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Dispute Resolution Strategy: Negotiate first or directly initiate a lawsuit?

There is a situation which frequently happens: a trader orders some goods from Chinese counterpart, but the other party does not deliver the goods after they receive the payment. In this case, shall the trader negotiate first or directly enter into the litigation/arbitration process first? Which is a more appropriate way to solve the trouble?


Strategy A: Sending Lawyer's Demanding Letter and Negotiation First


Advantage:

a. Cost: You do not have much cost at this sage, only the attorney fee, normally less than USD 1,000.

b. Time: A demanding letter could be drafted and delivered in around one week upon engagement.

c. Chance of Settlement: After receiving the letter, your Chinese counterpart may settle with you (From our past experience, we have around 31% chance to reach an agreement by sending demanding letter and negotiation)


Disadvantage: It may increase the risk that your Chinese counterpart may transfer their assets/shut down companies to avoid liability once they know you hired a lawyer


Strategy B: Filing Litigation or Arbitration and Applying for Asset Preservation First