Dispute Resolution in China in the Post-Pandemic Era: With a Focus on International Construction Dis

Dispute Resolution in China in the Post-Pandemic Era: With a Focus on International Construction Disputes and Guarantee Disputes

后疫情时代中国争议解决现状：聚焦国际工程与保函类纠纷

The Current State of Litigation and Arbitration in China: Impact of the Post-Pandemic Era

中国诉讼与仲裁的现状：后疫情时代的影响

The pace of cross-border investment projects has generally slowed down due to the impact of the pandemic. However, according to public data, Chinese enterprises have continued to see growth in both the value of newly executed construction contracts and the completed turnover in overseas engineering projects from January to September 2024.

受疫情影响，跨境投资项目趋势总体放缓；但数据显示，2024年1至9月中国企业对外承包工程新签合同额及完成额仍呈增长趋势。

Amidst the uneven global economic recovery and rising international conflicts, performance risks associated with international engineering projects have significantly increased, leading to a surge in engineering disputes and bank guarantee-related conflicts. A significant increase in dispute resolution cases following the pandemic has been shown by public data from Chinese courts and arbitration institutions. Among the arbitration cases handled by Chinese main arbitration institutions (eg, the China International Economic and Trade Arbitration Commission (CIETAC) and the Beijing Arbitration Commission (BAC)), the average annual growth rate of construction contract disputes has surpassed 90%.

目前全球经济复苏不均衡、国际冲突频现，国际工程项目的履约风险明显上升，工程争议、保函类纠纷不断涌现。法院、仲裁机构公开数据显示，疫情后争议解决案件的数量快速攀升。在中国主流仲裁机构（如贸仲、北仲）受理的仲裁案件中，建设工程类案件的年均增幅超过90%。

The Current State of International Construction Disputes and Guarantee Disputes in the Post-Pandemic Era

后疫情时代，中国国际工程与保函纠纷现状

In international construction projects, contractors are typically required to provide demand guarantees to the employers and further ensure that these guarantees remain valid and enforceable until the contractors have fulfilled their contractual obligations. Given the lengthy timeline and multitude of performance-related facts as well as challenging and complex dispute resolution proceedings, once a dispute arises, the beneficiary often leverages the “pay first, argue later” mechanism of the demand guarantee to claim payment. This is done with the aim of gaining an advantage in the subsequent handling of the project. Under these circumstances, guarantee disputes become a crucial battleground for both parties, directly shaping the strategy for handling construction contract disputes and potentially leading to parallel litigation.

国际工程项目中，承包商通常需向业主提供见索即付保函，以担保其在合同期限内的履约义务。由于国际工程案件周期跨度长、涉及大量履约事实，争议解决复杂，因此，一旦争议发生，一方往往会利用保函“先赔付，后争议”的机制索兑保函，以期在后续项目处理中占据优势。在这种情况下，保函纠纷案件将成为双方的必争之地，其走向直接影响工程合同纠纷的处理方案，并与后者形成平行诉讼的局面。

Characteristics and Risks of Independent Guarantees

独立保函的特征与风险

Based on the pay-on-the-first-demand nature of guarantee, the payment is made by the issuer of the guarantee (usually the bank) immediately upon receiving the demand of the beneficiary (usually the employer of the project) once a complying presentation is made, irrespective of whether the underlying contract (i.e., the construction contract) has been duly performed. Therefore, it is challenging for an applicant (usually the contractor) to resist payment under the demand guarantee.

基于保函见索即付的特点，保函开立人（银行）在受益人（业主）提交表面相符的单据时即需付款，而不论基础合同（即工程合同）履行情况。保函申请人（承包商）试图止付保函的难度很高。

From the contractor’s standpoint, once a demand guarantee is claimed, a substantial sum must be paid to the employer before the underlying contract dispute is resolved, placing the contractor at a disadvantage. To mitigate this risk, contractors are advised to place significant emphasis on the stages of issuance, amendment, claim and suspension of the payment. Specifically, it is suggested to link the guarantee’s terms to the underlying transaction properly, establish certain documentary requirements, and strategically leverage the court’s limited review of the underlying contract to protect their interests. From the employer’s perspective, it is advisable to avoid linking the guarantee’s payment terms to the underlying contract as much as possible, thereby ensuring the guarantee remains independent and is solely related to the presentation of documents.

从承包商角度，保函一旦被索兑，意味着在基础合同纠纷未解决前，巨额款项需先行支付给业主，承包商将处于不利地位。为避免这一风险，在保函开立、修改、索赔和止付等阶段，承包商均应提高重视，将保函文本适当与基础交易相联、设定特定单据性义务、巧妙利用法院仅对基础合同作有限审理等方式，达到维护己方权益的目的。从业主角度，应尽量避免保函的支付条件与基础合同挂钩，保证保函的独立性和单据性。

Judicial Practice of Guarantee Disputes in China

中国保函类纠纷的司法实践

In Chinese judicial practice, disputes over guarantees primarily include issues related to the terms of the guarantee (such as issuance, payment, and transfer) and fraud-related disputes. In terms of judicial approach, the independence of guarantee is acknowledged as Chinese law respects international rules, ie, the “Uniform Rules for Demand Guarantees” (ICC Publication No 758). The courts typically first decide on whether the disputed guarantee is independent, then confirm the type of dispute and jurisdiction, before proceeding with any substantive examination. In cases of alleged fraud related to guarantees, Chinese courts conduct a limited review of the performance of the construction contract to determine whether a fraud exception exists that would justify stopping the payment.

在中国司法实践中，保函纠纷主要包括保函条款相关（开立、付款、转让等）及欺诈两类争议。在裁判思路上，中国法尊重国际商会第758号出版物《见索即付保函统一规则》等国际规则，认可保函的独立性。法院通常会先审理保函是否具备独立性，确认争议类型和管辖，再进行实体审查。对于保函欺诈案件，还会对基础合同的履约情况进行有限审查，判断是否存在欺诈止付的例外。

Dispute Resolution Mechanisms and Responses to Cross-Border Guarantee Disputes

跨境保函纠纷的争议解决机制与应对

As discussed above, due to the documentary and independent nature of demand guarantees, employers typically claim the guarantee as a first resort in construction disputes, which enables them to swiftly secure funds and gain leverage in negotiations. In a worse scenario, even if a project is suspended due to force majeure events (eg, war), employers may invoke the “extend or pay” clause to request an extension of the guarantee. If the contractor refuses, the employer may proceed to claim the demand guarantee directly.

如前所述，基于保函的单据性和独立性，当出现工程争议时，业主通常将索赔保函作为第一手段，以期快速获得资金及谈判主动权。甚至在工程因战争等不可抗力因素而暂停的情况下，业主亦可能利用或延或付条款，要求承包商延期保函，遭到拒绝则可直接索赔。

If a contractor believes the employer is not entitled to the payment under the guarantee, the commonly employed countermeasures include: (1) applying for an interim relief/filing a fraud lawsuit to suspend/terminate the payment; (2) initiating dispute resolution procedures under the construction contract, claiming damages for employer’s breach. By way of Approach (1), the payment could be suspended in a short time, but the standard of proof to establish fraud is highly challenging in the substantive review stage. It is necessary to prove the employer’ s intent to commit fraud, which involves a clear abuse of the right to claim. This can include fabricating documents, inventing transactions, or demanding payment while knowingly lacking the right to do so. Appropriate evidence should be combined with the performance status of the underlying contract to substantiate the claim. Approach (2), which involves seeking arbitration or litigation, typically requires a considerable amount of time and may not achieve the immediate suspension of payment under the guarantee. However, it can ultimately provide a comprehensive resolution to the dispute.

若承包商认为业主无权索赔保函，常用的应对手段包括（1）提起保函临时救济措施/欺诈诉讼，中止/终止支付保函款项；（2）提起工程合同项下争议解决程序，主张业主违约。其中（1）能达到即时中止保函付款的效果，但在实体审理阶段证明难度很高，需证明业主具有欺诈故意，即明显滥用索赔权的情形，如虚构单据、虚构交易、明知无权索兑款项而索兑，需适当结合基础合同的履行情况证明。（2）通常耗时较久，难以达到即时中止保函付款的效果，但可最终一揽子解决争议。

It is clear that no single measure can achieve both the immediate suspension of payment and the ultimate resolution of the dispute. Therefore, international construction cases often involve multiple concurrent litigation or arbitration proceedings. These may include litigation over guarantee disputes and arbitration related to the construction contract. In cases involving counter-guarantees, there may also be parallel litigation proceedings concerning guarantees. Additionally, there might be dispute resolution procedures related to subcontract agreements.

由此可见，任一单独手段均无法达到既即时止付、又最终解决争议的效果，因此国际工程案件中通常存在多个同时进行的诉讼/仲裁程序，包括保函纠纷诉讼、工程合同仲裁；在转开保函的情形下，还可能存在多个平行的保函纠纷诉讼；甚至分包合同的纠纷解决程序。

In such situations, the key to securing a comprehensive victory lies in effectively coordinating and integrating the various legal proceedings, thereby fully leveraging each process to serve our interests.

在这种情况下，如何在统筹协调各个司法程序的基础上，充分利用各程序为己方服务，将成为全面胜诉的关键。

Conclusion

总结

In the context of the instability of the global economy and the shifting legal landscapes, international construction and guarantee disputes are on the rise. When addressing related disputes, it is essential to comprehensively consider the impact of parallel litigation across multiple jurisdictions and legal processes. Balancing the interests between various cases and strengthening the management of cross-jurisdictional matters is crucial to ultimately achieving commercial objectives.

当前全球经济动荡、法律环境变化，国际工程和保函类案件频发。在处理相关争议时，需综合考虑多法域、多程序的平行诉讼影响，平衡各案件间的利益关系，同时加强跨法域案件管理，以最终实现商业目标。