China Law Evolving -- Businesses Take Note
Twenty year old Luo Xiaoming died at a friend's house after drinking too much. His parents sued the homeowner and the Yiwu City of Zhejiang court awarded them 35,192 Yuan (US$4,399) in compensation. According to the China Daily, this landmark "case has stirred up controversy about who was really responsible."
So what does this have to do with business? A lot.
This case is another indication of China's judicial evolution. The ruling in this case would almost certainly have been different ten years ago (even five years ago), even in Shanghai or Beijing. Albeit slowly, China -- and with it, its courts -- is moving from a policy of economic growth at any cost, to one where the "little guy" gets some protection. This particular case involves dram shop laws, but there have been other cases involving employee rights, environmental rights, and securities fraud.
What this means for businesses (particularly foreign businesses) in China is the following:
1. Worker's rights will increase. Note the recent events at Wal-Mart and with FoxConn/Apple.
2. China's product liability and other tort laws will get tougher. Can anyone translate Ralph Nadar into Chinese?
3. China's environmental laws will get tougher.
4. Damages in court cases will increase.
5. The types of claims will expand. New causes of action will be accepted. I did a post the other day about a decision finding no compensation for a damaged sex life due to the injury of a spouse. Will anyone bet against such claims being accepted in China within ten years?
Many years ago, the Tokyo's Yomiuri Shimbun interviewed me for an article, entitled, "The Americanization of Law," the thesis of which was that American law and American lawyers influence business laws the world over. Call it Americanization or whatever else you want, but the trend towards an overall liberalization of laws is so common as to be almost inexorable.
In the United States, California typically comes first and then other states follow. Canada and England seem to take up U.S. liberalized laws five to fifteen years later. I have seen this in Korea, where ten years ago there was no piercing the corporate veil, but now there is.
I am not saying China is going to take on U.S. laws hook, line and sinker, but if you want to get a feel for where China's laws are heading, start studying United States law and reading U.S. court decisions.
http://www.chinalawblog.com/cgi-bin/mt/mt-t.cgi/1381
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Comments
Or watch Legally Blonde (http://www.imdb.com/title/tt0250494/ ). Hollywood probably have bigger influence on the general perception of America then anything else. There was a good article about Chinese pirate video translation ring in New York Times. (http://www.nytimes.com/2006/08/09/world/asia/09china.html?%20ex=1312776000&en=d289096626cc2924&ei=5088&partner=rssnyt&emc=rss ). Quoting from the article: "When I first started watching ‘Friends,’ I found the show was full of information about American history and showed how America had rapidly developed. It’s more interesting than textbooks or other ways of learning.”
I don't see the things listed above as Americanization of the Chinese law. The Union in China is going to be a step stone to install Communist branch in private enterprise and it's easier for the government to start with foreign enterprise, especially high profile cases. The product liability law reflect the raise of the power of middle class but it may not take the court route rather the court of the public opinion. Dell (http://www.forbes.com/technology/feeds/afx/2006/08/14/afx2949513.html ) is learning this. Environmental law is good for China's public image but also those impact most by the environment are the poor area which is the focus of current government's agenda to stabilize.
Bao QingTian (http://en.wikipedia.org/wiki/Bao_Qingtian) has major influence on Chinese's perspective on justice and law. There is no shortage of claim types from folklore around him. It may be easier to predict the type of claims in the modern court from his stories.
Posted by: David Li | September 3, 2006 6:24 AM
Mr. Li --
Thanks for checking in. I do not for a moment dispute that the influences on China's legal evolution are coming from multiple directions, but in the end, their laws are trending towards those in the United States.
Posted by: China Law Blog | September 3, 2006 8:01 AM
Though I agree with Mr.Li that many facets influence the progression of law in China, I'd still stand by Mr. Harris that Chinese law is gradually drawing more similarities with American law.
With the example of the trade union and the new draft labor contract law, albeit their intention to target foreign companies for any sorts of reasons, with any sorts of shady reason behind Chinese imitation of American law, the bottom line is that ultimately these laws are gradually reflecting American characteristics.
Posted by: NYU08 | September 4, 2006 12:41 AM
NYU08 --
Thanks for checking in, and thanks for agreeing.
Posted by: China Law Blog | September 4, 2006 5:25 AM
GREAT NEWS! So, this means I can take recourse against the restuarant below my apartment window? The Chinese decide to fight at 3 AM after several large beers....The bar owner won't close the place?
Oh, wait...He pays the local constabulary...sigh...
Hey, congrats on your much deserved best biz blog nomination at www.Asiablogawards.com....
Posted by: Lonnie | September 4, 2006 8:18 PM
Lonnie (OMB)
Exactly. You can sue the bar owner and maybe even win. Since you are in China, you will be lucky to get even $400, but think how much you will enjoy the lawsuit and your improved relations with the bar owner. Examine all possible repurcussions to avoid pulling a Foxconn.
Thank you for the congrats. I'm telling everyone I have already bought a new tuxedo and written my 30 minute speech thanking all of the little people who helped me get here. My congrats to your much deserved nomination as well in the best China blog category.
Posted by: China Law Blog | September 4, 2006 9:25 PM
Thanks for these very useful insights Dan - some contributors to the MAJ-Sojourner Debate have already seized on this article, and I'm about to as well, as your analysis supports my case against Sojourner.
Posted by: MAJ | September 4, 2006 11:20 PM
MAJ --
Happy to assist.
Posted by: China Law Blog | September 4, 2006 11:38 PM
Another possible direction will be trailed by Internet. Here is a one on a couple losing their jobs after the video of them killing a kitty (http://www.latimes.com/news/nationworld/world/la-fg-webjustice5sep05,0,5865294.story?coll=la-home-headlines ). The video was on the net and the two was hunt down. The Internet hunt caught the attention of local authority and those two lose their jobs. There are also other similar stories involving more ambiguous cases ranging from daughter posting story about the father's mistress and the hunting of "Sex and Shanghai" blog author.
Chinese want instant gratification instead of lengthy legal process. It would be hard for Chinese law to evolve to the detail of American law to the point that defendants could get off on the base of technicality. Strong sense of unity (the Chinese-ness), untrustworthy authority, and relatively homogenous culture will likely to see Internet mob taking a bigger role in the development of the Chinese legal system.
How would you like to judged by your peers of 1.3 billions?
Posted by: David Li | September 4, 2006 11:55 PM
Mr. Li --
I think you raise some great points, but I am not sure whether mob justice even fits within a legal system. My fear is not so much being judged by 1.3 billion people, it is being judged by those people without their having seen all of the evidence and without my having had any chance to put any on. The problem with mob justice is less the mob and more the lack of any real justice. I have faith in juries that review evidence, but not in those that don't.
Posted by: China Law Blog | September 4, 2006 11:59 PM