Yesterday, we did a post on how to effect Hague service of process on a Chinese company so as to bring that company into a United States lawsuit. I concluded that post with the following:
Tomorrow, I will discuss why it oftentimes makes no sense to sue Chinese companies in U.S. courts, but also set forth some situations where it makes all the sense in the world.
Tomorrow is now today (actually, because I just landed in the U.S. from Korea, yesterday is today) and so I am going to talk about when to sue Chinese companies in U.S. courts and when not to.
U.S. judgments have virtually no value in China. Neither a treaty nor a reciprocal arrangement exists between China and the United States regarding the recognition or enforcement of judgments in civil matters. Chinese courts simply disregard U.S. judgments. I have written extensively about this in the following posts:
- Enforcing Foreign Judgments in China — Let’s Sue Twice
- Chinese Companies Can Say, “So Sue Me.”
- Taking Judgments To China (And Korea), Let’s Not Sue Twice
- Will Your US Judgment Be Enforced Abroad? Not China, But Maybe
- Why Suing Chinese Companies In The US Is Usually A Waste Of Time
- How To Sue A Chinese Company. Part III. Litigation Strategies And Enforcing Judgments
We have written on this so frequently because we are constantly getting contacted by American lawyers who want to retain us to enforce their judgment in China against a Chinese company. We tell them that Chinese courts do not enforce U.S. court judgments and they invariably do not take it well, mostly because they now need to explain to their clients why they spent so much time and money securing a judgment that likely will have no value whatsoever. So if your only reason for suing a Chinese company in a U.S. court is so that you can take that judgment to China and collect, do not even bother.
But this does not mean that suing a Chinese company in a U.S. court never makes sense, because there are many instances where it does, including the following:
- The Chinese company has assets in the United States;
- The Chinese company has assets in a country that enforces United States judgments (Canada, South Korea and England spring to mind);
- The Chinese company does business with United States companies that do not pay the entire amount upfront for the Chinese companies goods or services. In these circumstances it may be possible to use the U.S. court judgment to seize funds owed by the United States companies to the Chinese company;
- The Chinese company has plans to come to the United States and your judgment against it will put a real crimp in that; or
- You are the defendant in a case and there are legal benefits (like sharing the liability) or even psychological benefits to being able to tell the court or the jury that you served the Chinese company but it has chosen not to show up. This last reason should not be underestimated as my firm has handled Hague service of process on Chinese companies a number of times in these sort of situations.
What do you think?