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This series of posts is on how to pursue litigation or arbitration against a Chinese company that owes you money or has wronged you. Part 1 dealth with jurisdiction and on Hague Convention service of process. Part 2 was on conducting discovery against a Chinese company. This post is on litigation strategies against Chinese companies and enforcing judgments against them.
Litigation Strategies Against China Companies. U.S. companies hold many advantages over Chinese companies in U.S. litigation. American jurors generally view Chinese companies unfavorably. Chinese companies frequently try to skirt the discovery rules and if you bring this to the court’s attention the Chinese company is at risk of losing credibility or incurring sanctions. Probably most importantly, Chinese companies tend to underestimate the importance of U.S. trial court decisions, often holding back on vigorously defending a lawsuit until appeal. From Chinese Companies Court Disaster:
Appeals in China are usually de novo, meaning that if a trial court judge disagrees with your version of the facts, you can make another attempt to tell your side of the story at the appellate level. But in the U.S., appeals courts take as a given the trial court’s findings of fact and will hear only disputes about the trial judge’s interpretation of legal questions. This means that in America you rarely get more than one chance to put forth your version of the facts, so you had better do it right the first time. In China the fight often begins only once a case hits the appeals court.
U.S. Judgments In China. U.S. judgments have virtually no value in China. There is no treaty nor any reciprocal arrangement between China and the United States regarding recognition or enforcement of civil judgments. For these reasons, Chinese courts disregard U.S. judgments.
If the Chinese company you are suing has assets in the United States or in another country that generally enforces U.S. judgments (such as the United Kingdom, Canada, or South Korea), suing in a U.S. court may be the best way to proceed. Otherwise, the judgment of a U.S. court may end up being of little to no use. In other words, you should think long and hard before you sue a Chinese company in a U.S. court because spending time and money to secure an unenforceable judgment is seldom a good way to go.
My fourth and final post in this series will address suing Chinese companies in China and in arbitration.