Dispute Process Choices Among Chinese Companies in the United States : Some Preliminary Data and Analyses

This Article reports the first ever empirical study of how Chinese- owned businesses in the United States utilize contract clauses to choose dispute processes. As a large and recent source for foreign direct investment in the United States, China presents an interesting case study of whether foreign owned businesses replicate American dispute resolution process choices (e.g., whether contracts include arbitration clauses or not) when disputes arise within the United States. This study also offers a window into the continuing scholarly and practical questions of whether American courts (or other arenas) are considered "biased" against foreign litigants. Using data from a comprehensive survey of Chinese firms operating in the United States, we explore a number of factors, such as state ownership, business sector type, and size of U.S. investment, that might influence whether Chinese-owned companies prefer arbitration or litigation in disputes arising in the United States. We find several factors to be correlated with the presence of arbitration clauses m Chinese business contracts: sensitivity to costs and fees, access to corporate internal legal advice, views about judicial fairness, and preference for U.S. lawyers with Chinese backgrounds. While filling important knowledge gaps, this study also raises several novel questions for further consideration: whether there are changes in contract terms and dispute process choices post recent trade issues in China-US relations, the extent to which Chinese-owned businesses are either sui generis or similar to other foreign businesses in the United States, and, as will be reviewed in this article, whether changing dispute process choices within China are influencing choices Chinese businesses make when they operate abroad