When arbitration is not in the contract and the supplier's assets are in China, civil and commercial litigation in Chinese courts may be the most effective path to recovery. This guide explains when court litigation makes strategic sense, how the process works, and what foreign buyers should expect at each stage.
For foreign buyers in dispute with a Chinese supplier, the default preference in international trade contracts is arbitration — and for good reason. Arbitration awards are enforceable across 172 countries under the New York Convention, proceedings are confidential, and parties can select arbitrators with specialized industry expertise. But arbitration is not always available, and it is not always the best tool for the job.
When the supply contract lacks an arbitration clause — a surprisingly common scenario, particularly with smaller factories and purchase orders negotiated over WeChat — the foreign buyer's primary recourse is litigation in a Chinese court of competent jurisdiction. Even when an arbitration clause exists, there are scenarios where litigation offers distinct tactical advantages: most notably, the ability to apply directly to the court for pre-judgment property preservation (asset freezing) without first routing through an arbitration commission.
Chinese court litigation is governed principally by the Civil Procedure Law of the People's Republic of China (last amended in 2021, effective January 2022), supplemented by the Supreme People's Court's (SPC) judicial interpretations. Foreign-related civil and commercial cases are subject to Part IV of the Civil Procedure Law, which contains special provisions on jurisdiction, service of process, time limits, and enforcement. The SPC's 2022 Judicial Interpretation on the Application of the Civil Procedure Law (the "2022 CPL Interpretation") further clarifies many procedural issues relevant to foreign litigants.
This page provides a structured overview of Chinese court litigation from the perspective of a foreign buyer. It covers the court system, jurisdictional rules, procedural stages, evidentiary requirements, property preservation mechanisms, costs, and the critical question of enforcement — both of Chinese judgments abroad and foreign judgments in China.
China's court system is organized into four tiers under the Organic Law of the People's Courts. Understanding this hierarchy is essential because it determines which court has original jurisdiction over your case, where appeals are heard, and what level of judicial expertise you can expect.
The four-tier structure, from highest to lowest:
For foreign-related commercial disputes, jurisdiction typically starts at the Intermediate People's Court level or above. Under the SPC's rules on the concentration of foreign-related commercial cases, most provinces have designated specific Intermediate Courts or specialized divisions to handle cross-border matters, ensuring a baseline of expertise. First-instance judgments of Basic Courts can be appealed to the Intermediate Court; Intermediate Court first-instance judgments are appealed to the Higher Court.
In addition to the four tiers of general courts, China has established several specialized courts relevant to foreign trade disputes:
Determining the correct court is the threshold question in any Chinese litigation. Filing in the wrong court will result in the case being dismissed or transferred, costing time and filing fees. Under the Civil Procedure Law (Articles 22-24, 265-266 for foreign-related cases), jurisdiction in contract disputes is determined by a hierarchy of rules:
Under Article 35 of the Civil Procedure Law, parties to a contract may agree in writing to designate a specific court — provided the chosen court has an actual connection to the dispute (such as the place of the defendant, the plaintiff, the contract's execution, the contract's signing, or the subject matter). Foreign buyers should be aware that Chinese courts will enforce a properly drafted forum selection clause in a supply contract, and such a clause can preempt disputes over where to file. However, under Article 266 for foreign-related cases, if the defendant does not raise a jurisdictional objection, a Chinese court that would not otherwise have jurisdiction may acquire it by the defendant's appearance and submission to the court's authority.
Chinese courts assert exclusive jurisdiction over certain matters regardless of contractual provisions: disputes over real estate located in China, disputes over harbor operations, and disputes over inheritance concerning assets in China. Additionally, disputes involving Sino-foreign equity joint ventures, cooperative joint ventures, and natural resource exploration and development contracts performed in China are subject to exclusive Chinese jurisdiction (Article 266).
When a foreign buyer has the option to choose among several competent courts, the decision should be guided by: (a) proximity to the supplier's assets for enforcement, (b) the court's track record in foreign-related cases, (c) the procedural speed of the specific court (coastal courts in Shanghai, Shenzhen, Guangzhou, and Ningbo tend to be more efficient), and (d) the convenience of your chosen Chinese counsel. Filing in an inland court where the supplier has strong local connections but your counsel has limited presence can create practical disadvantages.
Arbitration is rightly considered the gold standard for cross-border commercial dispute resolution, but litigation in Chinese courts offers several distinct advantages in specific circumstances. The decision between arbitration and litigation should be made on a case-by-case basis after careful analysis of the following factors:
This is the single most important tactical advantage of litigation over arbitration. Under Chinese law, a party seeking to freeze a defendant's assets before or during proceedings may apply directly to a Chinese court. In arbitration, the applicant must submit the preservation request through the arbitral tribunal to the competent court — a two-step process that creates delay. Under Article 104 of the Civil Procedure Law, a court must rule on a property preservation application within 48 hours of receipt (if the applicant provides security). In practice, direct court applications for property preservation can result in asset freezes within days, whereas the arbitration route routinely takes weeks. For a foreign buyer facing a supplier that may dissipate assets, this speed difference can be outcome-determinative.
Court filing fees in China are significantly lower than institutional arbitration fees. Under the Litigation Fee Measures (2007), court acceptance fees are calculated as a percentage of the claim amount — for a claim of RMB 1 million, the court fee is approximately RMB 13,800, compared to CIETAC arbitration fees that might exceed RMB 40,000-60,000 for the same claim. For smaller claims (under RMB 500,000), the cost advantage of litigation is even more pronounced. Additionally, Chinese courts do not charge arbitrator or tribunal fees — the state bears the cost of the judiciary.
Chinese courts can compel joinder of third parties and entertain counterclaims more readily than an arbitral tribunal. If the dispute involves multiple entities — the supplier, its affiliated trading company, the factory, and perhaps individual shareholders or legal representatives — litigation allows all claims to be resolved in a single proceeding. In arbitration, the tribunal's jurisdiction is consent-based; non-signatory parties generally cannot be joined unless all parties agree.
Chinese litigation provides a single appeal of right to the next higher court. While this extends the overall timeline, it provides a meaningful check on first-instance errors. Most CIETAC and other institutional arbitration awards are final, with judicial review limited to narrow due process and public policy grounds. For cases involving novel legal issues or challenging factual determinations, the availability of appellate review can be a significant advantage.
Choose litigation when: (1) there is no arbitration clause in the contract; (2) you need urgent asset freezing and cannot afford the 2-4 week delay of routing through an arbitration institution; (3) your claim amount is modest (under RMB 500,000) and arbitration costs would be disproportionate; (4) multiple defendants need to be joined, including entities that did not sign the arbitration agreement; (5) the supplier's assets are entirely within China, making a Chinese court judgment the most direct path to enforcement; or (6) the legal or factual issues are complex and the right to appeal is important. Stick with arbitration when: the contract has a well-drafted arbitration clause, the supplier has assets abroad (where an arbitral award under the New York Convention is more easily enforced than a Chinese judgment), confidentiality is critical, or specialized industry expertise is needed on the tribunal.
A fundamental principle of Chinese civil procedure is the equal standing of all parties before the courts. Article 5 of the Civil Procedure Law provides that foreign nationals, stateless persons, and foreign enterprises have the same litigation rights and obligations as Chinese citizens and legal persons. This principle is reinforced by the principle of reciprocity: if a foreign country imposes restrictions on the litigation rights of Chinese nationals or enterprises, Chinese courts may apply reciprocal restrictions — but such restrictions are rare in practice in commercial cases.
Chinese civil litigation follows a structured sequence governed by the Civil Procedure Law. For foreign-related cases, certain time limits are longer than those applicable to purely domestic cases. Below is the typical trajectory of a foreign buyer's contract dispute from filing through enforcement:
The plaintiff files a complaint (起诉状) with the competent court, together with evidence, Power of Attorney, business license/certificate of incorporation, and the court fee. Under Article 126 of the CPL, the court must decide whether to accept the case within 7 days. For foreign-related cases, acceptance triggers the opening of a case file and the assignment of a collegial panel (typically three judges or a combination of judges and people's assessors).
Service on a Chinese-domiciled defendant is generally straightforward and effected by the court within 5 days of case acceptance. If the supplier cannot be located at its registered address, the court may serve by public notice (service by publication) after other methods have been exhausted. For foreign-related cases, service on parties outside China follows the mechanisms under the Hague Service Convention (if applicable) or diplomatic channels, and may take several months. The defendant has 30 days to file a statement of defense in foreign-related cases (versus 15 days for domestic cases).
After the defense is submitted, the court convenes one or more pre-trial conferences to exchange evidence, identify issues in dispute, and explore settlement. Unlike common law discovery, Chinese civil procedure does not provide for broad pre-trial discovery — each party submits its own evidence and may request the court to collect specific evidence that it cannot obtain on its own. The court fixes a deadline for evidence submission; evidence submitted after the deadline may be excluded unless good cause is shown.
The trial is conducted before a collegial panel, with a presiding judge directing proceedings. The trial sequence: (a) opening statements, (b) court investigation (证据调查) — where both parties present and challenge evidence, (c) court debate (法庭辩论) — where parties argue legal positions, and (d) closing statements. Witnesses may be called and cross-examined, although witness testimony in Chinese courts is given less weight than documentary evidence. The entire trial is recorded in the court transcript (笔录), which parties must review and sign after each hearing. Hearings are generally public unless state secrets, privacy, or trade secrets are involved.
The court may issue judgment at the conclusion of the final hearing or at a later date. The judgment must state the claims, the facts found by the court, the applicable law, and the reasoning. For a foreign buyer in a contract dispute, the court will typically apply the parties' chosen governing law or, absent such a choice, Chinese law under the principle of closest connection (最密切联系原则) under the Law of the Application of Law for Foreign-Related Civil Relations (2011). If the CISG is applicable, the court will apply the CISG directly as an international treaty to which China is a party, subject to China's Article 96 reservation.
Either party may appeal a first-instance judgment to the next higher court within 15 days of service of the written judgment (30 days for foreign parties residing outside China). The appellate court reviews both factual findings and legal conclusions. The appeal hearing is typically narrower than the first-instance trial, and new evidence is admitted only in limited circumstances. The appellate court may affirm, modify, remand, or (rarely) mediate. The appellate judgment is final and effective upon service, subject only to the extraordinary remedy of retrial (再审) before a Higher Court or the SPC on narrowly defined grounds.
A final and effective judgment may be enforced voluntarily by the losing party. If the judgment debtor does not comply, the judgment creditor may apply to the court of first instance for compulsory enforcement within 2 years of the expiration of the performance period specified in the judgment. The enforcement court has broad powers to: freeze and transfer bank deposits, seize and auction property, restrict the judgment debtor's legal representative from leaving China, place the debtor on the social credit blacklist, and impose daily fines for non-compliance.
The Civil Procedure Law imposes statutory time limits at each stage, but practical case duration varies significantly by court, case complexity, and the conduct of the parties. The following is a realistic timeline based on our experience with foreign-related commercial cases:
Coastal courts in Shanghai, Shenzhen, Guangzhou, Ningbo, and Suzhou tend to resolve cases faster than inland courts, in part because of higher judicial capacity and greater familiarity with cross-border disputes. Cases involving foreign evidence that requires notarization and translation inevitably take longer. The defendant's procedural tactics — jurisdictional objections, requests for extensions, and frivolous counterclaims — can add months. Chinese courts have increasingly adopted case management tools, and some (notably Shenzhen, Shanghai, and Beijing) now promote "fast-track" procedures for commercial cases below certain value thresholds.
Chinese civil procedure follows a party-driven evidence model codified in Articles 66-75 of the Civil Procedure Law and detailed in the SPC's Several Provisions on Evidence in Civil Litigation (amended 2019). Unlike common law jurisdictions, China has no pre-trial discovery — no depositions, no interrogatories, no document production requests. Each party bears the burden of producing the evidence it relies upon.
The Civil Procedure Law recognizes eight categories of evidence: (1) statements of the parties; (2) documentary evidence; (3) physical evidence; (4) audio-visual recordings; (5) electronic data; (6) witness testimony; (7) expert opinions; and (8) inspection records and survey reports. In commercial disputes, documentary evidence and electronic data carry the greatest weight.
Under Article 67, each party bears the burden of proving the facts on which its claim or defense is based. The general rule is "he who asserts must prove" (谁主张，谁举证). In a contract dispute, the buyer claiming breach must prove: (a) the existence of the contract, (b) the seller's breach (non-conforming goods, late delivery, non-delivery), (c) the quantum of loss, and (d) causation. The seller must prove any facts underlying its defenses (e.g., force majeure, buyer's failure to mitigate).
Evidence generated outside China is subject to special formalities under Article 16 of the SPC's Civil Evidence Provisions. Documents originated abroad must be notarized by a notary public in the country of origin and legalized by the Chinese embassy or consulate in that country (or authenticated with an apostille for Hague Convention countries, effective from November 2023 in China). This requirement applies to corporate registration documents, contracts signed abroad, inspection reports from foreign laboratories, and email/WeChat records exported from foreign servers. Without proper authentication, foreign evidence may be excluded or given reduced weight.
Chinese courts have become increasingly comfortable with electronic evidence. The SPC's 2019 Civil Evidence Provisions explicitly address electronic data, including WeChat messages, emails, SMS, blogs, and instant messaging records. The 2020 Several Provisions of the SPC on Electronic Data in Civil Procedure further refined the rules. To maximize admissibility, WeChat records should be: (a) exported and presented in their entirety (not selectively excerpted), (b) accompanied by notarized screen captures showing the sender's WeChat ID and the full conversation thread, and (c) where possible, corroborated by independent evidence. Many Chinese notary offices now offer WeChat record notarization services specifically designed for litigation use. We strongly recommend that foreign buyers preserve WeChat communications with suppliers from the very beginning of the relationship — not only after a dispute arises.
Witnesses may be called to testify in person. However, Chinese courts give documentary evidence significantly more weight than oral testimony, reflecting the civil law tradition. Witnesses must generally appear in person; written witness statements without court appearance carry little probative value. A foreign witness who does not speak Chinese may testify through a court-appointed interpreter. The opposing party has the right to cross-examine.
The ability to obtain pre-judgment or post-judgment property preservation is one of the most powerful tools available to a foreign buyer litigating in China — and it is one of the strongest arguments for choosing litigation over arbitration.
An applicant for property preservation is generally required to provide security (担保) in an amount equivalent to the value of the assets to be preserved. This is a significant practical barrier: freezing RMB 1 million in assets requires posting security of approximately RMB 1 million. However, several mechanisms can reduce the burden: (a) surety bonds from insurance companies authorized to issue litigation preservation guarantee insurance (诉讼保全责任险), which have become widely accepted by Chinese courts and cost a fraction (typically 0.3%-1% of the preserved amount) of the cash bond; (b) guarantees from qualified guarantee companies; and (c) in some courts, partial security may be accepted at the court's discretion.
Property preservation can target: bank deposits, real estate, movable property (including inventory and equipment), equity shares in companies, accounts receivable, and intellectual property rights. Bank account freezes typically last 1 year (extendable), real estate freezes 3 years (extendable), and movable property freezes 2 years (extendable). The preservation must be proportionate to the claim amount — the court will not freeze RMB 5 million in assets for a RMB 500,000 claim.
Chinese suppliers facing large claims have been known to transfer assets within days of receiving notice of a dispute. Asset tracing after a transfer is significantly more difficult — often involving separate fraudulent transfer litigation. The optimal sequence is: (1) conduct discreet asset investigation before filing; (2) prepare the preservation application and arrange security concurrently with preparing the complaint; (3) file the complaint together with the preservation application; and (4) have the court freeze assets before the supplier is served with the complaint. This strategy — common in Chinese commercial litigation — requires coordination between foreign counsel, Chinese counsel, and (where needed) private investigators.
When a foreign buyer has already obtained a judgment against a Chinese supplier in a foreign court, the practical question is whether that judgment can be recognized and enforced against the supplier's assets in China. The legal framework is established by Articles 288-299 of the Civil Procedure Law and the SPC's 2022 comprehensive provisions on recognition and enforcement of foreign judgments.
Under Article 288, a foreign judgment may be recognized and enforced in China if: (a) the foreign judgment is final and legally effective; (b) there is an applicable international treaty between China and the rendering country providing for mutual recognition and enforcement of judgments; or (c) there is a relationship of reciprocity (互惠关系) between China and the rendering country. The application must be made to an Intermediate People's Court at the place of the judgment debtor's domicile or the location of its property.
Historically, Chinese courts adopted a strict de jure reciprocity standard — requiring proof that a court in the rendering country had previously recognized and enforced a Chinese judgment. This created a "catch-22" problem: no first recognition could occur. The landscape has changed significantly:
Under Article 289, a Chinese court will refuse recognition and enforcement if: (a) the foreign judgment violates the basic principles of Chinese law or national sovereignty, security, or public interest; (b) the foreign court lacked jurisdiction under the standards of Chinese law; (c) the defendant was not properly served or denied the opportunity to present its case; (d) the judgment was obtained by fraud; or (e) a Chinese court has already rendered a judgment or recognized a third-country judgment in the same matter.
All proceedings in Chinese courts are conducted in Mandarin Chinese (Standard Chinese, 普通话). In regions with significant ethnic minority populations, the local minority language may be used alongside Mandarin, but for foreign-related commercial litigation in major commercial centers, proceedings are exclusively in Mandarin.
When a foreign buyer appoints Chinese counsel, the Power of Attorney (授权委托书) must meet stringent formal requirements. Under Article 271 of the Civil Procedure Law, if the Power of Attorney is executed outside China, it must be: (a) notarized by a notary public in the country of execution, and (b) authenticated by the Chinese embassy or consulate in that country (consular legalization), or (c) for countries that have acceded to the Hague Apostille Convention, authenticated with an apostille (effective for China from November 2023). If the foreign party's authorized representative executes the Power of Attorney before a Chinese judge during a court hearing, or if it is notarized within China, no consular legalization or apostille is required.
Only Chinese-licensed lawyers may appear as advocates before Chinese courts. Foreign lawyers may not file pleadings, examine witnesses, or make oral arguments. Foreign law firms may not practice Chinese law or represent clients in Chinese courts. Foreign buyers should engage Chinese counsel with specific experience in foreign-related commercial litigation, ideally with working proficiency in English (or the buyer's language) to minimize reliance on intermediaries. Many Chinese law firms with international practices employ bilingual lawyers who can communicate directly with foreign clients and foreign co-counsel.
Understanding the cost structure is essential for cost-benefit analysis. Chinese litigation involves three principal categories of costs: court acceptance fees, lawyer fees, and ancillary costs.
Court fees are computed under the Litigation Fee Payment Measures (2007) as a percentage of the claim amount, with progressively lower rates for higher claim amounts:
The court fee for an appeal is the same as the first-instance fee calculated on the appealed amount. The court fee is generally borne by the losing party. If the plaintiff prevails in part, the fee is apportioned in proportion to the amounts awarded versus denied. A plaintiff seeking property preservation must pay a separate preservation fee capped at RMB 5,000 per application.
Chinese lawyer fees are not regulated by a mandatory fee schedule. Fees are negotiated between the lawyer and client and may be structured as: (a) hourly billing (common in international firms, less common in domestic firms), (b) fixed fee per stage, (c) contingency fee (up to the regulatory cap — generally 30% of the amount recovered for pure monetary claims, though caps vary by province), or (d) hybrid arrangements. In commercial litigation, the prevailing party may recover a portion of its reasonable lawyer fees as part of the costs awarded by the court, though the awarded amount is typically significantly lower than the actual fees incurred. Contractual provisions for prevailing-party fee recovery are generally enforceable.
A favorable Chinese court judgment against a supplier is only as valuable as the buyer's ability to collect. If the supplier's assets are entirely within China, domestic enforcement mechanisms are robust. But if the supplier has moved assets abroad — or if the buyer seeks to enforce the judgment in the buyer's home jurisdiction or a third country — the enforceability of a Chinese judgment outside China becomes the critical question.
The fundamental challenge is that, unlike arbitration awards (which enjoy near-universal enforceability under the New York Convention), foreign court judgments are recognized and enforced under a patchwork of bilateral treaties, domestic statutes, and common law principles — and China's bilateral judicial assistance treaty network, while growing, is not comprehensive.
Given the limitations on extraterritorial enforcement of Chinese judgments, foreign buyers should: (a) investigate the supplier's asset profile before initiating litigation — if assets are concentrated in China, a Chinese court judgment is the optimal instrument; (b) if the supplier's assets are dispersed across multiple jurisdictions, consider whether arbitration (with its superior international enforcement framework) remains a better option, even if it means negotiating a submission agreement post-dispute; and (c) where possible, combine litigation in China (for asset freezing and the main claim) with enforcement proceedings in other jurisdictions where the supplier holds assets.
Danny Luo (Luo Wei) is a Partner and Strategy Committee Member at Jiangsu Tianni Law Firm, one of Jiangsu Province's leading full-service law firms. With over 17 years of practice focused on cross-border commercial disputes, he has represented foreign buyers from more than 10 countries in litigation and arbitration proceedings across China's major commercial centers — including the Intermediate and Higher People's Courts of Shanghai, Shenzhen, Guangzhou, Nanjing, Suzhou, and Ningbo, as well as CIETAC, HKIAC, and SIAC arbitrations.
Our litigation practice covers the full lifecycle of a commercial dispute: pre-litigation asset investigation, emergency property preservation applications, representation at trial and appeal, and post-judgment enforcement — including pursuing judgment debtors through China's social credit blacklist and exit restriction mechanisms. We work with a network of local counsel across all major Chinese provinces, enabling us to handle cases in any jurisdiction where a supplier may be domiciled.
Representative matters include: securing a RMB 4.2 million pre-judgment asset freeze within 36 hours of filing on behalf of a European machinery importer; obtaining a favorable first-instance judgment (upheld on appeal) for a North American retailer in a RMB 8 million product defect claim against a Zhejiang manufacturer; enforcing a CIETAC award through coordinated bank account freezes across three provinces; and successfully mediating a settlement between a Middle Eastern buyer and a Guangdong factory that avoided litigation entirely while recovering 85% of the claim value within 60 days.
Our approach is commercially pragmatic. We advise clients not only on the legal merits of their position but on the economic calculus of litigation versus settlement, the realistic prospects of enforcement, and the reputational and relationship dynamics — because in many supply chains, the optimal outcome is not burning the bridge but fixing the problem and resuming the relationship on clearer terms.
No. You can authorize your Chinese lawyer to appear on your behalf through a properly executed Power of Attorney. In practice, most foreign buyers do not attend court hearings in person. However, if you are a key fact witness, the court may request (though rarely compel) your attendance. Your participation can also be arranged through video link in some courts.
Yes, but enforcement is the challenge. You can file against a deregistered or dissolved company, but you will need to identify the shareholders or legal representatives and, where appropriate, argue for piercing the corporate veil. Chinese company law provides for shareholder liability in cases of commingling of assets, undercapitalization, or fraudulent dissolution. A discreet pre-filing investigation is essential to determine whether viable defendants and recoverable assets exist.
If the contract contains an exclusive foreign forum selection clause, Chinese courts will generally respect it and decline jurisdiction. However, if the clause is non-exclusive, or if the defendant appears and defends without raising the jurisdictional objection, a Chinese court may accept the case. Each situation requires careful analysis of the specific contractual language and the applicable law.
For a typical foreign-related commercial dispute resolved at first instance: 6-12 months. If appealed: add 3-6 months. If the judgment is not voluntarily satisfied and enforcement is required: add an additional 1-12 months depending on the nature and location of the debtor's assets. Cases with jurisdictional challenges, foreign evidence requirements, or recalcitrant defendants take longer.
In our experience, Chinese courts in major commercial centers (Shanghai, Shenzhen, Guangzhou, Nanjing, etc.) handle foreign-related cases professionally and apply the law even-handedly. The principle of equal treatment is taken seriously. The more practical challenges for foreign litigants are procedural — translation requirements, authentication of foreign evidence, and navigating a system with which they are unfamiliar — rather than overt bias. Having experienced Chinese counsel who can manage these procedural aspects is the single most important factor in leveling the playing field.
Partially. The court acceptance fee is fully borne by the losing party. Reasonable lawyer fees may be recovered, but Chinese courts typically award only a portion of actual legal fees incurred — often 30-50%, depending on the court's discretion and local practice. If your contract includes a clause providing for recovery of full legal costs by the prevailing party, the court is more likely to award a larger portion. Property preservation fees, translation costs, and notarization fees are generally recoverable as part of the "other litigation costs" awarded to the prevailing party.
We provide professional, comprehensive, and commercially pragmatic legal services to buyers worldwide. Whether you need immediate dispute intervention or preventive contract structuring, we are ready to assist.
Send EmailThis page is part of a special topic series on
luoweilvshi.comReturn to the main site for Danny Luo's full practice profile, insights, and contact options.
This page is part of a special topic series on
luoweilvshi.com