Background / Client ProfileA European industrial manufacturer had supplied several large shipments of equipment to a Chinese buyer under a long‑term distribution agreement. After receiving the goods, the Chinese company repeatedly delayed payment and eventually stopped responding. More than USD 2 million remained unpaid, and the client’s internal efforts and overseas collection agents had produced no meaningful progress.Key Challenges
- The Chinese debtor appeared to have limited assets on paper and a complex corporate structure.
- The contract provided for a foreign court forum, raising concerns about enforcing any foreign judgment in China.
- Key evidence such as delivery records and communications was scattered across different systems and languages.
- The client wanted a solution that was commercially efficient, not just a theoretical legal victory.
Our Approach
- Rapid Legal and Asset Assessment
We reviewed the contract, payment history, and correspondence, and conducted a quick China asset and background check on the debtor and its affiliates. Our investigation identified operating factories, bank relationships, and connected trading companies that could be used as leverage.
- Strategic Choice of Forum and Enforcement Path
Considering the difficulty of enforcing a foreign judgment in China in this case, we advised the client to bring proceedings in a Chinese court, using specific jurisdiction bases under Chinese law. This would allow us to move directly toward judgment and enforcement in China.
- Evidence Consolidation and Localization
We helped the client collect and organize contracts, invoices, bills of lading, emails, and WeChat messages. Key documents were translated into Chinese and prepared in a way that met Chinese evidentiary requirements, including notarization and legalization where necessary.
- Litigation and Negotiation in Parallel
We filed suit with a competent Intermediate People’s Court and, at the same time, opened a structured negotiation channel with the debtor’s management. The existence of court proceedings and our knowledge of their asset positions created real pressure to settle.
- Enforcement and Payment Plan
After obtaining a favorable judgment, we applied for asset preservation and enforcement measures, including freezing bank accounts and seizing receivables. This led to a negotiated payment schedule secured by additional guarantees.Results
- The client recovered over 90% of the principal plus a substantial portion of interest and costs within 12 months.
- The debtor agreed to enhanced security and stricter payment terms for any future business, reducing the risk of repeated defaults.
- The client gained a much clearer picture of the debtor’s group structure and risk profile in China.
Key Takeaways for Overseas Creditors
- Early asset tracing in China can determine whether debt recovery is commercially viable.
- Choosing the right forum and enforcement path from the beginning can save significant time and cost.
- Combining legal proceedings with informed negotiation often produces better outcomes than relying on one approach alone.
Call to ActionIf you face unpaid debts from a Chinese company or need to understand your enforcement options in China, our cross‑border dispute team can provide a focused assessment and action plan.