With all the financial turmoil roiling China and so much of the rest of the world, suing Chinese companies is a growth area. What it takes to litigate/arbitrate against Chinese companies is one of my favorite topics because so many are surprised to hear what it takes to get it right. Rule number one is do not just go off and sue in a United States/European/Australian court, assuming any judgment you get there will have any value in terms of actually collecting money. For example, Chinese courts do not enforce U.S. court judgments. See e.g., China Enforces United States Judgment: This Changes Pretty Much Nothing.
More than a decade ago, I wrote an article for The Wall Street Journal, Chinese Companies Court Disaster: Doing business in America means also learning how to navigate the U.S. legal system, on the increasing number of lawsuits brought by foreign companies against Chinese companies and on how Chinese companies handle those lawsuits. If you are involved in a lawsuit against a Chinese company or even just considering one, I urge you to read that article because nearly everything in there remains as true today as it was then.
This post deals with something far more basic. This post is for when you have already sued a Chinese company in the United States and now you need to figure out how to serve process on that company in such a way that will work for the U.S. courts and, in some cases, for whatever foreign court you may want to eventually enforce your U.S. judgment. This post deals with what to do after you have filed your complaint against your Chinese defendant. This post deals with how to effect service of process against your Chinese defendant in such a way that will maximize your chances of getting that defendant to take your lawsuit seriously and to eventually get you the results you are seeking in your lawsuit.
This post deals with how to properly effect service of process on a Chinese company or individual under the Hague Convention.
1. How Not to Effect Hague Service of Process on a Chinese Defendant
There is only one proper way to effect service of process on a Chinese defendant in a U.S. lawsuit and that is by following Hague Service rules for China to the letter. I feel compelled to mention this because my law firm hears far too often from companies that have paid someone in China to “privately” serve the Chinese defendant in their lawsuit and then learned (sometimes years later) that this service was not proper. Just as there are plenty of completely unqualified people (lawyers, non-lawyers, and fake lawyers) who claim to be able to draft legally enforceable contracts for China, but end up giving you contracts that are far worse for you than if you had no contract at all, there are also plenty of people who will take your money to effect completely worthless service of process for you in China. Your job is to avoid those people even though they will initially cost you at least ten times less than doing it correctly.
Service on a Chinese company by mail is not effective and U.S. courts have held that China’s formal objection to service by mail under Article 10(a) of the Convention is valid. See DeJames v. Magnificence Carriers, Inc. and Dr. Ing H.C. F. Porsche A.G. v. Superior Court.
2. How to Properly Effect Hague Service of Process on a Chinese Defendant
China is party to the Hague Convention on Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters, usually called the Hague Service Convention or the Hague Convention on Service. This means service on a Chinese company must comply fully with this Convention. Service under the Hague Convention on Service is effected through the designated Chinese Central Authority in Beijing, which is the Bureau of International Judicial Assistance, Ministry of Justice of the People’s Republic of China.
This means a United States plaintiff must submit the following to China’s Ministry of Justice:
1. A completed United States Marshals Service Form USM-94.
2. The original English version of the documents to be served (the summons must have the issuing court’s seal).
3. The Chinese translation of all documents to be served.
4. A photocopy of each of these documents.
Note that because the USM-94 will not be served, translation of this document is not necessary. In addition to the documents, a payment of approximately US$95 via wire must be sent with the service request. The Ministry of Justice then sends the service documents to the appropriate local court, and that court will effect service. Chinese courts are slow to send out service. If the Chinese company being sued is a powerful local entity, the service may be even slower. We find that having one of our China attorneys repeatedly call and email both the court itself and the Ministry of Justice expedites service. Generally, both the court and the Ministry of Justice prefer dealing with lawyers (not translators or even paralegals) who both speak and write in Chinese.
It is imperative you get all of the above 100% correct, as our international litigators are often retained by law firms that did not even learn why service was not occurring until 6-12 months into the process, at which time they had to start again. Neither China’s Ministry of Justice nor its official court servers will tell you if you made a mistake; they will instead simply not serve your complaint and wait for you to call them … or not.
Service has lately been taking from four to six months, which (somewhat shockingly) is the time frame China’s Ministry of Justice gives on its official website!
Chinese companies and individuals often will “refuse” service. In these circumstances, you usually should have whomever you are using for service draft an affidavit or declaration explaining to the U.S. Court what has transpired by way of service of process in China and the U.S. court almost invariably will deem service to have occurred. The potential need for an affidavit or declaration is yet another reason not to just use just anyone to effect service of process for you in China.