China lawyers
Don’t be a sucker. Translating your contract won’t work.

Every few months someone will write one of our China lawyers asking them to translate an already written contract for China. We always refuse, not just because we are lawyers not translators, but because doing so would be a complete waste of time simply because contracts that work for the United States, Europe, Australia, Canada, etc., simply do not work for China and putting those contracts into Chinese won’t change that.

The other day though, someone who wrote me asking to have one of our China attorneys translate an NNN Agreement into Chinese for him pushed back when I said that our firm has a clear and longstanding policy never to translate contracts (or anything else for that matter). After a couple more emails where I adamantly refused to have my firm do the work, he asked me if I would “just tell him how we arrive at our liquidated damages amount” and “refer him to a really good English-Chinese translator.”

My response to that was as follows:

You can translate your NNN perfectly (and good luck with that) but there is still a 99.99% chance it will be completely ineffective. I say this because I have never seen an NNN that works that has not been written by a very experienced China lawyer. I suggest that you read our most recent two posts on our blog, as those deal with how IP squirts out unless your NNN or other agreement includes provisions preventing them from leaking to these other third parties. This is only one of many ways the NNN you want translated pretty much has to be ineffective.

As for liquidated damages [more properly called contract damages], that is an art not a science and — get this — you have to write this in a specific way because if it is deemed to be a penalty and not a valid and reasonable effort at quantifying damages, no Chinese court will enforce it. In the end the right amount should be based on, among other things, the court’s predilection in the Chinese city in which the disputes will be resolved (as China’s courts are all over the map on this — and you had better choose the right court for your disputes or your contract will be unenforceable), the value of the product at issue, the value of the IP at issue, the size of the companies involved, the type of IP at issue, and, in the end, the most important thing is that the amount be low enough such that the other side will sign it and the court will enforce it. Oh, and one more thing, you need to write this so that you are not limited to just this amount, but so that you are also free to pursue other damages on top of this. The whole point of the contract damages provision is not to get the penalty; it is to prevent the other side from leaking out your IP. The force of this provision is that it allows you to go to a Chinese court (but only if written a certain way) and freeze the assets of the Chinese company. This is the key to getting the Chinese company to stop abusing your IP. This is also the key to this provision; it must be written “just so,” so that the Chinese company believes it is better off not stealing your IP than bearing the wrath of that provision if it does. For more on this, check out this. I have never seen anyone other than an experienced China lawyer get this right.

If despite the above, you want to spend money on translating I don’t think it matters who you use and you really do not need someone who knows legal terminology because you probably have not used the right legal terminology in the English language version of your NNN Agreement in the first place. There are plenty of Chinese translators on UpWork but I cannot recommend anyone because we do not use translators; we use our own Chinese lawyers to draft agreements.

Bottom Line: Translating contracts into Chinese does not make them valid China law contracts, it just doesn’t.

Print:
EmailTweetLikeLinkedIn
Dan Harris

I am a founder of Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, China and Spain.

I mostly represent companies doing business in emerging market countries. It has taken me many years to build my network and it takes constant communication and travel to maintain it. My work has been as varied as securing the release of two improperly held helicopters in Papua New Guinea, setting up a legal framework to move slag from Canada to Poland’s interior, overseeing hundreds of litigation and arbitration matters in Korea, helping someone avoid terrorism charges in Japan, and seizing fish product in China to collect on a debt.

I was named as one of only three Washington State Amazing Lawyers in International Law, I am AV rated by Martindale-Hubbell Law Directory (its highest rating), I am rated 10.0 by AVVO.com (its highest rating), and I am a SuperLawyer.

I am a frequent writer and public speaker on doing business in Asia and I constantly travel between the United States and Asia. I most commonly speak on China law issues and I am the lead writer of the award winning China Law Blog (www.chinalawblog.com). Forbes Magazine, Fortune Magazine, the Wall Street Journal, Investors Business Daily, Business Week, The National Law Journal, The Washington Post, The ABA Journal, The Economist, Newsweek, NPR, The New York Times and Inside Counsel have all interviewed me regarding various aspects of my international law practice.

I am licensed in Washington, Illinois, and Alaska.

In tandem with the international law team at my firm, I focus on setting up/registering companies overseas (via WFOEs, Rep Offices or Joint Ventures), drafting international contracts (NDAs, OEM Agreements, licensing, distribution, etc.), protecting IP (trademarks, trade secrets, copyrights and patents), and overseeing M&A transactions.