Chinese Law Prof Blog

Editor: Donald C. Clarke
George Washington University Law School

A Member of the Law Professor Blogs Network

Thursday, October 30, 2008

Call for papers: The role of law in the EU and China

I have received the following announcement:

CALL FOR PAPERS

The role of law in the EU and China

The establishment of the China-EU School of Law (CESL) was approved in the autumn of this year. Based in Beijing at the China University of Political Science and Law and supported by a large consortium consisting of 16 European universities under the leadership of the University of Hamburg the CESL will become a center for excellence in legal education, professional training, research and consultancy.

The CESL invites abstracts of paper proposals of approximately 1,500 words, along with abrief CV, for a workshop to be held over the course of two full days on January 10 and 11, 2009 in Beijing, PR China, in order to discuss the development of future research to beconducted at the CESL.

The CESL therefore calls for papers from scholars who can contribute with original research from either the European or Chinese perspective.

Contributions should cover one or more of the following aspects of the role of law in the EU and China:

o Legal and administrative transformation in China

o China and Europe in a globalizing world

o Legal theory, law and culture, and other general aspects of law

The deadline for submissions is November 30, 2008. Participants will be informed of their acceptance by December 15, 2008. Participants will be expected to provide complete copies of their papers, which should be approximately 10,000 words, in electronic form by January 6, 2008. Preferred format is MS Word.

Please submit proposals as an email attachment to Daniela Janicke, European Manager at the CESL (daniela.janicke@jura.uni-hamburg.de).

See the CESL website for further details: www.cesl.edu.cn

October 30, 2008 in Conferences | Permalink | Comments (0) | TrackBack (0)

Internews seeks resident journalism advisor on legal reporting

I have received the following announcement:

http://www.internews.org/about/employment/overseas/job_0200o.shtm
Employment
Resident Journalism Advisor on Legal Reporting, China
Location:  Beijing, China
Background:
Internews® Network is an international media development organization based in Arcata, CA and Washington, DC whose mission is to empower people worldwide with the news and information they need, the ability to connect, and the means to make their voices heard.

General Function:
The Resident Advisor (RA) provides training, professional advice, and guidance for Journalism Reporting trainings in China with a special focus on Rule of Law, Civil Society, Environment and Cultural heritage protection, Public Health and Digital media issues. The RA also contributes to creating original content on above mentioned media issues to be used in resource centers, online material, curricula.

ESSENTIAL DUTIES AND RESPONSIBILITIES:
Closely monitors the Chinese Media on a regular basis to provide accurate, relevant reports and guidance to Country Director and Beijing staff
Identifies relevant specific topics to prioritize and contributes to the writing of and commission of writing of training material for trainings, online resources
Coordinates content of training activities and the content work of other staff and external trainers in Beijing and other cities
Coordinates and edits resource material including online curriculum, online reference material, journalism textbooks in above mentioned areas
Regularly networks with relevant media and other professionals and leaders to identify and suggests best partners, speakers, participants, contributors across China
Is actively present during training sessions across the country, including on week-end time, and delivers specific training in Chinese or in English
Facilitates demands by Chinese partners to establish partnerships with foreign media, academic, non-profit institutions in the above mentioned areas including reaching out to institutions, providing guidance for libraries, exchange programs, visiting scholar programs, grant opportunities
Prepares and assembles materials for monthly and quarterly reports, in compliance with donor guidelines.
Assists Country Director with management responsibilities on as as-needed basis
QUALIFICATIONS:
To perform this job successfully, an individual must be able to perform each essential duty satisfactorily. The requirements listed below are representative of the knowledge, skill and/or ability required. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential task.

Fluency in Mandarin Chinese is required, both spoken and written
Extensive journalism experience with a proven track record and interest in on-line media
Experience living and working in China
Ability to handle multi-faceted programs with staff and partner organizations
Experience with international donor organizations and a high level of comfort working and interacting with universities and media outlets
Ability to adjust to shifting political circumstances and create programming and plans accordingly.
Sensitivity to cross-cultural dynamics in the work place.
Relevant university degree
Program Management experience strongly preferred
TO APPLY
Interested candidates meeting the qualifications should forward a cover letter and resume to 876-in(at) internews (dot) org (re-write in standard format), placing "RJA - China – in" in the subject line. EOE M/F/D/V

October 30, 2008 in Internships/Employment Opportunities | Permalink | Comments (0) | TrackBack (0)

International Center for Communication Development seeks legal expert

I have received the following job announcement. Much of it is in Chinese and not translated, so be aware. I have not included the material regarding the media expert.

The International Center for Communication Development (ICCD) is now
hiring for

-one Media Expert
-one Legal Expert

Please find the detailed job descriptions below, and we'll appreciate
if you would like to forward them to other friends who may have
interest.

Continue reading

October 30, 2008 in Internships/Employment Opportunities | Permalink | Comments (0) | TrackBack (0)

Lund University research fellowship

I have received the following announcement:

Research Fellowship

The Centre for East and South-East Asian Studies at Lund University hereby invites applications for one Research Fellowship commencing 1 February, 2009 and ending on 31 January, 2013.

In this call for applications, the position will be awarded for research focusing on contemporary China or contemporary Japan, in the fields of the social sciences, economics or law.

This call for applications is open to qualified candidates worldwide.

Candidates must have already received their doctoral grade. Only candidates who have received their doctoral grade within the last five years, prior to the date of commencement of the research fellowship, will be considered. In other words, applications from candidates who were awarded their doctoral grade prior to 1 February 2004 will not be considered.

The deadline for applications is 28 November 2008.

More information can be found here: http://www.ace.lu.se/research/research-fellowship

October 30, 2008 in Fellowships/Research Opportunities | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 29, 2008

Foreign scrap metal trader reported kidnapped and held for ransom by Ningbo SOE

Here's a rather shocking story of a scrap metal trader going to Ningbo to discuss a business dispute and ending up kidnapped by the other party, an SOE trading company. It's reported here at the Shanghai Scrap blog. Things like this don't happen every day, but unfortunately neither are they unheard of. A reportedly similar recent case involved what Forbes called the kidnapping of David Ji, a Chinese-American entrepreneur; check out the video report here (New York Times story here).

I should add that I don't have personal knowledge of the facts behind these stories, and am just supplying links to the reports of others. Readers should use their own judgment.

October 29, 2008 in News - Chinese Law | Permalink | Comments (0) | TrackBack (0)

Monday, October 27, 2008

Caijing commentary on liability for mass torts

Here's an interesting English-language commentary on mass tort liability issues from Caijing, prompted by the tainted milk scandal.

October 27, 2008 in Commentary | Permalink | Comments (0) | TrackBack (0)

Sunday, October 26, 2008

Lecture at HK Univ.: "What Does Law Look Like in the Taiwanese Street?"

The following announcement just appeared in my e-mail inbox. Sounds interesting.

The University of Hong Kong Department of Sociology presents a lecture.

TITLE: What Does Law Look Like in the Taiwanese Street? And What Does this Mean About Taiwanese Democracy?

ABSTRACT: In this lecture, I use data from my ongoing ethnographic studies of policing to explore some of the ways legal authority becomes figured in to the everyday routines of community order-management and social reproduction in contemporary Taiwan. I contextualize these findings by reference to various literatures that have addressed the multiple and diverse ways that law and legal institutions have been caught up in Taiwan's democratic reforms and political liberalization. My overall purpose is to clarify the specific and unique contribution that an anthropology of policing can make to our understanding of the cultural mechanisms shaping the historical development of Taiwanese society.

ABOUT THE SPEAKER: Dr. Jeffrey Martin is an anthropologist specializing in the study of modern policing. He has a PHD from the University of Chicago, and has taught at Taiwan's Central Police University, and the Graduate Institute of Taiwan Studies at Chang Jung Christian University in Tainan. He will begin an appointment in HKU's Department of Sociology next year.

ALL ARE WELCOME

4:00-5:00 p.m.
Thursday, November 6, 2008
Rm 1118, K.K. Leung Building
The University of Hong Kong
http://www.hku.hk/sociodep/PosterWhatdoeslawlooklike.DOC

Inquiries may be addressed to Professor Martin at jt.martin@gmail.com, or to the HKU Sociology Department at socidept@hkucc.hku.hk

October 26, 2008 in Commentary | Permalink | Comments (0) | TrackBack (0)

Administrative lawsuit against MOE's degree-certifying body

China's Ministry of Education has long had the reputation of being one of China's most conservative and obstructionist bureaucracies. For the last 17 years, the Ministry of Education Foreign Study Service Center (教育部留学服务中心) has certified foreign degrees (it was officially licensed to do so by the State Council and the MOE in 2000). Government departments will not recognize a foreign degree not certified by this body. (I'm not sure what the practice of private-sector employers is.) But the Center doesn't seem to operate very efficiently, and eventually one frustrated applicant trying to get his German law degree certified got fed up and brought an administrative lawsuit on the grounds of administrative inaction (行政不作为). The lawsuit was brought in the Haidian Basic-Level People's Court in Beijing on Sept. 19, 2008; the first hearing is scheduled for Oct. 29. (Caijing report here.)

What's interesting is the Center's defense. Although it enjoys a monopoly in the degree-certification business that is backed up by the refusal of government agencies to recognize foreign degrees it hasn't certified, and was set up by the MOE, it has argued that it is not the proper subject of an administrative lawsuit because it has no legally authorized power and does not exercise powers delegated by the MOE.

Given the Center's monopoly status, this defense sounds a little ridiculous at first. But unfortunately it may not be quite as absurd as it initially seems. Government agencies might in many circumstances rely on the judgments of unambiguously private-sector organizations (which of course the Center is not) in their operations, but that doesn't necessarily mean that private-sector organizations should be subject to the same laws and standards as government agencies. If the Center is an incompetent evaluator of foreign law degrees, shouldn't we blame the people who credit its evaluations as least as much as the Center itself?

But if we can sue government agencies for crediting unreliable evaluations from a private-sector organization, this seems to open the door to suing government agencies for just about anything in their operating procedures to which we object. In very few (if any) countries would courts be willing and able to take on the task of passing judgment on the reasonableness of every aspect of governmental operations, and certainly we can't expect it to happen in China. Thus it may be that in this context, it makes sense to allow government use of a private-sector process to confer a governmental nature to that process, such that it becomes subject to administrative litigation. It's a complicated and interesting question.

October 26, 2008 in News - Chinese Law | Permalink | Comments (0) | TrackBack (0)

Friday, October 24, 2008

Podcast interview with Stanley Lubman

The Asiabizblog has a podcast interview with Stanley Lubman here (posted Oct. 24). For readers who don't know Stanley, here's the introductory blurb:

Asiabizblog kicks off a new season of podcasts with an interview of Stanley Lubman, China law scholar and practitioner. Mr. Lubman has, over 40 years, been witness to and participant in China's veritable earthquake of changes.

Whether as student of Chinese law at Columbia University School of Law in the 1960s, as delegate to the earliest Guangzhou trade fairs in the 1970s, as attorney for energy deals in the 70s and 80s, as scholar/practitioner at Harvard, SOAS or Allen & Overy in the 80s and 90s, Stanley Lubman always seems to be one step ahead of the pack.

Such also seems to be the case with his journal article, "Looking for Law in China," available here. While much of the world, including academia, seems to approach China with an "irrational exuberance," a subject upon which I have discoursed a often (see below for links), Stanley Lubman's take on China's development is nuanced, endowed with a subtlety of understanding that comes only with experience. Many thanks to Stanley for his willingness to share his expertise with the Asiabizblog audience.

October 24, 2008 in Commentary, People and Institutions | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 22, 2008

Jerome Cohen on the "Three Supremes"

With the author's permission, I'm reposting here a recent op-ed by Jerry Cohen on the "Three Supremes" [what he means | what he doesn't mean].

Body blow for the judiciary 

Jerome Cohen
Updated on Oct 18, 2008

During the first term of the administration of Hu Jintao and Wen Jiabao , many legal specialists inside and outside China were disappointed by its tepid support for proposed reforms that would make the country's courts more professional and independent.
Noting China's ever greater need for a fair and competent judiciary, optimistic observers turned their hopes to the Hu-Wen second term. They reasoned that the more powerful and confident leadership would feel secure enough to establish overdue judicial reforms.

However, those hopes appear to be dashed. It is clear that a new, more authoritarian party line on the courts has been promulgated. The "Three Supremes", as it is known, was first espoused by Mr Hu last December.

During the National Conference on Political-Legal Work, convened by the party's central Political-Legal Committee that presides over the legal system, Mr Hu told the assembled judges, procurators and officials: "In their work, the grand judges and grand procurators shall always regard as supreme the party's cause, the people's interest and the constitution and laws." Like many previous communist doctrines, this "theory" is proving to be profoundly important.

In March, just after the National People's Congress confirmed the appointments of the heads of the Supreme People's Court (SPC) and the Supreme People's Procuracy for the next five years, the Political-Legal Committee, now led by the former minister of public security, issued a major notice. It required all legal personnel to seriously study and discuss Mr Hu's December speech and related documents. Since then, the new SPC president, Wang Shengjun, has launched a campaign within the court system to promote the "Three Supremes". His speeches leave no doubt that there has been a significant change in the tone and content of judicial leadership.

Gone is the emphasis that his predecessor, Xiao Yang , placed on bolstering professional competence, and individual and collective judicial autonomy. In a series of mind-numbing ideological cliches, Mr Wang emphasises upholding party leadership and focusing the courts on economic development and social stability. For Mr Wang, who has had no formal legal training, concerns for judicial fairness and justice must be interpreted in light of minyi, or "public opinion".

Understandably, many judges are reportedly confused and unhappy about this apparent return to the past, to the use of law as an instrument of "proletarian dictatorship" implemented through the "mass line" in the guise of "democratisation". How to reconcile the newly propagated "mass line" with legal norms and procedures must be a particular challenge for SPC vice-presidents and provincial high court chiefs. Now, under intense political pressure, they must put flesh on the doctrine's bare bones by formulating specific policies for the increasingly broad range of challenging cases.

Already their speeches suggest some diversity of views and nuances. Many administrators, legislative aides and especially lawyers are undoubtedly troubled by the new line, which downgrades the importance of their work. Some scholars and academic activists continue to advocate Xiao-Yang-type reforms, which paid lip service to party controls but gradually sought to introduce greater judicial independence and professionalism, reforms now condemned as "westernisation". A few prominent law professors, such as He Weifang of Peking University, dare to openly criticise the Hu doctrine, while others try to interpret it to minimise new obstacles. Some, however, praise it as "democratic".

China's continuing struggle over the death penalty makes clear that much is immediately at stake in the ideological realm. Although Beijing is too ashamed to reveal its appalling statistics on capital punishment, there are reliable reports that, thanks to substantial improvements in procedures at the high court and SPC levels, the number of executions may have dropped by as much as one-third.

Senior appellate judges intimate that, despite the new line, they continue to carefully scrutinise all death sentences. Yet there are indications that some trial courts, and even some reviewing judges, may now be more willing to approve capital punishment.

After all, the first public signal of Mr Wang's leadership was his announcement last April that, in handling death cases, the courts had to consider not only the law and social conditions but also "the feelings of the masses". Although the relationship among the courts, the media and the people is complex, no one was left in doubt that the party would serve as the authoritative voice of the masses.

Jerome A. Cohen is co-director of NYU's US-Asia Law Institute and Adjunct Senior Fellow at the Council on Foreign Relations in New York

October 22, 2008 in Commentary | Permalink | Comments (0) | TrackBack (3)

Lawyer loses freedom-of-information case; will appeal

I recently blogged here about a freedom-of-information lawsuit against the Anhui provincial government. Caijing reports that the plaintiff lost. He plans to appeal.

According to the report, the court held that the information sought by the plaintiff was not within the scope of the information covered by the State Council's Regulations on Open Government Information, because among other things the information related to an administrative reconsideration proceeding that was still underway. This seems a bit hard on the plaintiff, since he was complaining among other things about the indefinite suspension of the reconsideration proceeding, and claiming in effect that the reasons offered for the suspension were spurious.

October 22, 2008 in News - Chinese Law | Permalink | Comments (0) | TrackBack (0)

Friday, October 17, 2008

Huang Songyou placed under detention

Huang Songyou (黄松有), a vice president of the Supreme People's Court, is reported to have been detained under the extra-legal (a polite word for illegal) "double designation" (双规) system of Party disciplinary investigation. Huang is familiar to many in the Chinese law world as the chief promoter of the Qi Yuling decision, in which the Supreme People's Court instructed a lower court to grant a plaintiff relief based directly on a violation of rights found in the Constitution. This was widely considered to be a first step toward the eventual justiciability of the Constitution, but in the end the decision disappeared like a stone in the sea and hasn't been mentioned for years.

Here's a translation of a piece he authored at the time. I'd like to give credit for the translation, but I don't even remember who gave it to me, let alone who translated it. My apologies to the translator.

FOLLOW-UP, 18 Oct. 2008: Here's the Chinese version of Huang's article [source 1|source 2]. HT: Eva Pils.

October 17, 2008 in News - Chinese Law, People and Institutions | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 15, 2008

First lawsuit against Sanlu for death due to tainted milk

Here are two press reports: Associated Press (English) | Caijing (Chinese). (Thanks to Ben Liebman for bringing the AP story to my attention.)

The lawsuit was filed on Oct. 13 at the Intermediate-Level People's Court of Lanzhou in Gansu province. As with the other cases, the court has not yet accepted the case for hearing. According to the Caijing report, court officials said they were "waiting for unified arrangements to be made by superiors" (什么时候立案要等上面的统一安排), meaning apparently the provincial-level court. This does not, under Chinese law, constitute grounds for refusing to take a case. Art. 111 of the Civil Procedure Law states that courts must take cases that meet the criteria of Art. 108 and don't fall under the exceptions of Art. 111. Here's what these two articles say specifically (I'm borrowing here from a translation I didn't do myself):

Art. 108: When instituting an action, the following criteria must be fulfilled:

(1) the plaintiff is an individual, legal person or other organisation with a direct interest in the case;

(2) there is a specific defendant;

(3) there is a specific claim, factual basis and a reason for the action;

(4) the action falls within the jurisdiction of the people's court and is subject to the jurisdiction of the people's court in which it is brought.

Art. 111: The people's courts must accept for hearing actions filed in compliance with the provisions of Article 108 of this Law. The people's courts shall handle the following types of actions according to their specific circumstances:

(1) in a case within the scope of administrative proceedings as prescribed by the provisions of the Administrative Procedure Law, the plaintiff shall be notified to institute an administrative action;

(2) in a case where, pursuant to legal provisions, both parties to a contract dispute voluntarily reach a written agreement on arbitration whereby they will apply to an arbitration authority for arbitration and the parties are prohibited from instituting an action in a people's court, the plaintiff shall be notified to apply to an arbitration authority for arbitration;

(3) in a dispute which should be handled by another administrative organ as prescribed by the law, the plaintiff shall be notified to apply to the relevant administrative organ for resolution;

(4) in a case which is not within the jurisdiction of the people's court with which it is lodged, the plaintiff shall be notified to institute an action in a competent people's court;

(5) in a case in which a party institutes an action again after the judgement or ruling has already become legally effective, the plaintiff shall be notified that the action shall be treated as an appeal, except in a case where a ruling by the people's court allows the withdrawal of the action;

(6) in a case in which, according to law, no action is permitted to be brought within a specified period of time, but an action is brought in spite of this provision, the action shall not be accepted;

(7) in a case in which a judgement has already denied the granting of a divorce or in which the parties were reconciled after mediation or in a case involving an adoptive relationship in which a judgement has been made or mediation conducted, if an action is instituted again within six months in the absence of new circumstances or new grounds, the action shall not be accepted.

In short, the court is not even pretending that there is some defect in the filing. The court explained that the case has a broad impact and there are many potential plaintiffs - all good reasons, perhaps, for trying to come up with a unified system for dealing with these claims, but instead of the matter being handled by a body with clear authority - the NPC Standing Committee could, for example, pass legislation governing litigation and compensation matters - it's being handled by (here) a provincial-level court, which can't impose a national solution and has its own institutional priorities to think about.

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

Thursday, October 9, 2008

WTO panel partly sides with US in dispute with China over IP piracy

In August 2007, the US requested a panel to hear its complaint against China for inadequate enforcement of IP laws. The panel has now issued its interim report. Although the report is not yet public, AP reports (citing trade diplomats who have seen the interim report) that the panel faulted China for not prosecuting pirates who copy CDs and DVDs before they are passed by censors. Apparently the panel also found, however, that Chinese thresholds for prosecuting piracy do not break WTO rules.

For the full AP report, click here.

October 9, 2008 in News - Chinese Law, News - Miscellaneous | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 8, 2008

Court takes freedom-of-information case against Anhui provincial government

Yes - pretty amazing. The Hefei Intermediate-Level People's Court has accepted, and held the first hearing in, a freedom-of-information case brought by an attorney against the Anhui provincial government under the State Council's Regulations on Open Government Information. This is reported to be the first freedom-of-information case in which a provincial government is the defendant; it is probably one of only a very few cases of any kind in which a provincial government is the defendant. (These cases don't occur simply because someone sues a provincial government; they also have to be accepted for hearing by the courts, and that's a high hurdle.)

The full story as reported in Caijing is here. Here it is in brief:

In May, 2007, four residents of Jixi County in Anhui applied to the Anhui provincial government for administrative reconsideration (行政复议). They were seeking to cancel a decision of the Xuancheng municipal government establishing an industrial park. The residents had been ordered to tear down their residences on the grounds that they had been unlawfully constructed in violation of urban planning regulations, but the residents believed that the violation arose only as a result of the decision to establish the industrial park.

In their reconsideration petition, the residents argued that there were numerous procedural flaws in the Xuancheng government's decision. In particular, it violated two State Council regulations providing that such zones could be established only by provincial-level governments, and that there had been no environmental impact assessment.

The Anhui provincial government, after accepting the application for reconsideration, eventually decided to suspend the reconsideration proceedings on the grounds that the relevant laws, policies, and regulations needed clarification through "a request for instructions to the relevant departments" (向有关机关请示).

The residents then brought an action under the Administrative Litigation Law protesting the suspension of reconsideration, but no court would take the case.

Their lawyer, Yuan Yulai (袁裕来), then conceived the idea of doing something under the Regulations on Open Government Information. He applied to the provincial government in his own name, seeking information on specifically which regulations the government had asked about, to which department the request for clarification had been made, and what the answer had been. His request asked for a written response from the Anhui government.

Not getting a written response, he brought an action under the Regulations on July 16, 2008, and the court accepted the case.

Among other defenses, the Anhui government has asserted that one of its employees provided the information requested by telephone on June 20, 2008. It will be interesting to see if this kind of informal communication is deemed to count. One of Yuan's purposes, presumably, is to force the provincial government to put something on the record and not to let it get away with vague statements about "the relevant departments."

October 8, 2008 in News - Chinese Law | Permalink | Comments (0) | TrackBack (0)

Tuesday, October 7, 2008

Job openings in ABA Rule of Law China Initiative Program

I have received the following announcement:

The American Bar Association Rule of Law Initiative China Program is currently hiring for the following positions:

- Deputy Country Director
- Program Officer
- Staff Translator/Interpreter

Click on the job title for a description.  These positions are available immediately. 

October 7, 2008 in Internships/Employment Opportunities | Permalink | Comments (0) | TrackBack (0)

Friday, October 3, 2008

Jerome Cohen on Sanlu: Foreign investors, beware!

A shorter version of the article below by Jerry Cohen appeared in yesterday's South China Morning Post. I'm posting this here with his permission.

FOREIGN INVESTORS, BEWARE! IMPLICATIONS OF CHINA'S FOOD CRISIS

By Jerome A. Cohen

        China's contaminated milk powder scandal, like its previous food safety problems, contains many lessons for foreign investors as well as others. Those lessons also apply to foreign investment in other Chinese industries and in other countries too.  New Zealand's well-known Fonterra Corporation, the world's largest trader in dairy products, has undoubtedly learned much from its 43% ownership of a China venture with the Sanlu Group that became China's biggest producer of baby milk formula. But the tuition has been very expensive. Its Sanlu venture's sale of melamine-tainted products, over many months, has led to horrific human suffering, financial disaster for the partners and further damage to China's reputation.

        This latest food tragedy may make some foreign investors conclude that the risks of manufacturing in China outweigh the potential rewards. Yet such is the allure of the China market that most multinational companies will understandably want to maintain their interest. The challenge is how to do it better.

        Fonterra's fiasco should stimulate foreign joint venturers in China to consider following the example of the many multinationals that have established wholly foreign-owned enterprises there instead of some form of joint venture. Or, in situations where the Chinese government does not permit a so-called WFOE, the foreign firm may seek to negotiate a dominant ownership interest and other arrangements that will allow it to control the joint venture's management.

        If government policy or business considerations preclude it from controlling the venture, the foreign investor must review the adequacy of its participation in the day to day management. In the absence of new legislation requiring adequate participation, the foreign investor should try to obtain new contractual guaranties from its partner.  At a minimum, it must improve its knowledge of how its local partner is running the operation. My experience advising foreign firms in China for over twenty years convinced me that board of directors meetings, written reports and frequent visits are not sufficient to assure an accurate picture. Even posting qualified executives and technicians to work on site can prove inadequate if they lack the Chinese language and human relations skills to penetrate and be accepted by the local partner's business culture.

        The ideal candidates for posting to a China venture are Chinese who have been educated in both their own country and the foreigner's, have already worked at the foreign firm for several years and have proved themselves to be not only professionally competent but also trustworthy and loyal to the firm. Foreign employees in China ventures, especially those of Chinese descent, if they do discover sensitive and perhaps illegal activities, can be subjected to enormous pressures from their local colleagues not to report unpalatable facts to their home office.  Moreover, the foreign company must independently monitor Chinese media and Internet discussions to keep abreast of developments.

        As the Fonterra case illustrates, learning the truth is only half the battle. What then should the foreign investor do? Obviously it must immediately raise any matter that threatens public health with relevant local officials as well as its partner. But how long should it rely on unconvincing assurances that the matter will be properly handled? In China local business people and officials often conspire to conceal information from the central government. At what point should the foreign firm take the initiative to cure the situation and what should it do?

        Should it "blow the whistle" to its own government? To China's central authorities? Should it assure Chinese government action by "going public" via the media? And what will be the foreigner's future in China if it averts the kind of tragedy and economic disaster wrought by Sanlu but alienates its partner and Chinese officials?

        Fonterra's loss, said to be almost three-quarters of its investment in Sanlu, may turn out to be considerably more. Its China business may not survive the scandal. Moreover, the victims' claims for the deaths, hospitalizations and other harm suffered have yet to be reckoned with. Fonterra's chairman reportedly insists that his company did the right thing by "working within the system" for many weeks after belatedly discovering that the products of its China venture were being poisoned. China's legal system, or even New Zealand's, may reach a different conclusion, not only regarding liability of the Sanlu venture itself but also that of its investors.

       Whether the Communist Party's central "Political-Legal Committee", which controls the nation's courts, will allow them to deal with these issues of liability and compensation is still unclear. There are indications that it will not. Certainly public interest lawyers who have volunteered their services to the victims have been forced to desist by local officials, as has often happened in other sensitive "mass cases", such as those spawned by AIDs, the Sichuan earthquake, environmental pollution and family planning abuses.

        Yet, if the victims will not have access to the courts, a Party/government obsessed with "harmony" and "social stability" will have to resort to some other institution for processing their claims. The Ministry of Health has promised to pay for all the victims' hospital expenses, although disputes and doubts have already arisen about the scope and reliability of its pledge. But will the Ministry or some other agency provide compensation for other losses, such as death, and the pain and suffering of the victims and their families, as permitted by previous court decisions? And will the government seek reimbursement for its expenditures from the offending milk companies?

        So Sanlu and Fonterra, and other similarly-situated Chinese and foreign investors in China's milk industry, are likely to be called to account, indirectly or directly, perhaps even beyond the bounds of the usual understanding of corporate limited liability. Foreign Investors, Beware.
_________________________________________
Jerome A. Cohen is Co-Director of NYU's U.S.-Asia Law Institute and Adjunct Senior Fellow at the Council on Foreign Relations in New York.

October 3, 2008 in Commentary | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 1, 2008

First lawsuit against Sanlu for tainted milk

So reports the Beijing Youth Daily here; Bloomberg Wall Street Journal report in English here.

Pertinent facts: the victim, a 1-year-old boy, is currently hospitalized in Beijing. (It's not clear where his residence is.) The lawsuit, which seeks damages of 150,000 yuan, has been filed in the place of the victim's birth, Zhenping county in Henan province. Despite efforts to discourage lawyers from taking these cases, the victim is represented by a Beijing lawyer. Technically, the father appears to be a plaintiff as well, since the requested damages include an amount for lost working time, presumably attributable to the father's having to take time off work to care for his son, collect evidence for the suit, etc.

According to the report, the father first sought compensation directly from Sanlu but was turned away with the statement that "按照上级精神,目前对于结石患儿,只由政府先垫付医疗费用,关于赔偿问题三鹿方面还没有具体方案" ("In accordance with the spirit of higher-level [policy], children suffering from kidney stones can only first get reimbursement from the government for hospitalization expenses; as for the issue of compensation, Sanlu doesn't yet have a specific program").

Interestingly, although the Zhenping county court has not yet formally accepted the case, it did formally acknowledge receipt of the complaint. (Courts will sometimes refuse even to look at the papers in a hot-potato case.) Perhaps the plaintiff was wise to sue in his home territory.

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