We westerners (particularly we lawyers) are used to courts being legalistic. We expect courts to rule “strictly” on “the law.” This expectation is wrong in the United States and very wrong in China.

It is wrong in the United States because about 50% (yes, I am making this figure up) of all cases could easily go either way based on the law. Our job as lawyers is to convince the Court why the world will be a better place if it rules in our client’s favor. When we win these, we call it justice. When we lose these, we call it words I cannot mention online.

The Chinese courts are far less interested in the law and far more interested in “justice” than Western courts. When we win these in China, we call it justice. When we lose these, there is a tendency to cry corruption. I am of the view that Western companies far too often fail to realize the importance of equity/justice in Chinese courts. This failure to understand the Chinese system for putting the doing of equity far above the legalistic interpretation of law can work against Western companies doing business in China.

I am aware of many instances where Western companies, relying on Western legal constructs, believed themselves better positioned for Chinese lawsuit than they actually were, and then mistakenly refused to compromise based on their wrong belief. I have also seen Western companies bring lawsuits in Chinese courts or before Chinese arbitration panels they were convinced they would win, but I knew they would lose based on the equities. Chinese courts and Chinese arbitration panels do not generally like legal technicalities as they do not view that as the way to a harmonious society. I am not saying this to be funny or glib, but because it is true.

A recent fascinating case (both from a legal and a factual perspective) really brings this home. Danwei writes on this case in its post, entitled, “Collective punishment for building occupants.” Danwei provides the following case summary:

In November 2008, Yuan Zhengming, a 22-year-old street vendor was walking along the road when she was struck in the head by a metal object.

The object was determined to have fallen from the apartment building nearby, but since no one stepped forward to accept responsibility, Yuan sued all of the households on that side of the building.

She has now been awarded 259,580.57 RMB, to be split among 48 households (60 people). The only defendant who escaped blame, Wang Aitang, had never renovated his apartment after purchase. The court found that he had sufficient evidence that he had never used the flat, and therefore could not have been responsible for Yuan’s injuries.

Now before I go all legal-wonk on you, let me just say this ruling could never happen in the United States. Not in a million years.

There is a famous U.S. torts case, Summers v. Tice, in which someone was hit by two bullets from defendants, all of whom were out hunting together. Though it could not be determined from which defendant the bullet came, each defendant was found to have acted negligently and because it was the defendants who put the injured party in the position of being unable to determine which defendant (or defendants) had actually struck her, all defendants were found equally liable.

This Chinese case is way different though, in that only one of sixty people could possibly have been truly liable (it may even have been a guest in one of the apartments) and the other 47 apartment owners did absolutely nothing wrong. And yet, in an effort to give compensation and achieve what it saw as fair/just/equitable, the Chinese court ruled that all 48 apartment owners (minus the only one who could conclusively prove no involvement) would have to share in the payment.

Two lessons to be gleaned from this one case. First off, Chinese courts view the law and justice very differently from Western courts. Second, before you buy a condo in China, you should think about doing some due diligence on your fellow owners (just joking).

 

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Photo of Dan Harris Dan Harris

Dan is a founder of Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, China and Spain.

He primarily represents companies doing business in emerging market countries, having spent years building and maintaining a global, professional network.  His work has been as varied as securing the release of two improperly held helicopters in Papua New Guinea, setting up a legal framework to move slag from Canada to Poland’s interior, overseeing hundreds of litigation and arbitration matters in Korea, helping someone avoid terrorism charges in Japan, and seizing fish product in China to collect on a debt.

He was named as one of only three Washington State Amazing Lawyers in International Law, is AV rated by Martindale-Hubbell Law Directory (its highest rating), is rated 10.0 by AVVO.com (also its highest rating), and is a recognized SuperLawyer.

Dan is a frequent writer and public speaker on doing business in Asia and constantly travels between the United States and Asia. He most commonly speaks on China law issues and is the lead writer of the award winning China Law Blog. Forbes Magazine, Fortune Magazine, the Wall Street Journal, Investors Business Daily, Business Week, The National Law Journal, The Washington Post, The ABA Journal, The Economist, Newsweek, NPR, The New York Times and Inside Counsel have all interviewed Dan regarding various aspects of his international law practice.

Dan is licensed in Washington, Illinois, and Alaska.

In tandem with the international law team at his firm, Dan focuses on setting up/registering companies overseas (via WFOEs, Rep Offices or Joint Ventures), drafting international contracts (NDAs, OEM Agreements, licensing, distribution, etc.), protecting IP (trademarks, trade secrets, copyrights and patents), and overseeing M&A transactions.