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Oct. 14 – When doing business in China, many contracts need to also be written in Chinese. There is also usually an issue over arbitration in contracts between Chinese and overseas entities. It is usually typical – and often a legal requirement – for the contracts of joint ventures or construction design contracts for example, to be in Chinese as well as the language of the second party. This is reasonable; after all, the supplier or partner is located in China and Chinese is the official language.
However, if using English (or other) language original drafts, or even an English translation of a Chinese contract, it is wise to be aware that the Chinese language version, if only the Chinese contract is signed, takes legal precedence. That means that if the Chinese partner provides both copies, it is wise to obtain a third party verification of the Chinese language content. Most China-based firms will be able to provide this service for a small fee. It is also wise that when the final contracts are drafted (usually in both Chinese and English) that these are verified true translations by a China-recognized translation firm. Such firms are licensed by the Chinese authorities, and only they are authorized to provide certified true translations, they stamp the document as a certified translation.
It is not expensive, and again, most China-based firms will be able to provide this for you. Having such documentation can be valuable in the event of any future legal dispute; if you are in possession of a certified true translation then your legal argument in the case of any dispute concerning the exact wording of the contract is far more valid and has supporting documentation.
Richard Hoffmann is a senior associate in the Beijing office of Dezan Shira & Associates where he is a part of the business advisory services division. He has seven years experience in international and Chinese law. He can be contacted for China contractual issues at beijing@dezshira.com.
For construction related contracts, i.e. contracts with geotechnical investigation companies, design institutes and construction companies: When making a FIDIC-based contract, the actual contract will only be 3-4 pages, and in this contract is stated which other documents (tender documents, etc.) that also shall form part of the contract. Will it be sufficient to make the main contract in English and Chinese in order not to spend considerable time and money to translate the technical and contractual tender document (not to mention that the translation of these will increase the risk of errors due to translation) ?
If stating in the main contract document that disputes shall be settled in CIETEC, arbitration language shall be English and governing law shall be Chinese. It is furthermore stated that in case of differences in the translation the English version shall be followed. Will these precautions effectively solve the above problem regarding translation ?