Contract law interpretation to help foreign companies

The Supreme People's Court has issued a new and wide-ranging judicial interpretation of the PRC Contract Law which provides more certainty for foreign companies signing contracts in China.

The Interpretation on Several Issues Concerning the Application of the «PRC Contract Law»(2) (关于适用〈中华人民共和国合同法〉若干问题的解释（二）) was issued on May 13 2009. It aims to clarify some of the vague or controversial clauses of the existing Contract Law, which took effect on October 1 1999, and applies to all new contracts and any disputes which arose after 1999 for which no final court judgment has been rendered.

Lawyers say foreign companies will find comfort in Article 4 of the interpretation, which says that the court should consider the place of signing agreed by the parties as the place of signing in a legal sense, even if the contract is actually signed in another location.