China Law Blog

I went to a talk the other day by Sheida Hodge at the Washington State China Relations Council.  Ms. Hodge did an absolutely superb job speaking on Chinese cultural issues.

In the subsequent question and answer period, a young techie proclaimed that unless one is really in tight with the Chinese government, do not even think about getting your contract enforced in China because there is no way a foreign company can win in China's courts.  A few heads nodded in agreement. 

I wanted to jump up and start cross examining this guy because I knew I could eviscerate him.  In how many Chinese litigation matters have you been involved?  In how many different Chinese cities?  Can you tell me for a fact that case would have been decided any differently in the United States?  What empirical evidence do you have that it is impossible for foreign companies to prevail in Chinese Courts?  How many foreigners do you know who have actually participated in a Chinese lawsuit?  And that one case you have heard about, that was more than ten years ago, wasn't it? And how many litigation losers do you know in any country who have said the court's ruling against them was perfectly fair?  When you made this blanket statement about the impossibility of enforcing contracts in China, were you including arbitration also?

But I didn't.  Instead, I just leaned over and muttered to the person next to me from Esterline Technologies that what this person had said was simply not true. 

I actually have both numbers and personal experience on my side.  Starting with the personal experience, I can state that my firm has worked on (and is working on) a number of Chinese litigation matters (both civil and criminal) and we our clients have overwhelmingly been fairly treated by the Chinese courts.  I will concede that though these cases have been in a number of Chinese cities, including some in cities other than Beijing and Shanghai, all were in pretty sophisticated and well recognized Chinese business cities. 

So let's look at some numbers.  Today's China Daily, in an article, entitled, "International    Laws Applied in Local IPR [Intellectual Property Rights] Cases," notes that from 2002 to 2006, the Beijing No 1 Intermediate People's Court "ruled in favor of overseas parties in 60 percent of the 670 IPR cases."  If someone were to say that the foreign companies that brought these 670 cases probably had really strong cases and the success rate should actually should have been greater than 60 percent, I would not dispute that.  I would also not dispute that this 60 percent rate is almost certainly lower in most other cities in China --though it also would not surprise me if it were actually higher in Shanghai.  I also will not dispute that collecting on Chinese judgments is an arduous task unto itself. 

But I will contend that this 60 percent foreign company victory rate gives lie to the techie's contention that it is impossible for foreign companies to prevail in Chinese courts.  China's courts already are sufficiently fair that Chinese businesses for the most part do consider the legal ramifications of their actions.

Before anyone writes a comment with the world "apologist" in it, I ask that you at least first read these two posts, "Chinese Court Says "No" To Government -- Applause Still Not Warranted" and "Chinese Court Says "No" To Government -- Applause Not Warranted," where I discuss why China's courts require fundamental structural change before they can be considered institutionally fair.  I also ask that I get a another chance someday, somewhere, to take on that techie.