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English law is highly suitable for Chinese companies venturing abroad, as it covers a broad spectrum of commercial activities, including contracts, insurance, shipping, maritime law, and corporate dispute resolution. In a recent interview, the President of the Law Society of England and Wales highlighted this point.
When Chinese enterprises expand into regions such as Southeast Asia, the Middle East, or Africa, they often face legal systems that are vastly different from China’s. In some countries, legal proceedings can drag on for many years, sometimes nearly a decade, making it challenging for Chinese investors to safeguard their rights effectively.
To address these risks, companies can specify in their contracts which country’s legal system will govern the agreement. While Chinese firms generally prefer Chinese law, their foreign partners are typically unfamiliar with it and hesitant to accept it. In such cases, English law is often seen as a neutral and trustworthy compromise that both parties can agree upon.
The widespread adoption of English law stems from Britain’s historical role in international trade, finance, shipping, and insurance. Consequently, many businesses involved in cross-border commerce favor English law and commonly choose London as their dispute resolution hub, even when neither party is based in the UK.
For instance, a Chinese company might sign a contract with an Argentine firm that states any future disputes will be handled through arbitration in London under English law. Such arrangements are quite common in international business activities.
English law now governs approximately 80 percent of global maritime transactions, 85 percent of international oil and fats trading, 80 percent of global grain trading, and 40 percent of international corporate arbitration cases worldwide.
Several UK-based law firms have established offices in Shenzhen to assist companies in the Greater Bay Area with their global ambitions. Their clientele includes state-owned enterprises and technology firms. While advising on UK investments is only a small part of their services, most of their focus is on helping Chinese companies access international markets.
The expansion of Chinese law firms into the UK is seen as a mutually beneficial development. The presence of foreign law firms in London and the UK can grow the legal services market, attract foreign investment, and draw more international corporations.
The UK legal market is quite open, with more than 200 foreign and international law firms currently operating within the country. The Law Society encourages Chinese lawyers to study English law and gain legal qualifications in the UK.
During a recent visit to China, the President of the Law Society spoke with law students from four universities about the possibility of becoming dual-qualified as both Chinese and UK lawyers. This dual qualification would allow them to advise Chinese companies on British law while doing business abroad.
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