We have written many times of how Chinese courts do not enforce United States judgments. Because of this, U.S. judgments are usually worth little to nothing in China and if your only collection plan is to sue in the United States and then take your U.S. judgment to China, you are probably making a big mistake.
We see this mistake all the time when U.S. lawyers call one of our international dispute resolution attorneys seeking help to collect on a U.S. judgment they just secured for their client. But note how I have NOT said that securing a United States judgment is always a mistake.” A United States judgment against a Chinese company can lead to collection, but for that to occur, one must know about the operations of the Chinese company and be prepared to be legally creative in figuring out how and where to act in using the United States judgment to go after the Chinese company’s assets.
We are right now working on a couple such cases and since I recently set out some of the options in an email, I might as well post them here as well, especially since we are working on very deep background on both of these cases so my posting here cannot possibly tip off anyone:
Here are the methods we typically use to try to collect on US judgments against Chinese companies that do not have hard assets in the United States:
1. If the Chinese company has vessels, seize those. Usually not likely, but I mention it because it can be so easy.
2. If there are U.S. or EU (and other countries also) companies that owe the Chinese company money, go after that money. It often is faster, cheaper and easier to pay the US or EU company a percentage of what you secure from them, as opposed to getting it via a court order.
3. If there are US or EU (and other countries also) companies that will owe the Chinese companies money, go after that money.
4. Take the judgment to a country that enforces U.S. judgments and seize the Chinese company’s assets there. South Korea and Taiwan are often the best. Canada can be good too. There are many others.
5. Take the judgment to Hong Kong and use it to get a summary judgment against the Chinese company there. This can be quite expensive and it only sometimes makes sense. There are other countries where this sometimes also makes sense. This probably does not work as well with present-day Hong Kong, but it still is a viable option.
6. Write a letter to the defendant, in Chinese, letting them know all of the problems you intend to inflict on it if it does not pay. Those will include you alerting various governmental bodies about this company’s conduct and doing whatever else you can do to make sure this company does not rip anyone off ever again. This can be quite effective, particularly with companies that are hoping to go public.
There are various other options out there as well that for various reasons I do not feel comfortable publicly revealing. But the point is that it is in fact possible to use a U.S. judgment to collect from a Chinese company.