中国诉讼与仲裁

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Suing Chinese Conpanies in United States Courts

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Hague Service of Process on a Chinese Company in a U.S. Lawsuit

Suing a Chinese company in a U.S. court requires following specific procedures for delivering legal documents (known as service of process). While this process may seem complex, adhering to the Hague Convention streamlines matters.

What is the Hague Convention?

The Hague Convention on Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters is an international treaty that simplifies the process of serving legal documents across borders. Since China adheres to this convention, you can leverage it to serve process on a Chinese company in your U.S. lawsuit.

How to Serve Process Under the Hague Convention

Service of process under the Hague Convention involves submitting specific documents to China’s Ministry of Justice, the designated central authority. These documents typically include:

• A completed United States Marshal Form USM-94
• An English version of the original lawsuit documents with the issuing court’s seal
• An official Chinese translation of the lawsuit documents (excluding the USM-94 form)
• Photocopies of all the aforementioned documentsChina’s Ministry of Justice will send your service of process documents to the appropriate local court, and that court will provide service.

In our experience, Chinese courts typically take 3-8 months to effect service of process, but if the Chinese company you are suing is a powerful local business, service may take longer. It does help to repeatedly call and email the relevant Chinese court and China’s Ministry of Justice to help move the process along.

Important Litigation Considerations

• Translation Requirements: Although China didn’t explicitly request translations when joining the Hague Convention, their Ministry of Justice requires documents for service to be in Mandarin. It’s crucial to comply with these requirements to ensure smooth processing.
• Timeframes: Serving a Chinese company can be a slow process, taking anywhere from 3 to 16 months. This timeframe can be influenced by several factors, including the complexity of the case and the influence of the Chinese company you’re suing.
• Depositions in China: It’s important to note that China generally prohibits depositions on its soil, even with witness consent. If witness testimony is needed, depositions should be conducted in the United States, Hong Kong, or a neutral third country.

China formally objected to service by mail under Article 10(a) of the Hague Convention on Service and U.S. courts have held that objection valid. See DeJames v. Magnificence Carriers, Inc., 654 F.2d 280 (3d Cir. 1981), cert. den., 454 U.S. 1085; Dr. Ing H.C. F. Porsche A.G. v. Superior Court, 123 Cal. App. 3d 755 (1981).

United States Deposition and Discovery Rules Related to China

Once you file a U.S. lawsuit against a Chinese company, the court’s normal discovery rules apply. China, however, prohibits depositions on its soil, even with witness consent. In its declaration on accession to the Hague Convention on the Taking of Evidence Abroad in Civil and Commercial Matters, China stated it would not abide by those provisions granting consular officers the right to oversee depositions.

In 1989, China allowed a deposition in U.S. v. Leung Tak Lun, et al., 944 F.2d 642 (9th Cir. 1991), but advised that its grant of authority for that particular deposition should not be considered precedent. It has not permitted a deposition since, and conducting one in China may lead to arrest or expulsion. Even deposing a witness in China via the phone likely violates Chinese law and would not be a good idea for anyone planning to go to China.

The easiest way to depose a China‐based witness is usually to do so in the United States, Hong Kong or in a neutral third country.

Fifth, settlement is rare in Chinese business litigation matters. Litigation costs in China are almost always much lower than in the United States. Plus, after receiving a legal complaint, Chinese culture often views a settlement as losing face. The Chinese company you are suing may prefer to lose the case and blame it on the judge than to settle and have others perceive it as an admission of wrongdoing.

Sixth, Chinese courts rarely issue large damage awards, no matter the case. Businesses there typically operate with low margins, and the courts are reluctant to harm a functioning business or to cause layoffs. In particular, Chinese judges are hesitant to award damages for lost profits or for pain and suffering. Chinese courts simply do not award the sort of damages available in a U.S. court.

Seventh, the ability to collect judgments in China is still not near to the level of the United States or most of Europe, though it is getting better. Chinese courts often lack the authority to enforce collection and get little assistance from the other agencies who have the power to compel payment. In addition, Chinese companies sometimes find it more cost-effective to avoid a judgment by shutting down and re‐opening under a new name.