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Your China Contract Should Be In Chinese. Here’s Why.

Posted in Basics of China Business Law, Legal News

It is widely believed by American lawyers that their clients should do whatever they can to avoid finding themselves in a Chinese court.  This widespread belief is usually wrong.  It is usually wrong because most of the time it is the American company that will want to sue the Chinese company, not vice-versa. That being the case, the best place to sue a Chinese company is in China.  Is suing a Chinese company in China a great thing? No.  Obviously not.  But if you sue a Chinese company in China and you win, you have at least a decent chance of collecting on your judgment.  If you sue a Chinese company in the United States and win, you have almost no chance of ever collecting.  Chinese courts do not enforce US judgments.  Ever.  So unless the Chinese company against whom you get your judgment has assets in the United States (or in some third country that enforces US judgments), your US judgment is of zero value. Zero. For more on this, check out the following:

So if suing Chinese companies in China usually makes the most sense, your contract with that Chinese company should be written in such a way as to maximize your chances of prevailing in China at the lowest cost.  How do you do that?

Well the most important thing is to put that contract in Chinese.  We have always done this and we have done it because if it is in English the Chinese court will translate it into Chinese itself.  This effectively means that you will not know the exact contract on which you are suing until after the court comes back to you with the Chinese version.  Certainly it makes better sense to have your lawyers dictate what your contract says as opposed to some Chinese court.  But lately I have been hearing that a number of Chinese courts will not enforce English language contracts at all.  There is no law that says no enforcement, but various courts have taken it upon themselves to hold English language contracts void.  I have heard this from two “China people” I greatly respect but I have no personal experience to back this up.  One of these people told me that a number of Chinese lawyers had told him that “English language contracts are only admissible only IF the court so chooses. They also have the right to dictate how and who translates the contract.”  Another person told me that he had his English language contract rejected by a court in Chengdu as invalid.

Would love to hear other experiences with trying to enforce an English language contract in a China court.  In the meantime though, do your China contract in Chinese.  Okay?