USD 260,000 Brokerage Fee Litigation

A Hong Kong company we represented was involved in a brokerage dispute with Dongguan Company of China over its brokerage fees. We represented the Hong Kong company and filed the case to Dongguan People’s Court.

In this case, the Hong Kong company acts as a middleman, helping Dongguan Company find a buyer for solar panels, and facilitating the sale and purchase contract between the buyer and Dongguan Company. In addition, the Hong Kong company also guides Dongguan Company to participate in the bidding activities of the relevant business, guide and feedback Dongguan Company’s bidding.

Under the coordination of the Hong Kong company, the Dongguan company successfully conducted several transactions with buyers, collecting a total of USD 5.07 million. In accordance with the brokerage contract between the parties, the Dongguan company shall pay a brokerage fee to the Hong Kong Company for each unit sold. However, Dongguan Company breached the brokerage contract with the Hong Kong Company. Until the prosecution, all unpaid brokerage fees is a total amout of USD 260,000.

In order to prove that Dongguan Company had delivered the goods, and received the relevant payments. Even though the Spring Festival, the most important day for the Chinese people, was approaching, I decided without hesitation to go to various government and bank departments to obtain materials of Dongguan Company.

A tortuous Investigation Tour

I went to the Shekou Customs of Shenzhen Municipality, the Customs of Bao’an Airport of Shenzhen Municipality, and the Chengdu Customs, and obtained the declaration forms, packing lists and other customs documents of Dongguan Corporation in the recent two years so as to know the situation of delivery.

Because the customs rarely receive this kind of investigation application, so I need to explain and communicate with the customs staff carefully. In addition, the customs officer said that this kind of customs declaration information could not be provided to individuals and could only be provided to the court. Therefore, we have to follow up with customs every other week to see if they have provided the information to the court so that we can understand the latest developments of the case.

About the bank slips, because this can prove that Dongguan Company received the payment. Therefore, I went to Dongguan Company’s bank in Dongguan to investigate its collections in this case. And I went to Ningbo to investigate Dongguan Company’s bank slips in Ningbo. Because an investigation order generally requires two lawyers to go to the office being investigated, I had to go to the field alone in order to save our client’s cost. After many communications with the bank staff, stating the reasons, after many attempts, the bank staff finally agreed to issue me the results.

There is a small interlude, because during that time Shenzhen travel code have a star note (Shenzhen has COVID-19), the third day in Ningbo, I arrived at the airport and ready to go home for the Chinese New Year, but health code suddenly turned red. I asked the staff and was told that all the passengers who came from Shenzhen would turn red. So, I couldn’t get on the plane. I had to wait for the government employees in the Health Department to come to work before I could apply for my health code to be changed to green. Therefore, I had to stay in Ningbo for one more day. I could only go home the next day.

Small accidents happen all the time on business trips. But we try to avoid them and do our best to save our clients’ travel costs.

Freezing of the Defendant’s Assets

Before the lawsuit was filed, we applied to the court to freeze the defendant’s bank account, equities, real estate and other assets in order to prevent the defendant from transferring the relevant assets.

Since the amount of frozen assets was large, this brought a lot of pressure on the defendant. This was one of the reasons why the defendant agreed to the mediation.

Successful Mediation

At this time, we had in our hands sufficient evidence proving that the Defendant shipped the goods, and received payment for the goods without payment of brokerage fees to us. In addition, we have frozen various property of the defendant.

With the mediation by the judge, the defendant agreed to mediate with us to settle the dispute. During the mediation, each party had to take a step back. We finally settled the dispute with the defendant for 92% of the claim.

Compared with litigation, mediation is more efficient and lower cost. Since only half of the litigation fee is charged for mediation, the defendant can be required to pay the arrears within a certain period, saving the time of trial, trial and so on. If the defendant fails to pay the arrears, the plaintiff can still take the mediation agreement to the court for enforcement.