In commercial relations with Chinese suppliers and customers sometimes misunderstandings occur that cannot always be resolved in an extrajudicial way.
If you have to evaluate if bringing a civil action in China, several preliminary factors must be considered.
First, to sue a legal person in China, you need to know its name and registered office in Chinese characters. For this reason, in commercial relations with Chinese partners, it is always advisable to obtain a copy of the Chinese business license and carry out the consequent investigative checks to confirm the updating of the data.
Another aspect to consider is the existence of a contract signed with the Chinese counterpart that has reserved jurisdiction over any disputes between the parties to an arbitration forum. In this case, unless there are obvious defects in the arbitration clause, it will not be possible to go to a Chinese court.
The costs involved in a judicial civil dispute in China will also have to be taken into consideration. These are:
Court Fees for the first instance, to be paid in advance and reimbursed by the losing party.
Litigation Preservation Fees Court to freeze debtor's assets (optional), to be paid in advance and reimbursed by the losing party.
Letter of guarantee issued by a Chinese insurance company.
Costs of notarization and double legalization of documents to be filed in court as evidences.
Attorney fees
These amounts vary according to the value of the case. The costs of notarization and double legalization vary according to the type of document and the number of pages.
Finally, it will also be important to evaluate the limitations period for judicial action. According to the Chinese Civil Code, the general limitations period for civil claims is 3 years. However, there are also special limitation periods such as:
Compensation for environmental damage: 3 years.
Claims for disputes arising from an international contract for the sale of goods or a contract for the import and export of technology: 4 years.
Claims against the carrier with regard to the carriage of goods by sea: 1 year
The limitation period begins to run from the moment the plaintiff knows or should have been aware of the facts giving rise to his claim. The communication of the fact constituting the claim interrupts the limitation period, which begins to run again from the date of the aforementioned communication.
Finally, it is essential to be assisted by a competent team at a local level and with an international vision, which is able to understand the legal specificities of the case and has the right cultural sensitivity to communicate effectively both with the Western client and with the counterpart and the Chinese authorities.
Avv. Lifang Dong and Avv. Chiara Civitelli
The content of this article does not constitute legal advice, but has an informative function. For tailor made legal advice, contact the firm by e-mail to: info@dongpartners.eu or by phone +39 06 916505710. © Dong & Partners International Law Firm, All rights reserved.