China Law Blog

The China Business Law Blog does an excellent job analyzing a rather mundane Chinese case involving a consumer who sued his travel agency for breach of contract. Seems the travel agent failed to take the consumer to all of the sites set forth in their contract.

China Business Law Blog concluded the following from this case:

1. It "can be inferred that in case of a direct conflict between the Contract Law and an administrative regulation the former prevails."

2. "More consumers are choosing to exercise their legal rights and are not afraid of doing so in courts. Mr. Ma represents one of those individuals that do not let a wrongdoer walk free without putting up a fight. His attorney’s fees are probably more than the compensation he received. But that is kinda beside the point here."

3. "The Court was very competent in reaching its decision. It looked at the plain language of the contract, excluded force majeure as an excuse for the breach, and reached an equitable decision for lack of contractual provisions on damages."

I draw the following conclusions:

1. China Business Law Blog is right about the Chinese consumer's increased willingness to turn to the courts for their remedy. Hence the title of this post and the fact it is part VI of the series.

In previous posts in this series (here, here, and here), I talked about cases where Chinese courts have issued rulings that would not be at all unusual in California, but were groundbreaking for China.  I used these cases to extrapolate the changes cursing through China's legal system.  In my last post in this series, here, I wrote on how China's judges and prosecutors are studying law overseas and how that will impact China's own legal system. Our most recent post in this series was a consumer misrepresentation case against an airline that I described as "par for a rapidly changing course of Chinese consumer cases."

2. The Court was very competent in reaching its decision. We generally find the commercial law judges in China in the more sophisticated business cities to be quite good with the law.

3. For whatever reason (and the Courts always seem to come up with pretty good reasons), Chinese judges tend to "split the baby" on damages much more often than do American judges.

I see this third conclusion as the most important to potential business litigants on the ground in China. My firm is currently involved in assisting a foreign company pursue a case in China (and I am going to be as vague as possible here because the case is still very much ongoing) involving a lot of money. The case should be a complete slam dunk for our client and there really should be no way out for the court, other than to award our client the full sum it seeks. But, the case is taking way longer than it should and our absolutely superb Chinese attorneys (with whom we have worked on many cases previously) are telling us the judges are simply concerned about such a high damage award against a company that probably never profited from the transaction. American judges rarely to never have this same sort of reticence.

I touched on the damages issue previously in the context of product liability cases in China in the post "One Night In China And The World's Your Oyster." This low damages issue also comes up in IP cases where the prevailing party against a clearly infringing defendant is often awarded little more (sometimes even less) than the attorneys fees it cost it to secure the verdict.

No real evidence this is changing, but I have to believe that as the number commerical cases continues to proliferate in Chinese courts, the judges will become more accustomed to awarding greater damages.