China Litigation from the Inside

At any given time, my law firm’s international litigation team are involved in 3-5 matters involving companies owed money by Chinese companies.

Late last year — right before COVID I received I was cc’ed on an email from one of our litigators to an attorney who is regular counsel for a company we are assisting in China. Because this e-mail was “lawyer to lawyer,” it went into a bit more detail and had a bit more editorializing on the subject of China litigation. I loved it because it provides an excellent snapshot of the initial stages of litigation in Chinese courts and I very much wanted to put it on the blog.

But before I could do so, I had to strip out anything that might allow one to identify the pending case. I have done that by taking out any mention of parties, lawyers (both the China attorneys and the attorneys stateside) or even the court in this memo. I also changed at least one item in the post as a further diversion. I have, however, retained the heart and soul of this e-mail and none of my deletions/changes have any real impact on its substance.

I am writing to provide you with a general update on the ABC matter. We are currently waiting for the arrival of your document package. We plan to file the complaint shortly after receipt. Based on our current planning, that will be sometime in the middle or end of next week.

I would like to inform you about the basic procedures that will follow after the complaint is filed. Note in all respects that China is a civil law jurisdiction, so the procedure is much closer to that of continental Europe than to that of a common law jurisdiction such as the United States [or Canada or England].

After we file the complaint, the Court convenes an initial hearing. In China this happens quite quickly. Normally, in the XYZ court, the first hearing is convened within two months after the complaint is filed.

Generally, for complex international disputes, at least three hearings are required to resolve the case. The time for convening the second hearing can be the subject of some dispute. The defendant will be expected to plead difficulty and lack of information and complexity and the rest and will seek delay. In general, the Chinese courts do not like delay, and they tend to view such requests quite strictly.

The time for the first hearing can also be delayed if 123 Chinese company files a motion challenging jurisdiction or requests time to deal with complex evidentiary issues. Again though, these matters are viewed quite strictly in China. Chinese courts, especially the XYZ court, like to move the cases through their dockets extremely quickly.  That is why we have taken time to carefully prepare before filing the complaint. Once the process starts in China there is little time for extra preparation.

As a general rule, no personnel will be required to attend the hearing or even provide any form of statement or affidavit concerning the facts of the case. The Chinese courts like to work from documentary evidence. The evidence we have provided is quite complete and there should be no need for any supplementation in the form of either live testimony or affidavits. As a common law attorney, I find this quite odd, but that is the Chinese system. The Chinese courts view humans as more likely to lie than tell the truth, so they prefer to work with hard evidence whenever possible. This is a major advantage in this case, since the hard evidence is very good for us.  The court will not give them much room to talk out of it, which benefits our position.

I will attend and assist at all of the hearings in XYZ court and I will provide detailed reports on the proceedings. The XYZ court is a reputable court. However, all legal proceedings in China are much more rough and ready than we are used to in the United States and we must be prepared for the fact that the situation can be unpredictable.

Please let me know if you have any questions about this matter.