Good China contract lawyers

My firm’s answer is always a resounding NO.

Every couple of weeks one of our China lawyers will get an English or Spanish language contract (these usually go to our Barcelona office) with the following question: “What would you charge to translate this for China.” We typically respond by asking whether they want just a straight translation or whether they want us to “make the contract work for China” as well. About 98% of the time the response is something along the lines of how they would like us “to fix any problems you see while translating.”

In the case of the approximately 2% who want a straight translation we explain that we are a law firm and not a translation agency and that means we do not translate documents. We then suggest they use a good translator, of which there are countless.

For those who want us to fix any problems, we explain how that will require a lot more than our having one of our bilingual attorneys simply make a few corrections while translating; it will require we gather up all of facts relevant to the transaction and discuss with them (our new client) their goals for the transaction and their goals for China and even their goals for the rest of the world. Oftentimes, this also requires we conduct legal research on China national and local laws and speak with Chinese government officials. Much of the time this also requires we do at least basic due diligence on the Chinese counter-party. Does it really exist? Is it licensed to legally do the business that will be set forth for it to do under the contract? We often instruct them to register their key IP (usually trademarks, design patents, copyrights) in China before doing any sort of deal or signing any contract.Much of the time, we end up telling them that the whole structure of their deal is wrong and instead of an X contract, they need a Y contract. We also usually need to provide them with a China NNN Agreement to protect their IP and trade secrets before they reveal anything more to the Chinese side of the deal. In other words, our work on this will be no different in type or scope than if we were to draft the contract from scratch ourselves.

Why is this always the case? Because this is China and because contracts that work for the United States, Australia, Canada, Spain, Mexico, etc., do not work for China and putting those contracts into Chinese won’t change that. See China Contracts: Make Them Enforceable Or Don’t Bother. Almost without exception, the contracts we are provided will not be enforceable in China and thus will not work at all for the company that believes all they need is a translation and a “clean-up.”

Every once in a while the potential client will push back and ask a question or two that reveals that he or she plans to move forward on their own, but still wants our help to improve upon what they have already done. I was once irritatingly asked if I would “just tell him how we arrive at our liquidated damages amount for our China NNN Agreements” and “then refer him to a really good English-Chinese translator.”

My irritated 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 and written expressly for the client’s specific situation. I suggest you read some of our blog posts on how IP leaks out through third parties unless your NNN Agreement or other agreement includes provisions preventing IP from long to these other third parties. This is only one of many ways the NNN you want translated pretty will still be ineffective.

As for the amount of liquidated damages [more properly called contract damages], that is an art not a science. See China Contract Damages: More Art Than Science. You also must write this provision in a very 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 is 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 and economic strength of the companies involved, and the type and value and nature of the IP at issue. Oh, and the most important thing is that the amount be low enough such that the Chinese side will sign it and the court will enforce it, yet not so low that it will fail to deter the Chinese side from violating your contract. You also need to write this so that you are not limited to just the amount you set forth for damages, but so that you are also free to pursue other damages on top of this.

The whole point of the contract damages provision is usually not to get the penalty; it is to prevent the Chinese side from using your IP itself, or leaking it out to one of its “sister” companies. The value in properly drafted contract damages provisions is that they allow you to go to a Chinese court and freeze the assets of the Chinese company. When part of an NNN Agreement, your contract damages provision must be written so the Chinese company believes it is better off not stealing your IP than suffering the wrath of that provision if it does.

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 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 because we do not use outside translators I cannot recommend anyone to you.

I wish you all the best with this.

Bottom Line:  Translating a contract into Chinese does not a Chinese contract make it.

 

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.