English to Chinese Translations of Chinese Contracts
We’ve blogged about English to Chinese and Chinese to English legal translation services in the context of contract enforcement in China, and the role of arbitration in Chinese contracts. An all too common situation with people doing business in China can go like this. A person makes an order with a Chinese company and pays for the product plus shipping. The contract signed specifies where and when the goods will be delivered, but in the end all the buyer gets is excuses for non-performance. What can the foreign buyer do to enforce the contract or, at the very least, get their money back? In other words, what are the rules for breach of contract in China?
Of course the answer, as many legal answers are, is ‘it depends’. However, in general, the unfortunate truth is that in order to successfully take action against a Chinese company for breach of contract you will have to show that the contract:
- Is written in Chinese (note, always include a foreign language translation of any contracts with a Chinese company);
- Is sealed by the Chinese company
- Specifically states that all disputes will be resolved in a Chinese court
- Provides detailed information the delivery deadlines
- Has a liquidated damages provision for late performance.
If the contract does not include all of the above provisions, then pursuing a breach of contract claim is probably a waste of time. However, if your contract does satisfy all of these points, then the best option is to contact a licensed Chinese attorney who is based in China in order to pursue a non-contentious solution as the process of suing a Chinese company is difficult, at best.
It’s All About Careful Drafting
To prevent legal problems like this, the key is to put your time and effort into drafting an enforceable contract.
Yet surprisingly all too often foreign companies fail to include proper enforcement provisions in their international contracts, essentially making their contract – at least when it comes to China – unenforceable.
When drafting a contract with a Chinese company, there are three main rules that needed to be followed to ensure that your contract is enforceable:
1. In China, enforcement is always through litigation via the Chinese legal system
2. The governing law is always Chinese law
3. The governing language is always Chinese, and thus all documents will require a foreign language translation.
This is why it is important to involve a Chinese attorney. Many US attorneys do not understand the importance of these rules and will draft contracts that provide the governing law of the contract as the law of the US state where the contract is drafted, will draft the contract in English and will state that enforcement must be in the home state. Remember, a Chinese court will never enforce a US court judgment so any judgment obtained in a US court will never be enforced in China and, unless the Chinese company happens to have assets based in the US, the judgment is worthless.
The Litigation Option
Instead, the only real option one has is to litigate the contract in China. When litigating in China things happen fast. For example, Chinese civil procedure allows for a preliminary seizure of all assets and other pre-judgment relief – creating a rather quick and effective way of resolving issues when compared to the lengthy US system. Although arbitration is an option in China, doing so means you forfeit the right to this preliminary seizure, and thus arbitration is not often used. That being said, if your contract is drafted in English and provides for foreign law, your case will likely find itself lost in a maze of delays and futile dead ends.
Why? Because under the Chinese system the court will require the parties to prove the foreign law on any issues that are important for a decision before the proceedings are allowed to begin. Doing so is both time-consuming and expensive. The same goes for the issue of having the contract written in English. In such cases, the court will engage their own foreign language translator – at your expense.