China’s system is predominantly based on the civil law tradition. The primary source of law is comprehensive, written legal codes and statutes enacted by the legislature. Judicial precedent, or case law, is not formally binding on lower courts, though guiding cases issued by the Supreme People’s Court have persuasive authority and provide practical guidance for adjudication.

China employs a hybrid adjudicatory model. In criminal proceedings, it is predominantly inquisitorial, while in civil proceedings, it is more adversarial with judicial oversight.

Both written submissions and oral arguments are utilised in China’s legal process. The trial is not a complete re-litigation of the case based solely on oral evidence presented live in court. Instead, it often serves as a check and verification of the evidence and conclusions already formed in the written dossier.

This system places a premium on the thorough preparation of written documentation. A case can be won or lost based on the strength and comprehensiveness of the written submissions. Understanding the judge’s central, investigative role is also crucial, as strategic advocacy involves effectively guiding the court’s inquiry through well-organised evidence and legal reasoning.

China’s court system is organised in a four-tier hierarchy based on administrative divisions. There are no separate federal and state courts; instead, a unified system ranges from the Supreme People’s Court down to the Intermediate People’s Court, the High People’s Court, and the Primary People’s Courts. Each level corresponds to a specific governmental tier: national, provincial, prefectural, and county.

The system includes general jurisdiction courts rather than distinct subject-matter courts. District courts are the first-instance trial courts for most civil, criminal, and administrative cases. Appeals from district courts are heard by the Intermediate People’s Courts, which also handle major first-instance cases. The Supreme People’s Court sits at the apex, reviewing judicial work across the country.

Specialised courts exist for specific domains, such as maritime, intellectual property, and finance. However, these are not fully separate systems. Their judgments can be appealed to the corresponding higher-level general court, integrating them into the main hierarchical structure.

The timeline from filing a lawsuit to trial varies significantly based on case complexity and court workload. For civil cases using ordinary procedure, the statutory time limit for concluding a case is six months. In practice, simply getting a first hearing scheduled can take several months, especially in major cities with congested dockets. Delays are common and often occur due to procedural steps, such as service of process. A case might take three to four months to reach trial, while complex disputes can take a year or more.

China’s legal system operates on a principle of judicial transparency, meaning court proceedings and filings are generally open to the public. This commitment is demonstrated through online platforms that allow for case tracking and access to a vast database of court judgments. The system is designed to allow public access and provide legal guidance through published decisions.

To balance transparency with the protection of sensitive interests, the system incorporates specific procedures to restrict public access. Hearings can be closed, and evidence can be partially redacted or subject to confidentiality agreements in certain circumstances. These measures are legally mandated to protect state secrets, personal privacy, and commercially sensitive information such as trade secrets.

Businesses involved in litigation can, and should, proactively apply for these protective measures to prevent the disclosure of sensitive data. Understanding how to navigate this balance is crucial for managing legal risks in the Chinese judicial environment.

Representation in Chinese courts is restricted to specific categories of individuals. Practising Chinese lawyers are the primary representatives, but close relatives, employees, and individuals recommended by a community may also act in certain capacities, subject to providing proof of their relationship or authorisation. Each category must present specific documentation, such as practice certificates or kinship proof, to the court to be recognised as a legitimate representative.

A key rule states that any party needing legal representation must appoint a lawyer who is licensed in the People’s Republic of China. Consequently, foreign lawyers are prohibited from conducting cases or appearing as legal counsel in Chinese courts. However, they can still provide valuable support outside the courtroom. This includes providing strategic advice on international law and collaborating with the Chinese legal team managing the formal court proceedings.

In China, the availability of third-party funding for lawsuits is a developing area of law, with courts drawing a significant distinction between its use in litigation and arbitration. The general judicial trend is cautious, if not passive, regarding litigation, while arbitration is viewed more favourably.

China’s current law has no specific regulations authorising or prohibiting third-party funding in litigation. However, the longstanding legal principles against champerty and maintenance – which forbid instigating litigation and financing it for profit – create a significant degree of legal uncertainty. While China’s legal system does not follow the principle of stare decisis, there was once a judgment that ruled a third-party funding contract invalid for hindering the normal course of civil litigation and for adversely affecting the maintenance of social and public order.

Consequently, while such arrangements may occur in practice, their enforceability cannot be guaranteed and they carry inherent legal risk. And the general prohibition on law firms directly funding a case in exchange for a share of the award also indirectly shapes the third-party funding market, separating the roles of legal advisor and case financier.

China’s current law has no specific regulations on the types of lawsuits available or unavailable for third-party funding. In China’s evolving practice, third-party funding is primarily utilised in commercial lawsuits with high-value claims.

China’s current law has no specific regulations that prohibit the third-party funding availability for the plaintiff or the defendant. Third-party funding is, in principle, available to both plaintiffs and defendants in China.

In China’s third-party litigation funding market, there are no universally fixed minimum or maximum amounts prescribed by law. The funding amounts are typically determined on a case-by-case basis through negotiations between the funder and the client, heavily influenced by the specific details and potential value of the dispute. According to the statistics, the average amount a third-party funder in China will fund is 10-15% of the amount in controversy of the case.

Third-party funders in China typically agree to cover the essential direct costs of pursuing or defending a legal claim, which most commonly include professional fees for lawyers, court filing and administrative fees, appraisal fees and the costs of retaining necessary expert witnesses. Depending on the case, funding may also extend to ancillary expenses such as document translation and notarisation.

In litigation, while a contingency fee arrangement is not explicitly prohibited by statute and occurs in practice, it may be unenforceable. The legal principles against champerty and maintenance create significant uncertainty.

In China, there are no specific statutory deadlines that require a party to obtain third-party funding during litigation.

China’s legal framework for pre-action conduct varies significantly depending on the nature of the dispute, with distinct pathways for civil/commercial, employment, and administrative cases. In ordinary civil and commercial litigation, there is no universal mandatory pre-action protocol, but the system offers critical pre-emptive tools. A key mechanism is pre-action preservation, which allows a party to seek court orders freezing a defendant’s assets or preserving evidence before filing a lawsuit, provided they can demonstrate urgency and post-security.

For employment and administrative disputes, the rules are more prescribed. Labour cases require mandatory pre-litigation arbitration, meaning parties must first submit their dispute to an employment arbitration committee and obtain a ruling before they are permitted to file a lawsuit in court. Similarly, for certain types of administrative cases challenging government actions, the law may require a mandatory reconsideration process with a higher-level administrative body as a prerequisite to initiating litigation.

In China’s civil litigation system, the general limitation period for most civil and commercial claims is three years, as provided by China’s Civil Code. A key procedural aspect is that courts do not conduct active investigations to determine whether a limitation period has expired; rather, they will only consider this defence if the defendant raises it explicitly during the proceedings.

The three-year limitation period generally begins to run from the date the claimant knew, or should have known, that the contract was breached, their rights had been infringed and who the obligor was. The limitation period is not fixed; it can be interrupted by specific actions. Such actions include the claimant demanding performance, the obligor agreeing to fulfil the obligation, the claimant instituting a lawsuit, or applying for mediation. Each interruption restarts the clock, meaning the limitation period begins anew from the time of the interruption.

A defendant in China is subject to suit primarily on the basis of their domicile. For individual defendants, this refers to their habitual residence, while for legal entities such as companies, it is their principal place of business or the address at which they are registered. Beyond domicile, jurisdiction can also be established based on the location where:

• a contract was signed;
• a contract is to be performed; or
• the harmful event occurred or harm was caused in a tort case.

The jurisdictional requirements differ between the various levels of courts, primarily based on the subject matter and the amount in controversy. Specialised courts, such as maritime or intellectual property courts, have jurisdiction over disputes based on their specific subject matter, regardless of the defendant’s domicile.

Parties to a contract may also choose the court that will hear their disputes through a written jurisdiction agreement, provided their choice is connected to the dispute and does not violate rules regarding exclusive jurisdiction or the level of court.

A lawsuit in China is formally initiated by filing a Statement of Claim with a competent people’s court. This document serves as the foundational pleading that outlines the case. It must clearly identify the parties involved, state the specific claims being made, and present the factual and legal basis for those claims.

The civil procedure law permits a plaintiff to amend their Statement of Claim after it has been filed. This is typically allowed, but the court retains discretion to approve or deny such amendments, particularly if they are sought at a later stage of the proceedings.

In China, the court is primarily responsible for effecting service of process, and specific rules vary depending on whether the defendant is within or outside Chinese territory. The plaintiff initiates the lawsuit by filing a complaint with a competent court, and the court then takes charge of delivering the legal documents, including the complaint and summons, to the defendant. The system incorporates modern methods, such as electronic service, and maintains special procedures for cross-border litigation.

If all other methods have been exhausted and the defendant’s whereabouts remain unknown, the court will ultimately resort to service by public announcement. This involves publishing a notice of the lawsuit in a newspaper or on a court bulletin board for a legally prescribed period, after which service is deemed complete.

A party located outside China can be sued in Chinese courts if the legal dispute has a sufficient connection to China. The court will typically follow the methods outlined in international treaties to which China is a party (such as the Hague Service Convention) or use diplomatic channels.

If a defendant fails to submit a response after being properly served with a lawsuit, the court may proceed to a default judgment. This means the case will continue in the defendant’s absence. The court is not obligated to rule in the plaintiff’s favour automatically; instead, it will examine the plaintiff’s claims and evidence to determine whether they are well-founded.

A defendant who failed to respond has the right to apply to the court to set aside the judgment. To be successful, the defendant must typically provide a legitimate justification for their absence, such as force majeure or other valid reasons beyond their control. The defendant must also demonstrate that they have a meritorious defence to the original claims.

China’s legal system explicitly provides for collective litigation, primarily through mechanisms established in the Civil Procedure Law and specialised judicial interpretations.

For general civil disputes, such as those involving consumers, environmental issues, or product liability, the standard mechanism is the “representative action”. This model operates on a strict opt-in basis, requiring each potential claimant to actively register with the court to become a party to the lawsuit. Courts will examine whether the claims share common legal or factual questions and whether all parties in the group have identical or similar legal interests. The representatives may be appointed by parties of the group or by the court. The judgment rendered by the court is legally binding only on those parties who have formally registered and been represented.

Collective action for securities law violations represents a major evolution in Chinese group litigation. This model incorporates a special representative action that can function on an opt-out basis for eligible investors. In these cases, courts require a precisely defined class of investors harmed by the same alleged misconduct, such as securities fraud or false statements. The system mandates participation by a designated investor protection institution to serve as lead plaintiff. The court’s judgment is binding on all members of the defined group unless they explicitly declare their opt-out.

Chinese law does not impose a statutory obligation on lawyers to provide clients with a formal cost estimate of the potential litigation at the outset. In practice, most law firms provide clients with an initial estimate outlining potential litigation costs, such as court fees, preservation fees, and appraisal expenses.

This estimate is indicative rather than binding. Costs are subject to revision as the case progresses or becomes more complex. Therefore, while not mandated by statute, providing clients with a cost estimate is a recognised professional standard.

Parties may file interim applications before or during litigation to protect their rights or secure enforcement of a future judgment. Typical applications include:

• property preservation to prevent a party from hiding or transferring assets to ensure a future judgment can be enforced;
• evidence preservation to prevent loss or tampering; and
• conduct preservation to compel or restrain specific acts to prevent irreparable harm.

These applications may address both procedural and substantive issues. Courts evaluate the necessity, urgency, and proportionality of the measure before issuing an order.

Chinese civil procedure offers a pathway for the early resolution of claims. Which means if some of the facts are clear, the court can make a ruling on that part first.

For example, in a case represented by Anli Partners, the plaintiff sued to confirm the termination of the contract and compensate for losses. After ascertaining the facts of the case, the court made an early judgment and ruled that the contract was terminated.

Before trial, parties may submit applications that could dispose of the case in whole or in part. Common motions include:

• jurisdictional objections;
• counterclaims;
• requests for case withdrawal;
• applications to join necessary third parties;
• motions to stay proceedings pending arbitration or related litigation; and
• objections to the plaintiff’s standing or capacity.

Courts often address these procedural motions early in the case to ensure proper case management and procedural efficiency.

The legal framework allows third parties whose interests are affected by the lawsuit to participate in the proceedings mainly in the following two circumstances:

• independent claims, where a third party asserts rights over the same subject matter; and
• interested participation, where the case outcome may affect the third party’s legal interests.

A third party who asserts an independent right related to the dispute may voluntarily apply to intervene. Alternatively, the court may notify a third party, whose interests are not independent but will be affected by the judgment, to join the case.

Third parties have the right to present evidence, make statements, and, if their interests are affected, appeal the judgment.

The general principle in Chinese litigation states that a defendant cannot request security for costs from a plaintiff.

Applicants are generally responsible for the costs of interim applications at the outset. The court may later allocate these costs based on the outcome of the case.

If an interim measure is granted but subsequently deemed unnecessary or abusive, the applicant may be ordered to compensate the other party for any resulting losses.

The processing time for applications depends on their nature, complexity and urgency.

Standard vs Urgent Processing

Non-urgent applications may take weeks or even months for a ruling. However, for clearly urgent matters, such as pre-action asset preservation, the Civil Procedure Law imposes a strict 48-hour deadline for the court to issue a ruling.

Requesting Expedited Handling

A party can request priority processing by demonstrating compelling reasons for the urgency, such as an imminent risk of asset transfer or irreparable harm.

China does not operate a common-law-style discovery process. Each party bears the burden of producing evidence supporting its own claims or defences.

Evidence Submission and Exchange

The burden of proof rests on the parties, who must submit their evidence within a court-designated period. The court often organises a pre-trial exchange of evidence, allowing both sides to review each other’s evidence.

Court-Assisted Evidence Collection

A party may petition the court to collect evidence it cannot obtain independently. The court will grant such a request if it deems the evidence material to the case and the applicant’s inability to collect it is justified.

Courts may require third parties to produce evidence relevant to the dispute, such as records held by banks, employers, or administrative agencies. The requesting party must demonstrate that it cannot reasonably collect the evidence itself.

Evidence disclosure in China is limited to materials that parties intend to rely upon. Courts generally require both parties to exchange evidence before trial within court-set deadlines.

Late submission of evidence may be rejected unless justified by exceptional circumstances. Sensitive information, such as trade secrets or personal data, can be submitted under seal with confidentiality protection approved by the court.

In the absence of a common-law-style discovery process, evidence in Chinese civil litigation is developed mainly through:

• party submission of documents and witness statements;
• court-led investigations and verifications; and
• judicial evidence preservation or expert evaluation.

Documentary evidence remains the most persuasive form, particularly in commercial cases. The court plays an active role in determining what evidence is necessary and admissible.

China does not formally recognise the attorney–client privilege as in common law jurisdictions. Nevertheless, lawyers are under a statutory duty of confidentiality concerning all information obtained in the course of their practice.

In civil litigation, parties generally cannot refuse to provide evidence without justifiable reasons.

Chinese courts may grant injunctive relief to prevent irreparable harm or secure the enforcement of judgments. China’s injunctive relief is embodied in 4.1 Interim Applications/Motions.

The processing time for applications depends on their nature, complexity and urgency.

Standard vs Urgent Processing

Non-urgent applications may take weeks or even months for a ruling. However, for clearly urgent matters, such as pre-action asset preservation, the Civil Procedure Law imposes a strict 48-hour deadline for the court to issue a ruling.

Requesting Expedited Handling

A party can request priority processing by demonstrating compelling reasons for the urgency, such as an imminent risk of asset transfer or irreparable harm.

Chinese law allows courts to grant injunctions without notifying the respondent when immediate action is necessary to prevent irreparable harm. Ex parte injunctions are commonly used in asset-freezing scenarios.

Applicants must provide a security deposit sufficient to cover potential damages. Once the injunction is issued, the court promptly notifies the respondent and may schedule a hearing if objections are raised.

If an injunction is later found to have been wrongfully granted, the applicant bears liability for the respondent’s losses. The court may order the applicant to compensate the respondent from the security previously deposited.

This liability applies equally to ex parte injunctions. The security mechanism ensures that injunctive relief is used responsibly and discourages abuse of urgent judicial remedies.

Chinese court orders to freeze assets (asset preservation orders) generally only apply to assets within China. These orders cannot directly freeze a respondent’s overseas assets. However, through specific judicial assistance arrangements, a Chinese court can help freeze assets in Hong Kong or Macao to support arbitration.

Injunctive relief can be obtained against third parties under specific circumstances. This is particularly true for property preservation measures. For instance, when a court orders the freezing of a respondent’s bank deposits or the seizure of assets held by a third party, such as a bank or custodian, that third party is legally bound by the court’s assistance execution notice and must comply. A third party that refuses to assist may face compulsory measures from the court.

Failure by a respondent to comply with the terms of an injunction carries severe legal consequences. According to the Civil Procedure Law of the PRC, the court may impose the following measures.

Fines and Detention

The court may impose a fine of up to RMB100,000 on an individual or detain them for up to 15 days. For a unit, the fine may range from RMB50,000 to RMB1,000,000 and the principal responsible person may also be subject to detention.

Criminal Liability

If the act constitutes a crime, criminal liability may be pursued according to the law. For example, the respondent could be accused of “refusing to execute a judgment or ruling.”

These measures ensure the authority and enforceability of court-issued injunctions.

Trials in China are, as a starting point, conducted orally in open court in criminal, civil and administrative matters. Purely written procedures are exceptional and only available in limited circumstances expressly provided for by law.

In ordinary first-instance proceedings, a hearing is mandatory. The court leads fact-finding and oral argument, and parties, witnesses, appraisers and expert assistants are, in principle, expected to appear for examination and cross-examination, with the parties given a final opportunity to address the court. In simplified or expedited procedures, these steps may be streamlined, but a basic level of oral presentation and confrontation is still maintained.

At the appellate and retrial stages, the court decides whether to hold a hearing having regard to the complexity and specific needs of the case. Even where the matter is determined on the papers, the judges are required to review the case file and seek the parties’ views. Overall, the Chinese system is structured around oral, adversarial hearings, with the result ultimately recorded and formalised in a written judgment served on the parties.

In addition to full trials, Chinese courts frequently use short hearings to deal with procedural and interim applications, such as objections to jurisdiction, applications for preservation of property or conduct, preservation of evidence, and other forms of interim relief. These sessions are usually brief and are sometimes conducted by video or other online means. The judge hears focused submissions on the specific procedural or interim measure sought, assesses urgency, necessity and risk, and then issues a ruling, without conducting a full examination of the merits at that stage.

Chinese procedural law does not provide a separately named “case management conference”, but in commercial disputes with high-value, multi-party or complex evidentiary issues, judges will often convene one or more pre-trial meetings, in person or online. These meetings are used to clarify the parties’ claims and defences, narrow the issues that require determination, discuss the form and organisation of evidence, set deadlines for the production and exchange of evidence, and address in advance whether judicial appraisal or expert testimony will be required, so that a clear timetable and procedural framework can be put in place for the substantive hearing.

Jury trials are not available in civil cases in China. However, “people’s assessors” can participate in the trial process. People’s assessors are citizens who are selected to sit with a judge or a panel of judges to hear a case. However, the use of assessors is not as widespread as that of juries in common law jurisdictions, and their role is more limited.

The following are some important rules governing the admission of evidence at trial.

Legality of Evidence

Evidence must be obtained lawfully.

Relevance

Evidence must be relevant to the facts in issue.

Authenticity

Evidence must be genuine. Its content must reflect an objectively existing reality and not be fabricated or falsified. The court will examine authenticity, including through appraisal, verification and cross-examination where appropriate.

Sufficiency

The evidence must be sufficient to prove the facts of the case.

Exclusionary Rules

Even where evidence is obtained lawfully, it may still be excluded in certain circumstances. For example, where the manner of obtaining the evidence seriously infringes the legitimate rights and interests of others, or breaches a mandatory prohibition in law, the court may refuse to admit that evidence.

Standard of Proof

In civil proceedings, the standard of proof is generally that of a “high degree of probability”, meaning that the evidence must be sufficient to satisfy the judge that the facts in issue are highly likely to exist.

Expert testimony is permitted at trial in China.

• The parties can introduce their own expert testimony to support their case. The expert must be qualified to give an opinion on the issue in question, and their testimony must be based on their expertise.
• The court can also appoint its own expert to provide an opinion on a technical or scientific issue. This is a common practice when the issue is complex or the parties’ experts have conflicting opinions. The court-appointed expert is expected to be impartial and to provide an objective opinion to the court.

The expert’s opinion is not binding on the court, but it is persuasive evidence that the court will consider when making its decision.

The extent to which hearings and hearing records/transcripts are made public depends on the nature of the case and the applicable legal provisions, as follows.

Openness of Hearings

Public hearings

Except for cases that must not be heard in public according to law – such as those involving state secrets, trade secrets, personal privacy or offences committed by minors – other cases may have their hearings made open to the public via online live-streaming, the “China Court Trial Online” platform and similar channels. Members of the public can watch live broadcasts or replays of hearings on China Court Trial Online and other platforms to follow the progress of the proceedings.

Non-public hearings

For cases involving state secrets, trade secrets, personal privacy, offences committed by minors, as well as cases in which a party expressly requests that no live or recorded broadcast be made and such request is based on legitimate grounds, no live-streaming or public broadcast of the hearing will be arranged. The hearing process in such cases is known only to the parties, their legal representatives, litigation representatives and other specified participants in the proceedings.

Openness of Hearing Records/Transcripts

As a general rule, hearing records/transcripts are not directly disclosed to the general public. The parties and their litigation representatives may inspect and copy the hearing transcripts, but they must comply with the court’s rules and may not use the transcripts for unlawful purposes or disclose the information contained therein.

In China’s civil and commercial cases, judges play an active and leading role in hearings. They organise and manage the procedure, confirm the parties’ identities, explain their rights and obligations, decide the order of producing and challenging evidence, and ask questions to the parties, witnesses and experts to clarify key facts. Judges may request additional evidence, order expert evaluations, or hear expert opinions for technical or specialised issues. This ensures the hearing focuses on key issues rather than turning into an open-ended debate.

Whether a decision is given at the hearing depends mainly on how complex and urgent the case is. If the facts are clear, the evidence is sufficient and the law is straightforward, or if urgent matters such as asset preservation or interim measures are involved, the court will often give its decision at the end of the hearing.

In more complex or sensitive cases – such as those with many parties, large amounts of evidence, serious disputes over the law or major social impact – the court will usually reserve judgment, deliberate after the hearing, make any further inquiries needed, and then issue a written judgment within the statutory time limit.

First-Instance Timeline

Filing and case acceptance

After the claimant submits a statement of claim, the court should decide within seven days whether to accept the case. If the statutory requirements for filing are met, the court will register the case and notify the parties. If not, it will issue a ruling denying acceptance of the case, against which the claimant may appeal.

Service and defence

Within five days of registering the case, the court serves a copy of the statement of claim on the defendant, who shall submit a statement of defence within fifteen days of receipt. Within five days of receiving the defence, the court serves a copy on the claimant.

Ordinary first-instance time limit

Under the ordinary procedure, the case should be concluded within six months from the date of case acceptance. In special circumstances, this may be extended by a further six months with the court president’s approval. Any further extension requires approval from the higher court.

Summary procedure

Cases following the summary procedure should be resolved within three months of case acceptance, with the possibility of a one-month extension, subject to the court president’s approval.

Small-claims procedure

Cases under the small-claims procedure should be concluded within two months from case acceptance, with a possible one-month extension subject to approval by the court president.

Hearing/trial and judgment

The court must notify the parties and other participants in the proceedings at least three days before the hearing/trial. If a party is dissatisfied with the first-instance judgment, it may file an appeal with the higher court within fifteen days from the date of service of the written judgment. If dissatisfied with a ruling, the appeal period is ten days from service of the ruling.

Second-Instance Timeline

Time limit for appeal: A party that wishes to appeal a first-instance judgment must do so within fifteen days from the date of service of the written judgment. To appeal a ruling, the time limit is ten days from the date of service of the ruling.

Filing and transfer

The notice of appeal must be filed with the trial court that presided over the original proceeding. That court should serve a copy of the notice of appeal on the other party within five days. The other party then has fifteen days from receipt to submit a statement of defence. Within five days of receiving the notice of appeal and the defence, the original court must transfer the entire case file and evidence to the appellate court, which should register the appeal within five days of receipt.

Time limit for appeals against judgments

Appeals against first-instance judgments should be concluded within three months from the date the appellate court registers the case. In special circumstances, this period may be extended with the approval of the court president.

Time limit for appeals against rulings

Appeals against first-instance rulings should be decided by a final ruling within thirty days from the date the appellate court registers the case.

The statutory trial periods do not include the time taken for public announcements, expert appraisals, settlement negotiations between the parties, the handling of jurisdictional objections raised by the parties or the resolution of jurisdictional disputes between courts.

In practice, the actual duration may vary depending on the complexity of the case, the workload, and the court’s internal arrangements. In particular, in Beijing, due to the heavy caseload, an ordinary first-instance commercial case can, in practice, take around 12 to 18 months from the submission of filing materials to conclusion, even longer.

In China, a settlement agreement reached autonomously between the parties during the litigation process is treated as a civil contract and generally takes effect without the need for court approval, but it does not, by itself, carry compulsory enforceability. If one party fails to perform, the other will usually need to bring a separate action to enforce its rights.

If the parties wish the settlement to have the same enforceable effect as a judgment, they may ask the court to issue a civil mediation statement based on the settlement terms or apply for judicial confirmation of a mediation agreement reached outside litigation. The court will conduct both a formal and a substantive review of the settlement, including whether its content is lawful, whether it breaches mandatory provisions, whether it harms State interests, public interests or the lawful rights of third parties, and whether it reflects the parties’ true intentions. Once this review is passed, the mediation statement or confirmation ruling, upon taking effect, may serve as a basis for compulsory enforcement.

In China, the confidentiality of litigation settlements is typically achieved in two main ways. First, parties include confidentiality provisions in their settlement agreements. Secondly, cases may be concluded by withdrawal of the claim or through a court-issued civil mediation statement, which keeps detailed terms out of publicly available judgments. As a matter of law, court mediation is not public, and parties can ask the court to record only essential terms to protect commercially sensitive information.

Confidentiality is not absolute. Exceptions apply for regulatory filings, audit requirements and other mandatory disclosure obligations. Courts may also disclose limited information where necessary to safeguard public interests or the fundamental rights of others. Parties should therefore draft clear and targeted confidentiality clauses and, during the proceedings, proactively request redaction or technical processing of sensitive data, in order to balance confidentiality with legal disclosure requirements.

Under Chinese law, the enforceability of a settlement agreement depends on its legal form. A privately negotiated settlement that has not been judicially confirmed has only the binding effect of a contract; if one party defaults, the other must bring a separate claim for breach of contract. By contrast, where settlement terms are incorporated into a court mediation statement, a judicial confirmation ruling or an arbitral award, they acquire direct enforceability, and the successful party may apply straight to the court’s enforcement division for compulsory enforcement.

In practice, to balance commercial flexibility with enforcement efficiency, parties often adopt a dual-track structure: a concise court mediation statement paired with a more detailed private settlement agreement, or a “mediation plus arbitration” arrangement under which the settlement is converted into an arbitral award. Importantly, if a settlement reached at the enforcement stage is not carried out, the court will normally resume enforcement of the original judgment, and all enforcement steps remain subject to the statutory time limits for applying for enforcement.

A settlement agreement can be set aside on the same grounds as any other contract. These grounds include fraud, duress, serious misunderstanding, and apparently unfair contract. To challenge a settlement agreement, a party must file a lawsuit with the court. The party must set out the grounds for challenging the settlement and provide evidence to support their claim. If the court finds the settlement agreement invalid, it will issue an order setting it aside.

Under Chinese law, the main forms of relief include:

• specific performance – requiring the breaching party to continue performing its contractual obligations;
• damages – compensating actual loss and foreseeable loss of expected profits;
• liquidated damages – payment of an agreed sum, subject to judicial adjustment where it is manifestly excessive or insufficient;
• injunction-type relief – orders to cease ongoing infringements or remove unlawful interferences; and
• restoration and restitution – restoring the status quo ante or requiring the return of property.

Depending on different subject matters of commercial disputes, Chinese law also provides for certain specialised remedies:

• in corporate governance matters, shareholders may exercise information rights, bring derivative actions and, in extreme cases, apply for dissolution of the company;
• in the context of a contract, the non-breaching party may terminate the contract and simultaneously claim damages; and
• in the intellectual property field, right holders may seek pre-trial injunctions to prevent harm that would be difficult to remedy by damages alone.

These remedies may be granted singly or in combination, and the court will determine the most appropriate form of relief on the facts of the case to afford effective protection to the successful party.

Compensation for damages follows the “principle of compensation,” aiming to restore the injured party to the pre-damage state and to cover both actual losses and foreseeable benefits. Simultaneously, the “principle against unjust enrichment” applies, preventing the non-breaching party from profiting excessively due to the breach of contract.

Punitive damages are only applicable in areas explicitly stipulated by law, as outlined below.

• Consumer fraud – claimants may seek three times the amount paid as compensation. 
• Intellectual property infringement – malicious infringement may result in damages ranging from one to five times the actual loss.
• Product liability – compensation is available when products with known defects are manufactured or sold, resulting in severe consequences.
• Environmental pollution – intentional pollution that causes serious outcomes. 

In general, in commercial contract disputes, courts do not award punitive damages. However, parties may achieve a similar deterrent effect by agreeing on liquidated damages in their contracts.

Mechanisms Limiting Compensation Amounts

In cases of judicial adjustment of liquidated damages, if the agreed liquidated damages are significantly greater than the actual loss (typically exceeding the loss by about 30%), the courts have the discretion to reduce the amount.

Pre-Judgment Interest

Successful parties may collect pre-judgment interest. The accrual parameters are:

• contractual basis – f the contract specifies an interest rate, courts generally enforce it;
• statutory basis – absent agreement, courts typically reference the Loan Prime Rate (LPR) or former PBOC benchmark rates; and
• statutory limits – consumer loan interest cannot exceed 4 times of LPR; commercial contracts face no fixed cap but are subject to judicial reduction if excessive.

Post-Judgment Interest

Interest continues to accrue after judgment. The rules are:

• mandatory application – under Civil Procedure Law, double interest applies automatically for delayed performance;
• fixed rate – the additional interest is calculated at 0.0175% daily (approximately 6.39% annually); and
• no discretion – this punitive rate is statutory and not subject to judicial adjustment.

Core Enforcement Procedures

The successful party must apply for enforcement to the court of first instance within two years from the date on which the judgment takes legal effect. The court will use various methods to locate assets available for enforcement. Once such assets are identified, it will promptly apply control measures such as seizure, attachment and freezing, for which the court will take appropriate realisation measures according to the nature of the property in order to satisfy the debt, as follows:

• auction or sale – for physical assets such as real estate and vehicles, the court will usually entrust a professional auction institution to conduct a public auction;
• transfer of funds – for bank deposits, the court may issue a ruling directing the bank to transfer the funds to the court’s designated account; and
• payment in kind – with the consent of the applicant for enforcement, the judgment debtor’s property may be valued and used to set off the debt.

If, after exhausting available asset-investigation measures, no property is found that can be enforced against, the court may rule to terminate the current round of enforcement. If new assets are later discovered, the applicant may apply to resume enforcement.

In addition to directly realising assets, the court may also:

• list the judgment debtor as a dishonest debtor, impose restrictions on high-value consumption and disqualify it from certain government procurement;
• impose fines or judicial detention on persons who evade or obstruct enforcement; and
• transfer cases for criminal prosecution where the conduct may constitute the offence of refusing to enforce a judgment or ruling.

In China, foreign civil and commercial judgments may be recognised and enforced on two main bases: an applicable international convention or bilateral treaty between China and the state of origin, or, in the absence of such instruments, the principle of reciprocity. The judgment creditor will normally apply to the intermediate people’s court at the debtor’s domicile or the place where key assets are located and must file an authenticated copy of the judgment, proof that it is final and effective, evidence of proper service, and any required notarised and legalised documents with certified Chinese translations.

Once the formal requirements are satisfied, the court hears submissions from both sides and undertakes a limited review. It considers whether the foreign court had a proper jurisdictional basis, whether the proceedings met basic standards of procedural fairness and gave the defendant a real opportunity to be heard, whether there is any conflicting effective Chinese judgment, and whether recognition would clearly conflict with fundamental principles of Chinese law, public policy or China’s sovereignty and security. If recognition and enforcement are granted, the judgment is enforced in essentially the same manner as a domestic judgment; if refused, the applicant will usually have a limited period to seek reconsideration.

The Chinese legal system applies a two-tiered system. Under the Civil Procedure Law of China, if a party disagree with the judgment of the first instance, he may appeal to the court of a higher level. After reviewing the judgment of the first instance, the court of appeal will make the judgment of the second instance, which is the final and effective judgment.

If the party disagree with the judgment of the second instance, they may apply to the court of a higher level for retrial review. The retrial review is a mechanism that prevents the major and severe mistakes of the first and second instances. According to statistics published by the Supreme Court of China, more than 90% of retrials do not change the outcome of the original instance. Also, before the retrial court changes the judgment of the previous instance, that judgment is regarded as final, binding, effective, and enforceable.

In the Chinese legal system, there are four levels of court, and from the bottom level to the highest level are the court of district, the court of intermediate, the court of high level and the supreme court. Which court serves as the court of appeal depends on the court of first instance. Generally, the level of court where a case starts is determined by the monetary value of the subject matter.

The Civil Procedure Law of China provided several institutions where an appeal can be granted by the appealing court, namely:

• the facts in the judgment of first instance are unclear;
• the law application is not correct;
• the court of first instance did not notify the necessary party to attend the litigation; and
• the procedure of the first instance violates the law.

If a Party disagreed with the judgment of the first instance, they have the right to appeal their case to the court of the next level within 15 days after receiving the judgment of the first instance.

The appealing party shall submit the petition for appeal to the court of first instance. Upon receiving the appealing party’s petition, the court of first instance will issue a payment notice requiring the appealing party to pay the appeal fee. After the court of first instance receives the appeal fee, it will hand the case files, including the petition for appeal, to the court of second instance.

The appeal is the party’s legitimate right under Civil Procedure Law of China. The appealing party is not required to obtain any court’s approval when exercising this right.

The appeal court’s consideration is divided into two parts.

Procedural Review

The appeal court will consider whether:

• the materials submitted by one party have been duly delivered to the other party;
• the court of first instance failed to notify any “necessary party” to join in the proceeding; the “necessary party” under the Civil  Procedure Law of China include those parties who have their own claims and those who do not have their own claims but are indispensable for fact-finding;
• the court of first instance has organised the parties to cross-examine the opposing party’s evidence; and
• the court of first instance has arranged at least one hearing, in which all the parties have fully presented their case and expressed their opinion.

Substantial Review

The appeal court will consider whether:

• the facts-finding parts of the judgment of the first instance have solid evidence to be supported;
• the court of first instance has fully investigated all the relevant facts that enable it to make a judgment; and
• there is any law application mistake by the court of the first instance.

Summary

In most situations, the appeal court will arrange a re-hearing, and in practice, the appeal court will conduct a thorough review of the first-instance decision. 

In the appeal procedure, both the appealing party and the appealed party are allowed to raise new evidence. Thus, new points and facts are very common in the appeal. If the new points or facts are relevant to the case, the appeal court may take them into account and grant the appeal. 

Speaking of granting an appeal, the Chinese appeal courts adopt an approach of “return or overrule”, which means:

• if the Chinese appeal courts find any fact-finding issues in the judgment of first instance such as failing to investigate all the relevant facts or facts lacking evidence to support, the appeal court may return the case to the court of first instance for retrial at his discretion; or
• the appeal court may himself investigate all the relevant facts, figure out all the questions of law and make a judgment overruling the first-instance judgment.

Therefore, there is no granting with conditions in Chinese lawsuits.

The appellate court may:

• maintain the judgment of first instance;
• return the case to the first-instance court; and
• make a new judgment changing the judgment of the first instance.

Court Fees

The court will allocate court fees at its discretion; usually, the court fee allocation is proportional to the parties’ liabilities.

Attorney Fees

Unless the parties have an agreement on the attorney fee, such as the losing party reimbursing the prevailing party’s attorney fee, Chinese courts will not uphold an attorney’s fee claim.

Expenses (such as Accommodation, Transportation or Logistics)

Same as attorney fee: unless the parties have an agreement, Chinese courts will not uphold such an expenses claim.

Amount

In addition to an agreement on attorney fees and expenses, the claiming party must demonstrate the reasonableness and necessity of such fees and expenses to gain the court’s support. The most common way to prove is for the claiming party to show that the attorney fees and expenses have been actually paid by them and to establish direct links between these fees and expenses and certain matters necessary to resolving the dispute.

When awarding costs, the court will consider:

• the result of judgment when awarding the court fees, usually the court fee allocation is in proportionate with the liabilities of the parties; or
• whether the parties have an agreement on the attorney fees and expenses, and whether the attorney fees and expenses are reasonable and necessary.

Under the Civil Procedure Law of China, there is a debit interest for delay in performance at 0.0175% per day. Therefore, once the court awards costs in a judgment, it will, in most cases, not award interest on those costs.

However, this does not mean that the obligated party can avoid interests. If the obligated party does not pay the costs by the end of the performance period designated in the judgment, the debit interest for delay in performance (0.0175% per day) shall automatically commence.

In China, the People’s Supreme Court highly emphasises the importance of ADR because the case load of Chinese courts has experienced exponential growth in recent years. Take the Beijing Chaoyang District Court as an example, in 2024, the Beijing Chaoyang District Court completed the trial of approximately 160,700 cases, which means one judge completed 574.6 cases per year. 

In this case, the Chinese People’s Supreme Court reiterated in different situations that ADR should be utilised to resolve disputes within society.

The most popular ADR are commercial arbitrations and employment arbitrations.

Both the Civil Procedure Law and the Arbitration Law provide basic arbitration rules for commercial arbitration. On 12 September 2025, China’s national legislature promulgated the new Arbitration Law, seen as another signal that China aims to promote ADR.

ADR is not a compulsory procedure in China’s civil procedure. Only Employment Law provides that employment arbitration should be a prerequisite to filing an employment lawsuit. There is no sanction for refusing ADR.

However, as caseloads grew rapidly, some courts conduct informal mediation before formally hearing the case to close it as quickly as possible, which, to some extent, is regarded as “half-compulsory” by some litigation participants.

Nationally renowned arbitration institutions provide good arbitration services, such as CIETAC, Beijing Arbitration Commission, SHIAC, Shanghai Arbitration Commission.

China Arbitration Law and Civil Procedure Law

• Provisions of the Supreme People’s Court on Several Issues Concerning the Trial of Judicial Review of Arbitration Cases.
• Relevant Provisions of the Supreme People’s Court on Issues concerning Applications for Verification of Arbitration Cases under Judicial Review.
• Interpretation by the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China.
• Interpretation of the Supreme People’s Court concerning Some Issues on Application of the Arbitration Law of the People’s Republic of China.

The following disputes may not be arbitrated in China：

• marital, adoption, guardianship, support, and succession disputes; and
• administrative disputes that shall be handled by administrative agencies in accordance with the law.

• There is no arbitration agreement.
• The matters being arbitrated exceed the scope of the arbitration agreement or the authority of the arbitration agency.
• The formation of the arbitration tribunal or the arbitration procedure is not in conformity with the statutory procedure.
• The evidence on which the award is based is forged.
• The other party has withheld the evidence which is sufficient to affect the impartiality of the arbitration.
• An arbitrator demands or accepts a bribe, practices favouritism, commits falsification, or renders an award by bending the law in the arbitration in the case.

China is a member of the New York Convention. Therefore, foreign arbitrations can be enforced in China. Once the court makes a verdict to enforce an arbitration award, the enforcement is the same as a domestic judgment.

To enforce an arbitration award, the applicant shall first submit a written application stating their requests. Also, the applicant shall submit the original copy of the arbitration award. One thing to note is that if the arbitration award is not issued by an Chinese arbitration institution, an Apostille is required by the court. After reviewing the materials submitted by the applicant, the court will decide whether to enforce the award. If the court issues a verdict, the award can be enforced; enforcement is the same as a domestic judgment. If the court believes there are legitimate reasons that the award should not be enforced, the court must report to the court of a higher level in its jurisdiction; for a domestic award, only the high court in the jurisdiction can decide not to enforce an award; for a foreign award, only China Supreme Court can decide not to enforce a foreign award.

Another thing to mention is that in December 2022, the Supreme People’s Court of China published a guiding case in which an award issued by an ad hoc arbitration tribunal was recognised and enforced by the Nanjing Intermediate Court. This case provides a legal basis and experience for enforcing an ad hoc arbitration award in China.

China’s national legislature has promulgated the new Arbitration Law, which will come into force on 1 March 2026.

Growth in litigation in China has been noticeable in the following areas:

• commercial disputes related to possible liabilities by State-Owned Enterprise;
• disputes related to bankruptcy and restructuring; and
• disputes related to the company’s control.