Civil & Commercial Litigation in China 101: You need to know（2）

4. Statutes of Limitations

According to the Civil Code of PRC, the general limitation is three(3) years, unless otherwise provided by laws. For disputes arising from contracts for the international sale of goods and technology import and export contracts, the limitation period for bringing an action or applying for arbitration shall be four(4) years. Generally, the limitation period is calculated from the date when the right holder knows or should have known that his or her rights have been infringed and who the obligor is, and the limitation period can be suspended or interrupted in accordance with the law.

5. How to start a claim before the Court of First Instance?

The plaintiff has to submit the following documents to the competent court, in order to initiate the litigation in China:

l Statement of claim

l Supporting documents(evidences)

l Documents in respect of the identity of the plaintiff and the defendant.

l The Power of attorney when engaging a lawyer

For foreign related litigation, the documents in respect of identity of the plaintiff and defendant have to be notarized and legalized before filing the lawsuit.

For some special cases, there is a rule of pre-court procedure. Such as labor disputes, the parties involved have to resolve the disputes through the local labor arbitration committee. The arbitration award can be appeal to the court, if the parties are not satisfied with the award. However, for most cases, there is no pre-court procedure before filing a lawsuit.

Upon acceptance of the case registration by the court, the plaintiff must pay the court fee before the deadline set by the court, upon receiving the notice from the court. Usually, the time frame is 7 days. Therefore, it is suggested for the foreign clients to pay the court fee to law firm before filing the case, and the law firm will pay the court fee, in avoidance of missing the deadline.

6. Costs of the lawsuit

To file lawsuit in China, the main costs includes court fee, attorney fee, translation fee property preservation fee, etc.

• Court Fee, charged by the court

According to the current relevant regulations, for the case involving a property dispute, the court fee shall be paid section by section on a cumulative basis subject to the amount or value of the claim as per the following proportions.

Claim amount (CNY)

Fee/Rate

Less than 10000

CNY50

Between 10,000 and 100,000

2.50%

Between 100,000 and 200,000

2%

Between 200,000 and 500,000

1.50%

Between 500,000 and 1,000,000

1%

Between 1,000,000 and 2,000,000

0.90%

Between 2,000,000 and 5,000,000

0.80%

Between 5,000,000 and 10,000,000

0.70%

Between 10,000,000 and 20,000,000

0.60%

Exceed 20,000,000

0.50%

Usually, the court fee will be finally bore by the losing party, and sometimes the court considers of a fair distribution base on the claim amount and the amount awarded.

• Attorney Fee

For most commercial cases, attorney fees is usually charged by the following modes

u Flat fee

u Flat fee + contingency rate (successful fee)

u Charged by hourly rate

For some special cases, successful fee is not permitted by the law and relevant regulations. The Attorney fee is depending on the government guide policy and the market orientation.

• Translation Fee, charged by translation institution/company

According to the Civil Procedure Law, all documents not written in Chinese must be translated into Chinese, when filed to the court. The translation fee will depends on how many papers and number of words that have to be translated.

• Property Preservation Fee

This fee will only occur when the plaintiff decides to file the application of property preservation. According to the current regulations, this fee charged by the court will not exceed CNY5,000. The applicant would usually be required to provide security for taking measure of property preservation, which can be managed by insurance company or surety company. The fee charged by the insurance company or surety company will depends on the amount of application for property preservation.