The limitation period is the period within which you may request a Chinese court or arbitral tribunal to protect your rights in personam.
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.
If you fail to bring a case before a Chinese court or arbitral tribunal within this period, the court or arbitral tribunal will no longer support your claims.
Therefore, if you wish to collect your debt in China, you should:
(1) file a lawsuit in a Chinese court or apply for arbitration within the limitation period; or
(2) allow this period to run anew continually.
1. How long is the limitation period?
Different claims are subject to different limitation periods.
The usual limitation period is three years.
The limitation period for a claim involving a contract for the international sale of goods and a contract for the import and export of technology is four years.
2. When does the limitation period begin?
The limitation period begins from the date when the right holder knows or should have known that his right has been harmed.
In short, the period commences from the due date of the performance of an obligation. This generally refers to the due date of the repayment period or delivery period.
3. When can the limitation period run anew?
One may in fact extend the limitation period as much as possible by making it run continually anew.
For example, you can send a demand notice to the debtor before the limitation period has expired. The limitation period shall run anew from the date when your notice is served on the debtor.
If the debtor indicates to you that he will not perform his obligations before the due date of the limitation period, for example by refusing to pay, the limitation period will also run anew from the date of his refusal.
You can entrust a Chinese collector or lawyer to serve the debtor’s notice within China, which may make it easier to prove to a court or arbitral tribunal that the limitation period should run anew.
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Contributors: Meng Yu 余萌