According to the Law on Choice of Law for Foreign-related Civil Relationships, the parties of a contract can choose the applicable law only when the contract contains foreign elements. At the samed im time, according to China’s current judicial practice, the parties may agree to resolve the dispute through a foreign arbitration centre when the contract contains foreign elements.
Otherwise, a people’s court is likely to consider the ruling of a foreign arbitration centre invalid, or refuse to recognize the terms made by foreign arbitration institutions because the contract concerned does not contain foreign elements.
Therefore, parties of the concerned contract when choosing the relevant law and arbitration institution should first consider whether the contract has foreign elements.
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