Overview
An investment consulting company provided project positioning and consulting services for a resort development project under a written service agreement.
The consulting company completed and delivered the agreed final report, but the client failed to pay the contractual service fee despite repeated demands for payment.
The dispute raised several practical issues commonly encountered in commercial service contracts:
- Whether the service provider had fully performed its contractual obligations;
- Whether the agreed daily penalty for late payment was enforceable;
- Whether contractual provisions requiring the losing party to bear legal and related costs could be enforced;
- How a service provider can protect its ability to recover a judgment debt when the counterparty refuses to pay.
Representing the consulting company, Yu Yuting, Attorney at NEO-ARK Law Firm, pursued both the substantive claims and the necessary asset-preservation and enforcement measures.
The court ultimately ordered the resort investment company to pay the outstanding service fees, contractual penalties, legal fees and guarantee-related costs. After the judgment became effective, enforcement measures resulted in the defendant's bank funds being seized and transferred to the client.
Case Snapshot
| Item | Details |
|---|---|
| Practice Area | Commercial Litigation & Contract Disputes |
| Case Type | Service Contract Dispute |
| Jurisdiction | Guangzhou, China |
| Client | Investment Consulting Company |
| Counterparty | Resort Investment Company |
| Core Issues | Unpaid Consulting Fees, Contractual Penalties, Legal Fees, Property Preservation and Enforcement |
| Dispute Value | Approximately RMB 300,000 |
| Court | Guangzhou Haizhu District People's Court |
| Key Outcome | Contract Fees, Contractual Penalties and Litigation-Related Costs Recovered |
| Enforcement | Bank Funds Seized and Directly Transferred |
| Lead Lawyer | Yu Yuting / Sun Jianhui |
| Law Firm | NEO-ARK Law Firm |
Client's Situation
1. Consulting Services Were Completed but Payment Was Withheld
In December 2020, the parties entered into a Project Positioning Report Special Research and Consulting Services Agreement.
Under the agreement, the consulting company was engaged to provide positioning and consulting services for a resort project.
The agreed service fee was RMB 250,000.
The contract provided that payment would be made within 15 working days after the final report had been completed, delivered and accepted.
The consulting company completed the report and delivered it as agreed.
However, the resort investment company failed to make the contractual payment.
2. The Contract Contained a Late-Payment Penalty
The agreement provided for a contractual penalty of 0.04% per day for overdue payment.
It also contained a provision under which the losing party would bear litigation-related costs, including legal fees.
After repeated demands for payment produced no result, the consulting company commenced litigation before the Guangzhou Haizhu District People's Court.
Legal Strategy
| Legal Issue | Strategy |
|---|---|
| Contract performance | Establish that the consulting company had completed and delivered the agreed services |
| Outstanding service fees | Enforce the contractual payment obligation |
| Contractual penalty | Defend the agreed daily penalty rate against the defendant's request for reduction |
| Legal and related costs | Rely on the contractual cost-allocation provision |
| Asset preservation | Apply for preservation of the defendant's bank assets during litigation |
| Judgment enforcement | Pursue direct enforcement against the preserved funds after judgment |
Property Preservation and Enforcement
1. Asset Preservation Was Initiated at the Litigation Stage
Because the defendant had failed to make payment despite repeated demands, the consulting company did not wait until the end of the litigation to consider enforcement risks.
A property preservation application was filed together with the lawsuit.
The court subsequently approved the preservation and froze approximately RMB 298,000 in the defendant's bank funds.
This measure helped prevent the relevant assets from becoming unavailable for enforcement.
2. Judgment Was Enforced Through the Preserved Funds
After the judgment became effective, the defendant still did not voluntarily comply.
The consulting company therefore applied for compulsory enforcement.
Because the relevant bank funds had already been preserved, the court was able to directly seize and transfer the preserved amount through the enforcement process.
After deduction of enforcement costs, approximately RMB 300,000 was ultimately returned to the client.
The case therefore achieved actual recovery rather than merely obtaining a paper judgment.
Why This Case Matters
For consulting companies and other service providers, obtaining a favourable judgment is only one part of commercial dispute resolution.
The more practical question is often:
Can the judgment actually be enforced and the money recovered?
This case demonstrates the value of combining contractual rights with procedural measures.
A well-drafted service contract can provide a basis for claiming:
- Outstanding service fees;
- Contractual late-payment penalties;
- Legal fees where contractually recoverable;
- Other agreed litigation-related costs.
At the same time, timely property preservation can materially improve the prospects of recovering the judgment debt when the counterparty refuses to pay voluntarily.
For companies providing consulting, investment advisory, project research or other professional services, the case highlights the importance of considering contract drafting, dispute resolution and enforcement strategy together.
Frequently Asked Questions
Can a consulting company recover unpaid fees if the client refuses to pay after receiving the final report?
Yes, where the service provider can establish that it performed the contractual obligations and the contractual payment conditions have been satisfied.
The specific payment terms, acceptance mechanism and evidence of performance are important.
Can a contractual late-payment penalty be enforced in China?
Potentially, yes.
The enforceability of a contractual penalty depends on the agreement, applicable law and circumstances of the dispute. A party seeking to reduce the agreed amount may need to establish the legal basis for adjustment.
Can legal fees be recovered in a commercial contract dispute?
They may be recoverable where the contract contains an appropriate provision and the relevant legal requirements are satisfied.
This case demonstrates the practical value of expressly addressing litigation-related costs when drafting commercial service agreements.
Why is property preservation important in a contract dispute?
A judgment does not necessarily result in voluntary payment.
Where there is a legitimate enforcement risk, timely preservation of the counterparty's assets can help ensure that assets remain available if compulsory enforcement becomes necessary.
What should service companies include in their contracts?
Service agreements should clearly address, among other matters:
- Scope of services;
- Delivery and acceptance procedures;
- Payment deadlines;
- Late-payment consequences;
- Dispute resolution;
- Allocation of legal and related costs;
- Evidence and documentation of service completion.
Key Takeaways
- A completed consulting service can support a claim for unpaid contractual fees.
- Clearly drafted payment and late-payment provisions can strengthen a service provider's position.
- Contractual provisions concerning legal and related costs may reduce the financial burden of litigation.
- Asset preservation should be considered before a judgment where there is a meaningful enforcement risk.
- Effective dispute resolution should focus not only on obtaining a judgment but also on actual recovery.
About the Author

Yu Yuting
Partner | NEO-ARK Law Firm
Lawyer Yu focuses on foreign-related litigation, cross-border disputes, commercial matters, and legal services for overseas individuals and businesses in China.
Email: [email protected]
About NEO-ARK Law Firm
NEO-ARK Law Firm provides legal services in foreign-related litigation, commercial disputes, family law, and cross-border legal matters, assisting both international and domestic clients throughout China.














