How to Sue a Company in China: Tackling Litigation Properly
If there is trouble with Chinese companies, for example because ordered products are not delivered on time, trading partners can consider filing a lawsuit. However, this must be thought through well in advance and contractual details must be analysed.
Due to the corona pandemic, demand for Chinese products, especially in the medical sector, has increased rapidly. Unfortunately, cooperation with Chinese companies does not always work smoothly and can sometimes turn out to be very asymmetric. Ecovis Heidelberg has dealt with many cases in which German companies have successfully sued Chinese factories for failure to deliver goods on time.
We know the Chinese legal system and can support you in any dispute. Richard Hoffmann, Lawyer, Ecovis Heidelberg, Germany
If you are facing problems like this with your Chinese partner there is no need to accept the situation. Although solving a dispute with a Chinese company can be very time consuming for a foreign company, with the right strategy, litigation can end successfully.
How do you go about suing a Chinese company?
To analyse whether suing the contractual partner is a good option and to find the right strategy, the following points should be considered:
Do you have written contractual arrangements?
Who is your contracting partner, i.e., private company or state-owned enterprise?
Where is the contracting partner based in China? Different locations lead to different strategies.
What is the disputed volume of euro/renminbi?
Is there any agreement about the jurisdiction?
Do you want to block the other party’s bank account?
It should be noted that litigation in certain areas is under the exclusive jurisdiction of the Chinese courts. For example:
Real estate disputes
Disputes arising from harbour operations
Disputes arising from the fulfilment of contracts between Chinese-foreign joint ventures
Which documents are needed?
If you decide to sue a company in China, the Chinese courts may, for example, demand the following documents:
Power of attorney
Subject qualification document
Representative figure’s identity document
Application for preservation of property
How to legalise the documents?
Documents produced abroad should generally be notarised and authenticated abroad and then translated and notarised by a Chinese notary office before they can be used as effective evidence for court prosecution, explain the Ecovis experts.
Invest in Colombia: Portfolio and Direct Investment
Foreign investments are operations on the foreign exchange market. The Colombian financial regulations stipulate that these resources must be channelled according to the regulations of the Central Bank (Banco de la República).
Investments made by non-residents in Colombia (inbound investments) and investments made by Colombian residents outside the country (outbound investments) are part of the foreign exchange market, as well as the profits or dividends from these investments.
In terms of inbound investments, there are two main investment groups:
1. Portfolio Investments
These are mainly made up of securities listed in the National Registry of Securities and Issuers (Registro Nacional de Valores y Emisores, or RNVE) which may be, among others, stocks or bonds. Here, an administrator, for example a stockbroker, must be in charge of such an investment, explain the Ecovis experts.
We can advise you on legal and tax matters when investing in Colombia. Giovanny Tellez, Legal Advisor, ECOVIS Colombia SAS, Bogotá, Colombia
2. Direct Investment
Unlike portfolio investments, whose character is mainly speculative, direct investment seeks to develop an activity in Colombia or to be part of an activity or company that is already being developed. In this case, the investor must comply with the guidelines established by the Central Bank.
Although the most common form of investment in Colombia is the transfer of foreign currency to the country through an intermediary on the exchange market or IMC (“Intermediario del Mercado Cambiario”, for example a bank), this is not the only way. Other types of contribution are also possible, for example merchandise or intangibles. In these scenarios, the Central Bank must also be informed that such contributions have been made, in order to settle the exchange balance and avoid sanctions, say the advisors from Ecovis.
Direct investment in Colombia entails certain tax responsibilities on the part of non-residents. If an investment is sold, the investor must file an income tax return with the National Tax and Customs Directorate (Dirección de Impuestos y Aduanas Nacionales, or DIAN) for these operations. In addition, the Central Bank must be informed of these transactions, using the required documentation. To comply with tax obligations, the foreign investor must be registered in the DIAN Single Tax Register (RUT), in addition to appointing an attorney-in-fact in Colombia.
We welcome our new partners from Taurus Corporate Finance headquartered in Deventer.
Ecovis cooperates with Taurus Corporate Finance a Netherlands based Corporate Finance firm. Taurus Corporate Finance was established in 2011 as a merger of the M&A-activities of our existing Dutch partners from ECOVIS BonsenReuling and a consultancy firm. Mark Eenink was the first managing partner and founder of the firm. Nowadays he is supported by three further managing partners. Taurus Corporate Finance has a total staff of 12. Taurus Corporate Finance provides services in the following consulting fields:
Restructuring & Recovery
We warmly welcome our new colleagues from the Netherlands to the Ecovis family!