Local representation can be the key to successfully collecting debt in another country. Enforcement of a debt can be challenging in some regions. Familiarity with the local debt collection process can help manage creditors expectations. Our TCM China answers offers some insight to debt collection and legal recovery in the mainland.

1. Are there any problems with a US claimant pursuing a claim against a debtor in your country?

When foreign nationals, stateless persons, or foreign enterprises or organizations need to appoint lawyers for filing or respond to a lawsuit in a people’s court, they shall appoint the lawyers of the People’s Republic of China only. The power of attorney and related proof docs must be authenticated by the US notary office and then confirmed by the Chinese embassy in US before those docs becomes effective.

2. The outstanding invoices are in dollars. Can the claim made in court proceedings be in dollars?

Yes. The plaintiff can announce their claim in dollars.

3. If there is no contractual right to interest, can interest nonetheless be claimed, and if so, at what rate?

Yes. We can refer to the loan interest rate of the Bank of China.

4. How do court costs compare with the US?

The court cost is comparatively lower than in US and generally will not exceed 2.5% of the total claim amount. The lawyer’s fees depends on each case and range from 10% to 25%.

5. What language would the court proceedings be in, and do documents have to be translated?

The litigation will be conducted in Chinese. The proof docs should be translated by the certain agencies appointed by the court.

6. Will witnesses be required to visit your country for depositions in the trial?

All individuals who have knowledge of a case shall be under the obligation of giving testimony in court. When it is truly difficult for a witness to appear in court, he may, with the consent of the court, submit a written testimony.

7. What are the rules regarding enforcement of a judgement obtained against a debtor in the U.S.?

If a person fails to fulfil his obligations specified in a legal document, the court may notify relevant departments to assist the measures of restricting leaving the country, making records on the credit system, making public the information about non-performance of duty through public media or any other measure stipulated by law. If a party applies for enforcement of a legally effective judgment or ruling made by a people’s court and the party subject to the enforcement or its property is not within the territory of the People’s Republic of China, the applicant may directly apply for the recognition and enforcement of the judgment or ruling to the foreign court that has jurisdiction over the case, or have the people’s court request a foreign court to recognize and enforce the judgment or ruling according to the relevant provisions of the international treaties concluded or acceded to by China or on the principle of reciprocity. If a party applies for the enforcement of a legally effective arbitration award made by a foreign-affair arbitration institution of the People’s Republic of China and the party subject to the enforcement or its property is not within the territory of the People’s Republic of China, the applicant may directly apply for the recognition and enforcement of the arbitration award to the foreign court that has jurisdiction over the case.

8. What personal liability is there on officers of a corporation that has issued checks that have not been honored?

Issuance of dud checks or issuance of checks the signature and seal thereon are not in line with those left in advance not with the purpose of gaining money and belongings by cheating shall be imposed a fine of 5% of the amount at face value but not less than RMB 1000 Yuan by the People's Bank of China; the bearer has the right to ask the maker for 2% compensation of the amount on the check

9. What liability do officers of the corporation have if the corporation goes into bankruptcy?

Where a director, supervisor or senior manager, going against his obligations, fails to be honest and hardworking, which leads to bankruptcy of the enterprise where he works, he shall bear civil liability according to law. The person as specified in the preceding paragraph shall not serve as a director, supervisor or senior manager of any enterprise within three years from the date when the procedure for bankruptcy is terminated.