Litigation in China

What You Should Know About China Litigation.

Posted by Dan on April 17, 2011

The China Law Insight Blog has a very thoughtful post entitled, "Evidence Collection and Alternatives to "Discovery" in P.R.C. Litigation." The post does an excellent job explaining the lack of pretrial discovery in China court cases and why American companies and lawyers tend to be so ill-prepared for this. To grossly summarize and oversimplify the article, foreign (especially American) companies need to know the following three things about litigating in China:

1. Once a case begins in a Chinese court, things move fast. Very fast. Within a month or so of filing a case the court will issue a notice of the evidence production period and that period is usually 30 days. This means you will need to provide the opposing party and the court with enough evidence to win the case and that evidence must be translated into Chinese. 
2. Chinese courts strongly favor documentary evidence over other kinds of evidence, including live testimony. 
3. Chinese courts do not have discovery as we know it in the United States.

I am going to add one non-procedural item to the list of things that Americans should know about Chinese courts and that is that the courts tend to look much more at the equities of a case (as opposed to the law) than do American courts.
All of the above mean that American companies involved in litigation in China must engage in the following strategies so as to increase their chances of prevailing;

1. If you are going to pursue litigation in China (or if you are sued in China), you need to gather up your evidence and have it translated as quickly as possible.
2. Your case is likely going to rise or fall on the strength of your documentary evidence and if you do not have strong documentary evidence you probably should not bring the case. And as I discussed in the post, "China Contracts. Email Not Usually Included," Chinese courts in determining the terms of a contract typically stay within the four corners of a signed document and tend to give little credence to email or oral "understandings."
3. You should not count on being able to get evidence from your opposing party.
4. Think about the equities of your case, not just the law. Ask what is fair and what would be good for China.  

If you want to read more about litigating against Chinese companies (in China or elsewhere), check out the following:

• China Courts. You Ain't In Kansas Any More
• China Sex, Mistresses, And Improper Payments, And What They Mean For Your China Business Litigation
• China Sex, Mistresses, And Improper Payments, And What They Mean For Your China Business Litigation. Part II, The Contracts Do Matter Edition
• How To Sue A Chinese Company. Part IV. Arbitration In The U.S. And Suing In China.