China's Courts Are Fair, Part II

Yesterday, Ben Kostrzewa, a summer associate at my law firm, sat in on a trial at the Qingdao Maritime Court.  Here is his report:

I [Ben] grow increasingly skeptical of the criticisms the Chinese justice system receives in the United States, particularly from academics.  Foreign scholars who, by law, cannot appear before a Chinese judge, rely on anecdotal evidence to draw broad conclusions.  Yet far too many Chinese scholars are unwilling or unable to examine contemporary Chinese legal practice objectively.  As a result, it is difficult to get a sense of Chinese courts from stateside reporting. 

The Qingdao Maritime Court is a small court in a small town, but there are signs here that judicial reform is slowly growing outwards from Beijing and Shanghai.  The judge, though young, was knowledgeable in maritime affairs.  All judges in China are required to pass a comprehensive examination to sit on the bench.  The exam is identical to the exam lawyers must pass; the test covers administrative law, civil law, civil procedure, and criminal law.  It is substantially more competitive than the Bar exam in the States, as only seven percent pass.  If you are one of the lucky few, you can choose to become a lawyer, a judge or a prosecutor.  This means it is possible to become a judge immediately upon graduation from undergraduate studies or directly from another career.  Judges are not required to have practiced law in China.  The result of this system is that many judges are knowledgeable in the law but lack experience. 

The case I heard involved a dispute between two shipping companies, a large multinational company and a Chinese company.  A problem was discovered with shipped goods when they arrived in Europe.  The goods were quarantined because they did not meet local standards, which resulted in a large quantity of lost product.  The two shipping companies were suing over who would bear the losses.

Because of a time conflict, the case was heard in the judge's small office.  The lawyers crowded around the judge's desk while a clerk took longhand notes.  The judge began by asking both sides to summarize their arguments.  The lawyers had not filed briefs with the court, so the arguments were recorded by the court reporter while the judge listened.  However, the judge, perhaps taking advantage of the informal atmosphere, frequently left the office to answer cell phone calls.  The two parties continued unabated, taking turns responding to the other side's arguments.  Neither side presented any witnesses.  After two hours of oral arguments, the trial ended.  The judge asked about settlement prospects and said he would have a judgment within a few weeks.

Unlike in U.S. Courts, the parties exchanged evidence for the first time immediately before trial.  because Chinese discovery rules do not require early disclosure of documents, there was little time for either party to examine the opposing side's evidence.  The lawyers scrambled to analyze the documents while making their arguments.

When speaking to the attorneys after the trial, they said judges often order discovery prior to trial.  Chinese judges realize the early release of evidence is a vital part of a fair process.  However, because Chinese civil procedure does not require it, judges are not obliged to order the release.  Anyone facing litigation in China should ask their attorney to request an early exchange of discovery.  There is no guarantee the judge will uphold the request, but it is worth the effort.

In many ways, this case highlights the procedural defects that still exist in China's judiciary.  However, even as China's judicial system matures, there will always be differences in legal culture.  China's dispute resolution culture is rooted in informal mediation schemes.  It may never reach the degree of procedural formalism in the United States.  And in spite of the procedural differences, in this case, attorneys on both sides seemed satisfied that the case would ultimately be fairly decided.  The attorney for the foreign shipping company was not worried that the court would protect the local companies.  Unlike ten years before, when the foreign company might worry about parochialism and corruption, now it is no bigger a problem in China than it is elsewhere in the world.  Considering the expense and delay often found in American courts, perhaps the informal yet fair attitude of the Chinese court is a blessing in disguise.

Whoa there Ben.  Here are my comments on the above:

1.  Many (if not most) of the criticisms of the Chinese judiciary relate to its handling of the more political cases, such as land seizures or censoring.  They do not usually attack Chinese business litigation.

2.  I think your description of Qingdao's Maritime Court as a small court in a small town is (unintentionally) misleading.  Qingdao is no Shanghai, but Shandong Province is one of the leading provinces in terms of Foreign Direct Investment (FDI) and Qingdao is a thriving city.  China takes great pride in its maritime courts and its judges are generally better than the norm.  Though I definitely think corruption in China's civil cases is not as bad as often painted, I have to believe it is more prevalent than in the United States. 

3.  I do not think one can state unequivocally that a party facing litigation in China should request early discovery.  In fact, if the facts are against you or your client, you should delay discovery as long as possible. 

4.  The United States litigation system favors an accurate result over cost and time.  China is the opposite.  I have clients who complain about how long cases take in the United States and about the discovery here and then flip around and complain about how they are blocked from conducting thorough discovery overseas.  There will always be a trade-off between speed/cost on the one hand and accurate decisions on the other.  I do not see it as a procedural defect for a country to pick any particular point along this continuum.

5.  Do you really expect the lawyers to reveal to you that they think the judge is corrupt? 

Despite my quibbles with Ben's assessment, I agree with the thrust of his report.  Many years ago, I had a case in Qingdao's Maritime court and I am working on bringing another one right now.  In the case I had, I was impressed with the judge; everything he did indicated to me he knew the law, knew what he was doing as a judge, and was striving to reach the fair and just result. 

For more on the fairness or China's courts, please see my earlier posts on this topic, entitled, "China's Courts Are Fair" and "The Yin And Yang And The Apples And Oranges On Chinese Courts."