Know Who You Are Doing Business with
Company name registered in Chinese Industrial and Commercial Bureau (ICB) is very complex, they are totally different companies even just a letter is different. You can not recognize the Chinese name in its website or advertisement, except you check with ICB. Usually, foreign client could not recognize the subtle difference of these company names. Seller uses one company name to negotiate with buyer, but uses another name to sign contract with buyer. By using different English name, inducing to buyer to sign contact and pay cargo payment.
According to Chinese civil procedure, the names of plaintiff and defendant must be accurate in bill of complaint. Plaintiff shall provide the business license and legal representative certificate to certify its legal status. Plaintiff also shall provide the accurate information of defendant, such as business license or register information in ICB. If the name of plaintiff or defendant was wrong, then this case shall be withdrawn.
Case: An American company (buyer) reached a contract with Shanghai company (seller). Seller negotiated with buyer by using company’s Chinese name, but signed contract with an English name. Seller’s Chinese name was registered in Industrial and Commercial Bureau, but the English name was not registered, was informal. After signed this contract, seller violated the contract, did not deliver the cargo.
Then buyer started arbitration procedure in London, and obtained winning case award. After that, American buyer began to apply recognize and enforce the award in China Court. The Judge reviewed this award, ascertained the claimant and defendant in this case, confirmed the applicant and respondent in enforcement procedure. Judge considered that seller’s Chinese name was exist, but it could not certify that English name in this award was referring to Seller, and seller did not attend the arbitration procedure, so Judge did not recognize and enforce this award.
Although all the manager and employee of seller admitted this trade deal in privately, this case was still lost in Chinese court. The American buyer lost all payment and legal fees in this case. If buyer checked the company name at beginning, such mistake will not happen.