How to Enforce a Contract Against a Chinese Company: Step-by-Step

Winning an arbitration award or court judgment against a Chinese company is only half the battle. The award means nothing until the money is actually collected. Enforcement in China follows a specific procedural path governed by the PRC Civil Procedure Law and the Arbitration Law, and foreign companies that understand this path before they begin can avoid the delays and missteps that cause enforcement to stall.

Domestic Awards vs. Foreign Awards

The enforcement procedure depends on where the award was issued. A CIETAC award or an award from any Chinese arbitration commission is a domestic award under PRC law. The winning party applies directly to the Intermediate People's Court at the location of the losing party's domicile or where the losing party has property. Under PRC Arbitration Law Article 62, the court is required to enforce the award. The losing party can apply to set aside the award under Article 58, but the grounds are narrow: the arbitration agreement was invalid, the award addressed matters beyond the scope of the agreement, the tribunal's composition or procedure violated the law, the evidence was fabricated, or the opposing party concealed evidence material to the outcome.

A foreign arbitration award — from ICC, SIAC, HKIAC, or any tribunal outside mainland China — must be recognized under the New York Convention before it can be enforced. The winning party files an application with the Intermediate People's Court where the Chinese company is domiciled. The court reviews the application under PRC Civil Procedure Law Article 283 and the New York Convention's grounds for refusal. Chinese courts have become increasingly consistent in recognizing foreign awards, though the process typically adds three to six months compared to enforcement of a domestic CIETAC award.

Filing the Enforcement Application

The enforcement application must be filed within two years of the award becoming effective. Missing this deadline extinguishes the right to enforce — PRC Civil Procedure Law Article 239 makes this a hard cutoff with limited exceptions. The application is filed with the Intermediate People's Court and must include the original award (or certified copy), proof that the award is final and binding, and a Chinese translation of any foreign-language documents certified by a qualified translator.

Licensed PRC attorneys prepare and file this application because the court requires all documents in Chinese and all filings to be signed by a Chinese lawyer or the party itself (if the party appears in person, which is impractical for most foreign companies).

Asset Discovery and Preservation

Before or simultaneously with filing the enforcement application, the winning party should investigate the losing party's assets. In China, the primary enforcement targets are bank accounts, real property, equity interests in other companies, vehicles, and intellectual property (trademarks and patents). Licensed PRC attorneys can conduct asset searches through the National Enterprise Credit Information Publicity System, the China Judgments Online database (to identify other litigation that may reveal assets), and the China Land and Real Estate Registration database.

If there is a risk that the losing party will transfer or dissipate assets before enforcement is completed, the winning party can apply for property preservation under PRC Civil Procedure Law Article 100. The court can freeze bank accounts, prohibit the transfer of real property, and seize movable assets. This application requires the winning party to provide security — typically a bank guarantee or cash deposit equal to the amount to be preserved — so the cost must be factored into the enforcement strategy.

The Court Enforcement Process

Once the court accepts the enforcement application, it assigns an enforcement judge who issues an enforcement notice (执行通知书) to the losing party, ordering payment within a specified period — typically 15 days. If the losing party does not comply, the court takes enforcement measures: querying and freezing bank accounts through the nationwide court-bank electronic network (总对总查询系统), which allows the court to search all banks in China simultaneously; seizing and auctioning real property through judicial auction platforms; restricting the legal representative's travel by adding them to the exit prohibition list (限制出境); and adding the company and its legal representative to the national blacklist of dishonest judgment debtors (失信被执行人名单).

The blacklist is a particularly effective tool. Once listed, the company and its legal representative cannot obtain new bank loans, bid on government contracts, purchase airline or first-class train tickets, register new companies, or serve as directors or supervisors of other companies. In practice, this pressure often motivates payment even when direct asset seizure is difficult.

Timeline and Costs

Enforcement of a domestic CIETAC award typically takes six to twelve months from filing the application to collection, assuming the losing party has identifiable assets. Foreign award recognition adds three to six months. The court charges an enforcement fee calculated as a percentage of the amount enforced — approximately 1.5% for claims under RMB 500,000, declining to 0.1% for amounts above RMB 5 million. Attorney fees for the enforcement process are separate and depend on the complexity of the case and the number of assets to be pursued.

The single most important factor in successful enforcement is choosing the right dispute resolution clause at the contract drafting stage. A CIETAC clause makes enforcement faster and cheaper than a foreign arbitration clause because it eliminates the recognition step. Having the contract reviewed by licensed PRC attorneys before signing can ensure the dispute resolution clause is designed for effective enforcement — not just resolution.

If you need to enforce a contract against a Chinese company, consult licensed PRC attorneys experienced in Chinese court enforcement proceedings.