China Law Blog

At any given time, my firm is involved in a number of litigation matters in Chinese courts and a couple of them have recently been coming to the fore.  In most of these cases, we are representing American companies owed between $1 and $10 million by Chinese companies who owe this money either because they have not paid or because they provided bad product.

The other day, I received an e-mail from my co-blogger, Steve Dickinson, who oversees the China side of our litigation matters.  The e-mail from Steve was actually to an attorney who is regular counsel for the company we are assisting in China.  Because Steve's e-mail was lawyer to lawyer, it went into a bit more detail and had a bit more editorializing on the subject of China litigation.  I loved it because it provides an excellent snapshot of the inital stages of litigation in Chinese courts and I very much wanted to put it on the blog.

But before I could do so, I had to strip out anything that might allow one to identify the pending case.  I have done that by taking out any mention of parties, lawyers or even the court in this memo.  I also changed at least one item in the post as a further diversion.  I have, however, retained the "heart and soul" of the e-mail and none of my deletions/changes have any real impact on its substance.

I am writing to provide you with a general update on the XYZ matter. We are currently waiting for the arrival of your document package.  We plan to file the complaint shortly after receipt.  Based on our current planning, that will be sometime in the middle or end of next week.

I would like to inform you about the basic procedures that will follow after the complaint is filed.  Note in all respects that China is a civil law jurisdiction, so the procedure is much closer to that of continental Europe than to that of a common law jurisdiction such as the United States [or Canada or England]. 

After we file the complaint, the Court convenes an initial hearing.  In China this happens quite quickly.  Normally, in the XYZ court, the first hearing is convened within two months after the complaint is filed.

Generally, for complex international disputes, at least three hearings are required to resolve the case.  The time for convening the second hearing can be the subject of some dispute.  The defendant will be expected to plead difficulty and lack of information and complexity and the rest and will seek delay.  In general, the Chinese courts do not like delay, and they tend to view such requests quite strictly.  The time for the first hearing can also be delayed if XYZ files a motion challenging jurisdiction or if XYZ requests time to deal with complex evidentiary issues.  Again though, these matters are viewed quite strictly in China.  Chinese courts, especially the XYZ court, like to move the cases through their dockets extremely quickly.  That is why we have taken time to carefully prepare before filing the complaint.  Once the process starts in China there is little time for extra preparation. 

As a general rule, no personnel from XYZ will be required to attend the hearing. Further, XYZ likely will not be required to provide any form of statement or affidavit concerning the facts of the case.  The Chinese courts like to work from documentary evidence.  The evidence we have provided is quite complete and there should be no need for any supplementation in the form of either live testimony or affidavits.  As a common law attorney, I find this quite odd, but that is the Chinese system.  The courts here view humans as more likely to lie than tell the truth, so they prefer to work with hard evidence whenever possible.  This is a major advantage in this case, since the hard evidence is very good for us.  The court will not give them much room to talk out of it, which benefits our position. 

I will attend and assist at all of the hearings in XYZ court and will provide detailed reports on the proceedings.  The XYZ court is a quite reputable court. However, all legal proceedings in China are much more rough and ready than we are used to in the United States and we must be prepared for the fact that the situation can be unpredictable.  If anyone can keep things under control for us, it is Mr. XYZ. 

Please let me know if you have any questions about this matter.

I hope this will be just the first in a series of memoranda on the different stages of Chinese litigation.