Find Out How Much a Lawsuit Will Cost in China ?
In most expats’ minds, going to court in China is a daunting prospect that costs a fortune. The actual fees, however, are far more transparent than you thought. Read on to understand how much it will exactly cost for filing a lawsuit in China.
1. Chinese Lawyer Fees Vs.Lawyer Fees in Europe and American
In most European and American countries, lawyer’s fees are charged on an hourly basis. As a result, this type of billing can lead to a lack of clarity in the total price, as the working hours always vary based on the workload, and extra work may be required when unforeseeable circumstances arise during the litigation. Moreover, the hourly rate is so high that the final lawyer’s fee will likely be higher than budgeted.
This is unlikely to happen in China where most local Chinese law firms charge fees mainly based on the claim amount rather than an hourly rate. As a matter of fact, most local governments will issue guiding prices for lawyer’s fees. In the case of Shanghai, the guiding standards of lawyer’s fees are as follows:
For cases involving property relations, the lawyer’s fees for one instance may be charged at a cumulative rate in segments according to the claim amount:
| Claim Amount | Rates for One Instance |
| For the portion of the claim amount up to and including CNY 100,000 | 8% to 12% of the total claim amount. However, if the claim amount is less than CNY 3,000, the lawyer’s fee will be at least CNY 3,000. |
| For the portion of the claim amount over CNY 100,000 up to and including CNY 1 million. | 5% to 7% for the portion of the claim amount |
| For the portion of the claim amount over CNY 1 million up to and including CNY 10 million. | 3% to 5% for the portion of the claim amount |
| For the portion of the claim amount over CNY 10 million up to and including CNY 100 million. | 1% to 3% for the portion of the claim amount |
| For the portion of the claim amount over CNY 100 million | 0.5% to 1% for the portion of the claim amount |
Here’s an example: Let’s say your landlord didn’t return your deposit on your really, really nice apartment, and the claim amount is 400,000 rmb. The lawyer’s fee for one instance would be calculated like this:
The first 100.000 Rmb are charged at 8%, that’s 8.000 Rmb.
The next 300.000 Rmb are charged at 5%, that’s 15.000 Rmb
Comes to a total of 23.000 Rmb.
However, those fees aren’t written in stone and a law firm might negotiate a different fee structure for cases with a high working load, for complex cases, or even based on the financial status of the client, the risks and liabilities that the lawyer and law firm might take, and the lawyer’s social reputation and working competence.
2. Lawyer’s Fees for Criminal Cases
Criminal cases usually don’t have a claim amount, so the calculation works differently. It goes by stages, and it’s a lot more up to the negotiation between you and the lawyer what fees you’ll settle on.
| For the criminal investigation stage: | 1,000-10,000 Rmb for each case |
| For the prosecution stage: | 2,000-10,000 Rmb for each case |
| The first instance stage: | 3,000-30,000 Rmb for each case |
Some lawyers may also choose to charge you by time. The range is huge and you might be quoted anything between 200 rmb and 3,000 rmb per hour. Better negotiate a fixed fee for each stage.
Lawyers may also have their own rates, which may be higher or lower than the above standards. But the above standard may also be used as a reference.
3. How Much are Court Fees?
In the same manner that lawyer fees are subject to the guiding rates, court fees vary depending on the specific cases, the standard of court fees in China is as follows:
For the cases where the claim concerns property relations, the court fee will be charged at a cumulative rate in segments according to the claim amount as follows:
| Claim Amount | Rates for One Instance |
| For the portion exceeding RMB 10,000 to CNY 100,000 | 2.5% of the portion |
| For the portion exceeding RMB 100,000 to CNY 200,000 | 2% of the portion |
| For the portion exceeding RMB 200,000 to CNY 500,000 | 1.5% of the portion |
| For the portion exceeding RMB 500,000 to CNY 1,000,000 | 1% of the portion |
| For the portion exceeding RMB 1,000,000 to CNY 2,000,000 | 0.9% of the portion |
| For the portion exceeding RMB 2,000,000 to CNY 5,000,000 | 0.8% of the portion |
| For the portion exceeding RMB 5,000,000 to CNY 10,000,000 | 0.7% of the portion |
| For the portion exceeding RMB 10,000,000 to CNY 20,000,000 | 0.6% of the portion |
| For the portion exceeding RMB 20,000,000 | 0.5% of the portion |
There are a few exceptions, divorce cases can be slightly more expensive – in the 50-300rmb range, with a 0.5% fee of the value of assets you are fighting over that exceed 200.000rmb.
Cases related to infringement of name, portrait, reputation, honor, or any other right related to personality, the court fee will be 100-500rmb, and 0.5 %- 1% of the compensation amount.
Luckily, there’s an online calculator that helps you calculate the court fees and execution fees. right here
4. The Fee for Preservation
Property preservation means if you sue someone, and you want to make sure that his property cannot transfer during the litigation, then you may apply for property preservation so that the judge will frozen the property. The fees there fore are in the xx to xx Rmb.
Evidence preservation is that when you sue someone, and the defendant has some evidence that is important for the case, but you are afraid that he will destroy the evidence. Then you can apply for evidence preservation, so that the judge will take some measures to avoid him destroying the evidence. The fees there fore are in the range.
| Claim Amount | Rates for One Instance |
| Not more than RMB 1,000 or no property amount is involved | RMB 30 for each case |
| For the portion of more than RMB 1,000 but less than RMB 100,000 | 1% of the portion |
| For the portion of more than RMB 100,000 | 0.5% of the portion (however, the total preservation fee will be capped at RMB 5,000) |
Certainly, you can also use the online calculator (http://www.zjcourt.gov.cn/zjzy/web/fee) as mentioned above to calculate the preservation fee.
5. The Fee for a Guarantee Letter
If you are applying for property preservation, the court will require you to provide a guarantee. The guarantee can be in the form of cash equal to 30% of the value of the preserved property, other property of the same value as the preserved property, or a guarantee letter issued by an insurance company.
Generally, the fee for a guarantee letter is around 0.2% of the value of the preserved property. However, the standard of guarantee letter fees may vary for different insurance companies.
6. Notarization Fee
Pursuant to Chinese law, any documents created abroad need to be notarized and certified. For instance, if you engage a Chinese lawyer while you are not in China, you have to sign the power of attorney outside of China. Then this power of attorney needs to be notarized in the notary office and certificated in the Consulate of China in the country where you sign it. As another example, if you need to provide the payment voucher as evidence in the litigation which is issued by an overseas bank, you have to make the payment voucher notarized and certificated, otherwise, the court may not recognize the validity of this evidence.
In this condition, you will have to pay for notarization fee. The notarization fee will depend on the standard of the country where you notarize the documents.
7. Translation Fee
When the evidence is in a foreign language, it will have to be translated when provided to the court. There are two translation agencies recognized by the Shanghai court for the translation of foreign litigation documents, namely Shanghai SISU Translation Service Co., Ltd and Shanghai Interpreters’ Association. You may visit their official websites for more information and quotations.
8. Do I Need to Pay an Execution Fee When Applying for Execution?
No. You don’t.
Although, if the plaintiff applies for execution after the judgment takes effect, the execution fee has to be paid to the court. However, in practice, the plaintiff does not have to pay for the execution fee in advance. The court will charge the execution fee from the executed properties of the defendant.
As a whole, it doesn’t take much to engage in a lawsuit in China — or, at least, not as much as you thought. Going to court might be a good choice for you to solve disputes and receive proper recompense.
Saway Wang
Email: sawaywang@billionslawyer.com
Tel/Whatsapp: +86 18017682422
All You Need to Review When Signing A Contract
Contracts are a ubiquitous part of daily life, providing the framework for parties to fulfil their obligations and settle disputes. However, failing to review a contract thoroughly can lead to trouble. Pay careful attention to the terms and conditions, including any limitations, warranties, or obligations stated. Seek legal advice if necessary to ensure clarity and protect your interests. This article presents key considerations for reviewing a contract. It also shares some useful Chinese websites to help you learn more about your counterparty.
1. Verify the eligibility of the counter party
(1) Identity information
- For a natural person, it is necessary to review his/her original ID card or passport and confirm the information matches that on the contract.
- For a Chinese company, we’d better confirm whether the company has been legally and validly registered through the official website of National Enterprise Credit Information Publicity System: https://www.gsxt.gov.cn/index.html.
(2) Litigation or enforcement status
If the counter party is involved in litigation or enforcement, its capacity to fulfil the contract will be significantly affected. Here we share the following websites to confirm the counter party’s litigation or enforcement status:
- Enforcement Status:
China Enforcement Information Public Website (http://zxgk.court.gov.cn/), an official website operated by the Supreme People’s Court of The People’s Republic of China, in which you can check whether the counter party is executed by the court for failing to perform the judgment.
- Litigation Status:
Qichacha (https://www.qcc.com/) or Tianyancha (https://www.tianyancha.com/), a website operated by the private entities, in which you may check whether the counter party (only for company) has any relevant litigation cases.
2. Ensure the validity of the contract
(1) Confirm the counter party’s qualification
Qualification determines whether the contract is valid, invalid or pending effectiveness. For example, if the contract is signed by the counter party who is under 18 years old, then the contract will take effect when his/her statutory guardian recognizes the contract retroactively. Another example, if the contract involves the sale of medicine and neither party to the contract has a license to sell medicines, thus the contract will be void.
(2) Confirm the deputy’s authorization
Make sure that the deputy of the company who signs the contract on behalf of the company has the authorization to do so. Otherwise, the contract will only take effect upon the company’s retroactive recognition of the contract. However, if there is reason to believe that the deputy had authorization, the contract will remain valid.
(3) Confirm the transaction’s legality
The contract will be deemed invalid if its object is illegal or prohibited for trading. For instance:
- In China, Land ownership, drugs, obscene goods are prohibited for transaction, and cigarettes, tobacco, salt, guns are restricted for transaction (only can be exchanged by the specific entity who has the qualification).
- If the service content involves assisting in the theft of personal information, the service contract is considered invalid as it violates mandatory laws.
3. Confirm the ownership
Before entering into an agreement for the purchase of an asset, it is crucial to review whether the asset is legally and validly owned or registered in the name of the seller. This ensures that the transaction is conducted in a legally sound manner. Here we’ll share several ways to confirm the ownership:
（1）Real estate
Review the title deed of the real estate, and also request the owner to obtain the updated real estate information page of the real estate from the local Real Estate Exchange Center or on its official website (in Shanghai, the official real estate information can be obtained from the website of “一网通办”) .
（2）Cars
Review the ownership certificate of the car, and also ask the owner to obtain the updated property information page of the car at the local Vehicle Management Office.
（3）Shares
Verify the relevant information on the official website of National Enterprise Credit Information Publicity System: https://www.gsxt.gov.cn/index.html
（4）Trademark
Verify the relevant information on the official website of Trademark Office of China National Intellectual Property Administration: https://sbj.cnipa.gov.cn/sbj/sbcx/
（5）Patent
Verify the relevant information on the official website of Patent Office of China National Intellectual Property Administration: https://pss-system.cponline.cnipa.gov.cn/conventionalSearch
（6）Copyright
Verify the relevant information on the official website of Copyright Protection Center of China: https://register.ccopyright.com.cn/query.html
4. Quality Standards
(1) Clarify quality standards
Specify the quality standards as explicitly as possible:
- For a purchase agreement, include the brand, origin, type, texture, color, size, ingredient, package, function, quantity and weight.
- For a service agreement, include the quality standards can be the detailed service results, effect and characteristics of the deliverables, etc.
(2) Set quality guarantee deposit
Quality guarantee deposit is the retention payment set for ensuring the quality standards to be satisfied. Generally, it’s 5-10% of the total price, and is paid after a certain duration, allowing the buyer to refuse payment if the product has any quality issues during this time.
E.g. The buyer shall paid 10% of the total price as quality guarantee deposit within 10 working days after 2 years of delivery.
(3) Acceptance
Typically, both parties will need to inspect the deliverables and confirm whether they satisfy the quality standards after delivery, this process is called “acceptance”. However, there is another scenario where the quality standards have been met but the receiving party fails to confirm the acceptance. In such case, a “deemed acceptance clause” can be helpful.
E.g. Party A shall inspect the Products within 3 working days of delivery. If the Products meet the quality standard, Party A shall sign the acceptance confirmation. If Party A believes that the Products have quality problems after acceptance, it shall notify Party B in due time. If Party A neither signs the acceptance confirmation nor raises any objection to the Product, it shall be deemed that Party A has accepted the Product.
(4) Quality Remedy
Quality remedy is the resolution for quality problems. For instance, when the product has any quality problems, the buyer may require the seller to repair, return or exchange the product according to the contract.
5. Payment Term
(1) Amount
Firstly, the total price and unit price shall be clearly prescribed in the contract, including whether the tax is included or not. Additionally, it is important to specify the currency (e.g. CNY, USD) and corresponding exchange rate. For international trade, it may be necessary to include terms such as CIF or FOB.
(2) Payment Time
As to the payer, we suggest implementing an installment plan with specific payment conditions to reduce the risk of non-performance by the payee.
E.g. Party A shall make a down payment of 20% of total price, followed by a payment of 50% of the total price upon completion of the service by Party B, and finally a payment of 30% of the total price upon Party A’s acceptance.
As to the payee, we suggest setting the liquidated damages for the payer’s delayed payment.
E.g. The payer shall pay the payee 0.05% per day of the outstanding payment to the payer for delayed payment.
6. Ensure Deliverables On Time
Similarly, to ensure timely delivery of the deliverables, we can employ liquidated damages for late delivery in the contract. If delivery is in instalments, we must specify the detailed delivery time for each instalment.
7. Circumstances of Termination
Based on the Civil Code of PRC, both parties may terminate the contract under the following circumstances:
- Both parties agree on termination;
- Force majeure;
- One party expressly states or indicates that it will not perform its principal obligation prior to the expiration of the performance period;
- One party fails to perform its obligation;
- One party violates the contract rendering it impossible to achieve the purpose of the contract. Except that, both parties may also agree on other circumstances of termination in the contract.
In addition to the aforesaid circumstances, both parties may also define further circumstances of termination in the contract.
E.g. In the event that Party B is declared bankrupt, its business license is revoked, liquidated, dissolved, or enters these procedures; or Party B’s major property is seized, or other preservation measures are taken, Party A may terminate the contract.
8. Liquidated Liabilities
Although the Civil Code of the PRC provides that the defaulting party shall continue to perform the contract, remedy the breach or compensate for losses when it breaches the contract, this provision is not explicit enough. Including a specific amount or percentage for liquidated damages (e.g. 20% of the total price) or a specific compensation for losses caused by the breach (e.g. lawyer’s fee, notarization fee, guarantee fee, translation fee, etc) in the contract will help the aggrieved party to obtain greater compensation.
9. Applicable Law and Court
The applicable law and court can only be the one which has the closed connection with the case. This connection can be established by the location of one party or the place where the contract is signed or performed. For instance, if the contract is signed and performed in China, then both parties may choose Chinese law and Chinese court as the applicable law and court.
Additionally, arbitration may be a suitable alternative for dispute resolution due to its confidentiality and flexibility. Shanghai International Economic and Trade Arbitration Commission (SHIAC) and China International Economic And Trade Arbitration Commission (CIETAC) are both commonly selected by the parties.
Saway Wang
Email: sawaywang@billionslawyer.com
Tel/Whatsapp: +86 18017682422
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