How can we mitigate the risk so the terms of the acquisition or investment agreement will not be enforceable in China?

My qualifications are in the US. I can say that your concern is a common one and well-founded. I know Americans who have been doing business in China for years. It would make sense for you to contact one of them.

Dear Sir, Thanks for your message. Basically, we suggest a proper dispute settlement clause shall be added and reviewed by both Chinese lawyer and US lawyer, so that we make sure that the Chinese court will not have any jurisdiction over the dispute settlement between two parties.

I have lived in China for the last 11 years and have 25 years of experience doing business here, first a lawyer and then an investment banker. I have found that it is the structuring of the deal that is critical, not the legal provisions. That is, whatever the courts and laws used, you must still enforce the agreement where the Chinese side has assets. Most Chinese developers have limited assets in the U.S., so even if you get a court judgment in the U.S. against Chinese parties with no assets in the U.S., you would still need to go to China to enforce the judgment. There are steps you can take to enhance your ability to enforce contractual provisions, but I find it better to structure the deal so that you have constant leverage on the Chinese partner to timely perform its obligations. You should also keep in mind that last year the Chinese government imposed significant restraints on the ability of Chinese to invest in a number of opportunities overseas, including real estate development projects.

Thanks for your question. Are you asking how you can “prevent” the terms of the agreement from being enforceable in China? Or rather how you can make the Agreement enforceable in China? Developers are usually interested in the second question because they want to make sure they can force the Chinese party to do what it has agreed to do.