Doing business internationally can often be an enriching venture, yet it sometimes poses challenges, especially when dealing with Chinese suppliers. Issues such as breaches of contract, delayed deliveries, or subpar quality of goods are not uncommon. When amicable solutions fail, legal action may become necessary. Here’s a detailed guide on how to sue a supplier in China and what the process entails.
Understanding Jurisdiction in Chinese Courts
The first step in initiating a lawsuit is establishing the jurisdiction of local courts. This ensures that your case is filed in the correct court, which has the authority to decide on your matter. Generally, this involves two scenarios:
- The court at the defendant’s domicile or main business location usually holds jurisdiction over civil or commercial disputes.
- Alternatively, jurisdiction may belong to the court where the contract was signed or performed.
However, exceptions exist, such as valid arbitration clauses in contracts or labor disputes requiring arbitration before court proceedings. Additionally, criminal elements in a case may transfer jurisdiction to police or prosecution departments.
Real-World Application
If a U.S. company faces issues with a supplier based in Shanghai, they would typically file their case in a Shanghai court unless an arbitration clause dictates otherwise.
Did You Know?
Each Chinese province may have unique rules for foreign-related cases, emphasizing the importance of consulting with a Chinese lawyer.
Preparing Your Case
Preparation is crucial when suing a supplier in China. Key steps include:
- Notarization and Verification: All documents must be notarized locally and verified by the Chinese Embassy or Consulate.
- Evidence Collection and Translation: Evidence must be translated into Chinese and notarized if originating outside mainland China.
- Asset Information Gathering: Knowing the defendant’s assets can aid in asset preservation orders during litigation.
Practical Tip
The time required for these preparations largely depends on completing notarization and verification processes in your home country.
The Litigation Process
Commencement of Litigation
The journey through litigation begins with pre-hearing procedures, including filing your case and potentially freezing the defendant’s assets if you have relevant information. Court fees must be paid within seven days once your case is accepted.
Trial of First Instance
If no settlement is reached, the trial typically concludes within six months from commencement, encompassing notices to defendants, evidence submission, hearings, and judgment issuance.
Appeal Process
Dissatisfied parties can appeal first-instance judgments to higher courts, potentially extending proceedings by 6-9 months.
Enforcement Stage
If a winning judgment is ignored by the opposing party, you can apply for enforcement within two years from the judgment’s execution deadline. Recognition of foreign judgments is possible under certain conditions.
Fun Fact
The Chinese legal system follows a two-instance trial system, meaning many judgments are not final until after an appeal.
Frequently Asked Questions
- Required Documents: Companies need original copies of complaints, power of attorney, certificates of incorporation, and all evidence related to the case. These should be notarized and validated by relevant authorities.
- Lawsuit Costs: Expenses include notarization fees, translation costs, litigation costs (case acceptance and application fees), and potential asset preservation fees.
- Available Remedies: Compensation often includes interest; punitive damages are rare except in cases like consumer fraud or unlicensed food production.
- Court Appearance: You can appoint a local Chinese lawyer to represent you without needing to appear personally in court.