A Guide to Successfully Suing a Chinese Company

Chinese lawyers

Business disputes between a Chinese company and a foreign firm are quite common. Knowing the process of how to sue a Chinese company should be your first priority. If you don’t have the knowledge, it is a good idea to hire a China business lawyer with an extensive knowledge of dealing with China litigation cases.

 

When it comes to suing a Chinese company in Mainland China, the US and the European firms face no jurisdictional restriction. Articles 3 and 237 of the PRC’s Civil Procedure Law grant Chinese court’s jurisdiction over international cases involving foreign plaintiffs against Chinese companies.

 

There 3 things you must know about suing a Chinese company

 

1- Where to sue?

Jurisdiction will usually be the first issue you will need to resolve in figuring out your litigation strategy against a Chinese company. Before attempting to sue a Chinese company, make sure that you qualify to use the Chinese court system. Review your case and compare it to the guidelines that a local Chinese court offers. If you are unsure, consult with an attorney.

 

2- Sue in what language?

Your English document must be translated into Chinese first by the authorized party. Some Chinese courts don’t enforce English language contracts at all. It is extremely important that you preserve all records that have any relationship to the case.

 

3- Determine the claims

Determine what claims you have and what type of damages you are interested in. Damages can take many forms, such as monetary compensation or a replacement product. This may seem obvious, but you need to have a genuine legal claim or “cause of action” in order to have a court support your position.

 

Drafting a solid contract with a Chinese company is the first step to successfully suing it. It is essential to set what will happen under which conditions. The US and the European firms will often have a standard contract, which is unlikely to be optimal when engaging in business with Chinese companies. Make sure your China attorneys really understand the case. And they need to work closely with you to ensure you understand the Chinese legal system and its nuances and processes.

 

You need to draft your suit papers in the right way. If the information in suit papers is incorrect in any way, China company may move to dismiss the action in its entirety. When suing a Chinese company, the first thing you should do is to carefully draft the suit papers with an experienced China business lawyer.

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A Complete Information on the CEPA Agreement Between Hong Kong & Chinese Mainland

Hong Kong and the Chinese mainland inked two new agreements on 28 June 2017, namely the Investment Agreement and the Economic Technical Cooperation Agreement (Ecotech Agreement) to further facilitate trade and investment between the two. With the two new agreements, CEPA has broadened its scope to become a comprehensive free trade agreement (FTA) covering investment as well as economic and technical cooperation on top of trade in goods and trade in services. Chinese Vice-Minister of Commerce, Ms. Gao Yan, and the Financial Secretary of the Hong Kong Special Administrative Region (“Hong Kong”), Mr. Paul Chan, executed the Investment Agreement.

Financial Secretary Paul Chan Mo-po called the upgraded arrangement “a modern and comprehensive free trade agreement” that was “more attuned to the need of trade development between two sides and the new trend of international investments”. The agreements make CEPA a comprehensive free trade pact by broadening its scope to cover trade in services, trade in goods, technical co-operation, investment and economic cooperation.

The Investment Agreement further include non-service sector investment into CEPA framework. Both the Mainland and Hong Kong commit to offer national treatment and most-favoured treatment in the non-service sector investment to the investors from the other side. Neither Hong Kong nor China will enforce tough restrictions on the investors of both countries. Here are some fascinating features of the CEPA agreement signed between the Mainland China and Hong Kong:

  • Enforce a commitment or undertaking
  • Performance requirements
  • Both the countries will release the entry restrictions of members of senior management and boards of directors and other personnel
  • Eligible Hong Kong residents are allowed to take qualification examinations for proficiency in computer technology and software for professionals and technicians in the Mainland
  • CEPA allows Hong Kong service suppliers to set up joint ventures or wholly-owned enterprises within the Mainland to provide online data processing and transaction processing services, store and forward services and content services

The Investment Agreement is the Mainland’s first investment deal with pre-establishment national treatment commitments made for the advocation of investment adopting a negative listing approach. The Agreement made reference to the framework of the Agreement between the Mainland and Hong Kong on Achieving Basic Liberalization of Trade in Services in Guangdong (the Guangdong Agreement) signed in December 2014, covers and consolidates commitments relating to liberalization of trade in services provided in CEPA and its Supplements and also the Guangdong Agreement, becomes a stand-alone, subsidiary agreement relating to trade in services under the framework of CEPA.

“[The new agreement] will make it easier for us to invest on the mainland,” said Eddy Li Sau-hung, president of the Chinese Manufacturers’ Association of Hong Kong. Li said local manufacturers often had to form a joint venture with mainland partners to conduct businesses over the border per Chinese law. Under the upgraded agreement, most firms are allowed to exert full control of their mainland companies.

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