Enforcement of Contracts against Chinese Companies

At Above the Law, Dan Harris of the law firm of Harris Moure has thoughts about the futility of attempting to enforce U.S. court judgments against defendants located in China:

Clinging to the hope that she does not need to go back to her client to explain why she drafted a contract that fails to give her client any real remedy and/or why she just charged her client around $50,000 to file and prosecute a meaningless lawsuit to judgment, the lawyer caller usually asks one or more of the following questions, to which I give the following answers:

  • How can China not enforce U.S. judgments? China is an independent country that does not particularly like the U.S. legal system and has not ratified any treaty requiring it to honor U.S. judgments. China can pretty much do whatever it wants when it comes to enforcing U.S. judgments.
  • But this judgment is from a U.S. District Court. Surely that makes some difference. No, that makes no difference whatsoever.
  • Why don’t we just file a new lawsuit in China? There are two reasons that cannot work. First, your client has a valid written agreement stating very clearly that all disputes must be resolved in a particular U.S. court. China may not enforce U.S. judgments, but it does generally enforce dispute resolution provisions and it will undoubtedly enforce this one by refusing to hear the case. Second, you have already sued the Chinese company in the United States and won, and suing again in China will be blocked by collateral estoppel (another doctrine that is given effect in China, especially when it favors Chinese defendants).

​​The entire post, which contains guidance on drafting effective contract provisions in these situations, can be found here.

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