Foreigners' guide to China procurement disputes: lawyer's letter (RMB 2k-5k) & litigation. Covers court fees, document rules (Hague Apostille), and attorney costs.
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When foreigners have procurement disputes with suppliers in China, negotiation should be the first step. What if negotiation fails? This article introduces other options.
I. If negotiation fails, you may first engage a Chinese lawyer to send a Lawyer's Letter for quick pressure
A Lawyer's Letter issued in the name of a law firm demands the supplier to perform its obligations (payment, replacement, compensation) and clarifies the consequences of breach of contract.
A Lawyer's Letter is only valid if stamped with the law firm's official seal. This is why simply asking a lawyer to call the other party is usually ineffective (as many of our clients request), because the other party cannot verify the lawyer's identity over the phone.
- Fixed fee: generally RMB 2,000–5,000
- If the other party refuses to cooperate, litigation may be initiated immediately.
II. Full Litigation Procedure
1. Determine the competent court
- General rule: sue at the court where the supplier is located.
- Agreement prevails: if the contract specifies a governing court, follow the agreement; if not, you may choose the court at the place of signing or performance of the contract.
2. Prepare documents (cross-border compliance)
- Identity documents: passport and Chinese translation, power of attorney
- Litigation materials: complaint, key evidence (contracts, orders, payment records, communication records); all foreign documents must be translated into Chinese and stamped by a qualified translation company; documents formed overseas (such as passports) require **Hague Apostille**.
- Document costs: translation RMB 200–500 per document; notarization and certification RMB 1,500–5,000 per document.
3. Case filing and trial
- Filing: submit materials for review; prepay court fees (refundable if you win, borne by the losing party).
- Trial (usually within 3 months after filing): the court will prioritize mediation; if mediation fails, a trial will be held. You may be fully represented by a lawyer and do not need to appear in person.
- Judgment (usually within 3 months after hearing): you may appeal within 15 days after first-instance judgment. If the other party refuses to perform after the judgment takes effect, you may apply for enforcement (freezing accounts, seizing goods).
III. Detailed Cost Breakdown
1. Court-related fees (borne by the losing party)
- Court fees (for monetary claims, calculated progressively):
1. ≤ RMB 10,000: RMB 50
2. RMB 10,000–100,000: amount × 2.5% − 200 (e.g., RMB 100,000 = RMB 2,300)
3. RMB 100,000–200,000: amount × 2% + 300
4. ＞ RMB 200,000: rate decreases gradually, maximum 0.5%
- Preservation fee (freezing assets): 1% for ≤ RMB 100,000; 0.5% for ＞ RMB 100,000; capped at RMB 5,000.
- Appraisal fee (quality / damage disputes): RMB 5,000–20,000.
2. Attorney fees
Fixed fee: RMB 1,000–100,000 per case (higher for cross-border cases); contingency fee: basic fee plus 10%–30% of the recovered amount after winning.
3. Other expenses
- Notarization / certification: RMB 1,500–5,000 per document
- Translation: RMB 200–500 per document
- Travel expenses: reimbursed at actual cost for out-of-town cases.
IV. Practical Suggestions
1. Include a clause in the contract: *"The breaching party shall bear all reasonable costs of rights protection, including attorney fees and court fees."*
2. Keep full written evidence of communications, payments, and inspections; avoid oral agreements.
3. Prioritize sending a Lawyer's Letter: low-cost attempt to settle and avoid lengthy litigation.
4. Choose a cross-border lawyer: preferably a PRC lawyer experienced in foreign-related procurement disputes and bilingual.
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