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What to do when a commercial dispute arises?

What you can do and what you cannot do in case of commercial disputes, such as late payments, will depend on the governing law and dispute settlement clauses stipulated in your contract. The first step, therefore, would be to check these two items. At the same time, a lot will also depend on the quantity and quality of evidence available to you; you should start collecting evidence as soon as possible, before it becomes unavailable.

In general, the following steps should be followed:

  • Keep following up with the Chinese business partner, showing that you are determined about solving the dispute. It is advisable to involve not only the specific department you have been dealing with, but also other departments such as finance, sales/business development, etc.
  • Continue to collect as much evidence as possible
  • Submit to the Chinese company an Attorney´s letter from a Chinese law firm, which will put some pressure and make them understand that the EU SME is duly assisted to act in China, aware of its rights and willing to defend its interests by any means.
  • If the above does not work and the dispute over the agreement cannot be solved in an amicable manner, the EU SME should then file a lawsuit against its Chinese business partner as a result of the breach of contractual obligations.
  • Arbitration can be considered if a relevant valid clause was included in the business contract (see dedicated FAQs in this section).
  • Litigation the last option which will probably lead to a termination of your business relationship with your client.