Civil litigation in China

Have you been involved in civil litigation in the Chinese courts? What was your experience?

Answer

Dan Harris is the go-to-guy on questions about the legal system in China (his blog has the unique ability to make sense of the complex Chinese legal system) has helped me sort out more than a few suppliers who have violated my contact terms regarding lead times, non-compete and/or intellectual property. I’m not sure if I have been lucky, simply well prepared, or perhaps I started with very low expectations, but my experience overall has been pleasantly surprising (knock on wood).

Let me give you a summary of my most recent experience with the Chinese legal system to give you a feel for how fast things are changing in China.

A supplier was holding some funds that belong to me and diplomacy had failed, so my assistant and I got up early and made it to the court to be the first in line to submit our notarized documents and present our papers to the clerk in order to book a date for the hearing. The clerk went over our papers and everything was in order, except a very technical suggestion in their SOP that we needed a formal letter from my company’s board of directors stating that I have the right to represent the company in submitting the paperwork. That request was quite silly because I am the sole owner of the company and carried the company chop and passport and even business license stating I was sole owner with me that day. But a government officer has a lot of room to interpret the rules as they see fit. So we explained the situation. Plus it helped that I went in person as having a westerner kow-tow to the clerk to ask to speak to her supervisor to explain our case actually worked, and after a bit of a wait we got an audience with one of the judges that very afternoon.  We once again explained the situation and politely mentioned how the costs of lawyer fees, court fees and notarization, combined with my time away from the office, travel back from out of town to come to court and so on… are significant when you consider the whole case is for less than 20K USD. Believe it or not, the judge was receptive and wanted to help. But he couldn’t easily overturn his subordinate’s stance that we should submit more documents as that would cause his subordinate to lose face. But he did want to help, so he actually picked up the phone and called the defendant in our case to explain that he was “sitting here with the foreign boss, who is very serious about this case and after reviewing the case, if he was the judge, he would probably rule in his favor,” so the defendant would be better off paying the amount now rather than risking a loss and even larger payment once court cases and perhaps damages were applied.”

The situation made me really pause to reflect on how much China has changed over my 10 years living here. Even as recent as a few years ago: 1. the courts would certainly not go out of their way to help a foreign entity 2. The clerk would no way allow her superior to be bothered. But today was remarkable, the system was working fairly and both the clerk and even the judge went way out of their way to help. Wow, China court system is more effective than my experiences in the USA.

 

Leave a Comment