Since practicing law in China, I have handled hundreds of cases, over half of which involved debt disputes. While most cases ultimately recovered the owed funds, some dragged on for years, costing clients significant time and money.
This article aims to help readers understand the key points and feasibility of recovering debts through legal means.
1. Why Pursue Legal Action for Debt Recovery?
Clients often remark, “Litigation is useless—I’ll send my ‘brothers’ to collect at his doorstep.” These so-called “brothers” are often individuals operating in a legal gray area. Their tactics typically involve harassing phone calls, intimidating visits, stalking debtors, and similar actions.If the debtor reports this to the police, the result is not only administrative detention for the “brother,” but the client may also be involved. In severe cases, this can hinder subsequent legal recovery efforts, or even lead to the client being detained alongside the “brother.”
2. Are Lawyer’s Letter Effective?
Based on my experience in China, one-on-one lawyer letters have limited impact. Sending a lawyer letter to a single debtor rarely results in repayment. However, when multiple debtors are involved, mass-sending lawyer letters may yield partial recovery with some probability. Lawyer’s lettercarry low costs. If they successfully recover debts, we can avoid lengthy litigation and expensive legal fees, making Lawyer’s Letter a relatively cost-effective dispute resolution method under certain circumstances.
3. Is Pre-litigation Mediation Effective?
Pre-litigation mediation aims to reduce judicial workload by facilitating settlements before court intervention. However, in practice, such mediation often drags on indefinitely, wasting significant time for plaintiffs. Moreover, since mediators typically contact defendants by phone, defendants may transfer assets in advance. Additionally, some mediators may blindly advise plaintiffs to withdraw lawsuits to boost their own KPI. Attorney Lyu advises against placing excessive hope in pre-litigation mediation. If there is a risk that the defendant may transfer assets to evade enforcement, you need to promptly get an injunction to secure the defendant’s assets before proceeding with mediation.
4. How Long After Filing Does a Trial Commence?
Based on Attorney Lyu’s experience, trial period vary dramatically across Chinese courts. In some regions with lighter caseloads, trials may commence within one or two months after filing. However, most China courts operate at full capacity, meaning it may take three months or even half a year after filing before a trial is scheduled.Moreover, one should not blindly assume that smaller courts in smaller cities handle fewer cases and proceed more quickly. Attorney Lyu has experienced a hearing scheduled six months later at a subordinate court in a small city, as well as a hearing convened the following month at a main court in a big city.
5. How long after the hearing does a judgment typically take?
From the first hearing to the final judgment generally requires three to six months. If complications arise during the process, it may take a year or even longer to obtain the first-instance judgment. Prolonged litigation is a persistent challenge for courts worldwide. As a Chinese saying goes, “The longer the night, the more darknesses,” and drawn-out cases introduce significant uncertainty. Attorney Lyu believes parties should cultivate a proactive risk awareness before disputes arise, seeking legal counsel before each transaction. Lawyers, in turn, should actively pursue pre-trial resolutions to alleviate the burden on both parties and conserve judicial resources.
6. Are Cases with Contracts or Memorandums Guaranteed Wins?
Some clients approach lawyers with excessive optimism, believing that written evidence like contracts or Memorandums guarantees victory once litigation commences. Reality often differs. Generally, once defendants appear in court, they will vehemently deny the authenticity, legality, and relevance of the plaintiff’s evidence. Moreover, their counsel also will mount legal defenses. Therefore, even written evidence bearing a defendant’s signature and seal should not be viewed with excessive optimism—no case is a sure win.and many defendants will retain counsel to mount legal defenses. Therefore, even written evidence bearing the defendant’s signature or seal should not inspire blind optimism—no case is guaranteed to be won.
7. What roles can China attorneys play in civil and commercial litigation in China?
In litigation, a China attorney primarily do the following jobs:1. Collaborate with clients to gather and organize evidence. 2. Helping clients establish realistic expectations based on the case’s actual circumstances. 3. Communicating with court staff to ensure the case progresses in a timely manner according to legal procedures.4. Debating with opposing parties and their attorneys during hearings to assist the judge in ascertaining the truth of the case. 5. Presenting relevant legal bases and precedents to the judge as needed, enabling the judge to correctly apply the law and avoid misjudgment. 6. Applying to the court for investigative orders as needed to conduct inquiries at relevant entities and obtain new critical evidence.
It can be said that in most cases, the involvement of a diligent and conscientious attorney significantly influences the outcome of the case while substantially reducing the client’s litigation burden.Notably, the right to investigate and gather evidence is a statutory authority granted to attorneys under the Law of China. The vast majority of China enterprises and institutions will cooperate with lawyers’ investigative and evidence-gathering efforts. In numerous complex litigation cases, Attorney Lyu has successfully obtained crucial evidences through such investigations and won the cases based on these evidences.
8. What to Do When the opposing Party Fails to Comply After Receiving a Mediation Agreement or Judgment
In practice, some defendants with low moral standards may transfer assets to evade enforcement after losing a case, refusing to comply with valid mediation agreements or judgments. Even after plaintiffs apply for court-ordered enforcement, executable assets may remain untraceable due to various obstacles. Attorney Lyu recommends promptly initiating enforcement proceedings. While some applicants assume the debtor may become solvent later and delay enforcement, experience shows that in such situations, the debtor’s financial resources tend to diminish over time. Therefore, applicants should promptly seek court-ordered enforcement. If the court fail to locate the debtor’s assets, it is crucial to promptly engage legal counsel. While attorneys lack the same enforcement authority as the court in enforcement proceedings, their representation—funded by the applicant—often translates into more diligent efforts to protect the applicant’s interests.