Court in China

Court in China is a complex legal structure that reflects the centuries-old history and modern political and economic priorities of the state. When foreign entrepreneurs start working in this market, they often do not realize how important it is to understand the specifics of the local legal system. The fact is that any business activity - from sourcing to creating joint ventures - can potentially lead to conflicts if the terms of cooperation are not clearly spelled out or if deep disagreements arise between partners. In the complex business environment of the PRC, legal protection becomes an important tool, but at the same time, facing local laws and bureaucratic nuances without preparation means exposing the company to increased risks. Any conflict can develop into protracted proceedings, the result of which depends not only on formal norms, but also on the practices developed by local courts over decades of development. That is why understanding How does the Chinese court system function?, helps a business avoid many wrong steps, saves from material losses and maintains its reputation in a country where trust and image are especially valued.

In this article we will look in detail at how and on what principles they work. Chinese courts, and also analyze the basic differences between local justice and Western analogues. We will analyze the key barriers that foreign companies may face during legal proceedings, including cultural differences, language aspects and the specific work of Chinese lawyers. We will also consider the structure of the legal system. Particular attention will be paid to the principles affecting the independence of the authorities and the degree of party control. We will also touch upon the appeals system and the conditions for reviewing cases, and analyze the advantages and disadvantages of alternative dispute resolution options, such as arbitration and mediation. Finally, we will discuss how to avoid trial in China, we will formulate recommendations for protecting business and illustrate how legal expertise helps win cases even in the most difficult legal conditions.

Main challenges for foreign companies in litigation in China

When a foreign entrepreneur decides to enter the Chinese market, he often thinks that compliance with familiar international standards and the presence of well-drafted contracts will be sufficient for successful work. However, reality shows that the Chinese judicial system has unique features that can create additional barriers for foreign investors. One of the main challenges is that formal legislation does not always reflect the actual practices of local courts. They can come not only from the letter of the law, but also from unspoken factors, be it regional interests or economic development priorities of a particular province. In addition, in some cases, officials may influence decisions if the dispute involves powerful state-owned corporations.

Another problematic issue is the language issue. Despite globalization, during litigation between companies in China Chinese remains the main working language. Foreign entrepreneurs accustomed to negotiating in English may find that even a high-quality translation is not always able to convey specific legal nuances. Moreover, in the legal process, special attention is paid to the execution of documents according to strict procedures. If the statement of claim or evidentiary materials are presented only in a foreign language, this may result in a delay, since court in China will require official translation and notarization. This not only slows down the proceedings, but also increases legal costs.

Cultural differences also have an impact. In the PRC, a special place is occupied by the concept of “persons” and the system of informal connections. In corporate practice, this can lead to the fact that decisions are not always made on the basis of legal reasoning alone. Sometimes local judges are guided by social and political considerations, trying to find a compromise that will be as consistent as possible with the interests of a particular locality. Foreigners who are not familiar with these subtleties may perceive the result of the case as biased, although in fact a court in China could act in line with local traditions. Often, the parties try to resolve the dispute even before the official start of the proceedings, using personal connections or attractive financial offers.

Lack of transparency and uniformity in enforcement is also a significant obstacle. In theory, Chinese law and courts should be guided by uniform rules, but in practice, different regions may have different procedural approaches. In one place, judges strictly require a complete set of documents certified in accordance with all requirements, while in another they allow a more liberal interpretation of the same article of the law. Foreign companies have to consult with local lawyers in advance to assess the characteristics of the specific area or city in which the event will take place. court in China. Taking all these factors into account helps you build a competent legal strategy and avoid serious financial losses.

General structure and features judicial system in China

When starting to study how the court works in China, it should be taken into account that the country’s legislative framework has been significantly updated over the past few decades. Following a series of economic reforms starting in 1978, there was a need to modernize the legal system to provide legal guarantees for investment and international trade transactions. As a result, new codes and procedural norms emerged, many of which were created at the intersection of Soviet experience and Asian traditions. However, even if there are formally uniform rules, the Chinese judiciary continues to develop with an eye on party priorities. At the same time, judicial reforms regularly make adjustments to the process, as the government strives to reduce bureaucracy and digitalize legal proceedings.

Structure of Chinese courts officially enshrined in legislation. It looks quite logical: the state has formed four main levels of people's courts, each of which has its own competence. In recent years, special emphasis has been placed on the introduction of electronic systems for filing claims, tracking cases and presenting evidence. This trend is evident not only in metropolitan areas, but also in many provincial centers, where special Internet courts have been opened, created for disputes related to e-commerce and online services.

It is important for foreign investors to understand that Chinese court structure allows for the existence of so-called specialized judicial units. These include intellectual property courts, financial courts and maritime courts. Each of them focuses on a specific area of ​​law and is designed to provide a more professional handling of disputes. Despite the choice of a specific court for filing a claim, there is always the possibility that external, including political, circumstances may influence the outcome of the case.

Hierarchy of the judicial system in China

Chinese judicial system formed in the form of a hierarchical structure, where at the very top is the Supreme People's Court (最高人民法院). The said authority has the highest rank in the relevant scheme, and also coordinates the activities of all dependent legal institutions. This supreme mechanism considers objections to the decisions of the senior people's collegiums and has the authority to single-handedly correct decisions that are of significant national importance. In addition to the judicial sphere, this structure publishes explanations of laws that serve as a guide for subordinate authorities in analyzing similar issues.

The next step belongs Higher People's Courts in China (高级人民法院). They operate within regions, and also operate in four metropolitan areas of direct subordination, including Beijing and Shanghai. These judicial units review verdicts approved by lower-class authorities, but can administer justice in the first instance when it comes to serious conflicts or proceedings affecting public interests. Each province often has individual legal specifics, so the decisions of such panels may be subject to change taking into account the economic and social situation.

National courts (中级人民法院) function in large cities, regional centers and special administrative entities. As a rule, such units are authorized to analyze complex criminal, civil and economic disputes, and also act as an appeal board for verdicts rendered by courts at the basic level. Considering that many commercial conflicts between companies can involve significant financial claims, it is at this level that an impressive portion of disputes related to violations of contracts, corporate conflicts and other categories are resolved.

Key Principles of China's Judicial System

The system is based on the principle of popular sovereignty combined with party leadership. The People's Court of China is formally obliged to act in the interests of citizens, protecting their rights and freedoms, but the real balance of power may tilt in favor of state interests. The role of the party in the Chinese judicial system remains high, since many personnel appointments are under the control of the Communist Party. In addition, party committees can form ideological directions that are reflected in judicial practice.

Case law in China is not formally recognized as a source of law, but in reality, the decisions of the Supreme Court become a mandatory model for lower authorities. When faced with similar factual findings, courts typically rely on pre-existing “model examples” and guiding explanations. Thus, although there is no classical precedent in the Anglo-Saxon sense in China, there is a developed practice of judicial interpretations published by the highest court.

The role of the Supreme People's Court in shaping law enforcement is especially important, since this body not only considers business disputes in the final instance, but also issues documents that direct judges at all levels to a unified approach to certain categories of cases. For example, if a new area arises (for example, Internet technologies or blockchain), the Supreme Court in China may issue instructions on how to apply existing rules of law to such specific cases. This practice allows us to maintain uniformity of law enforcement throughout the country and equalize the differences in practice in different regions.

Corporate disputes in China: how conflicts between companies are resolved

Any business project in the Middle Kingdom potentially involves the risk of corporate disagreements. Corporate disputes in China often arise when the parties interpret the terms of agreements differently or inconsistent act in terms of managing a company with foreign capital. A significant increase in the number of such conflicts is explained not only by the increase in the volume of foreign investment, but also by the increasing complexity of business schemes involving partners from different countries. In addition, Chinese enterprises, seeking rapid expansion, may underestimate the legal consequences of non-compliance with obligations.

Courts in China are able to consider conflicts related to transactions in the field of production, services, supplies, as well as disagreements arising within joint ventures. There are also situations where a corporate structure created with the participation of foreign shareholders leads to internal struggle for control over the management or assets of the company. Litigation between companies in China can be extremely complex, especially if one of the parties is a powerful local corporation with the support of regional authorities. Initially, it is difficult for a foreign investor to objectively assess how high the likelihood of administrative intervention or other factors not directly related to the law is.

Business and courts in China interact according to special rules: on the one hand, the state is interested in creating a positive investment climate, on the other hand, there remains concern that too active satisfaction of the demands of foreign plaintiffs may contradict the interests of large local enterprises. Chinese corporate law regulates the creation and operation of companies in sufficient detail, but certain gaps in it allow the parties to exploit loopholes. Sometimes there are situations when the defendant company tries to shift responsibility to a related legal entity or challenge the authenticity of documents, citing inaccurate translations.

That's why judicial practice on corporate disputes in China continues to be shaped by numerous clarifications of the Supreme Court. These clarifications are systematically updated, which introduces certain dynamics into the law enforcement environment. To successfully resolve a commercial conflict, it is necessary to calculate potential pitfalls in advance, have a good understanding of the procedure for filing a claim and have a proven defense strategy. It is especially important for a foreign investor to rely on the assistance of law firms that are familiar with the local context and have experience in conducting proceedings against Chinese enterprises.

Main types corporate and commercial disputes in China

Contract disputes in China occupy a central place among corporate conflicts. They may relate to failure to meet delivery deadlines, refusal to pay for goods and services, as well as price revisions due to market fluctuations. If the contract has not been worked out in detail and does not contain precise provisions regarding force majeure, termination conditions or consequences of failure to fulfill obligations, the parties may find themselves in a protracted standoff. This is especially true for high-value transactions or long-term projects where every little detail matters.

Shareholder disputes in China can flare up even with seemingly good business performance. Non-transparent distribution of dividends, violation of the rights of minority investors or uncoordinated sale of shares - all this can lead to legal action. However, Chinese law generally maintains the formality of a company's charter documents and internal corporate agreements, placing emphasis on ensuring that each party fulfills its stated obligations. If the constituent documents of the shareholders do not provide for a mechanism for resolving disputes, then the conflict that arises may be protracted and its result unforeseen.

Protection of intellectual assets, including patent rights, brand marks and author rights, is an essential part of commercial litigation in China. Conflicts in this area are regularly caused by encroachments within the framework of copying technical solutions, unlawful use of officially confirmed brands and design patent rights, and are also associated with the sale of goods under fake title. Enterprises that ignore the mechanisms for taking into account their own legitimate interests in the PRC may risk having their trademarks discovered that are already registered to others. For resolution of commercial disputes on intellectual property issues in China it is necessary to submit a request either to the relevant departments, or to the Beijing Intellectual Property Court. This body is in charge of cases involving foreign corporations in asserting patent rights. At the same time, local authorities also have the right to analyze similar issues.

Corporate fraud and unfair market practices come in many forms, including misrepresentations in documentation and misleading suppliers and customers. In some situations, the case may become a criminal prosecution, but more often such conflicts are resolved within the framework of civil proceedings, where the issue of compensation for damage is considered. Legal risks doing business in China are especially high if the company has not conducted a preliminary check of its counterparties or has entrusted critical aspects of its activities to a local partner - finances, logistics, access to corporate secrets.

Interaction of international firms with courts KitaI

A large number of foreign companies begin their activities within the PRC without fully understanding the local legal peculiarities. Most often, they come to the need to delve into the judicial mechanisms of this country only when conflicts arise, trying to figure out how to file a claim and what regulatory requirements must be followed. However, timely preparation for possible proceedings should be carried out at the stage of drawing up the contract, so that all participants are informed of the likely consequences. Disputes between international suppliers and Chinese institutions are generally analyzed according to the registered office of the defendant, unless the parties have agreed otherwise in advance.

Linguistic barriers and documentation format are often the most difficult obstacles. Chinese courts introduce strict regulations regarding the appearance of submitted papers, which must be presented in Chinese or accompanied by a notarized translation. Any differences between the original and its adapted version may give rise to objections, and the tribunal may refuse to accept such material as evidence. Claims against local organizations require detailed study, since any inaccuracy that could be considered insignificant abroad, can influence the result not in favor of the applicant.

Despite all the difficulties, experience shows that foreign companies often win legal disputes, provided that they have a legal position supported by evidence and sufficient resources to conduct a lengthy process. Chinese commercial law is evolving, and the state is encouraging the development of more transparent conflict resolution mechanisms, as a stable legal environment attracts investment. However, any initiative to go to court must be taken seriously calculated, after all, courts in China are traditionally seen as a last resort when all other means of settlement have failed.

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Litigation in China: key steps and rules

Understanding the General Principles legal proceedings in China does not always give a comprehensive idea of ​​how exactly it is implemented litigation in China in practice. In order to assess your chances of success, it is important to know what stages a court case goes through, how the requirements for filing documents are formulated, and what the dispute resolution procedure generally looks like. The main steps are discussed below, with a focus on corporate conflicts, although the general logic applies to other types of civil cases.

Preparing a claim. As a first step, it is important to analyze whether it really makes sense to contact the court in China and whether there are alternative ways to resolve the situation. When the decision is made to go to court, the applicant company collects the necessary evidence, including contracts, business correspondence, bank statements and emails. These materials must be properly certified and, if documents are in a foreign language, translated into a language recognized by the court. Claim process in China is determined by procedural law, which requires the applicant to provide a detailed statement of the circumstances of the case, justification of the legal basis for the requirements and clearly expressed requirements for the defendant.

Acceptance of the claim for proceedings. After submitting documents to the court, the responsible officer checks the documentation for compliance with established requirements. IN Chinese judicial system the claim is accepted for consideration only after successful verification, after which the applicant is given time to pay the state fee. If serious deficiencies are found in the documents, the claim may be left without progress, giving a period for their correction. In addition, during this period the court determines whether the case falls within its jurisdiction. Claims in Chinese court may be rejected if the judicial authority decides that this category of cases should be considered by other departments or administratively.

Preparatory meeting. After registering a case, the court holds preliminary hearings, at which it is determined what evidence will be considered, whether it is necessary to attract experts, or whether to appoint special examinations. Judicial deadlines in China allow several such meetings to be held if the case is particularly complex. At the same stage, the defendant presents his objections and may petition to dismiss the claim or to postpone the hearing. Judicial practice in China shows that at the preparatory stage the parties sometimes try to conclude a settlement agreement, so judges often act as a kind of mediator, suggesting ways of pre-trial settlement.

Main consideration. After completing all the formalities, the process proceeds to the stage of detailed consideration of the case. How is a court hearing conducted in China?? Participants present their arguments, present new evidence, if any, and call witnesses and experts. Note that the judge actively asks questions to clarify details and guides the process, trying to prevent deviation from the subject of the proceedings. All evidence presented in a Chinese court must be particularly convincing, especially when it comes to documentation from abroad, whose authenticity and translation quality are subject to strict scrutiny.

Making and announcing the decision. Upon completion of the consideration, the judge or panel of judges makes a decision in which they formulate conclusions on the merits of the claim. At the same time Chinese legislation and courts are guided by the written form of the final document, which indicates the motivation for the decision, legal justification and prescribed measures for implementation. How to prove your case in a Chinese court? The main thing is to provide a detailed factual base and reflect the compliance of the stated requirements with current legislation. The final decision may provide for the forced recovery of sums of money from the obligated party, the transfer of assets belonging to it, or other methods of compensation for infringed interests.

When any of the persons involved expresses disagreement with the adopted act, he has the right to challenge the decision in a higher-level body within a specified time frame. The powers of the applicant when considering the case in the judiciary of the People's Republic of China suggest the possibility of initiating an appeal if the initial authority made obvious procedural errors or did not take into account essential materials. Resolving a dispute with local counterparties at the review stage may involve re-examining the circumstances. However, sometimes further analysis is limited - only those aspects that were subject to objections from the initiator or the responsible party are taken into account.

In some cases, a supervisory review may be required if new circumstances come to light new circumstances or gross errors made by lower courts. Lawsuits against a Chinese company may be delayed if there is a need to involve third-party experts, conduct additional examinations, or deal with issues related to foreign law (for example, when the law of a foreign state is applied).

Each of these steps involves additional costs and takes time. Legal costs in China may cover not only payment of court fees, but also attorneys' fees, translation costs, as well as accommodation for the plaintiff or his representatives if the process takes place in another city. As a result, the case strategy must be carefully thought out: sometimes it makes more sense to reach a pre-trial agreement than to get involved in a lengthy trial. However, if the legal arguments are compelling and the financial stakes are high, going to court in China can be an effective method of protecting business interests.

Enforcement of judgments in China

Getting a court order in your favor is only half the success, because it is more important to achieve its actual execution. Why does China have a complex system for executing court decisions? Part of the problem is that defendants, especially if they have connections or large assets, may take steps to hide money and property. Sometimes a situation arises when a debtor company transfers assets to affiliated structures, creating artificial debts in order to legally evade forced collection.

How does the blacklist mechanism work for debtors? Legislation allows ships in China to enter unscrupulous payers into a special database, which is published and synchronized with the public credit rating system. Such inclusion can seriously complicate the life of a company or individual: from a ban on the purchase of business class tickets to credit restrictions and public discredit. The interaction of judicial authorities with business when collecting debts is expressed in the fact that debtor companies begin to lose the opportunity to enter into new contracts, since partners see their status in an open register.

Enforcement of judgments in China entrusted to special departments at local courts, which operate on the principle of enforcement proceedings. How to implement judicial debt collection in China When the debtor does not respond to demands? In certain circumstances, bailiffs can seize bank accounts, confiscate vehicles and other property of the debtor. Procedure for enforcing court orders in China also provides for the confiscation and subsequent sale of assets at auctions under judicial supervision. However, if the debtor does not have working capital, it becomes especially difficult to obtain funds for debts, and the process can drag on for a long time.

Despite existing tools, problems with enforcement of court decisions in China are still relevant. Some companies prefer government inaction in the hope that the plaintiff will get tired and give up further fight. Failure to comply with court decisions in China often results in the imposition of additional fines and seizure of assets, although this does not guarantee compensation for the creditor's losses. There is a risk that obligations under local court decisions will not be fulfilled if the debtor uses illegal means or officially declares bankruptcy.

How can you ensure that you receive payments after the issue? court verdict in China? The best option is to keep the situation under constant control, monitor the defendant's financial status and, if necessary, contact law enforcement if signs of fraud or deliberate evasion of obligations are detected.

How the appeals and review system works in China

Not all judicial acts are satisfactory to the parties, and that is why the laws of the PRC provide an appeal mechanism. Court in China allows that any participant in the process who disagrees with the decision may request reconsideration at a higher authority. However, this requires meeting deadlines and formal requirements. In order to file an appeal in China an appeal statement should be prepared, justifying exactly what the errors of the lower court were. All materials confirming the claims against the first decision are attached to the application.

During an appeal review, the case may be re-examined on the merits or limited to checking only those points that are disputed by the party. Challenge a court decision in China possible if available new evidence. To do this, you need to submit a request for the inclusion of additional materials, explaining why they were not presented earlier. If the judge decides that the evidence is truly significant and could not have been presented at the first review, it may be accepted and the findings reconsidered.

The Supreme People's Court of China acts as the highest court of appeal only in exceptional cases. Disputes are usually heard up to the level of the Higher People's Court of the relevant province or central government city. In addition, there is a special procedure for review in extraordinary situations, for example, in case of serious procedural violations or when the verdict of the first instance is clearly contrary to the law. However, initiating this review mechanism can be quite difficult and the process requires a significant amount of time.

Thus, appeals to the PRC provide an additional opportunity to restore justice if the first instance made shortcomings. But, as a rule, without strong arguments about the court's errors, it is not easy to win an appeal. It should be noted that the procedure for reviewing a verdict in the PRC is subject to strict regulations, and failure to comply with the allotted periods (usually 10 to 15 calendar days for filing a complaint in civil matters, subject to certain requirements) in most situations deprives the participant of the right to request additional review.

Alternative ways to resolve commercial conflicts in China

Numerous entrepreneurs are aiming to find mechanisms that will help reduce the costs of legal procedures. Litigation in China is not always the only option available, as the parties have alternative approaches at their disposal that may be less cumbersome and still very effective.

The mechanism of arbitration review (arbitration) is especially in demand, which is widely practiced by significant companies interested in prompt and non-public resolution of the dispute. Chinese International Arbitration has long established itself as a respected tool for resolving differences with foreign components, especially in the commercial, capital investment and development sectors.

Arbitration courts in China have the right to accept disagreements if the counterparties have previously added an arbitration clause to the contract. The settlement of claims under this approach is based on the impartiality of the arbitrators and the exclusion of unnecessary procedures inherent in official judicial institutions. Besides, the arbitration process in China is characterized by significant variability, allowing the parties to independently determine the language of the meetings, the place of the proceedings and the composition of the special commission. This advantage is especially valuable for foreign corporations.

Mechanism of meditions in China is also acceptable within the framework of the arbitration process: the arbitrators have the right to invite the parties to agree to a settlement, and upon reaching agreement, a document on peaceful settlement is issued that has legal effect.

How to submit a request to Chinese arbitration? Enough to fulfill a sequence of actions regulated by the rules of a specific site: submit a petition, pay the established fees and determine the circle of arbitrators. The main advantages of such consideration in China are expressed in the ability to bypass protracted administrative barriers, accelerated adoption of final decisions and a fairly loyal attitude towards foreign applicants. However, if one of the parties does not intend to reach an agreement, turning to the judicial system becomes inevitable.

Key arbitration institutions

There are several recognized platforms in China, among which are:

• CIETAC (China Foreign Economic and Commercial Arbitration Commission),
• SHIAC (Shanghai Structure for International Arbitration),
• SCIA (Shenzhen City Arbitration Commission).

These organizations specialize in resolving conflicts in the areas of international commerce, financial transactions and investment projects involving several countries.

CIETAC, being the oldest and most authoritative body, has branches throughout China, making the settlement process more accessible to participants from various regions. Founded in 1956, the commission has extensive experience in resolving international trade disputes, especially in the area of ​​exports and imports. CIETAC participation in settlement of international disputes in China guarantees a high degree of respect from local judicial authorities, which significantly increases the likelihood of enforcement of arbitral awards.

SCIA takes on the role of the most dynamic arbitration center focused on high-tech projects and innovative sectors of the economy. Shenzhen, neighboring Hong Kong, is a crossroads of international and local business flows, creating a unique environment for investment deals and start-ups. That's why arbitration proceedings in China under SCIA are in demand when it comes to agreements related to scientific research, technology and venture capital financing.

SHIAC was created on the basis of the former Shanghai branch of CIETAC, but then received the status of an independent organization. It is popular with companies doing business in the coastal regions of China, where the largest industrial zones and ports are located. In the region, which is considered the financial capital of the country, arbitration proceedings are carried out taking into account the latest changes in the global financial market. This allows you to effectively resolve disputes related to banking transactions, insurance or leasing transactions.

Using Alternative Conflict Resolution Methods in China through these institutions, enables the parties to the conflict to reach an agreement within a specified time frame. However, even after receiving an arbitration award, the applicant may still need to have it formally approved by the national court system. The process of enforcement of arbitral awards in China is subject to the jurisdiction of the 1958 New York Convention, which the country has begun to ratify. Typically, China's judiciary approves the recognition of such decisions as long as they do not contradict the principles of public order. However, there are cases when violations in the arbitration procedure lead to the courts refusing to enforce them.

Enforcement of arbitral awards in China

Arbitration award in the PRC is recognized as final and binding for all participants. If the defendant avoids voluntary execution, the process of enforcement begins through the people's court system. To do this, a claim is filed in court at the location of the debtor or his property, where the issue of recognizing the arbitration award and issuing a writ of execution is decided.

The application of the 1958 New York Convention in China requires local courts to review foreign arbitral awards to determine whether they comply with formal requirements and are consistent with fundamental principles of national law. In cases where the arbitration agreement is found to be invalid, the respondent was not properly notified of the procedure, or the award conflicts with public policy of the People's Republic of China, Chinese judiciary may reject recognition of such a decision.

For foreign companies choosing the arbitration process in China, the precise definition of the terms of the arbitration clause is critical. It specifies the location, procedure, language, number of arbitrators and applicable law. A competent arbitration clause greatly simplifies the entire subsequent process, including the possibility of obtaining security for a claim. As a result, alternative dispute resolution in China through arbitration often turns out to be more productive than classic litigation if the parties are ready for open communication and are interested in quickly resolving the conflict.

How to minimize legal risks and avoid ships in China

For many companies, the process of confrontation in the boardroom is a last resort, because court in China may take a long time and require significant financial and human resources. Therefore, a sound business strategy suggests that even before signing contracts, steps must be taken to reduce the likelihood of conflict. In order to avoid trial in ChinaFirst of all, it is worth paying special attention to the detailed elaboration of agreements, including a clear distribution of risks, obligations and responsibilities for violating the terms of the agreement.

The legal risks of a business increase when the verification of the counterparty is ignored in the process of preparing a transaction. Often, behind a sonorous company name there is a structure that has neither real assets nor the necessary experience. To protect business in China, it is imperative to check Chinese counterparties before a transaction: find out whether they have licenses, whether they have debt obligations, or whether they are on the “black list”. If in doubt, it is better to either refuse cooperation or demand increased guarantees, such as collateral or insurance.

Prevention litigation in China is also possible through pre-trial resolution of conflict situations. Such a settlement may take the form of direct negotiations, mediation, or formal mediation involving third parties. It is necessary to ensure that contracts contain provisions allowing for discussion of problematic issues to begin before filing a claim in the courts. This practice helps save resources and time, and also helps maintain commercial ties with partners when planning common initiatives in the future.

In addition, lawyers familiar with the peculiarities of the legislation of the People's Republic of China provide support in identifying possible problematic aspects in the legal field. Often, the mistakes of foreign entrepreneurs in China stem from an incorrect perception of the regulatory framework or an erroneous interpretation of local laws. It is recommended to systematically use legal advice and audit services, update brand and patent registration data, and monitor changes in corporate and tax legislation. All of these measures increase the likelihood that your business will avoid lengthy litigation and maintain its reputation in one of the world's largest markets.

Conclusion

Familiarity with the legal reality of the PRC shows that court in China is a tool that requires a deep understanding of local regulations, cultural considerations, and political factors. Here it is necessary to take into account multiple nuances, starting from choosing the right jurisdiction and ending with competent interaction with local bailiffs.

Litigation between companies in China can lead to a positive result if the foundation is laid in advance in the form of correctly drawn up contracts, timely verification of counterparties and a well-thought-out legal strategy. Our company specializes in comprehensive support for clients in this difficult jurisdiction. We offer support at all stages of interaction with the Chinese legal system: from pre-trial consultations and drafting contracts to protecting interests in court and coordinating enforcement. Contact us for professional legal assistance so that even before starting cooperation with Chinese partners, you can secure your business and minimize risks in one of the most promising, but at the same time difficult for foreign investors, countries in the world.