The 2023 amendment to the Civil Procedure Law (CPL) marked a major shift in PRC jurisdictional practice. The old requirement that a chosen PRC court must have an “actual connection” to a dispute has been removed, giving parties greater freedom to designate PRC courts in contracts. However, the concept of a “substantial connection” still plays a pivotal role, particularly when it comes to asymmetric jurisdiction clauses, where one party enjoys broad forum choice while the other is limited to a single PRC forum. In practice, PRC courts now exercise judicial oversight, assessing whether clauses are reasonable and do not contravene public policy, procedural fairness, or the rights of the weaker party.
Anatomy of the “Substantial Connection” Test
Prior to the 2023 CPL amendment, the legal standard required an actual nexus between the dispute and the chosen court. Courts relied on traditional connections such as the domicile of parties, place of contract performance, or location of the subject matter. These criteria functioned as a gatekeeper for jurisdictional validity, ensuring that PRC courts only accepted cases with a tangible local connection.
With the introduction of Article 277 in the amended CPL, the focus shifted from actual connection to party autonomy. Parties can now select a PRC court for foreign-related civil disputes regardless of whether the case bears a direct link to that court. While this represents legislative liberalization, it does not eliminate judicial oversight. Asymmetric jurisdiction clauses (AJCs), in particular, remain under close scrutiny.
AJCs — such as contracts allowing Party A to sue anywhere but restricting Party B to one PRC forum — trigger heightened judicial attention. Courts examine whether the imbalance undermines procedural fairness or creates an unreasonable disadvantage for one party. Although formally permitted under the CPL, these clauses are assessed for substantive fairness and connection to China to avoid creating oppressive outcomes.
Judicial Treatment of Asymmetric Clauses
PRC courts balance respect for contractual autonomy with the principle of procedural fairness. While the legislature favors freedom of contract, judges remain alert to clauses that create an extreme imbalance. The standard is not simply whether the parties agreed to a forum but whether enforcing that clause would produce an unjust result for the party with limited choice.
In practice, courts evaluate the appropriateness of the chosen forum, particularly in foreign-related or cross-border disputes. Factors such as the location of contract negotiation, the domicile of the parties, and performance-related activities in China influence judicial reasoning. Courts may uphold AJCs if the disadvantaged party has explicitly consented, or they may intervene if the clause significantly impairs procedural fairness.
The 2026 revisions to the PRC Arbitration Law further clarify the nexus between asymmetric clauses and arbitration. Courts now scrutinize attempts to bypass AJCs through arbitration, ensuring that parties cannot evade asymmetric provisions simply to gain procedural advantage. Fairness and connection to China remain central to judicial assessment.
When is a Connection “Substantial”?
The assessment of whether a connection is “substantial” depends on several practical factors. While no single factor is decisive, courts typically weigh the following:
| Factor | High Connection Strength | Low/Weak Connection |
|---|---|---|
| Domicile | Principal place of business in China | Representative office only |
| Performance | Payments or performance routed through PRC entities | Purely offshore execution |
| Subject Matter | Assets located in PRC or tangible use rights in China | IP or services outside China only |
| Negotiation | Contract negotiated or signed in China | Remote electronic signature only |
This matrix illustrates how courts assess the substantive connection beyond formal contractual language, reflecting the judicial instinct to protect fairness and maintain appropriate ties to the forum.
Strategic Drafting Recommendations
Generic clauses like “any court of competent jurisdiction” are vulnerable under asymmetric scrutiny. Drafting should anchor jurisdiction in a tangible PRC connection to reduce enforcement risk. When drafting AJCs, secure explicit acknowledgment from the non-option holder. A standalone “Jurisdiction Acknowledgment” can mitigate challenges based on unfairness or procedural imbalance.
Selecting a neutral forum with no PRC connection is permissible only when the dispute qualifies as foreign-related. Without a clear foreign-related nexus, courts may question the enforceability of the clause, particularly if it disadvantages one party.
While legislative reforms have expanded party autonomy in forum selection, the “substantial connection” test remains a vital judicial tool. PRC courts continue to assess fairness, reasonableness, and public policy concerns, particularly in asymmetric arrangements. For practitioners, understanding how judges evaluate connection strength is essential for drafting enforceable clauses and mitigating risk. As China increasingly embraces international litigation standards, the interplay between party autonomy and judicial oversight will remain a defining feature of PRC civil procedure.