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Measures can be taken against the defaulting party in China before filing a lawsuit Demand letter

Time:2014-03-13 Hit:1022

Measures can be taken against the defaulting party in China before filing a lawsuit Demand letter

The threat of litigation or arbitration can sometimes be an effective strategy to pressure the opponent either to fulfill its obligations or re-engage in negotiations to discuss the terms of settlement. The demand letter (usually drafted and sent by a Chinese Law Firm) states the claim and its legal grounds, demands restitution of some kind, and of course, threatens legal action if no response or resolution is forthcoming. In China, this letter does not have any legal effect beyond formalizing the claim and discontinuing any possible statute of limitations on the claim. But sometimes, it is helpful in China. The involvement of lawyer signifies to the respondent that the claimant is taking the matter seriously and is willing to invest time and money into forcing the issue. Additionally, sending the demand letter to a senior manager or the company’s legal representative will ensure that the respondent’s decision-makers are aware of the situation.

Sending a demand letter also means warning to the debtor of possible action, which may remand the debtor of some preparation such as anticipated property preservation, which could hurt the interests of the claimant.   

Therefore, instead of sending a demand letter, the claimant may file an application to preserve the respondents first- for which a lawsuit should be simultaneously filed. In practice, preserving an opponent’s property is as much part of litigation strategy as it is a way to show one’s determination to pursue its rights, and to pressure an opponent to compromise.

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