How to Sue a Supplier in China: Five Things You Have to Know
There are five things you need to do to get ready: 1) find the legal Chinese name of the Chinese company, 2) decide whether to sue in China, 3) if yes, hire a local Chinese lawyer, 4) evaluate the costs and benefits of litigation, and 5) prepare in advance evidence that Chinese courts would like.
Now, you can hand the case to a cross-border dispute case management expert, and they will handle all the work. This is also our core service.
1. You should find the legal Chinese name of the supplier
You need to know whom you can sue and then identify its legal name in Chinese.
When you are preparing to file a lawsuit, you need to find out exactly who the defendant (the person or business you are suing) is, so you can name the same correctly on your claim.
If you want to sue the other party, you need to know its legal name in Chinese.
You may see the name of a Chinese enterprise on the contract or the name of a Chinese manufacturer on the package. But these names are likely to be in English or other languages, rather than in Chinese.
All Chinese individuals and enterprises have their legal names in Chinese, and they have no legal or standard names in foreign languages.
In other words, their English names or names in other languages are named by themselves randomly. Usually, it’s hard to back-translate their weird foreign names to their legal Chinese names.
If you don’t know their legal names in Chinese, then you won’t be able to tell the Chinese court whom you are suing. Therefore, Chinese courts will not accept your case.
We can check relevant information or search online to find the legal Chinese name of the Chinese defendant as far as possible, and prove to the Chinese court that the Chinese name found and the foreign name provided point to the same subject.
2. You need to decide whether to sue in China
Even if you are not in China, you still can file a lawsuit with Chinese Courts
But in this case, you need to hire a Chinese lawyer to file a lawsuit with Chinese courts on your behalf. The lawyer can file a lawsuit and handle all relevant procedures on your behalf, even without requiring you to come to China at all. In addition, according to Chinese law, you can only hire Chinese lawyers for representation in litigation.
If you are still undecided about where to sue, please read an earlier post “Suing in China vs Suing in Other Countries: Pros and Cons”.
3. You need a network of Chinese lawyers
In an earlier post “Which Chinese court should I file my case?”, we have mentioned:
You are very likely not to file a lawsuit with a court in Beijing or Shanghai, but in a city with many factories, an airport, or a seaport hundreds of kilometers or thousands of kilometers away.
It means that the elite lawyers gathered in Beijing and Shanghai may not be able to help you any better.
With the advantage of knowing local rules and regulations well, local lawyers can find more effective solutions. It is really beyond the reach of lawyers in Beijing and Shanghai.
Therefore, Beijing and Shanghai lawyers are not ideal options, and you should employ a local lawyer.
For more information about a lawyer network in China, please read an earlier post “Sue a Company in China: Who Can Give Me a Lawyer-Network in China?”.
4. You need to consider whether the amount of the claim can cover the court costs and attorney fees in China
The costs you need to pay mainly include three items: Chinese court costs, Chinese attorney’s fees, and the cost of notarization and authentication of some documents in your country.
(1) Chinese court costs
If you bring a lawsuit to a Chinese court, you need to pay legal fees to the court at the time of filing.
The court costs depend on your claim. The rate is set on the scale of rates and denominated in RMB.
Roughly speaking, if you claim USD 10,000, the court cost is USD 200; if you claim USD 50,000, the court cost is USD 950; if you claim USD 100,000, the court cost is USD 1,600.
If you win as a plaintiff, the court costs will be borne by the losing party; and the court will refund the court cost you paid previously after receiving the same from the losing party.
(2) Chinese attorney’s fees
Litigation lawyers in China generally do not charge by the hour. Like the court, they charge attorney’s fees according to a certain proportion, usually 8-15%, of your claim.
However, even if you win the case, your attorney’s fees will not be borne by the losing party.
In other words, if you request the Chinese court to order the other party to bear your attorney’s fees, the court will generally not rule in your favor.
That being said, however, there exist some exceptional circumstances where the losing party shall cover legal fees.
If both parties have agreed in the contract that the breaching party should compensate the opposing party by covering his attorney’s fees in litigation or arbitration, and they have clearly stated the calculation standard and confines of attorney’s fees, the court is likely to support the payment request of the winning party. However, at this point, the court will require the prevailing parties to prove they have actually paid the fees.
(3) Costs of notarization and authentication of some documents in your country
When you sue, you need to submit relevant documents to the Chinese court, such as your identity certificate, power of attorney, and pleadings.
These documents need to be notarized in your country, and then authenticated by the Chinese embassy or consulate in your country.
The rate of this charge is up to your local notary and the Chinese embassy or consulate. Usually, it costs you hundreds to thousands of dollars.
5. You need prepare all the evidence before the Chinese supplier knows that you are going to sue him
The evidence rules in China is “the burden of proof lies with the party asserting a proposition”.
Therefore, you bear the duty to prepare all evidence in support of your claims, and cannot expect the other party to disclose the evidence he/she has collected.
Additionally, in Chinese courts, parties often lie to deny or falsify facts. And the practice is rarely punished under Chinese law. Consequently, when the other party denies the evidence, the judge is often unable to make an accurate judgment and likely disbelieves the evidence you present. However, the other party is usually deemed to admit the evidence produced by himself. And the judge will probably not accept the other party’s denial in court.
Of course, if he/she knows you’re going to sue him, he’s likely to be alert.
This will prevent you from gathering the appropriate evidence from him.
Bearing this in mind, you should lead the other party to express the key facts in writing before he/she knows you are going to sue, as Chinese judges tend to accept documentary evidence.
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