Chinese Law Prof Blog

Editor: Donald C. Clarke
George Washington University Law School

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Sunday, September 28, 2008

He Weifang on judicial mystification

Here's an interesting essay by He Weifang that follows up on his earlier essay emphasizing the need for professionalization in the judiciary. In this essay, entitled "How to Eliminate Mystification in the Judicial Process" (司法神秘化该如何祛除), He takes up a recently-reported speech by Supreme People's Court President Wang Shengjun in which Wang calls for demystification of the judicial process. Wang wants to demystify by somehow making the process closer to the masses - using simpler language, for example. He Weifang argues that true demystification requires, among other things, two things not mentioned by Wang. First, clarity about the rules that courts use in making decisions. It's mystifying when a lawyer has to tell the client, "Well, according to the law you should be declared innocent, but I can't tell you how the court will rule, because the judge will have to consider current policies, the security situation, and what is of service to the larger picture (法官还要考虑政策啊,治安状况啊,另外还要考虑服务大局)." Second, transparency in court proceedings. China has specific rules about proceedings that are to be closed to the public; all others are to be open. Yet as He points out, these rules are regularly violated. Cases that are for any reason sensitive, regardless of whether they come within the scope of the rules on closed trials, are routinely closed. (The recent trial of Yang Jia, the man who killed several policemen in Shanghai, is a case in point.)

September 28, 2008 in Commentary | Permalink | Comments (0) | TrackBack (0)

Saturday, September 27, 2008

Man who faked "South China Tiger" photo sentenced to 2 years and 6 months

Here's the story from Caijing; here's the AFP report. He got two years for fraud and 18 months for unlawful possession of ammunition; the two sentences were combined to a single term of two and a half years.

One issue was where exactly the fraud occurred. The defendant, Zhou Zhenglong, apparently received a reward of 20,000 yuan from the Shaanxi provincial forestry department, but this seems to have been an ex gratia payment, not a payment on a pre-existing reward promise. It seems likely to me that Zhou is just a dumb schmuck who one day woke up and acted on a bad and poorly thought-through idea, and then got caught up in something way beyond his imagination and control. Now he has lost two years from his life for embarrassing provincial officials.

September 27, 2008 in News - Chinese Law | Permalink | Comments (0) | TrackBack (0)

New report from China Labour Bulletin

Here's a new report [English|French|Chinese] from China Labour Bulletin, Han Dongfang's Hong-Kong based labor rights organization. It's called "No Way Out: Worker Activism in China's State-Owned Enterprise Reforms". A blurb describing the report is here; it states that the report

is based on five years of research, and draws extensively on CLB’s litigation in defence of worker’s rights. The report uses five illustrative cases to explore the many ways in which enterprise restructuring and privatization violated the human rights of laid-off workers; including their systematic exclusion from official channels of redress, the criminalization of labour protests, and the denial of workers’ rights to social security, to an adequate standard of living, to freedom of association and to freedom from arbitrary detention.

September 27, 2008 in Commentary, Publications | Permalink | Comments (0) | TrackBack (1)

China Colloquium, Fordham Law School, Oct. 3, 2008

I have received the following announcement:

On Friday October 3, 2008, the Louis Stein Center for Law and Ethics and the Leitner Center for International Law and Justice at Fordham Law School will present a full-day colloquium on the Rule of Law and Human Rights in China. This is an invitational program to be attended by academics, lawyers, members of the diplomatic community, and other experts on human rights, civil society, and the rule of law in China. It will consider these issues in light of the impact of the Olympics, as well as prospects for moving forward in a post-Olympics China. Principal speakers will open each panel with their remarks, followed by a moderated discussion for all attendees.

RSVP to the colloquium is required. Please contact Elisabeth Wickeri at [email protected] if you are interested in attending.

Thank you,

Elisabeth Wickeri
Leitner Center for International Law and Justice
Fordham Law School | 33 West 60th Street | 2nd Floor | New York, NY 10023
http://law.fordham.edu/leitner.htm

September 27, 2008 in Conferences | Permalink | Comments (0) | TrackBack (2)

Wednesday, September 24, 2008

China officially requests consultations with the US over antidumping and countervailing duties

The request for consultations, dated Sept. 22, 2008, was made under Art. 4.4 of the Dispute Settlement Understanding and is the first step toward a proceeding before the WTO's Dispute Settlement Body. Here's the text in English: HTML | Word.

China may request the establishment of a dispute settlement panel 60 days after the request for consultations if a settlement hasn't been reached (earlier if both parties agree).

September 24, 2008 in News - Chinese Law | Permalink | Comments (0) | TrackBack (0)

Monday, September 22, 2008

Chinalaw discussion on first private lawsuit under the Antimonopoly Law

There was a very good discussion on the Chinalaw list earlier this month of the many issues involved in China's first private lawsuit under the Antimonopoly Law. I have edited some of the contributions and put them in an easy-to-follow format for anyone who's interested. The document is here.

September 22, 2008 in Commentary, News - Chinese Law | Permalink | Comments (0) | TrackBack (1)

Job opening in Chinese environmental law, Vermont Law School

Tseming Yang of Vermont Law School sends the following announcement:

We have a job opening for a deputy director of Vermont Law School's Partnership for Environmental Law in China.  The position description is below.

We are considering applications as we receive them, and the position will remain open until filled.

Continue reading

September 22, 2008 in Internships/Employment Opportunities | Permalink | Comments (0) | TrackBack (0)

Sunday, September 21, 2008

Research associateship available in competition/antitrust law and policy, HK Polytechnic

I've been asked to circulate this advertisement concerning a new research post in competition/antitrust law and policy to be based at the School of Accounting and Finance, Hong Kong Polytechnic University.

The relevant web link is http://www.polyu.edu.hk/hro/job_external.htm#rese.

September 21, 2008 in Internships/Employment Opportunities | Permalink | Comments (0) | TrackBack (2)

Lessons for foreign investors from the Sanlu scandal

The Sanlu milk power scandal raises interesting issues relating to foreign investment in China, as Sanlu is 43% owned by Fonterra, a New Zealand-based dairy conglomerate. What did Fonterra know and when did it know it; what did it do and what should it have done? These questions are addressed in this article from the New Zealand Herald. But there are other angles to the story as well. The purpose of this post is to offer perspectives from two experienced China hands - Jerome Cohen and Sidney Rittenberg - on the problems of management faced by foreign investors in China. The comments below are reproduced with their permission (and my thanks).

Jerome Cohen:

All foreign investors had better review the adequacy of their representation in the management of PRC joint ventures in light of the milk tragedy. What kind of person to post to a China venture's day-to-day management has been a problem from the day Schindler Elevator and Jardine's started the very first industrial JV in 1980. Finding the right people to take on this delicate and responsible task has never been easy. If the designee is not fluent in Chinese and a clever observer and diplomat, as well as someone who has previously worked for the foreign investor or otherwise enjoys its confidence, he or she will not be effective. I have been involved in ventures where even skilled PRC nationals who have been posted to a JV by the foreign investor have been shut out of the inner workings of the enterprise because they were not part of the local partner's "system". In some other cases, even when the foreign company's rep knows that something improper is going on, he or she, especially if a PRC Chinese or ethnically Chinese, is subjected to heavy local pressures and incentives to "go along" and not report it to headquarters back home. This has often posed severe moral and even legal dilemmas for the foreign company's rep and eventually the company itself.

Sidney Rittenberg:

One problem in appointing competent joint venture personnel is that PRC Chinese usually are in the best position, other things being equal - especially if they have been trained in the USA and are clued in to the corporate culture. "Clued in" here means that they do not have an "us and them" attitude towards foreigners. We have had cases where a Chinese staffer who protects the legitimate interests of the American corporation will be called a "traitor" by the same corporation's Chinese representatives.

At the end of the day, everything depends on having the right people. We say, "the Three Cs" - Character, Competence, Connections. Strange though it may seem, some of our excellent corporations overlook the primary issue of character when picking either foreign or Chinese personnel for China. What is their track record? Are they loyal to their commitments? Can you depend on their word? Are they good to work with? This is an important (and challenging) part of due diligence, and due diligence is the name of the game. Sometimes, even the country general manager is picked because he has workable English, shoots an impressive line of self-recommendation, lays on a great banquet (or even a massage parlor), and enthusiastically agrees with everything you say. The hardest kind of case that we get, as consultants, is when the American corporation is already plagued with the wrong hire and has to get rid of him without seriously damaging the company in China.

September 21, 2008 in Commentary, News - Chinese Law | Permalink | Comments (1) | TrackBack (1)

Friday, September 19, 2008

State Council issues implementing regulations for Labor Contract Law

The text of the regulations, issued and effective Sept. 18, 2008, is here. For some commentary by Manfred Elfstrom of the International Labor Rights Forum, click here.

September 19, 2008 in News - Chinese Law | Permalink | Comments (0) | TrackBack (0)

Tuesday, September 16, 2008

China appeals WTO auto parts ruling

I last blogged here about the WTO Dispute Settlement Body's ruling against China in the auto parts dispute. Yesterday China formally appealed the ruling. Xinhua story here.

September 16, 2008 in News - Chinese Law | Permalink | Comments (2) | TrackBack (3)

Monday, September 15, 2008

Antimonopoly commission has first meeting

Here's the report from the Antitrust and Competition Policy Blog, with a link to a report from today's Wall Street Journal. Note that this is the policy-making commission referred to in Art. 9 of the Antimonopoly Law, not the enforcement authority referred to in Art. 10.

A translation of the AML by O'Melveny & Myers is publicly available here.

September 15, 2008 in News - Chinese Law | Permalink | Comments (0) | TrackBack (5)

UCLA conference on US-China business law, Oct. 24, 2008

There will be a conference on US-China business law on Oct. 24, 2008 at UCLA School of Law. For more information, click here.

September 15, 2008 in Conferences | Permalink | Comments (0) | TrackBack (0)

Sunday, September 14, 2008

Wacky insider trading case

Here's a report of what purports to be China's first civil suit for damages on account of insider trading. The defendant, Chen Jianliang (陈建良), is the former vice president of Xinjiang Tianshan Cement Co., a listed company, and is currently the CEO of its wholly owned subsidiary, Jiangsu Tianshan Cement Group Co., headquartered in Nanjing. In 2004, when Chen was at Xinjiang Tianshan, he used his knowledge of an impending corporate restructuring to engage in insider trading, buying and selling stock between June 21 and June 29, when the restructuring was publicly announced and caused the stock price to go up. In 2007, the China Securities Regulatory Commission found that he had violated relevant sections of the Securities Law on insider trading and fined him 200,000 yuan. (Punishment decision here.) (Since his insider trading involved the ultimate sale of almost 200,000 shares, this fine would be less than his gain unless he made less than 1 yuan per share; I haven't looked up the stock price at that time, but such a small gain seems unlikely.)

The plaintiff is a Guangdong man (I think; I'm making a likely but not foolproof inference from the name), Chen Ningfeng (陈宁丰), who lost money trading Xinjiang Tianshan stock around the June 21-29 period in which the defendant was engaging in insider trading. He brought suit against Chen in the Nanjing Intermediate-Level People's Court.

The news report says (at first; but see below) that neither the plaintiff, the defendant, nor the defendant's lawyer showed up, so the plaintiff's lawyer, the redoubtable securities lawyers Song Yixin (宋一欣) had the floor to himself. The CSRC decision left no room for doubt about the underlying culpability of the defendant; the issue the court was concerned with was that of measurement of damages. This, of course, has been a big problem in civil suits in the US as well; given that the plaintiff would have traded in the impersonal market even if the defendant had not engaged in the insider trading, a direct link between the plaintiff's losses and the defendant's wrongful trading is not plausible. (In the US, Congress eventually solved the problem by statute: the plaintiff gets standing by having engaged in transactions "contemporaneously" - undefined in the statute, but probably meaning within a window of few days - with those of the defendant, and need not prove anything further by way of specific loss causation. Damages are limited by the defendant's gains less what he has already paid out via disgorgement under Section 21(d) of the Securities Exchange Act.)

Attorney Song sought to make an end run around this problem by asserting, according to the news report, that in the US and Europe, the burden of proof was reversed in insider trading cases, and it was up to the defendant (who hadn't shown up) to prove that the plaintiff's losses - calculated at 9383.68 yuan - were not caused by his insider trading. (As we can see above, this is not entirely accurate or entirely inaccurate. US law hasn't really figured out what the damage theory should be, and so has a rule about recovery. That this is a theory of recovery instead of damages is shown by the fact that contemporaneous traders even in O'Hagan-type cases, where under misappropriation theory the wrong is perpetrated not on other traders but on the owner of the inside information, are allowed to sue and recover. I think it makes more sense to see plaintiffs as being given standing in order to motivate them to act as private attorneys-general, not in order to allow them to recover damages they actually suffered.)

At this point, a true Perry Mason moment occurred in the proceedings. The defense attorney (who had apparently by this time shown up in court) whipped a piece of paper out of his pocket: a signed request from the plaintiff requesting that the suit be withdrawn. Apparently legal ethics rules in China do not forbid one party's lawyer from talking directly to the other party.

Needless to say, this was a bit startling to Song Yixin, who asked the court to reject the request. (I'm not sure whether or how far he challenged its authenticity.) Not only should the plaintiff act through him, the designated representative, he pointed out, but he also had a contingency fee arrangement with the plaintiff whereby he had fronted the legal costs, and so he also had an economic stake in the case. The plaintiff could not unilaterally withdraw the suit. (I think it's fair to say that in the US - not of course necessarily a model of the right way of doing things - this conflict of interest between lawyer and client in contingency-fee cases would be treated as an embarrassing necessity better left unmentioned, not trumpeted loudly in public.) Song remarked to reporters that the plaintiff must have "gotten to" the defendant.

The reporter telephoned the plaintiff, who denied that he had "sold out" to the plaintiff.

As of the date of the report, the court (at least for the time being) has not accepted the plaintiff's request, and proceedings continue. As if fearing that the case was not already bizarre enough, the defendant's lawyer has stated that because the plaintiff has withdrawn the suit, it does not exist any more and there is no issue of "non-appearance". Furthermore, he has stated, if the court treats its proceedings as a trial, he will sue the court itself. (In China, as in most other legal systems, if you are unhappy with a court's decision the normal recourse is appeal to a higher court.)

For his part, Song says that his goal is to see if investor losses caused by insider trading can be recouped through a civil suit. If the court agrees to the plaintiff's request to withdraw the suit, he will sue the plaintiff for breach of contract and seek other investors to sue Chen Jianliang.

September 14, 2008 in News - Chinese Law | Permalink | Comments (0) | TrackBack (1)

Saturday, September 13, 2008

Research guide to Hong Kong law

Just published, courtesy of Roy Sturgeon and Sergio Stone; available here.

September 13, 2008 in Research Resources | Permalink | Comments (0) | TrackBack (0)

Tempest in the Beijing Lawyers Association - further materials

Apropos of my earlier posts (here and here) on this subject, here's an English translation of the original open letter.

September 13, 2008 in News - Chinese Law | Permalink | Comments (0) | TrackBack (2)

Friday, September 12, 2008

Tempest in the Beijing Lawyers Association - follow-up

Here's some commentary on my previous post from the very well-informed Sida Liu:

This is a very interesting development indeed. You're right that the BMLA's position is a bit vulnerable. The reason is simply demographic and economic, as I understand it.

Beijing has more lawyers than any other city in the country.  By 2007 Beijing already had more than 15,000 lawyers, and  this number is growing at a speed of about 2,000 lawyers per  year. Every lawyer pays 2,500 yuan annual "membership fee"  to the BMLA. This gives the BMLA about 40 million yuan in  revenue every year. On the other hand, the BMLA has only  about 30-35 regular staff. To spend the money they have  bought floors in a nice office building as office space, sponsored many overseas trips for the leaders of the justice  bureau, BMLA and a small number of leading lawyers, started  to conduct a survey of the Beijing bar every other year, and paid for an annual health examination of all lawyers. But still the money is mostly used in ways that do not necessarily benefit the vast majority of lawyers in the city. The grievance of those "migrant lawyers" who came from  out-of-town places is particularly strong as their practice  is often poorly supported by the firms and the BMLA.

Given this background, it is not surprising that these 35  lawyers can do something like this, with an even more  stunning "cultural revolution"-style response from the BMLA.  My feeling is that the crucial issue now is whether the call  of these 35 lawyers, mostly ordinary practitioners at the  periphery of the bar, could win the support of elite members  of the Beijing bar, many of whom assume positions in the  BMLA. 

September 12, 2008 in News - Chinese Law | Permalink | Comments (0) | TrackBack (0)

Legal knowledge propagation in China

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A colleague who wishes to remain anonymous has kindly directed me this Flickr site where he/she maintains a fascinating archive of photos from China relating (mostly) to state efforts to propagate knowledge about the legal system.

September 12, 2008 in Commentary, Other | Permalink | Comments (0) | TrackBack (0)

Thursday, September 11, 2008

Tempest in the Beijing Lawyers Association

Lawyers associations in China, including the Beijing Lawyers Association (the subject of this post), are typical Leninist "mass organizations": vehicles more for top-down control than for bottom-up articulation and representation of interests. In this way, they resemble labor unions, the Women's Federation at various levels, official churches, etc. Recently some lawyers in Beijing had the temerity to call for direct election of leaders of the Beijing Lawyers Association as well as other reforms that would have the effect, they say, of taking power from the small group of rich lawyers currently in control. (The text of their open letter and a list of signatories can be found here; translations welcome English translation here.)

The BLA leadership has not taken this challenge lying down. It has issued a pretty nasty response (English | Chinese) full of the kind of politically threatening language you rarely see any more: it speaks of "linking up" (a pejorative word evocative of Red Guards running rampant), working "under the signboard" or "raising the banner" of democracy, "stirring up rumors" and "rabble-rousing" (my personal favorite, which I haven't seen for years: 蛊惑人心), "inciting" lawyers "who don't understand the true situation", etc. The response warns darkly that using text messages and email to engage in this kind of activity is illegal, although considering that the writers are presumably lawyers the legal analysis seems pretty thin. Lawyers are urged to maintain a correct political orientation and to resist the blandishments of this "minority".

The lawyers who issued the statement are not, however, backing down, and have issued a firm response of their own (English | Chinese). It will be interesting (to say the least) to see how this turns out. The very vehemence of the BLA's initial response suggests to me that their position may be a little vulnerable.

September 11, 2008 in News - Chinese Law | Permalink | Comments (0) | TrackBack (2)

Conference on Chinese criminal law, Germany, 8-12 October 2008

A conference entitled "Chinese Criminal Law System in Socio‐Cultural Context" will be held at University of Wuerzburg in Germany from Oct. 8th to 12th. Among the speakers will be He Weifang. A copy of the program in English is here; I'm told that most of the presentations will be in German, however.

September 11, 2008 in Conferences | Permalink | Comments (0) | TrackBack (0)