Paid Through Alibaba Trade Assurance? Can You Still Sue the Supplier?

You paid a Chinese supplier through Trade Assurance on Alibaba.com. Then the goods didn't arrive, arrived short or arrived wrong. You may have filed a claim already. Alibaba may have refunded less than you lost, or ruled for the supplier.

Alibaba's own terms decide where the dispute goes next. They also set a 20-day deadline that is easy to miss.

What Trade Assurance does

Trade Assurance is Alibaba.com's protection for orders you place and pay for on the platform. Its refund policy says you can claim within 30 days of the delivery date. Enterprise and Enterprise Pro buyers get 60 days. If the order doesn't ship as agreed, the policy says you are entitled to "a full and immediate refund".

A claim has three steps. You apply for a refund in the order details. You negotiate with the supplier. If the supplier doesn't answer, or you can't agree, you escalate the case to Alibaba.

Alibaba then decides who is at fault. Its rules say it decides "in the capacity of a reasonable, non-legal professional". It treats its own system records as the main evidence. If it finds the supplier in breach, it can refund you on the supplier's behalf.

What it doesn't do

The refund has a ceiling. It can't be more than the "Trade Assurance Amount" plus the "Frozen Fund" under the order. Read with the rules' definitions, that adds up to the money you paid under the order, plus any inspection fee. Lost sales, or the extra cost of buying elsewhere, fall outside it.

Alibaba is not a court. Its terms say it is "not a judicial or arbitration institution". Its decision is not a court judgment.

The promise is the supplier's. The rules call Trade Assurance "an undertaking and obligation of Seller". Alibaba only pays on the supplier's behalf. So your claim, on the platform or in court, is against the supplier. For any loss the refund doesn't cover, I work out whether you can recover it from the supplier.

Why a Chinese court may not hear it

The sales contract is between you and the supplier. Under Chinese law, a contract binds the parties who made it (Civil Code art. 465). A supplier that fails to deliver, or delivers goods that don't match the contract, is liable for the breach (Civil Code art. 577). Damages can cover the loss the breach caused, including profit you would have made. They are limited to what the supplier could foresee when the contract was made (Civil Code art. 584). So the supplier may owe you more than a Trade Assurance refund. The question is where you can claim it.

Any claim runs against the registered Chinese company behind the storefront. An English shop name is not a legal name. Here is how to find the Chinese company behind an English name.

Alibaba's terms apply to the order. Every order placed and paid through the platform is also subject to Alibaba.com's Transaction Services Agreement (clause 3.3). Under clause 10.3, a dispute between buyer and supplier goes first to negotiation, then to Alibaba for a decision. If you disagree with the decision, you have 20 calendar days from receiving it. In that time, you must apply for arbitration at the Hong Kong International Arbitration Centre (HKIAC) and tell Alibaba. If neither side does, both are treated as agreeing that the decision is "final and binding". The agreement is governed by Hong Kong law (clause 10.1).

What a Chinese court does with that. Where a foreign-related contract sends disputes to arbitration, you can't sue in a Chinese court instead (Civil Procedure Law (in Chinese) art. 288). Chinese courts have treated the HKIAC clause in Alibaba's agreement as an arbitration clause. In 2013 the Hangzhou Intermediate People's Court upheld the dismissal of a seller's lawsuit against Alibaba on that ground ((2013) Zhe Hang Xia Zhong Zi No. 369). That case was between a seller and the platform, under a different clause. I have not found a published decision on a buyer suing a supplier under clause 10.3. Expect the supplier to rely on it.

Does the clause bind buyer and supplier? That is the open point. You and the supplier each signed Alibaba's agreement with Alibaba. Neither of you signed it with the other. On China's domestic platforms, several courts have held that a platform's agreement binds the platform and each user, but not buyer and seller. One example is a 2018 ruling of the Beijing No. 3 Intermediate People's Court on Taobao's terms ((2018) Jing 03 Min Xia Zhong No. 491). Alibaba.com's agreement is drafted differently. Clause 10.3 deals directly with disputes between buyer and seller, and clause 3.3 makes each order subject to the agreement. Under Chinese law, a contract that refers to an arbitration clause in another document can bring that clause into the contract (SPC Interpretation on the Arbitration Law, art. 11). So the answer could go either way.

The supplier must raise the arbitration clause before the first hearing. If it doesn't, it is treated as giving up the clause, and the court carries on (Arbitration Law (in Chinese) art. 37). That happened in a later round of the same Hangzhou dispute. The platform objected too late, and the court heard the claim ((2016) Zhe 0108 Min Chu No. 2373). So if Alibaba's decision goes against you, treat the 20 days as the real deadline. A lawsuit in China may still be possible, but it would start with a fight over which court can hear the case.

The arbitration itself is light. Under clause 10.5 it has one arbitrator, runs in English, and can be held online or on written submissions alone. An HKIAC award can be enforced against the supplier's assets in mainland China. This works under the arrangement between the mainland and Hong Kong for enforcing each other's arbitral awards.

All of this applies to orders placed and paid through the platform. A deal you agreed and paid outside Alibaba.com depends on the dispute clause in your own contract.

What to do now

• Save the record. Download the Trade Assurance order, the payment record, your chat with the supplier and the full claim file, including Alibaba's decision. Alibaba's process runs on its own records. An arbitrator will want copies you hold yourself. See the evidence to save when a supplier won't refund.
• Write down the dates. Note the delivery date, the date you filed the claim and the date you received Alibaba's decision. The 20 days run from that last date.
• Decide inside the 20 days. If Alibaba's decision leaves part of your loss unpaid, decide quickly whether to start HKIAC arbitration. After 20 days the decision is treated as final.

Did a Trade Assurance claim fail, or leave part of your loss unpaid? Send a short summary and the supplier's Chinese company name. Once I've checked that I don't act for the other side, I'll ask for the order or contract, the payment record and its last message. If Alibaba has decided your claim, add the decision and the date you received it. I'll tell you where you stand and what your options are. Send a short summary →

Part of my guide to supplier disputes in China.

This article is general information on PRC law. It is not advice on any particular matter.