Roman Shabrov spoke at a round table at the Moscow Chamber of Commerce and Industry with a report on “Foreign Trade Contracts with Companies from China: Conditions and Options for Protection from Violations”

On March 18, 2025, Roman Shabrov, an attorney and partner at the BRACE Law Firm, spoke at the round table of the Guild of Trade and Services Enterprises of the Moscow Chamber of Commerce and Industry “Effective Ways to Deal with Violations of Contractual Obligations” with a report on the topic “Foreign Trade Contracts with Companies from China: Conditions and Options for Protection from Violations.”

As part of his report, Roman pointed out the main challenges that Russian businesses face when interacting with Chinese businesses, namely: international settlements (blocking payments, compliance with Chinese banks), the impossibility of protection in case of violations, errors in drafting contracts, price increases at the stage of contract execution, and a number of others.

Among the violations on the Chinese side, the most common are failure to meet delivery deadlines, a high percentage of defects, deterioration in the quality of goods after the first deliveries, incorrect labeling and a number of other violations.

As Roman noted, when drafting contracts, it is necessary to take into account the complexity of regulating foreign economic relations with China. In this case, the main sources of regulation include:

• National law of Russia.
• National law of the PRC, including traditional (old) law of mainland China. The Chinese themselves describe Chinese law as a "socialist legal system with Chinese characteristics" (中国特色社会注意法律体系).
• Law of Hong Kong, Macau and Taiwan if the company is registered in these jurisdictions.
• Vienna Convention of 1980.
• Protocol on General Terms and Conditions for the Delivery of Goods from the USSR to the People's Republic of China and from the People's Republic of China to the USSR (signed in Beijing on 13.03.1990).
• Bilateral and other international treaties to which the Russian Federation and the PRC are parties.

In addition to all other conditions that must be reflected in a foreign trade contract with counterparties from China, Roman separately noted the delivery basis according to Incoterms, the subject of the contract, the cost of the goods and terms of payment, quality requirements, applicable law and dispute resolution authority, the term of the contract and the term of performance (delivery), the name and addresses of the parties, signatories, force majeure and other standard conditions.

The main mistakes in drafting a contract include the use of a contract form that does not comply with Russian legislation; a contradiction between the Chinese, English and Russian versions; a contradiction between the delivery method according to Incoterms and other terms of the contract; lack of dispute resolution mechanisms or impracticability of these mechanisms, including quality disputes.

In order to minimize legal risks, the contract must provide for shipping dates, as well as specify a penalty for failure to fulfill them, agree on all delivery details, provide for control of the production process and the quantity of manufactured products, take into account production deadlines and the time for fulfilling orders, and provide for a number of other conditions.

Roman Shabrov also touched upon the issue of choosing dispute resolution bodies in contracts between Russian and Chinese companies. The main risks and features of dispute resolution between Russian and Chinese companies in the ICAC at the RF CCI, the China International Economic and Trade Arbitration Commission (CIETAC), the Hong Kong International Arbitration Centre (HKIAC), other international commercial arbitrations, arbitration courts of the Russian Federation, as well as state courts of the PRC were covered. The conditions and options for judicial protection against breaches of contracts with Chinese companies were considered.

 Presentation of the report.

Link to news from the Moscow Chamber of Commerce and Industry: https://mostpp.ru/news/podderzhka-predprinimatelstva/gramotno-sostavlennye-dogovory-pomogayut-izbezhat-problem-ubytkov-i-dazhe-bankrotstva/