Enforceability of Contracts in China: Language Considerations

It's not uncommon for clients to ask me the following question: "I was told that I can only sign an agreement in Chinese to ensure its validity. Is that true?" The answer is no. 

You have the freedom to sign a contract in any language you prefer. In China, all contracts, regardless of the language in which they are drafted, are generally enforceable as long as their content is legitimate and they are duly executed.

However, it's important to understand that the purpose of signing a contract goes beyond binding parties to their obligations. Contracts also serve as written records of mutual agreements, which may be used in a courtroom someday to determine any breaches of the contract.

According to the laws of the People's Republic of China (PRC), only the Chinese language is allowed to be used in all PRC courtrooms. This means that although the court recognizes the content of a contract, it cannot be directly used in court unless it is translated by someone assigned by the court. 

Considering this provision, it is advisable to engage a trusted PRC lawyer to prepare a bilingual contract instead of relying on a court-appointed translator to translate a contract drafted in a foreign language.

Today's takeaway is: If you are conducting business in China and seek legal protection, it's highly recommended to prepare a bilingual contract and explicitly state that the Chinese version will prevail in case of any conflicts between the two versions.

Related provisions:

PRC Civil Code Article 465: "Any contract established in accordance with the law is protected by the law. Unless otherwise provided for by law, a contract concluded in accordance with the law shall be legally binding only on the parties thereto."

Civil Procedure Law of the PRC Article 262: "People's Courts trying foreign-related civil lawsuits shall use language or text commonly used in the People's Republic of China. Where a litigant requests for provision of translation, translation may be provided, and the expenses shall be borne by the litigant."