Courts, Codes and Arbitration
Civil obligations are governed by the Civil Code in force since 2021, which consolidated the previous separate contract and property statutes. Cases are heard by the People's Courts across four tiers, with the entry level determined by claim value and by whether a foreign party is involved. Many higher-value commercial contracts instead provide for arbitration - commonly CIETAC - and China is a party to the New York Convention, so a qualifying foreign award can be recognised, subject to the Convention's grounds and China's commercial reservation.
Asset Preservation and the Defaulter List
Two mechanisms do most of the work on a Chinese file. Asset preservation allows a claimant to apply, often at or before the commencement of proceedings, to freeze the debtor's bank accounts or property pending the outcome. Security is normally required, but the effect on a trading company is immediate.
The second is the list of dishonest judgment debtors. A company or its legal representative that fails to satisfy a judgment can be listed publicly, with consequences that extend well beyond the debt: restrictions on air and high-speed rail travel, on holding senior positions, and on obtaining credit. In practice this reputational and personal exposure produces payment in cases where conventional enforcement would stall.
Three Years Under the Civil Code
The general limitation period is three years, running from the date the creditor knew or should have known that its rights were infringed and who the obligor is. The period can be interrupted by a demand for performance, by the debtor's agreement to perform, or by commencing proceedings or arbitration - which makes a documented, properly served demand valuable beyond its immediate commercial effect.
Documents, Chops and Entity Identity
The company chop matters more than a signature. In Chinese commercial practice, a contract bearing the company's official seal is generally what binds the entity; a signature alone may not. Where your contract carries no chop, that is worth knowing before you build a case around it.
Identify the correct entity. Chinese groups frequently trade through multiple registered companies with similar English trading names. The unified social credit code on the contract or invoice is the reliable identifier - an English name is not. Pursuing the wrong entity is one of the more common and more costly mistakes on a China file.
How Long Does a Chinese Claim Take?
| Stage | Typical Duration | Cost |
|---|---|---|
| Pre-legal demand Formal demand in Chinese, negotiation | 3β6 weeks | Low |
| Asset preservation Application to freezing order | 2β6 weeks | Medium |
| Court proceedings First instance, foreign-related case | 6β18 months | High |
| CIETAC arbitration Where the contract provides for it | 6β15 months | High |
| Enforcement Court enforcement, defaulter listing | 3β9 months | Medium |
How Does SXB Global Handle a China Case?
We verify the contracting entity against its unified social credit code before anything else, then read the contract for the dispute resolution clause. Contact with the debtor is conducted in Chinese. Where the debtor is solvent but unwilling, the realistic prospect of preservation and defaulter listing is usually what moves the negotiation. Where legal proceedings become appropriate, SXB Global coordinates the instruction of appropriately authorised local counsel. Legal services are provided by the relevant independent legal professionals.