“When the defendant in a court case, a state-owned enterprise, fails to provide the evidence requested by the court, and yet still wins the case, there has clearly been a fundamental breakdown in the process,” Mr Mason said.

“The decision appears to be in violation of a number of the articles in the recently released draft of the Foreign Investment Law.”

Mr Mason, a former head of Cochlear in China, said the company will appeal the decision and is being assisted by the Australian Embassy in Beijing.

While China’s courts are notoriously biased against those who threaten the Communist Party, there had been some movement towards making commercial disputes more independent.

Growing criticism

The complication for Orcoda is that China Mobile, while listed in Hong Kong, is controlled by the party and therefore any judge would be brave to rule against it.

Orcoda, a software company with a market value of just $18 million, is not the first Australian company to have difficulty getting paid in China.

The ASX-listed gas producer Sino Gas & Energy had long periods of not getting paid by its state-owned customers and then last year accepted a $530 million takeover bid, partly due to the risks of doing business in China.

In response to growing criticism around the difficulty for foreign companies operating in China, Beijing released new draft laws late last year.

Under the proposed legislation the government pledged to provide equal treatment for foreign investors while providing greater intellectual property protections.

The laws pledged to “set up and improve the mechanism facilitating foreign investment” and to create an “open, fair and transparent” business environment for foreign companies.

The changes are part of Beijing’s efforts to avert further US tariffs on Chinese goods, as US President Donald Trump threatens to step up his trade war.

He has accused Beijing of stealing intellectual property from US companies and forcing them to hand over the technology in order to access the mainland market.

“We have been ripped off by China for a long time,” Mr Trump has often said.

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