courts”, in Henk
SNIJDERS / Stefan VOGENAUER, Content and Meaning of National Law in the Context of Transnational
Law, Sellier European Law Publishers GmbH (2009), at 176-177.
14 VOGENAUER / KLEINHEISTERKAMP, supra note 5 at 39; VOGENAUER, supra note 13 at 182;
BONELL, supra note 4 at 219; see also Fabio BORTOLOTTI, “Discussions – UNIDROIT Principles of
International Commercial Contracts: Reflections on their Use in International Arbitration”, Special
Supplement – ICC International Court of Arbitration Bulletin (2002) (hereinafter: ICC Bulletin
Special Supplement), 119 at 122.
15 VOGENAUER / KLEINHEISTERKAMP, supra note 5, at 42.
16 Ibid., at 49.
17 Ibid., at 38.
8 Unif. L. Rev. 2010

Besides, if the governing law (international or national) chosen by the parties is

silent or vague, the adjudicators may apply the Principles as interpretational or
supplementary rules of the governing law.19
At this point, the freedom and attitude of the adjudicators (courts and

arbitral tribunals in particular) in applying the Principles become relevant
because they decide whether and to what extent the Principles are to be
applied. Different adjudicators, usually from different legal backgrounds, with
different freedom of manoeuvre and in different capacities, have varied
attitudes and discretion in making applicable law decisions: they may “apply”
the Principles as “effective law” binding on the parties, as an interpretational or
supplemental vehicle or as “background law” to justify their decisions under the
otherwise applicable laws.
A typical example is that domestic courts and international arbitral
tribunals usually have different attitudes towards the Principles. It is so even
when the Principles are chosen by the parties to govern their contracts. On this
point, Professor Bonell has noted:
“The role which the Principles may play as governing law chosen by the parties
differs considerably, depending upon whether their application is invoked before a
domestic court or an arbitral tribunal.” 20
Particularly, State courts are generally reluctant to apply the Principles
absent parties’ choice. As Professor Lew has observed:
“I am not aware of any national court judgments where the UNIDROIT Principles
have been applied or their application even been considered in circumstances
where there is no express choice of law in the contract.” 21
In a sense, such difference makes forum shopping an important factor for

the parties: when they fail to reach choice-of-law agreements, a wise
forum-shopping decision could be helpful, to a certain extent, in increasing the
chances for the Principles to be applied. For example, the arbitral tribunals
under the auspices of the International Chamber of Commerce (ICC) tend to be
“friendly” towards the Principles and have applied them in many cases absent
19 Principles, Preamble, paras. 5 & 6..

20 BONELL, An International Restatement …, supra note 4, at 180-181.
21 Julian D.M LEW, “The UNIDROIT Principles as Lex Contractus Chosen by the Parties and
Without an Explicit Choice-of-Law Clause: The Perspective of Counsel”, ICC Bulletin Special
Supplement, 85 at 91.

Chi Manjiao
parties’ choice, whereas most domestic courts and many other arbitral tribunals
seem less so inclined.
3. Application by legislators

The Principles may also be “applied” by means of their legislative effect in a
broad sense.22 Unlike the above situations, where they are applied for dispute
settlement purposes, the Principles are here “applied” by virtue of their impact on
the making or revising of national legislation or international conventions. In fact,
legislators usually have a more decisive and ultimate say in “applying” the
Principles since they are legally entitled to decide whether and to what extent
they should be transplanted into national law. As will be discussed infra, the
Principles as a legislative model have played a very positive role in influencing
domestic law-making globally. This role is particularly important in civil law
countries, since judges there are not authorised to “make law”.
III. – APPLICATION OF THE PRINCIPLES IN CHINESE LEGISLATIVE PRACTICE
As held by the UNIDROIT Governing Council, the Principles “are not a binding
instrument and […] in consequence their acceptance will depend upon their
persuasive authority.” 23 It is widely recognised that the Principles have
successfully established persuasive authority in the field of international
contract law over the years, and “have exerted considerable influence on an
impressive number of legislative reforms of contract laws globally.” 24 In some
countries, the role of the Principles as a legislative model is believed to be a
“more important role” in practice compared with their role as applicable law in
dispute settlement proceedings.25
In this respect, China could be deemed a typical example. The primary
evidence for this is found in the legislative impact of the Principles on the

23 The Governing Council of UNIDROIT, “Introduction to the 1994 Edition”, UNIDROIT
Principles of International Commercial Contracts (2004).
24 See VOGENAUER / KLEINHEISTERKAMP, supra note 5, at 17. See also Marcel FONTAINE, “Un
Projet d’harmonisation du droit des contrats en Afrique”, in: CASHIN RITAINE / LEIN, supra note 2 at
95-106; Joself SKALA, “The UNIDROIT Principles of International Commercial Contracts: a Russian
Perspective“, in: ibid. at 119-134; Bart VOLDERS, “The UNIDROIT Principles of International
Commercial Contracts and Dutch Law”, in: ibid. at 135-148; and Martin SYCHOLD, “The UNIDROIT
Principles of International Commercial Contracts on Australian Law”, in: ibid. at 149-156.
25 See, e.g., HUANG Danhan, supra note 2 at 116.
10 Unif. L. Rev. 2010

development of Chinese contract law, particularly the drafting of the CCL.26
1. The development of Chinese contract law in a nutshell

In order to accurately understand the legislative impact of the Principles on
Chinese contract law, it is necessary to grasp the concept of Chinese contract
law and be briefly informed of its history.
Within the Chinese legal order, the term “Chinese contract law” has two
meanings: in the narrow sense, it refers to the CCL, adopted by the top
legislature of China, the National People’s Congress (NPC); while in the broad
sense, it refers to the whole body of contract laws in China, including but not
limited to (1) relevant international conventions to which China is a Party;27 (2)
national legislation adopted by the NPC and its Standing Committee as well as
regulations issued by the State Council of China;28 (3) judicial interpretations
issued by the Supreme People’s Court of China (SPC); 29 and (4) local
regulations adopted by local NPCs and their Standing Committees, particularly
those at the provincial level.30
Since the establishment of the People’s Republic of China (PRC) in 1949,
China has maintained a heavily centralised, planned economic regime. This
regime first started to change in the late 1970s, when China adopted its
open-door policy and began its economic reform to develop a market economy.
Along with this economic development, three major contract laws were
26 See, e.g., ZHANG Yuqing / HUANG Danhan, supra note 2 at 429-440; HUANG Danhan,
supra note 2 at 107-117; and JING Xi, supra note 2 at 107-118.
27 In the field of contract law, the most significant international Convention that China has
joined is the 1980 Convention on Contracts for International Sale of Goods (CISG). China joined the
CISG in 1986 with two reservations.
28 In China, only the NPC and its Standing Committee are empowered to make laws to be
applied nationally (laws in the strict sense). Laws that are pertinent to contracts include, but are not
limited to, the CCL as the core, relevant parts of the Civil Code of the PRC of 2001 (CCC) and the
Civil Procedural Law of the PRC of 1991 as revised in 2007 (CPL). It should also be noted that the
State Council and its ministries are also entitled to issue regulations that could also be applied
nationally (laws in the broad sense).
29 In China, the SPC regularly and frequently issues judicial interpretations to guide the
local courts in applying the laws. Though in the strict sense, the SPC’s judicial interpretations are not
a binding source of law in China, they are generally followed by courts across the country and thus
become de facto laws in China.
30 In China, local NPCs, including their standing committees, as well as local governments
at province, municipal city and county levels are also empowered to enact local regulations which
can only be applied within their respective jurisdictions.

Chi Manjiao
adopted in the 1980s: the Economic Contract Law of the PRC of 1981 (ECL), the
Foreign-related Economic Contract Law of the PRC of 1985 (FECL), and the
Technological Contract Law of the PRC of 1987 (TCL). These laws formed the
original framework of Chinese contract law and were regarded as the basis of

the CCL. However, this regime was fragmentary and discriminatory in nature
since commercial contracts were treated differently depending on their object
and subject, which was neither beneficial nor necessary to Chinese economic
development. As Professor Jing Xi has noted:
“These three contract laws were drafted in different stages of the reform. They were
initiated by different administrative sections, and regulated different contractual
relations. There was disharmony among their rules … The inconsistencies of these
contract laws led to a confusion and inefficiency in practice.” 31
The three contract laws co-existed for quite some years until the adoption
of the CCL in 1999. The CCL is the first and sole uniform contract law of China to
date and has played an important role in China’s economic development. In
general, the CCL is held a success because it not only unified the fragmentary
contract law regime in China but also substantially modernised this regime.
What an achievement this is may be illustrated by the fact that the CCL for the
first time explicitly recognised the basic principles of modern contract law, such
as the principles of contractual freedom and good faith.32 For instance, before
the adoption of the CCL, Chinese contract law generally deemed contracts to be
a tool to “ensure the implementation of the economic plans of the State”,33
while the CCL for the first time clarified that contracts are “agreements between
parties on equal footing”.34 Such clarification helped to quell the deep-rooted
misconception of the nature, function and legal consequences of contracts in
Chinese law and to prevent potential administrative interference by the
Government in commercial activities .35
31 JING Xi, supra note 2 at 109.

32 See Arts. 3, 4 and 6 CCL.
33 For example, the ECL clearly provides that its purpose is, inter alia, to “maintain the
social and economic order” and “ensure the implementation of State economic policy” (Art. 1). For
such purpose, ECL explicitly requires that contracts must “be in compliance with the State policy
and plan” (Art. 4), and further provides that “contracts that do not comply with State policy and plan
shall be invalidated” (Art. 7).
34 See Arts. 2 and 3 CCL.
35 See JIN Jian, “Contractual Freedom, State Interference and Chinese Contract Law”, Law
Review (1998-6), 61 at 64 (original in Chinese).
12 Unif. L. Rev. 2010

2. The positive impact of the Principles on Chinese contract law
The development of Chinese contract law could not have been achieved if
Chinese legislators had ignored the guiding value of the Principles and the 1980

United Nations Convention on Contracts for the International Sale of Goods
(CISG). In a sense, the Principles not only provide China with a “window” to
observe the development of contract laws globally, but they are also a
“shortcut” to link its laws with international standards. In fact, “Chinese
legislators were greatly inspired by those rules [of the Principles] that represent a
modernisation of contract law,” and the CCL is thus deemed “a convincing
example that the Principles have served as a useful model for national
legislator.” 36
The drafters of the CCL not only “widely consulted” the Principles,37 but
they also transplanted various provisions from them. A brief comparison
between the three former contract laws, the CCL and the Principles
demonstrates that the CCL has transplanted many provisions from the Principles
which Chinese contract law lacks.38 For instance, in the three contract laws,
there was no clear provision regarding the formation of contract; while the CCL
borrowed the “offer-and-acceptance process” from the Principles and the CSIG
to fill this vacuum.39 In addition, the CCL and the Principles are quite similar or
even identical in various other respects, such as the provisions on validity of
contract.40 Professor Liang Huixing, a leading contract law expert in China and
one of the chief drafters of the CCL, has clearly expressed the drafters’
preference and reliance on the Principles:
“The UNIDROIT Principles and the European Principles of Contract Law both
provide strict liability … which reflects the consensus of authoritative scholars of
both common law and civil law traditions and represents the general trend of the
development of contract law.” 41
The reference to the Principles has also been positively echoed by Chinese
36 HUANG Danhan, supra note 2 at 116.

37 See JING Xi, supra note 2 at 109-111.
38 For a detailed comparison between the CCL and the Principles, cf. ZHANG Yuqing /
HUANG Danhan, supra note 2 at 429-440.
39 See Art. 10 CCL; Principles Art. 1.2; Chapter 2 CISG.
40 See Art. 8 CCL; Principles Art. 1.3.
41 LIANG Huixing, “The Drafting and Probing of China’s Uniform Contract Law”, Chinese
Lawyer (1998-1), 65 at 67 (original in Chinese).

Chi Manjiao
officials who used to be major law-makers in China.42 For instance, Professor

Zhang Yuqing, former head of the Department of Treaty and Law of Chinese
Ministry of Commerce (the successor of Chinese Ministry of Foreign Trade and
Economics), when commenting on the contribution of the Principles in drafting

the CCL, said that “the broad scope of application of the UNIDROIT Principles
has no doubt had an impact on the new Contract Law [CCL].” 43
3. Difference between Chinese contract law and the Principles
However positive and profound the impact of the Principles on Chinese

contract law, and on the CCL in particular, they nevertheless feature several
notable differences. There are various reasons for these.
One reason for this is the unique historical background of Chinese contract
law. As noted above, the three contract laws that were in existence before the
adoption of the CCL had been so for quite some years. The CCL was drafted on
the basis of the three former contract laws, hence “it naturally bears traces of
each those laws.” 44 It is not surprising to note that some provisions of the
current Chinese contract law resemble their predecessors and bear traces of the
planned economy.
Another reason is China’s insufficient and ineffective participation in the
drafting process of the Principles. Though the Principles mainly relied on the
legislation and case law of Western legal systems, such as the contract laws of
the United States of America, England, France, Germany and Italy,45 China
seems to have failed to put across its stance in the drafting process in an
effective manner.
A third reason might be the cautious attitude of the Chinese Government
and legislature in the law-making process in light of the specific social and
economic situation of China. Both the Government and the legislature are
inclined to the opinion that contract law reform should be carried out in a
gradual and progressive manner in order to maintain social stability and ensure
42 It should be noted that, according to the Legislation Law of the PRC of 2003 and the
Constitution of the PRC of 1982 as amended in 2004, de jure law-makers in China are primarily the
National People’s Congress (NPC) and its Standing Committee. But in practice, the officials of the
relevant departments of the Chinese ministries play a very important role in proposing and making
laws.
43 ZHANG Yuqing / HUANG Danhan, supra note 2 at 430.
44 Ibid. at 437.
45 VOGENAUER / KLEINHEISTERKAMP, supra note 5, at 9.
14 Unif. L. Rev. 2010

a smooth transition to a market economy.

For all these reasons, it is understandable that China has not adopted the
Principles wholesale: some provisions in the CCL possess strong “Chinese
characteristics”, some are quite different from their counterparts in the

Principles, and some do not even have counterparts in the Principles.
According to the leading Chinese contract law experts, many such “unique”
provisions may be found in the CCL, such as those focusing on contracts subject
to approval or registration by public authorities, specific types of contract,
subrogation and contracts concluded under a State mandatory plan or State
purchase order.46
The “State purchase order” provision of the CCL may be deemed a typical
rule with “Chinese characteristics”. In China, there are various types of products
that come under direct State management and the State may, if necessary, order
the relevant enterprises to conclude contracts to satisfy the needs of the State; in
those cases, these enterprises may not invoke “freedom of contract” but are
obliged to conclude agreements to carry out such orders. 47 Contracts
concluded pursuant to a “State purchase order” are compulsory in nature, and
they used to be popular in China during the planned economy period. 48 More
recently however, with the development of the market economy, such contracts
have already lost significance in practice.
The “nullification of contract” provision in the CCL is another typical
example. It provides that the contract shall be nullified if it is concluded
fraudulently and “hurts State interests”,49 or if it “violates public interests”.50
Yet, in this regard, the CCL does not provide operable definitions of “State
interests” and “public interests”. Some Chinese scholars argue that it is too hard
in practice to distinguish “State interests” from “public interests” given the
current socio-political background in China, therefore these two terms should
be treated without being differentiated from one another. Besides, the scholars
are also concerned that “State interests” under this provision may be interpreted
46 For a more detailed analysis, cf. HUANG Danhan, supra note 2 at 114-116; ZHANG
Yuqing / HUANG Danhan, supra note 2 at 436-439.
47 Art. 38 CCL.
48 See, e.g., Provisional Regulation on State Mandatory Plans and State Purchase, adopted
by the Commission of Economy and Trade of the PRC and the Commission of Economic System
Reform of the PRC in 13 August 1993.
49 Art. 52(1) CCL.
50 Art. 52(4) CCL.

Chi Manjiao
by local courts as “interests of State-owned enterprises”.51

A more recent example is the hardship provision. Unlike the Principles,
Chinese contract law, particularly the CCL, contained no hardship provision for
quite a long time. Not until quite recently did Chinese contract law expressly

embrace this concept in the newly-issued judicial interpretation of the Supreme
People’s Court, which provides that if a “hardship situation” occurs the courts
should, “based on the principle of fairness, decide whether the contract should
be modified or terminated.” 52
China’s prolonged silence on the hardship provision was caused by various
special reasons. On the one hand, as mentioned above, Chinese law used to
treat contracts as mere instruments for the implementation of State economic
plans, bespeaking the strong influence of the planned economy, so there was no
real need for a hardship provision, since the State rather than the parties had the
need and the power to decide the “fate” of the contract (i.e. whether the contact
should be preformed or terminated or modified when a hardship situation
occurred) according to its economic plans.
On the other hand, the Chinese silence was also prompted by concerns as
to the proper application of the hardship provision by courts, particularly lower
courts. According to the drafters of the CCL, hardship is too difficult to define
clearly and uniformly since the determination of hardship would depend
heavily on the courts’ discretion on a case-by-case basis, and “it is hard to draw
a line between hardship situation and commercial risk.” 53 Given this
background, the recent codification of the hardship provision in China not only
reflects the development of Chinese contact law but also, at a more profound
level, demonstrates the development of the market economy in China.
Despite all the “unique” provisions of Chinese contract law, Chinese
scholars still seem confident of its future. For example, Professor Huang
observed that the “State purchase order” provision “is bound to be transitional
only, since China is still in the process of moving from a planned economy to a
51 See, e.g., ZHENG Jingyuan, “Public Interest in Chinese Contract Law”, Journal of
Kunming University Sci. & Tech., Vol. 8, Issue 7 (2008), 49 at 49-53 (original in Chinese).
52 See Art. 26, The Judicial Interpretation of the Supreme People’s Court on Certain Issues
Relating to the Application of the Contract Law of the PRC (adopted by the Judicial Committee of
the Supreme People’s Court at its 1462nd Meeting on 9 Feb. 2009; entry into force 13 May 2009).
53 The Legal Committee of the 9th National People’s Congress of the PRC, Report on the
Review of the Draft of the Contract Law of the PRC, Legal Daily, 15 March 1999 (original in
Chinese).
16 Unif. L. Rev. 2010

market economy”.54 In fact, the recent incorporation of the hardship clause

into Chinese contract law is a clear sign of this positive trend. With the ongoing
development of the market economy and China’s gradual integration into the
world economy, there is reason to believe that an increasing number of

advanced provisions in the Principles will be absorbed into Chinese contract
law in the future.
IV. – APPLICATION OF THE PRINCIPLES BY VIRTUE OF PARTY AUTONOMY IN CHINA
China acknowledges party autonomy as a basic principle of contract law.55

With this principle in place, it seems safe to say that if parties choose the
Principles to govern their contract, application of the Principles will be
guaranteed. Yet, as is in other countries, party autonomy is subject to various
restrictions in China, which may potentially discourage parties from choosing
the Principles in practice.
1. Parties qualifying for autonomy in China
Under Chinese law, party autonomy is “monopolised” by parties to

foreign-related contracts, while the parties to domestic contracts are not entitled
to the same right.56 Admittedly, such a restriction is not unique to China, but
due to the current economic reality in China, the adoption of this regime
discourages the majority of Chinese businesspersons, who are often engaged in
domestic rather than foreign trade, to resort to the Principles by virtue of party
autonomy.
There are various social, economic and legal reasons why Chinese
businesspersons are often reluctant or unable to venture into foreign trade.
China boasts a huge domestic market and enjoys a high level of self-sufficiency
in many industries despite its integration into the globalised world market;
Chinese businesspersons usually do not have sufficient foreign language or
communicative skills to engage in foreign trade, for educational reasons and
because of their traditional mindset; China’s prolonged closed-door policy in
the last century still exerts considerable influence in shaping the vision and
54 HUANG Danhan, supra note 2 at 116.

55 Art. 126 CCL (the relevant part reads “Parties to foreign-related contracts may choose the
governing law to settle disputes arising out of their contract, except where the law provides
otherwise.”).
56 Art. 126 CCL.

Chi Manjiao
mentality of businesspersons; Chinese contract law used to impose stringent

restrictions which limited its businesspersons in the conduct of foreign trade. All
these factors, and perhaps others, in combination greatly restrict Chinese
businesspersons in exercising party autonomy.

In this respect, the “foreign trade permit” regime is particularly noteworthy.
Established by the Foreign Trade Law of the PRC of 1994 (FTL), this was the
regime in force in China before 2004. It stipulated that Chinese enterprises and
individuals must obtain special Government authorisation to be legally capable
to conduct foreign trade and to conclude foreign-related contracts.57 As a result,
only those in possession of a “foreign trade permit” and participating in foreign
trade are legally entitled to exercise their autonomy in choosing the laws that will
govern their foreign-related contracts. Yet, due to the stringent requirements of
this regime, only a very limited number of export-oriented enterprises with a
comparatively large volume of exports qualify for such a permit.58
Fortunately, China abolished its “foreign trade permit” regime in 2004 in
accordance with the revised FTL, a measure intended to abolish foreign trade
controls to fulfil its WTO obligations. Under the revised FTL, and as from 1 July
2004, all Chinese enterprises and individuals are now entitled to conduct
foreign trade by “filing records” to the relevant Government departments and
no prior approval is needed.59 Yet, it has to be noted that even though the legal
restriction has been removed, many of the above-mentioned social and
economic factors persist.
2. Contracts to which the Principles may be applied in China
In China, the Principles can only be applied in foreign-related contracts, but the
CCL does not lay down any criteria to establish whether a contract is
57 Art. 9 FTL.
58 There are no statistics on the exact number of enterprises which have obtained a “foreign
trade permit”, yet according to the relevant State Council regulations, strict requirements were
imposed on enterprises to qualify for such a permit. For instance, according to the “Notice of the
State Council on the Relevant Opinion of the Ministry of Foreign Trade and the State Council
Production Office on Granting Industrial Enterprises a Foreign Trade Permit” issued on 11 May
1992, there were 10 requirements for enterprises to be granted such a permit including, inter alia,
that they must produce their own export products and have a foreign market; that the exports of
manufacturers of non-machinery products should exceed 4 million US dollars a year for two
consecutive years (see Art. 2(4) & (9) of this Notice).
59 See Arts. 8 & 9 Revised FTL of 2004.
18 Unif. L. Rev. 2010

“foreign-related” or otherwise. According to the relevant SPC judicial

interpretation, a case is “foreign-related” if: (1) either or both parties are foreign
nationals, stateless persons or foreign companies or organisations; (2) the legal
actions leading to the formation, amendment or termination of a legal

relationship occurred in a foreign country; or (3) the subject-matter is located in
a foreign country.60 Following these criteria, foreign-related contracts could be
broadly defined to cover contracts involving a non-Chinese party (or parties), or
whose conclusion, performance or termination are conducted outside China, or
whose subject-matter is located outside China. Such a broad coverage is
conductive to the Principles being chosen and applied in China.
3. Contracts exclusively subject to Chinese contract law
Under Chinese contract law, many types of foreign-related contracts are subject
to Chinese law exclusively. In these cases, party autonomy is denied. The CCL
explicitly lists three types of contract that are subject to Chinese law exclusively
if they are performed on Chinese territory: contracts of Sino-foreign equity joint
venture, contracts of Sino-foreign cooperative joint venture and contracts of
Sino-foreign joint exploitation of natural resources.61 According to the recent
SPC judicial interpretation, another six types of contract, relating to the
operation of foreign companies in China, are required to be subject to Chinese
law exclusively.62
4. The status of the Principles within the Chinese legal order
As mentioned previously, despite the debate on the status of the Principles,

most countries treat the Principles as an “incorporation of contract terms”
instead of a “choice of governing law” within their domestic legal orders. This is
also true in China. Under Chinese law, if the parties choose the Principles to
govern their contracts, the Principles are only deemed to be an “incorporation
of contract terms”. The CCL provides that “[p]arties to a foreign-related contract
may choose the applicable law to deal with the dispute arising from their
60 See Art. 304 SPC Opinions on Various Issues Arising from Application of the Civil
Procedural Law of the PRC (adopted on 14 July 1992).
61 Art. 126 CCL.
62 Art. 8(4)-(9) SPC Regulations on Applicable Law Issues in Foreign-related Civil and
Commercial Contract Disputes (adopted at the 1429th Meeting of the Judicial Committee of the SPC
on 11 June 2007) (hereinafter: SPC Regulations on Applicable Law Issues).

Chi Manjiao
contract except where otherwise provided.” 63 Here, the CCL is silent as to

whether the Principles could be deemed the “applicable law”. Yet, according to
the relevant SPC judicial interpretation, “the applicable law of foreign-related
civil and commercial contractual relations refers only to the substantive law of

the relevant States or regions, excluding conflict of laws rules and procedural
laws.” 64 It becomes clear that under Chinese law, the law governing a contract
must be “State law or regional law” rather than “rules of law”; hence
supranational or a-national rules such as the Principles do not qualify as
applicable law.
5. Formal requirement to choose the Principles in China
According to the above-mentioned SPC judicial interpretation, there is an extra

and special formal requirement for parties to exercise their autonomy: they must
make their choice of law in an explicit manner.65 This reminds the parties that
if they intend to choose the Principles, they should do so expressly. On the
other hand, as China does not recognise supranational or a-national rules as
applicable law, wordings such as “settle the dispute in accordance with lex
mercatoria” or “solve the dispute by general principles of contract law” or the
like could not be deemed a valid choice of law agreement under Chinese law
due to their “vagueness”. This formal requirement might be one of those
particular rules in Chinese contract law that actually deviate from the “implicit
choice” rule stated in the Preamble of the Principles. Obviously, this
requirement is not conductive to the application of the Principles in China.
To sum up, under Chinese law, if the parties to foreign-related contracts
explicitly choose the Principles to govern their contracts, they may be applied
as “incorporation of contract terms” by virtue of party autonomy. In this regard,
Chinese law may not be materially different from or harsher than those in other
countries, but due to the socio-economic tradition in China and the prevailing
view that contracts should be governed by the law of a State, the Principles have
rarely been chosen in practice.66
63 Art. 126 CCL.

64 Art. 1 SPC Regulations on Applicable Law Issues.
66 See HUANG Danhan, supra note 2 at 116.
20 Unif. L. Rev. 2010

V. – APPLICATION OF THE PRINCIPLES IN CHINESE JUDICIAL PRACTICE
There are several reported cases in which the Principles have been applied or
considered by Chinese courts at various levels. At the outset, it is to be noted

that Chinese courts have confirmed that parties to foreign-related contracts are
entitled explicitly to choose the Principles to govern their contract as
“incorporation of contract terms”. This is shown in the case of Xiamen Xiang Yu
Group Ltd. v. Mechel Trading AG where the Principles were applied by a
Chinese court based upon the parties’ explicit choice in conjunction with the
CISG.67 That being said, this article will now explore how the Principles may
be applied by Chinese courts when the parties fail to reach a choice of law
agreement.
1. The conflict-of-laws rules under Chinese law
Similar to courts in other countries, Chinese courts are required to follow the
choice of law rules to identify the applicable law if parties fail to choose the
governing law for their contract.68
Under Chinese law, the choice of law rules are scattered about in a range of
laws, but they do together form a complex system which can roughly be
described in four steps. Firstly and generally, courts should identify the
applicable law (domestic law or international convention) according to the
“closest connection” rule. 69 To assist the courts in identifying the “closest
connection”, Chinese law classifies contracts into various types and provides
applicable laws for each of them. 70 Secondly, in the event where the
applicable law thus identified fails to provide explicit provisions to settle the
dispute, international custom may be applied.71 Thirdly, by way of exception,
if the contracts fall within the prescribed types, they are subject to Chinese law
67 In this case, the choice-of-law clause in the relevant part reads “[a]pplication and
interpretation of this contract shall be governed by the United Nations Convention on Contracts for
the International Sale of Goods. On issues not covered by this Convention, the UNIDROIT Principles
(1994) shall apply. In case both instruments cannot cover the issue under dispute, international
customs and the law of Seller’s place of business (Swiss law) shall apply”. An abstract of this case is
available at <http://www.unilex.info/case.cfm?pid=2&do=case&id=1121&step=Abstract> (last
visited 20 Dec. 2009).
68 Art. 126 CCL; Art. 5 SPC Regulations on Applicable Law Issues; Art. 145 CCC.
69 Art. 126 CCL; Art. 5 SPC Regulations on Applicable Law Issues.
71 Art. 142 CCC.

Chi Manjiao
exclusively.72 Fourthly, also as an exception, if the applicable law is Chinese

law and that law is in conflict with the international conventions to which China
is a Party, the latter prevail except where China has made a reservation.73
As these choice-of-law rules restrict the freedom of the courts in making

applicable law decisions, particularly when compared with international
arbitrators, they might at times constitute an impediment to the application of
the Principles. On this point, Professor Kronke has observed that:
“While international and supranational courts such as the ICJ or the ECJ and
international arbitral tribunals are used to adjusting procedural rules to the specific
needs of transnational procedures, domestic courts still lack the necessary
tools.” 74
In China, since the applicable law of foreign-related contracts must be
identified as the “law of a State or region”, it is only and at best at the second
stage, i.e., when the applicable law so determined is vague or silent, that the
Principles may be applied as “international custom” by the courts. However,
this is a last and often unnecessary resort in practice since the courts will usually
find laws bearing the “closest connection” with the contracts. Thus, application
of the Principles by Chinese courts seems difficult, though chances do exist.
2. An analysis of the relevant Chinese cases
Despite the status of the Principles in the Chinese legal order, their impact on
judicial practice in China should not be neglected. Seven Chinese cases have so
far been reported in UNILEX in which the Principles are applied or
considered.75 In addition to the case cited above, where the Principles were
applied as a result of the parties’ express choice, in one case the Principles were
applied without any reason being given,76 and in the remaining five cases they
72 Art. 126 CCL. According to this provision, three types of contract are subject to Chinese
law exclusively if they are to be performed within Chinese territory: Contract of Sino-Foreign Joint
Venture, Contract of Sino-Foreign Cooperative Joint Venture and Contract of Sino-Foreign Joint
Exploitation of Natural Resources.
73 Art. 142 CCC.
74 Herbert KRONKE, “From International Uniform Conventions to Model Laws – From
Guides to Principles: The Choice of Approach”, in: Louis PERRET / Alain-Francois BISSON (Eds,), The
Evolution of Legal Systems, Bijuralism and International Trade, Wilson & Lafleur (2000), at 299.
75 These cases are available at <http://www.unilex.info/dynasite.cfm?dssid=2377&dsmid
=13619&x=1> (last visited 20 Dec. 2009).
76 See Hengxing Company v. Guangdong Petrochemical Subsidiary Company, abstract
22 Unif. L. Rev. 2010

were referred to by the court in “case comments”.77 It must be noted that in

China “case comments” are merely internal court circulars and have no binding
force in law. Hence, the Principles only served a scholarly or educational
purpose and were not effectively applied in these cases.

Two cases should be particularly highlighted. The first is Qian Binzhen v.
Huhhot Economic Technology Development Zone Mengniu Wine Co., Ltd.,78
in which the Principles were referred to in the “case comments”. The
noteworthy points of this case are that, firstly, the dispute was based on a purely
domestic contract instead of a foreign-related contract; secondly, the parties did
not in any way choose the Principles to govern their contract, while Chinese
contract law was the applicable law. Reading the facts of this case and
considering Chinese contract law as aforementioned, there seemed no room at
all for the Principles to be considered by the court in this case. The fact that the
judges nevertheless referred to the Principles, even though only in the “case
comments”, could imply that the Principles may serve as “background law” in
China: by so doing, the courts hope to confirm that their decision, made under
Chinese contract law, is in line with the “international standards” as represented
by the Principles.
In the second case, the courts took a bold step to effectively apply the
Principles. In Hengxing Company v. Guangdong Petrochemical Subsidiary
Company,79 the dispute concerned “hardship” during the performance of the
contract. Yet this term does not exist in Chinese contract law or in any of the
other instruments that might be the applicable law in this case. The Principles
seemed to be a readily accessible and authoritative legal instrument with a

visited 20 Dec. 2009).
77 See Qu Lianji v. Guangzhou Baiyun Tianxiange Restaurant, abstract available at
<http://www.unilex.info/case.cfm?pid=2&do=case&id=1241&step=Abstract>; Luoyang Singnal
Fire Ltd. v. Luoyang LYC Bearing Corp. (Group); abstract available at
<http://www.unilex.info/case.cfm?pid=2&do=case&id=1231&step=Abstract>; Shenzhen
Zhonghang Walls Ltd. v. Shenzhen Shenhua Real Estate Co., abstract available at
<http://www.unilex.info/case.cfm?pid=2&do=case&id=1446&step=Abstract>; Parties Unknown
Case by Shenzhen Intermediate People's Court and Guangdong High People's Court, abstract
available at <http://www.unilex.info/case.cfm?pid=2&do=case&id=1445&step=Abstract>; and
Qian Binzhen v. Huhhot Economic Technology Development Zone Mengniu Wine Co., Ltd., abstract
visited 20 December 2009).
78 See supra note 77.
79 See supra note 76.

Chi Manjiao
provision on “hardship”. As a result, the court applied the Principles without

giving reasons. Consequently, the defendant in the appeal proceedings
objected to the application of the Principles on three major grounds: (1) the
Principles were not chosen by the parties; (2) the Principles are not a binding

source of law in China; and (3) the contract was of a domestic nature and thus
should only be subject to Chinese contract law, not to the Principles. However,
the appellate court upheld the decision of the lower court albeit without
commenting on the application of the Principles.
This latter case has placed the courts in something of a dilemma: the
Principles seem to be the only instrument that could provide operable rules to
solve a dispute of this kind, but their application is not allowed under Chinese
law where the contract is domestic in nature. Hence, it is quite remarkable that
Chinese courts, faced with such a dilemma, effectively applied the Principles
absent parties’ choice, and what is more, in a purely domestic contract.
Obviously, the court’s decision in this case raises a challenge to the traditional
view that supranational or a-national rules such as the Principles are generally
not allowed to be applied to domestic contracts. This is probably why the courts
intentionally kept their silence regarding the application of the Principles.
It is true that the Principles are not really tailored for domestic contracts, as
is indicated by their very title. Yet, as is evident from the above Chinese cases,
the Principles are indispensable in certain cases where the otherwise applicable
laws are unable to settle the dispute. In fact, that the Principles may be applied
in domestic contracts is clearly supported by the UNIDROIT Governing
Council.80 Professor Bonell has also pointed out that:
“Notwithstanding the fact that the Principles are conceived for international
commercial contracts, there is nothing to prevent private persons from agreeing to
apply the Principles to a purely domestic contract. Any such agreement would
however be subject to the mandatory rules of the domestic law governing the
contract.” 81
Besides, some domestic courts are also getting “friendly” towards
supranational or a-national rules such as the Principles. For instance, a Swiss
court once gave a positive response on this issue:
80 THE GOVERNING COUNCIL OF UNIDROIT, “Introduction”, UNIDROIT Principles of

International Contracts (1994), at 3.
81 BONELL, The UNIDROIT Principles in Practice …, supra note 4, at 44.
24 Unif. L. Rev. 2010

“Concerning the question as to whether in disputes before domestic courts parties

are entitled to choose a-national or supranational rules as the law governing their
contract, the Supreme Court, as the Court of first instance, recalled that opinions
were divided and that, at least with respect to sets of general principles and rules

prepared by independent academics and comparable to domestic legal systems as
to intrinsic equilibrium, comprehensiveness and general recognition such as the
UNIDROIT Principles, the affirmative view prevailed.” 82
In fact, with economic globalisation in progress, “modern domestic laws
are often made also with international contracts in mind.” 83 Against this
background, there may be reason to expect the Principles to be applied to
domestic contracts more broadly and more frequently in times to come,
particularly for gap-filling reasons.
VI. – APPLICATION OF THE PRINCIPLES IN CHINESE ARBITRATION PRACTICES
The application of the Principles is well established in international

arbitration.84 Indeed, international arbitrators, particularly ICC arbitrators, have
been the chief source of decisions relating to the Principles and major
promoters in applying them.85 The excellent record in terms of recognition and
enforcement of ICC awards globally also enhances the applicability of the
Principles in arbitration. Besides, by applying the Principles, arbitrators also
play an important role in transforming the nature of the Principles from mere
“soft law” into “case-hardened law” and in promoting the unification of
international contract law.86
82 Abstract available at <http://www.unilex.info/case.cfm?pid=2&do=case&id=1124

&step=Abstract> (last visited 20 Dec. 2009).
83 VOGENAUER / KLEINHEISTERKAMP, supra note 5 at 34.
84 Bruno ZELLER, “The UNIDROIT Principles of Contract Law: Is There Room for Their
Inclusion into Domestic Contracts?”, 26 Journal of Law & Commerce (2008), 115 at 119.
85 See E. Allan FARNSWORTH, “The Role of the UNIDROIT Principles in International
Commercial Arbitration (2): A US Perspective on Their Aims and Application”, ICC Bulletin Special
Supplement, 21 at 26. See also Pierre MAYER, “The Role of the UNIDROIT Principles in ICC
Arbitration Practice”, ICC Bulletin Special Supplement, 105 at 106 (Professor Mayer also noted that
despite the considerable number of ICC cases in which the Principles were applied, they still only
represented a small proportion of all ICC cases). Evidence for this can also be found from the
statistics in UNILEX, available at <http://www.unilex.info> (last visited 20 Dec. 2009).
86 See ZELLER, supra note 84, 115 at 116 (Dr Zeller holds that “Due to the extended
application of the Principles in arbitration the argument can be advanced that the theoretical or soft
law stage has passed and the Principles have entered into the phase of “case-hardened” law”). See

Chi Manjiao
In recent years, arbitration has also become a popular dispute settlement

alternative in China. Several cases have been reported by UNILEX in which the
Principles were applied or considered by the tribunals under the auspices of the
China International Economic and Trade Arbitration Commission (CIETAC).87

These cases seem to open up an inspiring prospect for application of the
Principles in Chinese arbitration practice. However, despite the positive signals
given out by these cases, the following case study and comparative study tends
to show that it would be premature to regard them as heralds of successful
application of the Principles in Chinese arbitration.
1. The Principles in CIETAC arbitration as compared to ICC arbitration
The arbitration practices of ICC and CIETAC with respect to the application of
the Principles show substantial differences, and the Chinese arbitration regime
in general is not sufficiently accommodating of the Principles.
The first difference lies in the number of cases in which the Principles are
applied or considered. To date, there are seventy-eight ICC cases reported in the
UNILEX, as against only three CIETAC cases.88 It has also been observed that
“on the whole, most published [ICC] awards apply the Principles or take them
into consideration,” though these cases only stand for a small proportion of all
ICC cases.89
True, due to varied data collection leverages, the number of cases is neither
exhaustive nor decisive in deciding the arbitrators’ freedom and preference in
applying the Principles. However, the small number of CIETAC cases
nevertheless indicates that the Principles have not received sufficient attention
in Chinese arbitration. This is particularly true if one considers that CIETAC
deals with a huge caseload annually compared with its counterparts across the
world,90 and China hosts around 200 arbitration commissions nationally which
also MAYER, supra note 85 at 105.

87 There are three cases in all reported in UNILEX. A list of cases is available at
<http://www.unilex.info/dynasite.cfm?dssid=2377&dsmid=13620> (last visited 20 Dec. 2009).
88 Id.
89 MAYER, supra note 85 at 106.
90 CIETAC‘s caseload has risen steadily since the 1990s. According to the latest statistics,
whereas the CIETAC caseload was 1230 in 2008 (see <http://cn.cietac.org/AboutUS/> (last visited
30 December 2009), by November 2009 it had risen to 1357 (in 2009): see
<http://cn.cietac.org/NewsFiles/NewsDetail.asp?NewsID=903> (last visited 30 Dec. 2009).
26 Unif. L. Rev. 2010

may deal with foreign-related contract disputes.91

A more significant difference lies in the grounds upon which the Principles
are applied. Generally speaking, arbitrators advance various grounds to apply
the Principles.92 As far as ICC arbitration is concerned, such grounds include,

inter alia, the applicable law either solely or in conjunction with other
governing laws, interpretational or gap-filling instruments, or “background law”
to confirm that their decisions are in conformity with international standards.93
However, in CIETAC arbitration, as the following case study shows, the grounds
on which the Principles may be applied are very limited.
The first case was between a Chinese and a Korean party.94 The parties
made no choice of law, and the tribunal decided that Chinese contract law
should be applied under the “closest connection rule” notwithstanding the
claimant party’s request to apply the Principles (it should be noted that Korea
was not a Party to the CISG at the time of the arbitration). In responding to
claimant’s request, the tribunal held that though the Principles qualified as
“international usages”, they should apply only in the absence of relevant
provisions in the applicable domestic law. Since, in this case, the issues at stake
were expressly settled in the applicable law, there was no room to apply the
Principles. In other words, the tribunal refused to apply the Principles on the
ground that the “applicable domestic law” should prevail over “international
usage”, which is perfectly in line with the requirements of the conflict-of-laws
rules in Chinese law referred to supra.
91 LU Yunhua, Address to the 2008 National Conference on Arbitration Work on Behalf of

the Legal Office of the State Council of PRC on 25 November 2008 (original in Chinese). Available
at <http://www.ccarb.org/news_detail.php?VID=10531> (last visited 30 July 2009).
92 Professor Lew proposed five grounds on which the Principles may be applied by
international arbitrators: (1) to fill the gap or supplement relevant applicable national laws if
necessary where parties have expressly selected a national law to govern the contract; (2) if the
parties have agreed to application of lex mercatoria or general principles of law or the like; (3) if the
parties have expressly so agreed; (4) if the parties have not agreed on an applicable national law, but
the case is clearly international and neither party is willing to submit to the national law of the other;
and (5) if the arbitral tribunals have selected lex mercatoria, general principles of law or similar sets
of rules or acting as amiables compositeurs or ex aequo et bono. See generally, LEW, supra note 21
at 94.
93 For a general discussion of the application of the Principles in ICC arbitration, cf. MAYER,
supra note 77 at 105-117; M.J. BONELL, “The UNIDROIT Principles and Transnational Law”, Unif. L.
Rev. / Rev. dr. unif. (2000), 199 at 203; FARNSWORTH, supra note 85 at 22-26.
94 Abstract at <http://www.unilex.info/case.cfm?pid=2&do=case&id=1208&step=Abstract>
(last visited 22 Dec. 2009).

Chi Manjiao
The second case arose between a Chinese claimant and a Swiss

defendant.95 As the parties made no choice of law, the tribunal decided to
apply the CISG since both China and Switzerland are Contracting States of the
CISG. At first, the tribunal found that the CISG did not provide “a complete

code” on the disputed issue and accordingly held that “it [the CISG] had to be
applied in conjunction with the otherwise applicable domestic law.” Then, the
tribunal decided to apply Chinese law on two major grounds: (1) “it [Chinese
law] was implicitly chosen by the parties as the proper law of the contract by
agreeing that the place of arbitration was in China;” and (2) in deciding the merit
issue, the tribunal held that “in view of the considerable differences among
domestic laws in this field, the gap could not be filled by virtue of Article 7.4.13
of the UNIDROIT Principles but only by recourse to the otherwise applicable
domestic law.”
These two grounds are not convincing. The first ground, i.e. the “implied
choice theory”, is far too conservative since in contemporary international
arbitration, the parties’ choice of the place of arbitration cannot be readily
regarded as acquiescence to the application of the law of that State to the merits
of the case. This was made clear by UNCITRAL when it amended the 1985
Model Law on International Commercial Arbitration:
“The place of arbitration is often chosen for reasons of convenience of the parties
and the dispute may have little or no connection with the State where the
arbitration legally takes place.” 96
In fact, if the tribunal had insisted on applying Chinese law, it could have
found a more reasonable ground to justify its decision: as will be discussed
infra, a CIETAC tribunal is required by CIETAC Arbitration Rules to follow the
conflict-of-laws rules (in most cases the “closest connection rule”) to determine
the applicable law to the merits, hence it might be less provocative for the
tribunal to base its decision on the ground that “Chinese law bears the closest
connection to the contract” instead of that “parties have impliedly chosen
Chinese law by agreeing to arbitrate in China.”
The second ground, i.e. the “gap-filling theory”, sounds quite confusing.
That the Principles provide an effective vehicle to narrow differences among
96 UNCITRAL, The Explanatory Note by the UNCITRAL Secretariat on the 1985 Model Law
on International Commercial Arbitration as amended in 2006, para. 50.
28 Unif. L. Rev. 2010

domestic laws has been widely recognised, while gap-filling is one of the major
roles that the Principles may play. Therefore, it is hard to understand how the
tribunal came to the conclusion that the Principles are less capable of gap-filling
than are domestic laws.

In the third case, the dispute was between a French and a Chinese party.
The parties made no choice of law and the tribunal applied the CISG since it
was in force in both States. The tribunal rejected the French party’s request to
apply the Principles in deciding the amount of interest due on the delayed
payment, holding that “the Principles are neither an international convention
nor did the parties stipulate the Principles in the contract […] it lacked either
legal or contractual grounds for the arbitral tribunal to rule according to the
Principles.” However, what seems quite conflicting is that the tribunal in fact
applied the Principles on the ground that “it could refer to the Principles”.97 To
justify such “conflict”, the tribunal tried to draw a clear distinction between the
wording “apply the Principles” and “refer to the Principles” to avoid leaving an
impression that the Principles were effectively applied as applicable law. What
this actually implied was that the tribunal had not been granted sufficient
freedom in applying supranational or a-national rules such as the Principles.
Regardless of the results of these cases, the applicable law decisions taken
by CIETAC tribunals were quite conservative and sometimes controversial, even
though they cannot strictly speaking be said to be wrong under Chinese law.
The common thread running through these cases is that CIETAC tribunals,
unlike many of their international counterparts, clung to the view of superiority
of national laws and were somehow reluctant to apply or even consider the
Principles in practice. As will be discussed infra, this is mainly due to the severe
restrictions on the arbitrators’ freedom imposed by Chinese arbitration law and
contract law and this is obviously not conducive to the development of Chinese
arbitration and to the application of the Principles in Chinese arbitration.
2. The power of international arbitrators in applying the Principles
In fact, whether the Principles can be applied absent the parties’ choice in a
given case depends largely on how the arbitrators make their applicable law
decisions. At this point, the arbitrators’ freedom to make applicable law

Chi Manjiao
decisions becomes highly relevant. Such freedom is often provided by the

authorisation of the parties, the arbitration rules chosen by the parties and/or the
lex arbitrii. It is thus helpful to start with a brief comparison of major arbitration
rules and laws, which may be classified into four major modes.

Firstly, arbitrators as amiables compositeurs or ex aequo et bono seem to
have the highest level of freedom since they are permitted to decide the dispute
according to the legal principles they believe to be just, and the awards are
frequently based on equity or on the lex mercatoria. In this type of arbitration, as
suggested by Professor Lew, if the Principles “provide concrete rules which may
be applicable for the specific contract involved”, they “can and should be
applied” by arbitrators.98
In practice, arbitration by amiables compositeurs or ex aequo et bono with
the parties’ consent is allowed by many leading arbitration rules and laws, such
as the ICC Rules of 1998,99 and the 1998 Arbitration Rules of the London Court
of International Arbitration (LCIA Rules).100 For example, in ICC case 8874, the
contract authorised the arbitral tribunal to act as amiable compositeur and to
decide the dispute according to “principles of equity”, and the tribunal finally
settled the dispute by referring to the Principles without further explanation.101
It is a pity that arbitration by amiables compositeurs or ex aequo et bono is
not allowed in China.102 The prohibition means that CIETAC arbitrators must
base their decisions on laws directed by the parties’ choice or by
conflict-of-laws rules and this naturally decreases the chance of applying the
Principles in CIETAC arbitration.
The second mode is that the arbitrators have discretion in deciding the
applicable substantive law rules directly, meaning that there is not always a
need to decide or follow conflict-of-laws rules. Typically, such rules grant the
arbitrators the freedom to apply the “rules of law they deem appropriate”
instead of the “law of a State”, which is quite favourable for the application of
the Principles. On this point, Professors Vogenauer and Kleinheisterkamp, after
98 LEW, supra note 21 at 94.

99 Art. 17(3) ICC Rules.
100 Art. 22(4) LCIA Rules.
101 ICC Case No. 8874 of 1996. Abstract at <http://www.unilex.info/case.cfm?pid=2&do
=case&id=657&step=Abstract> (last visited 24 Dec. 2009)
102 Chinese arbitration law does not explicitly prohibit arbitration with amiable
compositeurs or ex aequo et bono, yet it does require that arbitrators must base their decisions on
laws. See Art. 7, Arbitration Law of the PRC of 1994.
30 Unif. L. Rev. 2010

a careful examination of the statutory interpretation of choice-of-laws rules,

noted that:
“Where choice of laws rules designate the “law of a State”, this is universally and
appropriately read to exclude the Principles. Where choice of law rules designate

“rules of law” as applicable, this is frequently read as an indicator that the
Principles can be included.” 103
This mode is also adopted by various leading arbitration rules and laws, such
as the ICC Rules,104 the LCIA Rules,105 and the French Code of Civil Procedure
of 1981.106 In fact, long before the adoption of ICC Rules in 1998, ICC arbitrators
were well aware that they “are not bound to apply the rules of conflict of one
country rather than another.” 107 ICC arbitrators also suggested that they “are not
subject to binding rules of conflict or substantive rules requiring compulsory
application” and that “there is no system regulating international private law
relations that is specific to international arbitration.” 108 Such broad freedom of
the arbitrators also explains why it is widely accepted at the international level
that for the Principles (or other types of supranational or a-national rules) to be
applied, arbitration is preferable to litigation.109
The third mode offers the arbitrators less freedom compared with the
second mode: they have limited freedom in deciding the applicable substantive
law, but have broad discretion in deciding conflict-of-laws rules. By flexibly
choosing conflict-of-laws rules, the arbitrators are able to make applicable law
decisions in favour of the Principles. Typically, such rules read as “the
arbitrators shall apply the proper law under the conflict of laws rule they deem
103 VOGENAUER / KLEINHEISTERKAMP, supra note 5 at 42.

104 Art. 17(1) ICC Rules (the relevant part reads “… the Arbitral Tribunal shall apply the rules
of law which it determines to be appropriate.”).
105 Art. 22(3) LCIA Rules (the relevant part reads “If and to the extent that the Arbitral
Tribunal determines that the parties have made no such choice, the Arbitral Tribunal shall apply the
law(s) or rules of law which it considers appropriate.”).
106 Art. 1496 French Code of Civil Procedure (the relevant part reads “Arbitrators shall
decide disputes according to the rules of law chosen by the parties, or, failing such a choice,
according to those they deem appropriate.”).
107 H. BATIFFOL, “L’arbitrage et les conflits de lois”, Revue de l’arbitrage (1957), 110 at 111.
Cf. Yves DERAINS, “The Role of the UNIDROIT Principles in International Commercial Arbitration (1):
A European Perspective”, in: ICC, UNIDROIT Principles of International Commercial Contracts, ICC
Bulletin Special Supplement, 9 at 12.
108 DERAINS, supra note 107.
109 FARNSWORTH, supra note 85 at 21.

Chi Manjiao
applicable.” This method is likewise shared by many arbitration laws and rules,
such as the European Convention on International Commercial Arbitration of
1961, 110 the English Arbitration Act of 1996, 111 and the UNICITRAL
Arbitration Rules of 1976.112

3. The power of Chinese arbitrators in applying the Principles
Apart from the above three modes, there is a fourth mode, in which the
arbitrators have little freedom in deciding either substantive law or
conflict-of-laws rules; instead, they must follow the prescribed conflict-of-laws
rules to identify the applicable substantive law. This method is adopted by the
CIETAC rules and by many, if not all other Chinese arbitration commissions.113
In particular, the CIETAC Rules provide that:
“The arbitral tribunal shall independently and impartially make its arbitral award
on the basis of the facts, in accordance with the law and the terms of the contracts,
with reference to international practices and in compliance with the principle of
fairness and reasonableness.” 114
Unlike many of the aforementioned arbitration rules, this provision is
vague and inoperable: it fails expressly to allow the arbitrators to apply “the
rules of law they deem appropriate” or “the proper law under the
conflict-of-laws rule they deem applicable.” Instead, it requires the arbitrators to
base their decisions on “law and the terms of the contracts”, while
“international practices” which the Principles may qualify are only secondary or
auxiliary sources of law in CIETAC arbitration.
Further, by simply requiring the arbitrators to apply “law and the terms of
the contracts”, CIETAC Rules also fail to provide conflict-of-laws rules to direct
the arbitrators to identify the applicable law of the case. Thus, reference should
be made to the lex arbitrii, i.e., Chinese law. In this regard, neither the 1994
110 Art. VII(1), European Convention on International Commercial Arbitration (the relevant
part reads “… the arbitrators shall apply the proper law under the rule of conflict that the arbitrators
deem applicable.”).
111 Section 46, English Arbitration Act of 1996 (the relevant part reads “… the tribunal shall
apply the law determined by the conflict of laws rules which it considers applicable.”).
112 Art. 33(1), UNCITRAL Rules (the relevant part reads “ … the arbitral tribunal shall apply
the law determined by the conflict of laws rules which it considers applicable.”).
113 See, e.g., Art. 60(2) Arbitration Rules of the Beijing Arbitration Commission of 2008;
Art. 5, Arbitration Rules of the Shenzhen Arbitration Commission of 2008.
114 Art. 43(1), CIETAC Rules.
32 Unif. L. Rev. 2010

Arbitration Law of the PRC (CAL) nor the 1991 Civil Procedural Law of the PRC
as amended in 2007 (CPL), the most pertinent laws where foreign-related
arbitration is concerned, provides operable conflict-of-laws rules,115 whereas
the CCL and the 2001 Civil Code of the PRC (CCC) do contain a conflict-of-laws

rule: if the parties fail to choose the governing law, the applicable law in general
should be “the law that has the closest connection with the contract”.116 It must
be noted that as this rule is not tailored for arbitration, it is also and mainly
applied by Chinese courts in litigation proceedings.
Thus, in CIETAC arbitration, the arbitrators must identify the applicable law
by following the conflict-of-laws rule (usually the “closest connection rule”),
and only if the applicable law is silent or vague, may the Principles be “referred
to” as “international practice” for interpretational or supplementary purposes.
The aforementioned CIETAC cases also demonstrate that CIETAC tribunals are
not allowed and do not try to apply directly “rules of law they deem
appropriate” or “the proper law under the conflict of laws rule they deem
applicable”; rather, the “closest connection rule” seems to be regarded by the
tribunals as the “queen rule” under Chinese law.
4. Implications of the comparative study
As far as the applicable law decision is concerned, the above case analysis and
comparative study give rise to two basic observations: (1) as the freedom of
CIETAC arbitrators in making applicable law decisions is severely restricted
under its Rules and Chinese law compared with that of ICC or LCIA arbitrators,
CIETAC arbitration is materially different from international arbitration; and (2)
as the conflict-of-laws rules in Chinese law apply to both arbitration and civil
litigation, no substantial difference exists between CIETAC arbitration and civil
litigation in China. Furthermore, as CIETAC arbitration is indeed a miniature of
115 Both the CAL and the CPL dedicate a special chapter to foreign-related arbitration
(Chapter 7 CAL; Chapter 27 CPL). However, neither of these chapters provides clear conflict of laws
rules for the arbitral tribunals to decide the applicable law in foreign-related arbitration. In this
respect, the CAL provides that “[i]n case this Chapter [Chapter 7] does not contain clear provisions,
the other relevant provisions of this law shall be applied” (Art. 65 CAL). Therefore, the arbitral
tribunal will have to refer to “the other relevant provision” of the CAL, while the only relevant
provision of the CAL provides that “[t]he Disputes shall be fairly and reasonably settled by arbitration
on the basis of facts and in accordance with the relevant provisions of law” (Art. 7 CAL). It is obvious
that no operable conflict of laws rules could be found in either the CAL or the CPL.
116 Art. 126 CCL; Art. 145 CCC.

Chi Manjiao
Chinese arbitration as a whole because of its leading role, the difference

between CIETAC arbitration and international arbitration also makes obvious
the gap between Chinese arbitration and international arbitration.
In fact, in international arbitration, the arbitrators’ freedom in determining

the applicable law is more often than not implied, and such freedom is
confirmed by various leading arbitration rules, national laws and international
instruments either expressly or implicitly, including the 1958 Convention on
Recognition and Enforcement of Foreign Arbitral Awards (New York
Convention). 117 It is based on their broader freedom in that international
arbitrators are generally believed to be more capable of applying the Principles
than domestic courts. Yet, due to the severe restrictions on Chinese arbitrators’
freedom to make applicable law decisions, arbitration in China is no more
accommodating of the Principles than litigation. As a consequence, the
Principles have not been and cannot be received in as friendly a manner as they
would deserve in Chinese arbitration.
Indeed, the situation is not only “unfriendly” to the Principles, it also
weakens the attractiveness and competitiveness of Chinese arbitration
internationally and in the long run. It also goes some way to explain why
arbitration is not preferred to litigation in solving transnational contract disputes
in China as it is in other States with more advanced arbitration laws.
117 DERAINS, supra note 107 at 10-12. Here, it must be noted that when arguing that the New
York Convention “implicitly confirms the arbitrators’ freedom in determining the law applicable to
the merits of the case”, Professor Derains based on the fact that the New York Convention “made no
reference to the question of law applicable to the merits of the case in the list of grounds upon which
the enforcement of awards may be refused”. It is true that under the New York Convention, courts
are only allowed to scrutinize procedural issues when making enforcement decisions (Art. V), yet
this Convention only sets forth standards for courts to scrutinize “foreign awards” or “non-domestic
awards” (Art. I), but is silent on the provision that may be applied to “domestic awards”. Thus
Professor Derains’ argument may not be correct in China or the like where a “dual-track regime” of
judicial review on arbitral awards is adopted, i.e., domestic awards and foreign awards are subject
to different standards of judicial review at the enforcement stage. More specifically, courts only
scrutinize procedural issues of foreign awards but will scrutinize both procedural and substantive
issues of domestic awards. According to Chinese law, the applicable law decision made by the
arbitrators in a domestic awards is clearly listed as an item of judicial review (Art. 213 Chinese Civil
Procedural Law of 1991 as revised in 2007). In the presence of such a “dual-track regime”, the
freedom of Chinese arbitrators in making applicable law decisions is seriously restricted, if it exists at
all. For a more detailed discussion of this issue, cf. Cliff CHI Manjiao, “Drinking Poison to Quench
Thirst: The Discriminatory Arbitral Award Enforcement Regime under Chinese Arbitration Law”, 39
(2) Hong Kong Law Journal (2009), 541 at 541-560.
34 Unif. L. Rev. 2010

VII. – CONCLUSION
Due chiefly to the fact that the Principles are non-binding in nature, that no
international convention on choice of law in contracts is in force, and that the

conflict-of-laws rules in different countries are far from uniform, it is impossible
to find a uniform standard in applying the Principles globally or even within a
single State jurisdiction. Rather, application of the Principles often seems
discretional, depending on the individual cases.
The application of the Principles in China has known both successes and
failures. On the one hand, there is no denying that the Principles have played an
important role in modernising Chinese contract law, mainly by their legislative
impact on the drafting of the CCL. Moreover, the Principles are also clearly
recognised by Chinese courts and have been considered or even applied by
courts not only as mere references and background law, but also as effective
applicable law absent parties’ explicit choice, notwithstanding China’s strict
conflict-of-laws rules.
On the other hand, there also exist some impediments that potentially
hinder application of the Principles in China. Firstly, application of the
Principles by virtue of party autonomy in China seems below par because of
China’s long-standing socio-economic and legal traditions, the restrictions on
party autonomy in the past and the extra formal requirements in choosing the
governing law of contracts. Secondly and more importantly, Chinese arbitration
is not sufficiently accommodating of the Principles since Chinese arbitrators do
not have sufficient freedom to make applicable law decisions in favour of the
Principles. This insufficiency appears particularly acute if we compare Chinese
arbitration as represented by CIETAC practice with international arbitration as
represented by ICC practice, and considering the fact that international
arbitrators are the major promoters of the Principles and that international
arbitration is the major forum for application of the Principles. Thus, the
“inability” of Chinese arbitrators not only constitutes a serious impediment to
the effective application of the Principles in China, but it also impairs the
attractiveness and competitiveness of Chinese arbitration at the global level.
The study also suggests that, in China, the Principles are mainly applied
and promoted by legislative and judicial practice rather than by party autonomy
and arbitral practice. This implies that the application and promotion of the
Principles in China depends heavily on State power (represented by legislators
and courts) rather than on private parties (represented by business persons and

Chi Manjiao
arbitrators). This is the natural result of China’s long years of strict economic
planning and its centralised political structure.
To make China a better destination for international business and
arbitration, the Principles deserve broader and more effective application.

However, previous experience of lawmaking and law reform shows that simply
transplanting the provisions of the Principles into Chinese contract law is not
enough to make China sufficiently accommodating of the Principles. China
would need substantially to improve its conflict-of-laws rules, particularly those
contained in Chinese arbitration law, to remove unnecessary restrictions on
party autonomy and to establish a more autonomous arbitration regime in
which arbitrators have more freedom in making applicable law decisions in
favour of the Principles. Moreover, China also needs to invest more trust in, and
give more freedom to, private parties and arbitrators in shaping and monitoring
contract relations.
Such a change may not be easy for China: at the nominal level, it would
involve a new round of legislative activity; at the essential level, it could mean
changes in China’s old socio-economic and legal traditions and in its
socio-political structure. Still, as China is sparing no effort to further its
economic reform and to participate in the globalisation process, it may yet see
its way to making such changes gradually, over time.

36 Unif. L. Rev. 2010

Application of Unidroit in China

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Application of Unidroit in China

Uploaded by

Copyright:

Available Formats

ARTICLES

Downloaded from https://academic.oup.com/ulr/article/15/1/5/1648330 by La Trobe University user on 14 February 2023

In recent decades, with the implementation of economic reform and an

Rev. dr. unif. 2010 5

adoption of the Contract Law of the People’s Republic of China of 1999

Downloaded from https://academic.oup.com/ulr/article/15/1/5/1648330 by La Trobe University user on 14 February 2023

II. – SITUATIONS IN WHICH THE PRINCIPLES MAY BE APPLIED

In the Preamble of the Principles, the visionary drafters suggest several

6 Unif. L. Rev. 2010

Downloaded from https://academic.oup.com/ulr/article/15/1/5/1648330 by La Trobe University user on 14 February 2023

Rev. dr. unif. 2010 7

Downloaded from https://academic.oup.com/ulr/article/15/1/5/1648330 by La Trobe University user on 14 February 2023

2. Application by adjudicators (courts or arbitral tribunals)

10 BONELL, An International Restatement …, supra note 4, at 181.

8 Unif. L. Rev. 2010

Besides, if the governing law (international or national) chosen by the parties is

Downloaded from https://academic.oup.com/ulr/article/15/1/5/1648330 by La Trobe University user on 14 February 2023

In a sense, such difference makes forum shopping an important factor for

19 Principles, Preamble, paras. 5 & 6..

Rev. dr. unif. 2010 9

Downloaded from https://academic.oup.com/ulr/article/15/1/5/1648330 by La Trobe University user on 14 February 2023

III. – APPLICATION OF THE PRINCIPLES IN CHINESE LEGISLATIVE PRACTICE

22 Principles, Preamble, para. 6.

10 Unif. L. Rev. 2010

development of Chinese contract law, particularly the drafting of the CCL.26

1. The development of Chinese contract law in a nutshell

Downloaded from https://academic.oup.com/ulr/article/15/1/5/1648330 by La Trobe University user on 14 February 2023

Rev. dr. unif. 2010 11

Downloaded from https://academic.oup.com/ulr/article/15/1/5/1648330 by La Trobe University user on 14 February 2023

31 JING Xi, supra note 2 at 109.

12 Unif. L. Rev. 2010

2. The positive impact of the Principles on Chinese contract law

Downloaded from https://academic.oup.com/ulr/article/15/1/5/1648330 by La Trobe University user on 14 February 2023

36 HUANG Danhan, supra note 2 at 116.

Rev. dr. unif. 2010 13

officials who used to be major law-makers in China.42 For instance, Professor

Downloaded from https://academic.oup.com/ulr/article/15/1/5/1648330 by La Trobe University user on 14 February 2023

3. Difference between Chinese contract law and the Principles

However positive and profound the impact of the Principles on Chinese

14 Unif. L. Rev. 2010

a smooth transition to a market economy.

Downloaded from https://academic.oup.com/ulr/article/15/1/5/1648330 by La Trobe University user on 14 February 2023

Rev. dr. unif. 2010 15

by local courts as “interests of State-owned enterprises”.51

Downloaded from https://academic.oup.com/ulr/article/15/1/5/1648330 by La Trobe University user on 14 February 2023

16 Unif. L. Rev. 2010

market economy”.54 In fact, the recent incorporation of the hardship clause

Downloaded from https://academic.oup.com/ulr/article/15/1/5/1648330 by La Trobe University user on 14 February 2023

IV. – APPLICATION OF THE PRINCIPLES BY VIRTUE OF PARTY AUTONOMY IN CHINA

China acknowledges party autonomy as a basic principle of contract law.55

1. Parties qualifying for autonomy in China

Under Chinese law, party autonomy is “monopolised” by parties to

54 HUANG Danhan, supra note 2 at 116.

Rev. dr. unif. 2010 17

mentality of businesspersons; Chinese contract law used to impose stringent

Downloaded from https://academic.oup.com/ulr/article/15/1/5/1648330 by La Trobe University user on 14 February 2023

2. Contracts to which the Principles may be applied in China

18 Unif. L. Rev. 2010

“foreign-related” or otherwise. According to the relevant SPC judicial

Downloaded from https://academic.oup.com/ulr/article/15/1/5/1648330 by La Trobe University user on 14 February 2023

3. Contracts exclusively subject to Chinese contract law

4. The status of the Principles within the Chinese legal order