The Intersection of International Trade and Domestic Law: UK-China Commercial Contracts and Regulatory Compliance

By Natalie Popova, Legal Consultant | Express Law Solutions

Disclaimer: This article is for general information only and does not constitute legal advice. For specific guidance, contact Express Law Solutions.

Cross-border UK-China commercial contracts present complex legal and regulatory challenges. Companies must navigate the intersection of domestic English law with distinct Asian legal frameworks, particularly concerning cross-border trade regulation, enforceability, dispute resolution, intellectual property, and sector-specific compliance.

These issues are especially significant in the global trade of supplements, cosmetics, and textiles compliance. These sectors are highly regulated, with diverse supply chains and strict product safety requirements. Non-compliance can lead to enforcement actions, product seizures, financial penalties, reputational damage, or even unenforceable contracts.

This article examines the legal frameworks governing such transactions, including UK legislation, PRC law, and comparative Asian jurisdictions. It explores practical considerations for drafting, executing, and enforcing cross-border agreements in these high-risk sectors, with emphasis on international arbitration enforcement.

The UK Legal Framework

English contract law, private international law, and trade legislation provide the foundation for cross-border agreements.

Rome I Regulation (2009) governs applicable law in contractual obligations. English law is widely chosen for its clarity, neutrality, and developed jurisprudence.
The Sale of Goods Act 1979 sets implied terms such as merchantable quality and fitness for purpose.
The Unfair Contract Terms Act 1977 restricts unreasonable exclusion clauses.
The Protection of Trading Interests Act 1980 shields UK traders from prejudicial extraterritorial laws.
Incoterms (ICC 2020) define delivery, risk allocation, customs obligations, and insurance responsibilities.
The Trade Act 2021 empowers the Trade Remedies Authority to investigate anti-dumping and safeguard measures.

Arbitration clauses are strongly recommended (ICC, SIAC, HKIAC), since enforcement in Asia may be difficult in national courts.

Regulatory Regimes in Key Sectors

Dietary Supplements and Foods

Governed by the Food Supplements (England) Regulations 2003 and retained EU Regulation (EC) No. 1924/2006 on nutrition and health claims.
Food Information Regulations 2014 require accurate labelling of ingredients, allergens, and nutritional content.
Imports from Asia must comply with UK border controls under the Official Controls (Animals, Feed and Food) Regulations 2009.
Contracts should include supplier warranties confirming compliance with UK law and international safety standards.

Cosmetics

Governed by the UK Cosmetics Regulation (SI 2019/696), based on EU Regulation (EC) No. 1223/2009. Obligations include product safety assessments, notification to the Office for Product Safety and Standards, and bans on misleading claims.
The Cosmetic Supervision and Administration Regulation (CSAR 2021) applies in China. Contracts should ensure compliance with both UK and Chinese rules.

Textiles and Apparel

The Textile Products (Labelling and Fibre Composition) Regulations 2012 mandate disclosure of fibre content.
The Consumer Protection Act 1987 applies to all imported products.
The Modern Slavery Act 2015 requires supply chain due diligence. Contracts should include ethical sourcing clauses and audit rights.

Risk Allocation in Cross-Border Contracts

Quality Control & Inspection Rights: Contracts should grant UK buyers inspection rights and require third-party certificates (SGS, Intertek).
Intellectual Property: Trademarks should be registered in both the UK (Trade Marks Act 1994) and China to prevent counterfeiting. Contracts should prohibit unauthorised use of branding.
Dispute Resolution: International arbitration is vital. China is a party to the New York Convention 1958, which ensures enforceability of arbitral awards, though enforcement may face obstacles.
Force Majeure: Contracts must address geopolitical risks, pandemics, and shipping disruptions. Clauses should define liability clearly under both UK and PRC law.

The Chinese Legal Framework

The PRC Civil Code (2021) (Book III: Contracts) regulates contract law, replacing earlier statutes. Contracts require the official company seal (“chop”) for enforceability.
Chinese law recognises freedom of contract but restricts it by public policy and mandatory rules.
Choice of Law: Foreign-related contracts may select governing law, but agreements substantially performed in China are often subject to mandatory PRC law.
Arbitration: Foreign arbitration clauses are enforceable if they designate institutions such as ICC, SIAC, or HKIAC. Awards are enforceable under the New York Convention, though Chinese courts may reject them on public policy grounds.

International and Comparative Context

Both the UK and China are WTO members. WTO agreements, such as TRIPS and the Anti-Dumping Agreement, directly influence contracts and dispute settlement strategies.
Incoterms 2020 remain central in allocating risk. Terms such as FOB Shanghai or CIF London significantly alter liability for freight and insurance.

Other Asian jurisdictions:

Singapore: A common law jurisdiction with SIAC as a strong arbitration hub.
Hong Kong: Operates under “one country, two systems” with HKIAC as a leading arbitration forum.
Japan: Civil law jurisdiction with strong enforcement of arbitration awards.
India: Common law heritage, but enforcement delays are common. Arbitration clauses (SIAC, LCIA India) are advisable.

Risk Mitigation in Drafting

Effective contracts should include:

Compliance Warranties: Suppliers must warrant conformity with UK and PRC product laws.
Inspection Rights: Independent verification (SGS, Intertek) and mandatory certificates of conformity.
Intellectual Property Protection: Trademarks registered in both jurisdictions, prohibiting counterfeiting and parallel imports.
Force Majeure Clauses: Carefully drafted to align with both UK and PRC law.
Ethical Compliance: Supply chain transparency clauses under the UK Modern Slavery Act 2015.

Conclusion

The regulation of UK-China commercial contracts is shaped by divergent legal systems, sector-specific frameworks, and international obligations. While English law provides contractual certainty, PRC law imposes mandatory rules and procedural requirements, such as the use of the company seal.

Businesses that align contractual drafting with both UK and Chinese requirements can avoid regulatory penalties, reputational risks, and unenforceable obligations. Robust dispute resolution clauses and strong compliance mechanisms enable companies to build sustainable and resilient trade relationships across Asia.

Need help? At Express Law Solutions, we review, draft, and negotiate contracts to ensure they’re fair, clear, and enforceable.

References

Contracts (Applicable Law) Act 1990, c.36 (UK)
Sale of Goods Act 1979, c.54 (UK)
Unfair Contract Terms Act 1977, c.50 (UK)
Protection of Trading Interests Act 1980, c.11 (UK)
Trade Act 2021, c.10 (UK)
Civil Code of the PRC, Book III (Contracts), 2021 (CN)
SAMR “Company Seal Administration Measures” (2020) (CN)
PRC Law on the Application of Laws to Foreign-Related Civil Relations (2011) (CN)
New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958
Food Safety Law of the PRC, 2015 (amended 2021) (CN)
Cosmetic Supervision and Administration Regulation (CSAR), 2021 (CN)
World Trade Organization: TRIPS Agreement, 1994
International Chamber of Commerce: Incoterms 2020
Trademarks Act 1994, c.26 (UK)