China Law Blog

Very timely piece from a reliable source!

I want to add a few words to Myth No.3: I recently learned of the National Judges College in Beijing, which trains judges of course. Don't know why, but I am really impressed by it.

With regards to Myth 4 I think that the threat to whether Chinese statutes have meaning has less to do with whether the people are hesitant to file lawsuits and more with the fact that The Party retains its interest in every aspect of the law. From the Constitution's text to every proceeding, decision and appeal; all are subject to change via the common interests of the nation as a whole a.k.a. The Party line.

Whether this system is bad for China I'm not sure but it certainly leads many citizens of the P.R.C., nevermind foreigners to believe that the statutes are lacking in "meaning".

Regarding myth #5, why would reading an English translation of Chinese law be an exercise in futility? Is it because the official translations are inaccurate or lack explanatory footnotes?

Brad Luo,

I much prefer the American method where judges come up from the ranks of attorneys. Based on my limited experience with judges in China, Korea, and Japan, I just prefer a judge who has actually done more than just graduate near the top of his or her law school class. With all due respect, what can a 24 year old judge really know beyond the law?

Tim,

An absolutely valid point and one we here at CLB have a tendency to ignore. The reason we tend to ignore it though is because it typically has little to no impact on mainline commercial cases, or at least that is our sense. Now on criminal and political cases, I have absolutely no doubt this is far less true.

Glen Wilkins,

Excellent question. The translations are typically really good so it is not that. It is that it is oftentimes impossible to understand the laws without knowing their full context. This is true of all countries of which I am aware (even the United States), but I think particularly true of China where there may be two or three laws, in very different sections, that speak to the same issue. This "duplication" is more common in China than in any other country I know. The commentaries written on the laws in China are many times the key and those commentaries are (as far as I know) always in Chinese.

"With all due respect, what can a 24 year old judge really know beyond the law?"

I thought all the judges in the PRC are retired military. I don't know what would be worse, a young greenhorn on the bench or a salty old ex-PLA pensioner longing for the days of the Long March. At least the youngster might have more familiarity with all the new fangled technology.

Myth #6: The Chinese gov't can be taken to court in China for actions that violate written Chinese law.

How's them apples?

Glen Wilkins:

Very valid point. As Steve mentioned, "China has worked especially hard at improving the quantity and quality of its judiciary." Does not the training of young graduates in the judge's colleges represent such efforts at "improving he quantity and quality of its judiciary"? It is a matter of incremental progress. I think courts in more developed areas are preferrable venues, to a certain extent, because of such improvement in the judiciary, specifically more education and better CLE for the judges.
*****************

CLB:
Would the American way of implanting seasoned attorneys into the courts be better for China? Absolutely, and I don't think it is beyond realm of possibility for China to implement the same thing. Based on my conversations with Chinese lawyers and law students, they very much like the American way of selecting judges because as they say--it makes sense. Of course, that turns on the questions of when and how:

Does the Chinese judiciary currently allow the conversion of lawyers to judges?

If not, when will the rules be adjusted for the betterment of the judiciary?

And finally, what forces can effect a change of the status quo?

It would be nice for lawyers in China to shed some light on the above questions.

Here are some court cases to prove nh's "Myth #6" is itself a myth.

For example, there are great many eminent doman cases in China unreported by western media:

http://gd.news.sina.com.cn/local/2004-12-11/862790.html
(Guanzhou imposing restriction on land acquisition such as gauranteed payment to farmers, and time limitation on acquisition holding period. In this article it mentions Guanzhou crouts has judicated over ONE BILLION RMB worth of land compensation cases.)

http://news.xinhuanet.com/house/2004-12/21/content_2365446.htm
(7 farmers appeal law suit against Land Resource Dept.)

(villagers sue government for garnered compensation payment.)

http://zjc.zjol.com.cn/05zjc/system/2005/01/27/006030562.shtml
(150 farmers appeal decision in favor of government. Another article have since reported that they have prevailed over the Land Resource Dept.)

I would venture that it is impossible to function to any degree of depth in China without knowing the language, as that is the central part of establishing legal, social and commercial context.

It would be like trying to understand American law by reading Chinese translations of cases.
How much sense does that make?

Ultimately you need to deal with individuals/firms which can function at the local level as your partners. The sooner a newcomer reaches that realization, the better.

Just so I'm not yanking anyone's chain, those 150 farmers in WuXi sued the National Land Resource Bureau and won:

Here's a more recent eminent domain case where local decision was appealed successfuly thru prescribed legal avenue:

http://www.fxtxls.com/ShowArticle.shtml?ID=20071011211126.htm

Farmers in HweyGuo township won an illegal land use case in 11/2006. The developer was find but the illegal buildings stand. The Farmers petitioned for restoration of farmland to the municipal level but was denied by Land Resource Dept in Zhengzhou.

So the farmers sought to overturn the administrative decision in Zhengzhou municipal court in 7/2007. Two months later the court decided in favor of the farmers. Zhengzhou Land Resource Dept was ordered to reverse it's decision and pay court cost.

Link #1 is about a regulation, not a court victory. It seems to cover both payments to farmers for taken land and farmers having to pay the local gov't for land they want to use. But the catch phrase is that the local economic cooperative (ie a group of cadres, ie local gov't) is the final decider of how much the user must pay.

Link #2 discusses the lawsuit filed (actually it isn't a lawsuit but a request to the NPC to review an existing law), but not any result of the case and the farmers actually lost the first judgement(and the farmers were in a city hospital when they received word of the first decision).

Link #3

The farmers' lost the first decision in 1993 and the paperwork for the case has been lost.

Link #4
Where is the article saying they prevailed over the Land Resource Dept?

A first comment to Myth No. 2:

I agree that the US is totally over-lawyered! But can the absolute number of lawyers in China really be compared to Countries like Germany, Italy or Spain? Germany has the biggest population in Europe with 83 million inhabitants. China on the other hand has 1.3 billion. That makes (80m inhabitants/120.000 lawyers) =
667 inhabitants per lawyer in Germany when calculating with the min. number of laywers and
(1.3 billion inhabitants / 120.000 lawyers) =10833 inhabitants per 1 lawyer in China.

Another comment - this one to the debate about young judges in civil law countries:

I am not familiar with Asian countries using Civil Law such as South Korea and Japan.
But in Europe nobody will find a 24 years old judge in a court - simply because it is impossible graduate from a European University when studying law with the age of 24! If a student nevertheless manages it to graduate at such a young age he deserves to be a judge.
But I agree that judges still might seem to be young in Europe when compared to judges in Common Law countries. BUT the main ability a judge in a Civil Law country has to have is: The ability to read and interpret written codes of law. Civil Law countries do not allow its' judges creative freedom when they adjudicate. I believe that whoever "survives" a European University and manages to graduate has this ability. (The fact that I am only 24 years old might play a major role here ;-) )

Therefore I think college education is the critical point here. As long as China educates their judges right - even young judges are "good to go".

Don't these points sort of bypass (one of) the main complaint(s) the original article made about China, which is the "rule of law" problem?

It's fine to cite the number of lawyers, the number of laws, the topics on which laws are passed, and the number of lawsuits filed. But aren't there still problems with the actual enforcement of laws? For instance, every article I've read about political, environmental and/or economic issues for the past two years has emphasized the problems with Central government control (or lack thereof) over the provincial/local governments. It's possible that every one of these authors is wrong. Is that your position? That because the central government has passed laws on environmental controls and economic development, those laws will be a) clearly defined and b) implemented meaningfully? Or that Danone is assured a fair hearing in Chinese courts in its dispute with Wahaha?

What about the continued existence of neibu regulations? Or regulations whose sum total (in Chinese) is "We must strictly control foreign investment in XXXX sector"?

I'm guessing the title of this post is at least a little tongue-in-cheek, and the original CER article did discuss judge shortages & training shortages. But it seems that the more fundamental point of the original CER article was "rule of law," such as the observation "most judges simply avoid making the hard decision and procrastinate and mediate in the hope that government officials will engineer a compromise."

China uses 24 year old judges just like it uses 24 year teachers of college freshmen. They don't need experience, high test scores simply affirms their ability to regurgitate information and that is all they need to do, the senior cadres will decide on how the laws are to be interpreted and applied and what is to be taught in the classroom.

There are other examples besides eminent domain cases. Here's one where farmers in FengHwa sued the govenor and won:

http://www.gmw.cn/content/2007-04/17/content_589803.htm

These facts prove Chinese government CAN be taken to court - and LOSE.

I have a different set of myths--don't know if you hear them or if it's just me. Care to answer?

1. Courts are not independent. Whether you win or lose in court could be up to the people that the court is connected to. Many govt. officials are involved in "private industry." It may not matter if all your legal ducks are in a row if the other side has better guanxi. True or not?

2. The legal system is getting better all the time but enforcement is till so poor that it may not matter. Even if you win, so what? Maybe you can stop one offense, but if there is money in it another will pop up (or may already have). True or not?

3. IPR protection/enforcement is really the domain of politics rather than courts. Case in point: The Olympics. The fact that they can enforce IP on issues that are of ($) value to the State shows that IPR is still a political rather than legal issue, at least some of the time. Economic development of China is still a more important issue than international IPR. True or not?

4. Because China is process rather than precedent based system if someone else files paperwork for your trademark/patent/etc. you are basically out of luck. China is not the only country that works like this, I know, but as "the world's factory" and the largest source of black market goods it's a huge issue here. True or not?

Glen Wilkins,

I'll take the youngster.

nh,

They can, but then it is the government that decides the case, which is a major problem. Yes, you can win against a local party hack (sometimes) who has violated Beijing policy, but that assumes that hack is not too powerful, etc.

Brad Luo,

Good questions. I do not THINK anything forbids lawyers from becoming judges (I have a Chinese lawyer friend who was a top tier maritime judge and is now an excellent lawyer, so it can certainly go that way), but I think they must still complete full on judge's training.

Charles Liu,

Those cases do not really disprove what nh is saying. In some ways, your bringing up these cases is the equivalent of pointing out that the New Jersey Generals score points against the Harlem Globetrotters so the games are not rigged. Nh is right that the government controls the judiciary and the same judiciary is called on to rule on the government. This is a big flaw in China's system, but it does not typically affect business disputes.

Paul Denlinger,

You are absolutely right. I sit in the US and talk with clients and can explain all sorts of things to them and give out all sorts of advice, but when confronted with something new, I absolutely must turn to Steve to do the legal research in Chinese. There is no way around it. Even though Steve's Chinese is perfect, he sometimes needs to consult with Chinese lawyers because he does not have substantial experience in the particular area, just as here in the US my firm oftentimes has to bring in outside the firm expertise to assist our overseas clients. In China, without Steve's language capabilities, we probably would not be able to do that either.

Sarah Elschen,

I initially agreed with you regarding the number of lawyers and actually called Steve to go after him on this. But he ended up convincing me that it is a pretty fair comparision since China's economy is about the same size as a country like Germany and that number is as important as the number of people.

Ah, youth.... Law is an undergraduate degree in China so 24 year old judges certainly exist. I have a common law court bias, I know, but I do find judges in Civil law countries oftentimes do not have any real understanding of business, and I find that frustrating. I know they have less room to interpret, but they have to have some room.

JT,

You make some excellent points and yes, the title was at least somewhat tongue in cheek (gotta grab readers with the big headlines you know).

These points do completely bypass the "rule of law" problem, but they do so to emphasize that much of what is being said about China's legal system just is not true. As for rule of law, my perspective is definitely very slanted because every litigation matter my firm has had in China has been for a non-Chinese client and has almost always been a business matter that probably never rose to the level of any real concern to the Central government. Having said this, I think your raising the Danone Wahaha dispute is very interesting because it is quite possible the courts will favor Danone because the world is watching. I have been involved in a couple of Chinese litigation matters where I felt the Court was bending over backwards to show how fair it could be to a foreign company. These cases were in sophisticated/developed parts of China.

I will not dispute that there are regulations in China that are written in such an incredibly broad way that anyone walking down the street can be said to violate them. These are a problem and they scare me.

We have found that many Chinese judges do avoid making the hard decisions, but we have found this in cases that have nothing to do with the government and our sense is that they are a bit afraid to award millions of dollars simply because the numbers seem so big and they really want the parties to work it out.

David Dayton,

Heard them all many times and all have at least a grain of truth to them. Here goes:

I have a different set of myths--don't know if you hear them or if it's just me. Care to answer?

1. Courts are not independent. Whether you win or lose in court could be up to the people that the court is connected to. Many govt. officials are involved in "private industry." It may not matter if all your legal ducks are in a row if the other side has better guanxi. True or not? True, but the farther away one gets from the local officials (i.e., appeals), the less likely this is to be true.

2. The legal system is getting better all the time but enforcement is still so poor that it may not matter. Even if you win, so what? Maybe you can stop one offense, but if there is money in it another will pop up (or may already have). True or not? True, but part of this is that Chinese courts are just learning about things like fraudulent transfers and piercing the corporate veil. I have had many discussions on these issues with Chinese lawyers (because this is an issue in which I have a lot of experience and interest) and they tell me that we lawyers need to keep working on the judges on this and things will continue improving. I believe this. I argued and lost (through my Korean lawyers) the piercing the corporate veil doctrine in Korea so many times that I actually think it was my arguments that finally led Korea to institute a piercing the corporate veil law. China already has one, but it is going to take a while before it becomes truly effective.

3. IPR protection/enforcement is really the domain of politics rather than courts. Case in point: The Olympics. The fact that they can enforce IP on issues that are of ($) value to the State shows that IPR is still a political rather than legal issue, at least some of the time. Economic development of China is still a more important issue than international IPR. True or not? Mostly False. You are combining two things here. I agree that enforcement of IPR outside the courts is mostly political, but if you bring your own civil suit to enforce IPR in China, your chances are not half bad.

4. Because China is process rather than precedent based system if someone else files paperwork for your trademark/patent/etc. you are basically out of luck. China is not the only country that works like this, I know, but as "the world's factory" and the largest source of black market goods it's a huge issue here. True or not? Half true, half false. This is a huge, huge issue and it is usually the very first issue I raise with every new client. It is mostly a huge issue for North Americans (which is where most of our client base comes from) because things are the exact opposite here. There is absolutely nothing wrong with China's IP laws as they are (I am told) very similar to many EU countries. They are very different from US laws and so US companies tend to get burned. The US, for instance, says the first to use a trademark gets it while China (and most other countries) say the first to file for it gets it. I do not think one system is necessarily better than the other, but in the first to file system you should as hell better know about it or you run massive risks. We get calls all the time from US companies complaining about how someone in China stole "their" trademark and we have to tell them it was not theirs to begin with. Of course, had they hired a lawyer with China experience and simply paid the minimal fee upfront to register the trademark, they would not be having any problem. So it is nothing we lawyers cannot easily remedy.

@CLB re "Globetrotters" analogy:

Frist let me agree the truth is probably somewhere in between.

However, to refute the claim "The Generals NEVER score any points aginast the Globetrotters", one simply Show cases where the Generals score points.

That's what I've done, show examples where the Chinese government CAN be taken to court.

Win or lose is another thing isn't it? But the reality is there are lots of examples like impeachments all over China that western media don't cover.

I'm sure there are examples related to national security the government will never give ground on, but then again don't we do the same thing? Just ask Jose Padilla.

"That's what I've done, show examples where the Chinese government CAN be taken to court."

Charles Liu: The examples you've shown involves bureaucratic hearings, not court of law cases.
US federal, state and tribal agencies have administrative processes that include hearings, but they are not the same as court cases.

Dan, sorry about the repost:

"Here's a more recent eminent domain case where local decision was appealed successfuly thru prescribed legal avenue:

http://www.fxtxls.com/ShowArticle.shtml?ID=20071011211126.htm"

Also:

"There are other examples besides eminent domain cases. Here's one where farmers in FengHwa sued the govenor and won:

http://www.gmw.cn/content/2007-04/17/content_589803.htm

These facts prove Chinese government CAN be taken to court - and LOSE."