Where should a contract dispute be filed?

Follow the agreed jurisdiction; absent agreement, the defendant's domicile or place of performance, and company-related disputes go to the company's domicile.

How long does litigation take?

First instance usually takes three to six months and can be extended for complex cases; arbitration is final but more expensive.

What should be prepared before suing?

Secure the contract, performance records, correspondence and loss evidence, and assess preservation and the counterparty's solvency.

Commercial Disputes and Litigation/Arbitration

AI company disputes cluster in four areas: shareholders and equity, contract delivery, financing transactions, and employment. The first question is not whether to litigate or arbitrate, but what the outcome has to achieve — a judgment, preservation of assets, leverage in negotiation, or time.

Choosing the route after a dispute starts is usually too late

Choosing the procedure and forum

Dispute resolution clauses are often ignored at signing and decide the cost when a dispute arrives. The difference between litigation and arbitration is not only the tribunal. Arbitration is final at first instance, not public, and enforceable across borders under the New York Convention. Litigation offers appeal and retrial, readier asset preservation, and comparatively controllable cost. Cross-border transactions and trade-secret matters usually lean toward arbitration; matters where the counterparty’s assets are domestic and rapid preservation is needed usually lean toward litigation. A vaguely drafted clause can trigger both a jurisdictional challenge and procedural delay.

Shareholder and equity disputes

The flashpoints are capital contribution, control and exit. Contribution deadlines, the validity of shareholder resolutions, the scope of information rights, and pre-emptive rights on transfer are the four most common grounds. The Company Law in force since July 2024 changed the allocation of risk: the timetable for paid-in capital, the procedure for depriving a shareholder of rights, and the transferor’s supplementary liability when transferring equity whose contribution period has not expired all warrant a review of existing articles and shareholder agreements.

Contract delivery and payment recovery

Contract disputes at AI companies usually concern delivery standards: whether model performance met the agreed metric, whether API availability and latency amount to breach, and how liability for substandard training data is allocated. The core issue is not the law but whether the contract turned acceptance criteria into measurable terms. The evidentiary difficulty at the litigation stage is largely fixed at signing.

Financing transaction disputes

The main category is obstruction in performing valuation adjustment and redemption obligations. A redemption arrangement between an investor and the target company is constrained in performance by the capital reduction procedure and the capital maintenance principle — often overlooked at signing and discovered to be unenforceable when asserted. The boundary of a founder’s personal redemption liability, the calculation basis for performance compensation, and the order of precedence when the investment agreement conflicts with the articles all need to be settled at the transaction-document stage.

Employment disputes

Employment disputes at AI companies sit at the intersection of options and the employment relationship: whether options constitute remuneration, how options are treated on departure, payment of non-compete compensation, and the burden of proof when terminating for performance. The amounts are usually modest, but outcomes shape expectations for similar disputes, so the approach needs to stay consistent.

Cost and tempo

The cost of a dispute is not only legal fees. Preservation guarantees, expert examination and audit, cross-border evidence collection, and management time often exceed the amount in dispute. A workable sequence is: establish the facts and assess liability before choosing a procedure; use a standard evidence template across similar claims to lower per-case cost; and where a commercial relationship still exists, substitute settlement or licensing for litigation. Procedure should not replace commercial judgment.