If your Chinese supplier has failed to deliver goods, provided sub-standard products, or refused to refund your payment, you have the right to seek legal redress through the Chinese judicial system. While the process may seem daunting, China’s specialized Intermediate People’s Courts and Internet Courts are increasingly efficient in handling international commercial disputes.
Here is the step-by-step legal process to hold a defaulting supplier accountable.
Step 1: Preliminary Legal Audit & Evidence Collection
Before filing a lawsuit, you must consolidate your evidence. In China, documentary evidence is king.
The Purchase Order (PO) or Contract: Ensure it has the "Company Chop" (official red stamp) of the supplier.
Proof of Payment: Bank transfer records (SWIFT receipts).
Communication Records: Saved emails, WeChat histories, or WhatsApp messages discussing the default.
Identity of the Defendant: You must have the correct Chinese name of the supplier. A name in English is usually insufficient for Chinese courts.
Step 2: Demand Letter (Lawyer’s Letter)
Often, a formal Attorney Letter written in Chinese and issued by a licensed Chinese law firm is enough to resolve the dispute. It signals to the supplier that you are serious and prepared for litigation. Many suppliers settle at this stage to avoid court costs and the risk of being placed on the "Blacklist of Dishonest Entities."
Step 3: Determining Jurisdiction
You must decide where to file the suit.
Contractual Agreement: Check if your contract specifies a court or an arbitration commission (e.g., CIETAC).
Default Jurisdiction: If the contract is silent, the lawsuit is typically filed in the court where the defendant is incorporated or where the contract was performed.
Step 4: Notarization and Authentication (Crucial for Foreigners)
If you are a foreign entity or individual suing a Chinese company, your identity documents (Certificate of Incorporation, Power of Attorney) must be notarized in your home country and authenticated by the Chinese Embassy or Consulate (or follow the Apostille Convention if applicable).
Note: This process can take 2–4 weeks and is mandatory for the court to accept your filing.
Step 5: Filing the Case and Pre-trial Mediation
Once your documents are filed and the court fee is paid, the court will formally "docket" the case. Most Chinese courts will then mandate a Pre-trial Mediation phase where a court-appointed mediator attempts to reach a settlement between you and the supplier.
Step 6: Trial and Judgment
If mediation fails, the case proceeds to trial.
Language: The official language of the court is Chinese. All foreign-language evidence must be translated by a court-certified translator.
Representation: Foreigners are not required to be present if they have appointed a Chinese licensed lawyer to act on their behalf via a Power of Attorney.
Step 7: Enforcement of Judgment
Winning the case is only half the battle. If the supplier refuses to pay the court-ordered amount, your lawyer must apply for Compulsory Enforcement. The court has the power to:
Freeze the supplier's bank accounts.
Seize and auction their factory equipment or inventory.
Restrict the company’s legal representative from high-speed rail or air travel.
Why Partner with HireLawFirm.com?
Navigating the Chinese legal system requires local expertise and a global perspective. Our team specializes in:
Supplier Due Diligence: Preventing disputes before they happen.
Swift Asset Freezing: Preventing the supplier from transferring funds before the trial.
Bilingual Litigation: Keeping you informed in your native language throughout the process.
Don’t let a defaulting supplier stall your business. Contact us today for a free initial case evaluation.
