CHINA Law and Practice Contributed by: Fubin Xiang, Xinyi Zhang, Mengmeng Wei and Lanmengyuan Zhang, W&H Law Firm
bunal fees may be high, and an award is final on the merits.
forum clauses are commonly used across all types of insurance policies, while disputes around forum clauses arise more frequently in property insurances rather than in life insurance. 2.3 Cross-Border Disputes and Conflicts Issues Conflicts of Jurisdiction Conflicts arise mainly through parallel proceedings. The Civil Procedure Law amendments effective from 1 January 2024 specified when a PRC court may stay proceedings and codified a discretionary forum non conveniens principle. This allows a Chinese court to decline jurisdiction where the dispute is more closely connected with, and more conveniently tried in, a for- eign court, provided that no PRC exclusive jurisdiction or agreed jurisdiction is engaged. However, in practice Chinese courts are rather cautious when applying this principle. Conflicts of Choice of Law Once jurisdiction is established, the court applies Chi- na’s conflict-of-laws rules, as mentioned previously. Where foreign law applies but cannot be ascertained after the required process, PRC law is applied instead. 2.4 Anti-Suit Injunctions PRC law does not contain a general anti-suit or anti- arbitration injunction regime equivalent to that found in some common law jurisdictions. Instead, the ordinary response to proceedings brought in China in case of breach of a valid exclusive jurisdiction or arbitration clauses is for the court to decline to hear the dispute, provided that the objection is properly raised. In practice, Chinese courts do have similar orders, called conduct preservation orders, under which Chi- nese courts have issued anti-suit orders and anti-anti- suit orders in practice. These orders can restrain a party from commencing or continuing proceedings abroad. Such practice began in the maritime courts and has since been extended to other disputes, such as intellectual property. However, this relief should not be treated as a routine remedy for enforcing every insurance forum clause. In an insurance or reinsur- ance dispute, the availability of such relief remains highly fact- and forum-specific.
2. Jurisdiction and Choice of Law 2.1 Choice of Law in Insurance Contracts For a purely domestic insurance or reinsurance con- tract, PRC law will govern, and mandatory PRC insur- ance and financial regulatory rules cannot be overrid- den by agreement. For cross-border insurance or reinsurance contract, party autonomy is generally respected. In the absence of a governing law choice, China adopts the “closest connection” test. Under Article 41 of the PRC Law on the Application of Laws to Foreign-Related Civil Relations, in case of lack of agreement, the governing law would be the law of the habitual residence of the party whose performance is most characteristic of the contract, or the law with the closest connection to the contract. For example, when liability insurance poli- cies are issued by Chinese insurers within the territory of China, even if the insured operates and the acci- dent occurs abroad, in the absence of agreements, PRC laws shall be applied to insurance disputes as the governing law. However, there are also exceptions. The “closest connection” test does not apply to legally mandated compulsory insurance. For example, cross-border compulsory motor vehicle traffic insurance manda- torily applies the law of the place where the accident occurs. In addition, where the application of foreign law would harm China’s public interests, PRC law must prevail. 2.2 Jurisdiction and Forum Selection Chinese courts generally respect written jurisdiction agreements. For domestic disputes, such agreements are valid only if statutory connection requirements are satisfied, and the agreement does not conflict with exclusive or hierarchical jurisdiction rules. For foreign- related civil disputes, the 2023 revision of the Civil Procedure Law, effective from 1 January 2024, per- mits parties to choose a PRC court in writing without the former “actual connection” requirement, but still subject to PRC exclusive jurisdiction rules. In practice,
66 I NSURANCE L I T IGATI O N 2026
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