Old Debt Owed by a Chinese Company: Is It Too Late to Sue or Arbitrate?

1. Start with the claim and its governing law

This guide concerns commercial payment claims before a final judgment or award: unpaid prices, supplier refunds, service fees and commissions. Employment, carriage, negotiable instruments and other specially regulated claims may have different deadlines. If you already have a judgment or award, or a no-asset enforcement closure, assess the applicable enforcement route instead of applying this article's claim-limitation analysis.

Article 7 of the PRC Law on the Application of Laws to Foreign-Related Civil Relations connects limitation to the law applicable to the underlying relationship. Article 41 addresses contractual choice of law and the connecting rules without a choice. Review the governing-law and dispute clauses first. Neither your home country's period nor the Chinese general period can be assumed solely from where you or the debtor is based.

Under PRC law, Civil Code Article 188 generally provides three years unless another rule applies. Article 594 specifies four years for litigation or arbitration concerning international sale-of-goods and technology import/export contracts. A cross-border consultancy, agency, work contract or separate settlement is not automatically within that exception. Classification follows the transaction and claim, not the invoice's English label. Under Article 198, ordinary limitation rules apply to arbitration where legislation provides no separate arbitration period; changing forums is not a fresh clock.

2. Establish maturity before counting years

Article 188 normally starts the clock when the creditor knew or should have known of the infringement and the obligor. For a sale balance, examine the agreed payment date, delivery documents, acceptance and other conditions. For a refund, establish why repayment became due and when. Discovering that a debtor has no money is different from learning that its obligation was breached.

Article 4 of the SPC limitation provisions first requires the payment date to be determined under contractual gap-filling rules where it was not specified. If it cannot be determined, the period generally runs from expiry of the time allowed in the demand; an express refusal when the creditor first claims performance can start it then. Issuing a replacement invoice years later does not itself rewrite maturity.

Civil Code Article 189 uses the final instalment's due date where the parties agreed instalments of the same debt. Separate orders over several years are not necessarily one instalment debt. Review an actual amendment, a unilateral request for more time, a balance reconciliation and a final settlement separately.

3. Before expiry: identify a qualifying interruption

Civil Code Article 195 covers a creditor's request for performance, the debtor's agreement to perform, litigation, arbitration and equivalent events. The period is recalculated from the interruption or conclusion of the relevant proceedings. First establish that the applicable period was still running when the event occurred; then test the recipient, content, delivery and evidence.

Article 8 of the SPC limitation provisions recognises written or electronic demands that reached or should have reached the debtor. Article 14 addresses part performance, instalment commitments, security, requests for deferred performance and repayment plans. A message asking to keep in touch is not necessarily a demand for a specified unpaid obligation.

Under Article 9, a claim for part of the same debt generally interrupts limitation for the remainder unless that remainder was expressly waived. That does not automatically combine unrelated invoices. Similarly, an unidentified receipt should not be treated as an acknowledgment of every disputed balance.

Keep filing, acceptance, withdrawal and closure records for proceedings. A draft pleading or lawyer appointment is not itself the filing event. Articles 10–12 address submitting a claim, payment orders, specified pre-action measures and requests to bodies legally empowered to resolve the dispute. Their requirements and the date a relevant process ended matter; an informal platform complaint should not be assumed to protect time.

4. After expiry: a new demand is not a unilateral revival

Civil Code Article 192 allows the obligor to resist performance after limitation expires; Article 193 prevents a court from applying limitation on its own initiative. Expiry is therefore not the same as the debt vanishing or every filing being impossible. Nevertheless, a valid defence may defeat recovery through the claim. Hoping the debtor forgets to plead it is not a sound plan.

If the debtor agrees to perform after expiry, Article 192 bars reliance on expiry; a voluntary payment cannot be reclaimed on that ground. Article 19 of the SPC provisions also addresses a new agreement about the original debt. Examine whether the debtor actually undertook performance, which obligations and amounts it covered, the speaker's authority and any conditions.

Acknowledging receipt, agreeing to check accounts, or discussing settlement without admitting liability may fall short of agreeing to pay. Signing for delivery and accepting an obligation are different acts. A partial payment must be assessed by timing, allocation and what it says about the unpaid remainder. Do not assume a token payment saves every invoice.

Where the record contains a long unexplained gap, disclose that risk and assess genuine acknowledgment or settlement evidence. Do not backdate documents, manufacture delivery proof or assume that relabelling a contractual claim as unjust enrichment creates a new deadline.

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5. A six-column limitation timeline for each debt

This is the article's working tool. Give every document a reference number and test each interval, rather than simply collecting the latest correspondence. Where the start date is disputed, show the earliest reasonable date and the alternative case, then plan against the tighter risk. Mark missing material as unlocated, not as an event that never happened.

• Claim and rule: debtor's legal name, order, payment type, currency and balance; governing law and the basis for three years, four years or another period.
• Original trigger: performance conditions, due date, first breach or refusal, and the basis for a refund, with supporting documents.
• Successive events: dated demands, payments, extension requests, commitments, reconciliations and procedural steps throughout the period.
• Delivery and authority: sender, recipient, email or account ownership, receipt or system evidence, and authority to speak for the company.
• Effect and gaps: demand, undertaking, discussion or post-expiry agreement; whether time had already expired and which sums are affected.
• Action now: missing evidence, earliest risk date, appropriate court or arbitration route, responsible person and filing receipt. Preparing the table does not stop time.

6. Build evidence of receipt, meaning and authority

Preserve contracts and amendments, orders, commercial invoices, acceptance and delivery documents, the original refund request and response, bank statements and transfer references. An accounting balance records your position; it does not necessarily show that the debtor accepted liability or that limitation remains open.

Keep original emails, headers, attachments and full threads. For messaging evidence, preserve account identification, original devices and context. Courier evidence should connect the contents actually sent with receipt. A postage slip or a sent-message screenshot alone may leave a gap; an old employee's email address may create a recipient or authority issue.

For promises, identify the company, signature or seal provenance, representative's authority, covered orders, amount, date and conditions. Do not omit wording such as for reconciliation only or subject to final agreement. Overseas-document formalities and Chinese translations depend on the document and receiving authority; authentication does not resolve the underlying meaning or authority question.

7. Very old debts and the twenty-year provision

Transactions predating 2021, particularly those spanning the 2017 changes, need a historical analysis of events and transitional rules. Articles 1–5 of the SPC Civil Code temporal-effect provisions distinguish pre-Code, post-Code and continuing facts. Do not apply today's three-year rule across the entire history or assume that the Code automatically restarted an old period. This guide does not certify the historic limitation position of any particular debt.

Article 188 also addresses a twenty-year maximum protection period, but its application needs care. SPC Guiding Case 249, released in 2025, explains that a twenty-year defence is not supported where repeated valid interruptions kept the ordinary period alive. It is a third-party published financial-loan case, not a matter handled by Ada Ren. The SPC set aside the earlier decisions and remitted the case; that procedural outcome is not evidence of payment recovered.

The lesson is to examine the complete chain, not that every debt over twenty years remains enforceable or that a creditor may safely wait twenty years. A recent reply does not automatically cure an earlier expired interval.

8. Keep other clocks separate

Civil Code Article 194 concerns suspension where a statutory obstacle prevents the claim being exercised during the final six months; the period expires six months after that obstacle ends. Overseas residence, language difficulty or a commercial preference to wait does not automatically qualify. Suspension and interruption have different triggers and consequences.

Article 197 makes limitation periods, calculation and suspension or interruption grounds statutory, and invalidates an advance waiver of limitation benefits. Parties may arrange genuine payment obligations, but a clause saying permanently valid or never time-barred is not a universal solution.

Maintain separate dates for termination rights, defect notices, guarantees and enforcement. Article 199 treats the duration of termination and rescission rights separately; Article 692 states that a guarantee period is not suspended, interrupted or extended. A demand against the principal debtor does not automatically preserve the guarantee. This article's litigation period does not replace contractual or applicable sales-law inspection and notice requirements.

9. Act on the earliest risk, then assess commercial value

If an arguable deadline is close, records have a multi-year gap, or a proposed settlement releases claims, obtain a focused assessment immediately. Do not wait through an assumed seven- or fourteen-day demand cycle. Enquiries, translation, document certification and negotiations are not statutory grace periods.

Confirm the arbitration clause or court jurisdiction, correct defendant and authority documents before choosing a protective demand, formal proceedings or a clear debt acknowledgment. Where a genuine asset risk exists, assess preservation alongside the claim. A letter to the wrong company or an unrelated platform should not displace effective action.

Limitation is only one gate. Assess contract formation, performance, quality counterclaims, receipts and the net balance, together with assets, costs and enforcement prospects. Preserving time does not make an insolvent debtor solvent. An undertaking to pay is not money received.

For an initial review, provide the parties and client location, claim type and balance, earliest due date, all demand and payment dates, latest response, dispute clause and any proceedings. Ada Ren can assess the China-law position within an agreed scope and communicate in English; formal submissions follow the receiving authority's requirements, with local professional input where foreign law is relevant.