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My Company Has a Dispute with a Foreign Company. What Are Our Legal Options?

One of our clients owned the molds a Chinese factory was using to manufacture its products. The contract made that ownership clear, but when the client decided to move production, the factory refused to return them. We worked with Chinese litigation counsel to sue and seek an order preserving the factory's assets. The court froze the factory's bank accounts in about five days, and the factory released the molds the next day. I wish more international disputes ended that quickly. Of the thousands of China manufacturing agreements we have drafted, this is the only time a factory has tried to keep a client's molds. The details, including why the contract mattered, are in our article on recovering molds from overseas factories.

I have also spoken with lawyers who won substantial U.S. judgments against foreign businesses before asking us how to collect. Sometimes the defendant had no assets an American court could reach, and collecting overseas meant another expensive proceeding with uncertain prospects. Telling someone that a costly judgment is probably worthless is not a conversation I enjoy. This is the problem behind International Litigation: Winning the Lawsuit Is Often the Easy Part.

Most international disputes we see start with ordinary business problems. A supplier takes a deposit and never ships, or a distributor stops paying while continuing to sell the client's products. Often the contract points to one country while the debtor's assets are in another. The options include negotiation, an emergency asset freeze, a lawsuit at home, a lawsuit where the defendant keeps its money, and arbitration if the parties agreed to it. Sometimes the best advice is not to sue. Before recommending anything, I want to know who owes the obligation, where the assets are, and which forum offers a practical remedy.

What Should You Do When an International Business Dispute Starts?

Start with the documents, including the ones you would rather your lawyer never see. Save the agreements, amendments, purchase orders, invoices, shipping and inspection records, payment records, and correspondence about the disputed obligations. Preserve communications showing promises your employees made, specifications they changed, payments they missed, or delays they approved. An international litigator who first learns the bad facts from opposing counsel is already behind.

Evidence held overseas can be hard to obtain later, particularly when you need to obtain documents from a Chinese company. Preserve emails and attachments, WeChat and WhatsApp conversations, platform messages, and their dates in their original form. Screenshots alone are not enough. For defective goods, save representative samples and packaging, document their condition, and consider independent testing before altering anything.

Check your deadlines immediately. The contract may require prompt notice of defects, provide a cure period, or set a deadline for arbitration. Statutory limitation periods vary by country and claim. Insurance claims, bank payment disputes, and marketplace procedures have their own deadlines. Two months of angry emails can cost a company an inexpensive remedy while it waits for a response that never comes.

Do not withhold payment or terminate the relationship without advice. Either step can trigger counterclaims or lead the supplier to hold back goods or tooling. With Chinese suppliers, unpaid invoices can also lead to a claim by Sinosure, China's export credit insurer. We have handled more than 100 such matters, and our Sinosure guide for foreign buyers explains why protecting the buyer's position should come before negotiating the balance.

I would also resist the reflex to send a threatening lawyer letter. A demand can lead to settlement when the other side has money and wants to preserve the relationship. It can also give a dishonest counterparty time to move assets, hide inventory, or interfere with your supply chain. We have seen Chinese factories respond by refusing to release products or tooling, as discussed in Why Demand Letters to Chinese Suppliers Often Backfire. Before giving notice, find out what the other side controls and whether there is an available remedy you would be better off pursuing first.

Identify the Right Defendant and Its Assets

Our China litigation work often begins with a company-name problem that should have been resolved before the first purchase order. The buyer negotiated through a website using one English name, signed a contract with another, paid a Hong Kong company, and received goods from a mainland factory. Those companies may be related, but they are not interchangeable. If the trading company received the money and made the promises, suing the factory alone can be an expensive mistake.

The same problem arises outside China. Distributors use subsidiaries, joint ventures operate through holding companies, and wealthy owners sometimes do business through companies with few assets. Control alone does not make a parent liable for its subsidiary's debts. Guarantees, direct involvement, or other legal grounds can support claims against additional parties, but those grounds must be proved under the applicable law.

Before spending much time on the merits, we verify the legal entities involved. Corporate records, contracts, bank instructions, registrations, and ownership information help establish who promised what and who owns the assets. In China, this means checking the registered Chinese name and company chop rather than relying on the English name in an email.

For a damages claim, I want to know where the defendant keeps its money. If the proposed court cannot reach the assets, we need to determine whether its judgment can be recognized where the assets are, whether arbitration is available and offers a better enforcement route, and whether any bank accounts, receivables, shipments, or other property can be preserved now. Those answers often determine where we proceed.

What Outcome Do You Need, and Is It Worth the Cost?

I ask clients what they actually need before recommending litigation. A company whose factory is holding critical molds may care more about getting them back than winning damages years later. A brand owner facing counterfeits may need an injunction. An investor forced out of a foreign joint venture may need access to company records before deciding whether to seek payment or negotiate an exit.

For straightforward litigation or arbitration in China, our usual screening threshold is about $350,000. Below that, we generally advise against proceeding because legal costs consume too much of the likely recovery. This is our practice threshold, not a Chinese legal minimum, and we do not apply it mechanically in other countries. Claims above $350,000 still need a viable defendant and realistic collection prospects.

The China monetary claims we prefer usually rest on contracts drafted for enforcement in China. We look for the registered Chinese name, proper company chop, a controlling Chinese-language version, and a defensible contract damages provision. Missing one of these does not defeat a claim. Chinese law also recognizes contracts formed through performance and electronic communications, so a plaintiff can establish contractual rights without a signed, chopped agreement. Good documents make the claim easier to prove and the requested relief easier to obtain. We explain the exceptions and our screening process in How to Sue a Chinese Company.

A smaller claim can still justify litigation when a factory is withholding essential tooling or an injunction can stop continuing harm. I have less enthusiasm for a large damages claim against a company with no reachable assets, however strong the liability evidence. The budget should cover appeals, enforcement, and the possibility that an asset search produces nothing. It should also address legal-fee recovery and, in some jurisdictions, the risk of paying some of the opposing party's costs if the client loses.

Asset Freezes and Emergency Relief

In South Korea, our lawyers obtained a court order freezing nearly $100 million in assets for American creditors, which led to a prompt, favorable settlement. Our foreign judgment enforcement work has also included securing a large seafood shipment in China belonging to a Danish company and using the threat of enforcement to recover helicopters in Papua New Guinea. Depending on the jurisdiction, a creditor can seek attachment, property preservation, a freezing injunction, or other temporary relief before the underlying case is decided. The applicant must meet local legal standards and may need to provide security, and an improper freeze can create liability. Some courts allow applications without advance notice when notice would defeat the order's purpose, and others impose stricter requirements.

Where Should You Sue a Foreign Company?

Start with the contract. The governing-law clause identifies the substantive law the parties selected, subject to conflict-of-laws rules. The forum clause identifies the court they chose, while an arbitration clause sends covered disputes to arbitration. Choosing New York law in an English-language contract does not, by itself, give a New York court jurisdiction over every foreign defendant.

We have reviewed contracts that make an ordinary claim extraordinarily expensive to pursue. One agreement with a Chinese company required negotiation, followed by in-person mediation in China, followed by Chinese-language arbitration before three arbitrators, and the arbitrator-selection procedure was unclear as well. A straightforward payment claim under that agreement faced an expensive procedural path before anyone reached the merits.

I ordinarily remove mandatory negotiation and mediation requirements from our international contracts. Parties can negotiate or mediate whenever they wish, and we often recommend it. Mandatory steps give a party looking to delay another argument about why the case cannot proceed, sometimes while it moves assets. Carefully defined escalation procedures make sense in some transactions, but I do not insert them as boilerplate. We generally settle the dispute resolution clause near the end of contract drafting, after we understand the likely breaches, remedies, parties, and assets. Our article on Drafting China Dispute Resolution Clauses that Work discusses an actual contract illustrating the problem.

An unsigned or missing agreement complicates the forum question but does not necessarily defeat the claim. Purchase orders, payments, emails, and performance may establish a contract under the applicable law. The parties can still dispute whether an arbitration clause was accepted or a court has jurisdiction. Without an enforceable arbitration agreement, neither side can ordinarily force arbitration simply because it now prefers that forum. This is one reason the documents are the international deal.

Suing a Foreign Company in the United States

To sue a foreign company in the United States, a plaintiff needs subject-matter jurisdiction, proper venue, and a valid basis for personal jurisdiction over the defendant. That basis may come from the defendant's relevant contacts with a state, its agreement to litigate there, or an applicable federal jurisdictional provision. American assets can help with collection, but owning them does not, by itself, establish personal jurisdiction over an unrelated claim. These questions need answers before filing.

American discovery attracts plaintiffs to U.S. courts, but obtaining evidence overseas can be difficult. Documents held by American banks and business partners may be accessible. Compelling testimony or records from a mainland Chinese company is another matter. China's evidence-gathering and data laws can restrict collection and transmission, and a U.S. subpoena is not directly enforceable in China. Before choosing an American forum, determine where the critical evidence is and whether you can obtain it.

Mainland China is a party to the Hague Service Convention and objects to the methods in Article 10, including postal service. When the Convention applies, service must follow a permitted method. For mainland Chinese defendants with known addresses, we generally recommend formal Hague service through the proper Convention channel, especially when the client may later seek recognition of the judgment in China. Service through China's Central Authority can take months and requires careful preparation, including translation.

Two recent federal appellate decisions make email service on defendants in China particularly risky. In Smart Study Co. v. Shenzhenshixindajixieyouxiangongsi, decided in December 2025, the Second Circuit held that the Hague Service Convention prohibited email service on the China-based defendants in that case. The Seventh Circuit adopted the same treaty interpretation in Kangol LLC v. Hangzhou Chuanyue Silk Import & Export Co. in May 2026, but remanded to determine whether the Convention applied given the dispute over the defendant's address. The defendant's actual location and the Convention's scope still matter. A quick default judgment obtained through questionable service is a poor bargain if it cannot later be enforced.

Suing in the Foreign Company's Home Country

Suing in the defendant's home country can avoid a separate judgment-recognition proceeding when the local court can reach its assets. The challenge is local procedure. A case built around American depositions needs a different evidentiary approach in a court that relies mainly on documents.

For China manufacturing disputes, we often favor litigation in the right Chinese court when the defendant and its assets are in China. That court can enforce locally without first requiring recognition of an American judgment. Our experience with ordinary business disputes in major Chinese commercial centers has generally been favorable, though cases involving important local employers or politically sensitive interests require more caution.

Chinese courts can order property preservation when the applicable standards are met. A sensible contractual damages clause helps define the claim and can support a preservation application, but it does not automatically entitle the plaintiff to a bank freeze. The court decides whether to grant relief and may require security. Chinese manufacturers generally know that these clauses can lead to a frozen bank account, which makes a good damages provision one of the best ways to get a factory to honor its contract in the first place.

Under the revised Chinese Arbitration Law, effective March 1, 2026, arbitral tribunals seated in mainland China still cannot themselves freeze bank accounts. In qualifying arbitrations, parties can seek court-ordered property preservation, and the revised law also permits applications to a court in urgent situations before arbitration begins. We consider those remedies even when the contract requires arbitration.

CIETAC can be an excellent choice when a state-owned company insists on arbitration or there are reasons to avoid the defendant's local court. In a small city where the defendant is a major employer or taxpayer, properly structured arbitration may reduce concerns about local influence over the merits. The arbitral institution, seat, and available court assistance still matter.

When a dispute belongs in a Chinese court, we work with Chinese litigators we know. A foreign company hiring a Chinese law firm directly is almost always a mistake, because few foreign companies know China well enough to pick the right firm or to work with one on their own. International counsel helps select local lawyers, coordinate evidence and strategy, and keep the client informed about costs and risks. We take the same approach elsewhere, looking for lawyers who actually litigate in the relevant courts. A firm's claim that it handles international matters tells us little about its courtroom experience.

When International Arbitration Makes Sense

Arbitration has a genuine enforcement advantage when the debtor has assets in several countries. The New York Convention provides a system for recognizing and enforcing qualifying awards in more than 170 jurisdictions. It permits specified defenses to enforcement, but courts ordinarily do not retry the merits. No comparable worldwide system exists for ordinary foreign court judgments.

Arbitration can be expensive. Parties usually pay their lawyers, the administering institution, and the arbitrators. Three-member tribunals, experts, witnesses from different countries, translation, and hearings can push a substantial case into the hundreds of thousands of dollars. Challenges to arbitral awards are tightly limited, and the losing party has little opportunity to correct an error.

As we discuss in our article on international arbitration in cross-border contracts, a contract binds only the parties covered by its arbitration agreement, subject to recognized rules concerning non-signatories. A dispute involving several affiliates and contracts can become procedurally difficult when only some parties agreed to arbitrate. Emergency arbitrators and court-assisted interim relief are available in certain arbitrations, but the powers and procedures vary.

When Negotiation or Mediation Makes Sense

Settlement becomes possible when the other side has a reason to make a deal. A supplier may want future orders. A debtor whose bank accounts have been frozen wants access to its money. Before negotiating, I want to know what the other side needs and what it can deliver. Repeating that our client has a strong case does little when the defendant thinks it can ignore us.

Mediation can work even in very large disputes. Our firm represented the Government of Haiti in a dispute with a Chinese construction company that ended in a private mediation settlement of nearly $35 million after approximately two years. Keep watching limitation periods and other deadlines while negotiations or mediation continue, and do not assume the discussions suspend them.

A settlement needs to be enforceable where performance is expected. Identify the actual obligated entity and any guarantors, address payment security and installments, and specify when claims are released. If a Chinese company is paying money or releasing goods in China, we usually want a Chinese-language agreement that works under Chinese law and before the likely enforcement court. In one cross-border credit dispute we wrote about, incomplete settlement documents helped turn an apparent resolution into further litigation.

Getting Paid After a Judgment or Arbitration Award

A U.S. judgment ordinarily must be recognized under the law of the foreign country before the creditor can use local enforcement procedures. The defendant may raise objections concerning jurisdiction, service, finality, or public policy. Collection is then governed by the law where the assets are located. A creditor cannot simply present an American judgment to a foreign bank and demand payment.

Chinese courts have become more receptive to recognizing certain American judgments under an evolving reciprocity framework. Enforcement is not automatic. Jurisdiction, service, and the judgment's eligibility under current Chinese law all require careful review by Chinese counsel.

Arbitral awards ordinarily follow a different recognition framework, including the New York Convention where applicable. Even after recognition, the creditor needs assets it can lawfully reach. I reassess the economics before filing and whenever the next stage, including enforcement, requires substantial expense.

When a Foreign Supplier Dispute Involves Fraud

In a Yiwu supplier fraud matter, a buyer paid about $177,000 to a Chinese intermediary for three shipments. The first, worth approximately $35,000, arrived. The other goods never left China. According to the buyer, the intermediary passed only a small portion of the payment to the manufacturer, then spent months claiming that goods were nearly finished or had shipped. The buyer even sent representatives to investigate, but the promised deliveries never materialized.

We recommended that the buyer retain a reputable Chinese lawyer experienced in economic-crime complaints to evaluate a police referral. The alleged failure to fund production, coupled with false shipment claims, warranted examining whether the conduct was intentional fraud. We could not promise the police would accept the case, because Chinese authorities can treat a failed commercial transaction as a civil dispute.

Do not threaten criminal prosecution to collect an ordinary commercial debt. That can create legal problems of its own. When the evidence genuinely suggests fraud, counsel should evaluate criminal reporting alongside the civil claims and deadlines. Banks, payment platforms, insurers, and marketplaces may also offer recovery options worth investigating before financing an international lawsuit.

Defending Against Foreign Lawsuits and Judgments

Companies sometimes disregard a foreign court summons because they have no operations in the country, believe the plaintiff is bluffing, or think a judgment issued there cannot affect them. An arbitration notice can be dismissed just as casually. That is a serious gamble. A foreign court may proceed to a default judgment, and an arbitral tribunal can issue an award when a properly notified respondent refuses to participate. The plaintiff may later attempt enforcement wherever the defendant has assets.

When foreign legal papers arrive, preserve the record and have counsel calculate the response deadline immediately. The first review should cover jurisdiction, service or arbitral notice, contractual forum requirements, and whether an appearance or objection affects available defenses. Check insurance and indemnification rights, related proceedings, and possible counterclaims. An ill-considered response can waive defenses that would otherwise remain available.

We also defend companies and owners when foreign creditors seek recognition of judgments in the United States. Recognition of foreign-country money judgments here is primarily governed by state law, often through a version of the Uniform Foreign-Country Money Judgments Recognition Act. The creditor ordinarily has to establish that the judgment qualifies for recognition, and the debtor can raise permitted defenses, including jurisdictional or serious notice and due-process defects. A U.S. court does not normally reopen the foreign case just because the debtor thinks the foreign judge got the facts wrong.

These cases often turn on old records: who was served, whether the defendant appeared, whether it objected to jurisdiction, and what happened in the foreign proceeding. The defense must fit the recognition law of the U.S. state where the creditor filed. We represent both sides of these disputes, and our article on enforcing or challenging foreign judgments in the United States explains the available objections.

The Questions I Ask Before Hiring Foreign Litigation Counsel

Some years ago, I came across an email from one of our international litigators to a client considering a lawsuit in a small emerging-market country. The client wanted to know whether the claim was worth pursuing and which local firm to hire. Our lawyer had listed the questions we planned to ask the firms under consideration. I still use much the same list today.

Which court has jurisdiction, and does a forum clause or arbitration agreement change that? Could another country also hear the dispute?
Would a judge, jury, or panel decide the case, and how experienced are they with disputes involving foreign companies?
What evidence will the court accept, what authentication or translation is required, and how much weight does it give live testimony?
Can we compel documents or testimony from the defendant or third parties? Are pretrial depositions or other discovery procedures available?
Can the court resolve weak claims or defenses before a full trial?
Is corruption a credible concern in this court? Does the opposing party have political or economic influence, and are foreign litigants treated fairly?
Can we freeze assets, obtain an injunction, preserve evidence, or secure goods? What proof or security is required?
What will each stage cost, including court fees, lawyers, experts, translation, travel, security, appeals, and enforcement? Give us a realistic range, not an optimistic estimate.
Can the winner recover legal fees or costs? Which expenses qualify, and are contingency or alternative fee arrangements permitted?
How long do emergency relief, the first decision, appeals, and collection typically take? What causes delays?
When do comparable cases settle, and what usually brings the defendant to the table?
What defenses, counterclaims, or weaknesses in our documents and conduct concern you most? What have we overlooked?
Where are the defendant's assets, how can we investigate them before filing, and how effective is collection in this jurisdiction?
Who will actually handle the case? How much of the firm's practice is litigation, how often does it represent foreign clients, and what happened in comparable cases?
What would make you advise us not to sue? What is the worst likely outcome, what are the realistic collection prospects, and is the case worth the money?

That last question matters most to me. I distrust lawyers who assure an unfamiliar foreign client that it has an excellent case before examining the contract, the other side's likely evidence, and the defendant's assets. If the proposed local counsel cannot explain what might defeat the claim or make it uneconomic, I keep looking.

Frequently Asked Questions About International Commercial Disputes

Can my company sue a foreign company in the United States?

Yes, if the court has subject-matter jurisdiction, venue is proper, and there is a valid basis for personal jurisdiction over the defendant. The defendant's U.S. contacts or agreement to litigate here often matter. American assets can help with collection but do not, by themselves, establish personal jurisdiction over an unrelated claim. If the assets are overseas, enforcement ordinarily requires a separate recognition proceeding.

Is international arbitration better than suing in court?

Neither is better across the board. Arbitration offers an enforcement advantage when the debtor has assets in several countries because of the New York Convention. It also brings institutional and arbitrator fees and limited opportunities to challenge an award. When a Chinese manufacturer and its assets are in China, we often prefer litigation in the right Chinese court.

How long does an international commercial dispute take?

An emergency asset freeze can come within days in some courts, as it did in our mold case. A decision on the merits, an appeal, and actual collection take longer, particularly when enforcement requires proceedings in another country. Ask foreign counsel for separate estimates for each stage.

What size dispute is worth pursuing?

Our usual screening threshold for straightforward litigation or arbitration in China is about $350,000. Below that, we generally advise against routine money claims because legal costs consume too much of the likely recovery. Chinese law sets no such minimum. Smaller claims involving essential tooling or injunctive relief can justify litigation, while much larger claims against defendants with no reachable assets may not.

What if a government-owned foreign company owes us money?

State ownership does not necessarily confer sovereign immunity. Depending on the entity and claim, immunity statutes or treaties may apply. Immunity from suit and immunity from enforcement are separate questions, and a waiver permitting litigation does not necessarily authorize attachment of government property. Before filing, determine the entity's legal status, the nature of the transaction, and which assets can lawfully be reached.

Can lawsuits or arbitrations proceed in more than one country?

Yes, particularly when multiple companies are involved or contracts contain inconsistent dispute resolution provisions. Parallel proceedings increase expense and the risk of conflicting orders. Rules concerning stays, parallel proceedings, and the effect of earlier decisions vary by jurisdiction. We coordinate filings with local counsel so that a move in one country does not undermine the case elsewhere.

What if our evidence or contract is in another language?

The governing language clause and the original contract text matter. A Chinese court will not necessarily rely on an English summary, and other courts may require sworn translations or specific authentication procedures. Translation can add material cost in an arbitration or a document-heavy case, and poor translations can change the apparent meaning of contractual obligations. Preserve the originals and have lawyers who understand the relevant language review key provisions before filing.

Can we recover legal fees if we win?

Fee recovery depends on the governing law, the contract, and the forum. American litigation normally follows the American rule, subject to statutory, contractual, and other exceptions. Some foreign courts award specified costs, and arbitral tribunals may allocate costs under the agreement and applicable rules. Even an award of legal fees must be collected. Budget on the assumption that you will have to pay your own lawyers.

Getting an International Dispute Evaluated

If your company has a dispute with a foreign manufacturer, distributor, customer, or business partner, contact our International Dispute Resolution Team. Send us the contract, a short explanation of the problem, the countries involved, the amount at stake, and any approaching deadlines or immediate concerns about assets or evidence. We can assess whether pursuing the claim makes economic sense and what it is likely to cost.