Chinese Client Has Not Paid Your Consulting Fees: What Should an Overseas Service Provider Do?

Scope: the fee disputes covered here

This guide is for an overseas company, foreign individual or overseas Chinese professional that has supplied B2B consulting, software development, design, marketing, research, project management or comparable services to a mainland Chinese company, assuming the relevant PRC rules apply. Check governing law, forum, payment compliance, tax documents and any regulated-service requirements separately. A client’s location in China does not make PRC law the answer to every issue.

A fee for introducing a transaction may be brokerage commission; an unpaid amount for delivered goods belongs to the sales analysis and may involve the CISG. Employment, consumer services and specially licensed activities require different treatment.

1. Identify the actual contract and fee debtor

A heading such as consulting, service fee or outsourcing is not decisive. Article 1 of the SPC interpretation on the Contract Book’s General Provisions directs attention to the words, related clauses, purpose, trade practices, negotiations and performance. An SPC Intellectual Property Court case likewise treated an arrangement labelled labour dispatch according to its actual software-development and service-outsourcing content.

Confirm the Chinese signatory, the person giving instructions, any group company using the deliverables, the proposed payer and the invoice addressee. A business contact or beneficiary is not automatically the debtor. Authority, ratification, joint confirmations and payment history may still matter, so prepare a one-page party map before making a demand.

2. Build a four-layer service-fee proof matrix

An invoice alone rarely proves the whole claim. Put each milestone into the four layers below and identify the date, original file and proposition proved.

• Scope and authority: signed agreement, statement of work, purchase order, change instruction, approved quotation and the authority of the instructing person.
• Delivery and completion: report, code commit, design file, meeting record, time or milestone record, version number, transmission route and receipt evidence.
• Acceptance and use: sign-off, approval, issue list, non-response after a defined review request, production launch, onward circulation, reliance or instructions for the next phase.
• Amount and due date: fixed or time-based fee, milestone percentage, expenses, currency, tax and withholding treatment, invoice or tax-document condition, due date, receipts and net unpaid balance.

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3. Does delayed acceptance or silence make the fee payable?

Start with the contract. Is approval an express condition to payment, a cooperation obligation, or an activity running alongside a date-based fee? Civil Code Articles 158–160 govern conditional acts. Article 159 treats a condition as fulfilled where a party improperly prevents it for its own benefit. This is not a universal deemed-acceptance rule. The provider must still establish the agreed delivery, review process, opportunity to respond and improper prevention.

If the arrangement falls within the statutory definitions of technical consultancy or technical services, Articles 879–884 require the client to accept conforming work and pay, and require the provider to complete the service to the agreed quality. A client that fails to provide necessary inputs, disrupts progress or refuses or delays acceptance may still owe unpaid remuneration under the applicable provision. Conversely, incomplete or non-conforming work may justify reduced or no remuneration. Do not extend those special provisions to every business consultancy merely because it uses expertise.

Actual use is often important evidence, but not necessarily final acceptance. Launching software, citing a report, circulating a deliverable internally or requesting the next phase may weaken a claim that nothing was delivered. The contract standard, reservations, seriousness of any defect and the full course of performance remain relevant.

4. Read staged payments with the project as a whole

In its analysis of case (2020) SPC IP Civil Final 1545, the SPC Intellectual Property Court noted that software development is lengthy, changing and interdependent. Unless the contract clearly says otherwise, each instalment should not necessarily be isolated as the price of one discrete deliverable. An initial payment may fund mobilisation and resources rather than follow a completed output.

That does not remove the provider’s burden to prove performance. Separate mobilisation fees, monthly retainers, time charges, milestone payments, success fees and expenses. Match a genuine defect or incomplete item to the precise scope, standard, notice date and cure opportunity. One contested deliverable should not be assumed to erase every historic fee.

5. Test the client’s defences before escalation

Common defences include lack of authority, out-of-scope or below-standard work, a missed milestone, unapproved extras or subcontracting, missing invoice or tax documentation, intellectual-property or confidentiality issues, data-compliance concerns, a counterclaim or set-off, and an unmet payment condition. Put each defence against the evidence and amount rather than waiting for proceedings.

Civil Code Article 579 permits a claim for unpaid money or remuneration. Articles 582, 584 and 585 address remedies for non-conforming performance, provable loss and adjustment of agreed damages. A claim schedule should distinguish due and undisputed fees, provable but contested fees, amounts not yet due, a potentially valid price reduction or damages claim, and any set-off that still needs to be tested.

6. Limitation, demands and proceedings are separate questions

An ordinary PRC contract claim commonly has a three-year limitation period running from knowledge, or deemed knowledge, of the infringement and debtor. Article 189 may affect a debt agreed to be performed by instalments. A demand for performance, the debtor’s agreement to perform, litigation or arbitration may restart the period under Article 195, but retain the complete communication and delivery evidence. Negotiations are not an indefinite extension.

The four-year period in Article 594 concerns disputes arising from international sales and technology import/export contracts. It is not a general limitation period for every international service. Whether a contract qualifies as technology import/export, and whether an arbitral or other deadline applies, requires separate analysis.

Where the proof and balance are sufficiently clear, a demand can identify the debtor, milestones, delivery and acceptance record, calculation, undisputed amount and response date. A negotiated solution may provide for remedial acceptance, corrections, instalments, security and default. A promise to pay is not money received. If assets may move, evidence may disappear or limitation is close, assess arbitration or litigation and any justified preservation promptly.

7. What to prepare for an initial China-side assessment

Prepare the party map, scope and changes, four-layer proof matrix, milestone account, the client’s complete objections, the last acknowledgement or refusal, dispute clause, earliest possible deadline and known PRC assets. PRC proceedings usually require Chinese translations of foreign-language material; preserve native files, full email headers, platform exports and version history first.

Flag ongoing use, threatened deletion of accounts or repositories, asset movement, project termination or a potentially approaching three-year date in the first enquiry. Practical steps do not create a legal grace period.