Suing a Chinese Company for Breach of Contract

China Lawyers

“When you ain’t got nothing, you got nothing to lose.’

Bob Dylan, from Like a Rolling Stone

Got the following email the other day (which email I have modified so as to strip it of any identifiers):

I need some help with a problem I have with a Chinese company I have made an order with. The order is around the $35,000 mark, I have paid for a product and for the shipping.

I have a signed contract from the company that goods will be delivered by a certain time, they have failed to do this and keep coming up with excuses to as why the product isn’t ready.

How much notice do you have to give a Chinese company before you can sue them?

And how would I go about it? I am from Canada and paid the company directly. The Chinese company is owned by a Canadian citizen but it operates out in China.

Could you please help.

We probably get some variation of this email pretty much every week and the response of our dispute resolution lawyers is usually something like the following:

I’m sorry but we cannot help because I have no idea what the contract says about where to sue nor do I have any idea where this Chinese company has its assets. I will tell you though, that unless your contract is in Chinese AND was sealed by the Chinese company AND calls for disputes to be resolved in a Chinese court AND was incredibly specific about delivery deadlines AND has a liquidated damages provision for being late, you probably will be wasting your time pursuing this. If your contract does include most of these things, I suggest you contact a Chinese licensed lawyer based in China to see about pursuing your claims. I also question the economics of suing over $35,000 but I trust you will work that out with your Chinese lawyer. If your contract calls for disputes to be resolved in Canada, you will need to sue there and then try to get your Canadian judgment enforced in China and that alone will almost certainly cost you more than $35,000.

So to reiterate, if you want to maximize your chances of being able to pursue a Chinese company for breach of contract, your contract should be in Chinese, should be sealed by the Chinese company, should call for disputes to be resolved in a China court, should be incredibly specific regarding what the Chinese party is required to do to comply with the contract, and should include a liquidated damages provision setting forth the exact amount of damages to which you are entitled for the Chinese company’s failure to comply.

For more on what should go into your China contract, check out Three Rules for China Contracts and China Contracts: Arbitration Versus Litigation.

Leave a Reply

Your email address will not be published. Required fields are marked *