Ft.com has a fascinating and extremely sad story, entitled, “An accident shows how China treats consumers.” (h/t This is China!) It’s a great article, but the title is all wrong, at least if you are a lawyer. The title should be “An accident illustrates why it is (almost always) a complete waste of time to sue Chinese companies in United States Courts.”
I am sure that most of you will read this article and get all angry and ask, how can this be? I read this article and nod my head and think, “been there, done that.” That is because just about every month, I get a call from some lawyer, somewhere in the United States, calling me and expecting me to be really interested in the great case he or she is offering me. The case usually goes something like this:
- I have a $16.5 million judgment against this Chinese company for securities fraud. We got the judgment from such and such US court and “all we have to do now” (I swear they nearly always say this as though they just did 99.9% of the work and I am some 8 footer who merely needs to dunk the perfectly passed ball into the hoop) is get the judgment enforced in China. Do you want to help us on this (again, always asked as though I am going to jump at this alley-oop pass). Slightly irritated, I always like to come right back at them, by answering, in my most blaze voice possible, “almost certainly not.” But to keep them on pins and needles a bit longer, I do not explain why, I just ask them whether this company still does any business in the United States, knowing full well that if it did, this lawyer almost certainly would not have called me. Then when they say “no,” I ask whether it does business in Canada, England or South Korea (my three favorite countries for enforcing U.S. judgments). They invariably say they do not know. I then tell them that I know of absolutely no way to get their judgment enforced in China and that the best way to seize the Chinese company assets is to go after whatever assets it might have in the US, Canada, England or South Korea. I also say that if there is any way we can contend the case is based on a maritime claim, we could also try seizing any of the Chinese company’s US dollars that pass through New York banks as part of a Rule B maritime attachment. The call always concludes with their saying they will look into the Canada/England/South Korea angle and then their never getting back to me.
- I have a $2.4 million judgment against a Chinese company for breach of contract….These calls then go exactly as per #1 above. I then lecture them on how the next time they do business with an overseas company, they should have an arbitration provision in their contract.
- I have an $11.2 million tort judgment that includes $8.7 million in punitive damages…..These calls then go exactly as per #1 above, except this time, I have to tell them that even England, Canada, and South Korea will not enforce punitive damage awards and they also tend to be very wary of US tort judgments.
For more on the difficulties in suing Chinese companies/enforcing US judgments in China, check out the following:
- Enforcing Foreign Judgments in China — Let’s Sue Twice.
- Taking Judgments To China (And Korea), Let’s Not Sue Twice.
- Will Your US Judgment Be Enforced Abroad? Not China, But Maybe.
I am going to be speaking on this topic in New Orleans on November 11 at the “Chinese Drywall Litigation & Insurance Coverage Update.“