Overview

Suing a Chinese company outside of China for breach of contract is legally possible in certain circumstances but presents significant jurisdictional, procedural, and enforcement challenges. The ability to bring a suit against a Chinese company in a foreign court depends primarily on the jurisdiction clause in the contract, the location of the defendant’s assets and operations, and the applicable conflict-of-laws rules of the forum court. Even if a foreign court assumes jurisdiction and renders a judgment, the critical question is whether that judgment can be enforced against the Chinese company’s assets — most of which are typically located in China. This FAQ examines the legal framework governing cross-border commercial litigation against Chinese entities and provides practical guidance for foreign businesses evaluating their dispute resolution options.

When Can You Sue a Chinese Company in a Foreign Court?

1. Contractual Choice of Foreign Court

Under Article 35 of the PRC Civil Procedure Law (2021 amendment), parties to a contract involving a foreign element may agree in writing to submit their disputes to a foreign court, provided that the chosen court has a actual connection to the dispute (e.g., the place of performance, the domicile of one party, or the location of the subject matter). This is the most straightforward basis for suing a Chinese company in a foreign court — if the contract explicitly designates a foreign court as the exclusive forum, Chinese courts will generally respect that choice, subject to certain exceptions below.

2. No Exclusive Jurisdiction Clause

If the contract does not designate an exclusive court, or if it designates a non-exclusive foreign forum, a foreign court may still accept jurisdiction based on:

• Domicile or presence — the Chinese company has a branch, subsidiary, or substantial operations in the foreign jurisdiction
• Place of performance — the contract was to be performed in the foreign jurisdiction (e.g., delivery of goods to a foreign port)
• Place of harmful act — the breach caused harm within the foreign jurisdiction
• Asset presence — the Chinese company holds assets in the foreign jurisdiction (though this alone is rarely sufficient for general jurisdiction under most legal systems)

Important limitation: Under the doctrine of forum non conveniens, which applies in common law jurisdictions (England, Hong Kong, Singapore, the United States), a foreign court may decline to hear the case if it determines that Chinese courts are a more appropriate forum, even if it technically has jurisdiction. This is particularly likely when the contract is governed by Chinese law, the witnesses and evidence are in China, and the dispute has no substantial connection to the forum.

3. Exclusive Chinese Jurisdiction (Overriding Restrictions)

Article 274 of the PRC Civil Procedure Law provides that Chinese courts have exclusive jurisdiction over certain categories of disputes, regardless of any contractual choice of foreign court:

• Real property disputes — disputes involving immovable property located in China
• Port operations disputes — disputes arising from port operations in China
• Succession disputes — disputes over inheritance of property located in China
• Chinese-incorporated entity disputes — disputes concerning the establishment, dissolution, or internal governance of companies incorporated in China (including Sino-foreign joint ventures and WFOEs)

If your dispute falls into one of these categories, any foreign judgment would likely be unenforceable in China, making foreign litigation an impractical strategy.

Choice of Law and Its Impact

The law governing the contract has a critical impact on where and how you can sue:

• Chinese governing law — if the contract is governed by Chinese law, a foreign court must apply Chinese law to the merits of the case. This requires the foreign court to hear expert evidence on Chinese law, which increases litigation costs and complexity. More importantly, Chinese courts are more likely to recognize and enforce a foreign judgment that correctly applied Chinese law than one that applied foreign law inconsistently with Chinese legal principles.
• Foreign governing law — parties may agree that the contract is governed by a foreign law (e.g., New York law, English law). Under the PRC Law on the Application of Laws to Foreign-Related Civil Relations (Article 4), Chinese courts will respect a valid choice of foreign law, provided it does not violate Chinese public policy or mandatory provisions of Chinese law (such as labor protection or foreign investment regulations).
• PRC mandatory rules — regardless of the chosen law, certain mandatory provisions of Chinese law cannot be excluded by contractual agreement. These include anti-monopoly rules, foreign exchange controls, and labor law protections. If the dispute involves these issues, Chinese courts will assert the primacy of Chinese law regardless of the contract’s governing law clause.

Enforcement of Foreign Judgments in China

The single most important consideration when deciding whether to sue a Chinese company in a foreign court is enforceability. If the Chinese company has insufficient assets outside China to satisfy a judgment, you will need to enforce the foreign judgment in China — a process fraught with legal barriers:

Legal Basis for Enforcement

China does not have a general statutory mechanism for recognizing and enforcing foreign judgments. Instead, enforcement is governed by:

1. Bilateral judicial assistance treaties — China has signed bilateral treaties with approximately 40 countries (including France, Italy, Singapore, Russia, and Brazil) that provide for mutual recognition and enforcement of judgments. Notably, China has no bilateral treaty with the United States, the United Kingdom, Germany, Canada, or Australia for the mutual enforcement of civil and commercial judgments.
2. Reciprocity — in the absence of a treaty, Chinese courts may recognize and enforce a foreign judgment based on a reciprocity principle (Article 289 of the Civil Procedure Law). Historically, Chinese courts strictly required evidence that the foreign court had previously recognized a Chinese judgment. However, the SPC Minutes of the Conference on International Commercial Dispute Resolution (2021) adopted a more flexible “presumed reciprocity” approach, allowing Chinese courts to recognize foreign judgments from jurisdictions that would likely recognize Chinese judgments, even if no precedent exists.
3. Reservation of public policy — even where a treaty or reciprocity exists, Chinese courts may refuse enforcement if the foreign judgment violates China’s public policy or fundamental legal principles, a broad exception that courts have invoked in certain cases (e.g., judgments involving punitive damages or treble damages).

Practical Enforcement Record

As of 2026, Chinese courts have recognized and enforced foreign judgments in only a limited number of cases. The success rate for enforcement applications is estimated at approximately 30–40%, with significant variation by jurisdiction of origin. Judgments from Singapore, France, and Italy have the highest recognition rates due to existing bilateral treaties. Judgments from US and UK courts face greater scrutiny and are more likely to be denied on public policy or reciprocity grounds.

Strategic Considerations: Foreign Court vs. Chinese Court vs. Arbitration

Option 1: Sue in a Foreign Court

Advantages:

• Familiar legal procedures and language (English, etc.)
• No need to navigate the Chinese court system directly
• More robust discovery procedures (particularly in US courts)
• Potential for higher damages awards (including punitive damages in US courts)

Disadvantages:

• High likelihood of enforcement difficulties if assets are in China
• Longer timeline (often 2–4 years including enforcement)
• Higher legal costs (discovery, expert witnesses, translation)
• Risk that Chinese court finds it lacks jurisdiction and the foreign court dismisses on forum non conveniens grounds

Option 2: Sue in Chinese Court

Advantages:

• Judgment is directly enforceable against Chinese assets
• Lower litigation costs compared to foreign litigation
• Faster timeline for straightforward cases (6–12 months)
• Access to Chinese court’s asset preservation mechanisms (财产保全)

Disadvantages:

• Chinese-language proceedings requiring translation of all documents
• Limited discovery compared to common law jurisdictions
• No jury, and damage awards are generally compensatory only
• Potential perception of home-court advantage for the Chinese party

Option 3: International Arbitration

Advantages:

• Enforceable under the New York Convention (172+ countries including China)
• Neutral forum (CIETAC, HKIAC, SIAC, ICC)
• Final and binding (no appeal on merits)
• Confidential proceedings
• Parties choose the arbitrators and procedural rules

Disadvantages:

• Higher upfront costs than litigation in either forum
• Requires a valid arbitration agreement in the contract
• Enforcement of the award in China still requires Chinese court recognition (though the process is more streamlined under the New York Convention than foreign judgment recognition)

Practical Recommendations

1. Include an international arbitration clause in all contracts with Chinese counterparties. This is by far the most reliable and enforceable dispute resolution mechanism for cross-border commercial disputes. Specify a well-recognized institution (CIETAC, HKIAC, SIAC) and a neutral seat (Hong Kong, Singapore).
2. If You Must Litigate, Choose Hong Kong — Hong Kong courts offer common law procedures in English, and Hong Kong judgments are enforceable in mainland China under the Arrangement on Reciprocal Recognition and Enforcement of Civil and Commercial Judgments (2019). This arrangement provides a significantly higher enforcement success rate than judgments from any other foreign jurisdiction.
3. Assess asset locations — before initiating foreign litigation, conduct due diligence to determine where the Chinese company holds assets. If the company’s assets are primarily in China, litigating in a foreign court may be an expensive exercise with limited practical recovery.
4. Consider parallel proceedings — in some cases, it may be strategically appropriate to initiate proceedings both in a foreign court (for jurisdictional leverage) and in China (for asset preservation), though this approach carries risks of conflicting judgments and increased costs.
5. Negotiate settlement before litigating — the uncertainty and cost of cross-border enforcement create incentives for both sides to settle. Engage in structured settlement negotiations before committing to a litigation strategy, and consider using mediation through an international mediation center (SIAC-SIMC, ICC Mediation) as a cost-effective first step.

Key Takeaways

• Suing a Chinese company in a foreign court is possible when the contract includes a valid exclusive foreign court clause and the dispute does not fall under China’s exclusive jurisdiction
• Enforcement of a foreign judgment in China is difficult and uncertain — only 30–40% of enforcement applications succeed, and success depends on bilateral treaties, reciprocity, and public policy considerations
• International arbitration offers significant advantages over litigation: enforceability under the New York Convention, neutrality, finality, and confidentiality
• Hong Kong is the preferred litigation venue for enforcing against Chinese assets, thanks to the 2019 Arrangement on Reciprocal Recognition and Enforcement of Judgments
• Before choosing a forum, conduct asset due diligence to determine where the Chinese company’s assets are located — the enforceability of the judgment is the determining factor in any dispute resolution strategy
• Chinese courts have exclusive jurisdiction over real property, port operations, succession, and company governance disputes involving Chinese entities, regardless of contractual choice of court
• The best approach is proactive: include a well-drafted international arbitration clause in your initial contract, and specify Hong Kong or Singapore as the arbitral seat

Related Topics

• CG360-COMMERCIAL-LAW-FAQ-014: How long does commercial litigation take in Chinese courts?
• CG360-DISPUTE-RES: Dispute Resolution Overview for Foreign Firms in China
• Hong Kong vs Singapore: Which arbitration seat for China contracts?
• CG360-ARBITRATION: International Arbitration with Chinese Parties