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How Much Does It Cost to Sue a Company in China?-CTD 101 Series

Mon, 12 Sep 2022
Categories: China Legal Trends
Contributors: Meng Yu 余萌
Editor: C. J. Observer

In China, court fees and attorney fees depend on the amount of your claim. But some fees are fixed, namely the cost of notarization and authentication of some documents in your country.

This post was first published in CJO GLOBAL, which is committed to providing consulting services in China-related cross-border trade risk management and debt collection. We will explain how debt collection works in China below.

The total costs you need to pay mainly include three items: Chinese court costs, Chinese attorney’s fees, and the cost of notarization and authentication of some documents in your country.

1. Chinese court costs

If you bring a lawsuit to a Chinese court, you need to pay legal fees to the court at the time of filing.

The court costs depend on your claim. The rate is set on the scale of rates and denominated in RMB.

Roughly speaking, if you claim USD 10,000, the court cost is USD 200; if you claim USD 50,000, the court cost is USD 950; if you claim USD 100,000, the court cost is USD 1,600.

Specifically, for property disputes, Chinese courts charge court costs based on the amount/value in dispute.

In China, court courts are calculated with a progressive system in the RMB Yuan. Its schedule is as follows:

(1) From 0 Yuan to 10,000 Yuan, 50 Yuan;

(2) 2.5% for the part between 10,000 Yuan and 100,000 Yuan;

(3) 2% for the part between 100,000 Yuan and 200,000 Yuan;

(4) 1.5% for the part between 200,000 Yuan and 500,000 Yuan;

(5) 1% for the part between 500,000 Yuan and 1 million Yuan;

(6) 0.9% for the part between 1 million Yuan and 2 million Yuan;

(7) 0.8% for the part between RMB 2 million and RMB 5 million;

(8) 0.7% for the part between 5 million Yuan and 10 million Yuan;

(9) 0.6% for the portion between 10 million Yuan and 20 million Yuan;

(10) The part of 20 million Yuan, 0.5%.

If you win as a plaintiff, the court costs will be borne by the losing party; and the court will refund the court cost you paid previously after receiving the same from the losing party.

2. Chinese attorney’s fees

Litigation lawyers in China generally do not charge by the hour. Like the court, they charge attorney’s fees according to a certain proportion, usually 8-15%, of your claim.

However, even if you win the case, your attorney’s fees will not be borne by the losing party.

In other words, if you request the Chinese court to order the other party to bear your attorney’s fees, the court will generally not rule in your favor.

That being said, however, there exist some exceptional circumstances where the losing party shall cover legal fees.

If both parties have agreed in the contract that the breaching party should compensate the opposing party by covering his attorney’s fees in litigation or arbitration, and they have clearly stated the calculation standard and confines of attorney’s fees, the court is likely to support the payment request of the winning party. However, at this point, the court will require the prevailing parties to prove they have actually paid the fees.

By the way, you are very likely not to file a lawsuit with a court in Beijing or Shanghai, but in a city with many factories, an airport, or a seaport hundreds of kilometers or thousands of kilometers away.

It means that the elite lawyers gathered in Beijing and Shanghai may not be able to help you any better.

With the advantage of knowing local rules and regulations well, local lawyers can find more effective solutions. It is really beyond the reach of lawyers in Beijing and Shanghai.

Therefore, Beijing and Shanghai lawyers are not ideal options, and you should employ a local lawyer.

For more information about a lawyer network in China, please read an earlier post “Sue a Company in China: Who Can Give Me a Lawyer-Network in China?”.

3. Costs of notarization and authentication of some documents in your country

When you sue, you need to submit relevant documents to the Chinese court, such as your identity certificate, power of attorney, and pleadings.

These documents need to be notarized in your country, and then authenticated by the Chinese embassy or consulate in your country.

Specifically, most of the subject qualification documents and the authorization procedures of foreign companies are formed outside the territory of China. In order to confirm the authenticity of these materials, Chinese laws require that the content and the formation process of the materials be notarized by a local foreign notary (the step of “notarization”), and then be authenticated by the Chinese embassy or consulate in that country so as to certify that the signature or seal of the notary is true (the step of “authentication”).

The time and cost you will spend on notarization and authentication depend on the notary and the Chinese embassy or consulate where you are located.

Usually, it costs you hundreds to thousands of dollars.

 

 

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Do you need support in cross-border trade and debt collection?

CJO Global's team can provide you with China-related cross-border trade risk management and debt collection services, including: 
(1) Trade Dispute Resolution
(2) Debt Collection
(3) Judgments and Awards Collection
(4) Anti-Counterfeiting & IP Protection
(5) Company Verification and Due Diligence
(6) Trade Contract Drafting and Review

If you need our services, or if you wish to share your story, you can contact our Client Manager Susan Li (susan.li@yuanddu.com).

If you want to know more about CJO Global, please click here.

If you want to know more about CJO Global services, please click here.

If you wish to read more CJO Global posts, please click here.

 

 

Photo by Libre Leung on Unsplash

Contributors: Meng Yu 余萌

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