“The rule of law” in action in Shanghai

The best chapter in Jasper Becker’s book The Chinese is titled “The Rule of Law,” in which he raises the rhetorical question of whether the phrase refers to laws that impose limits on government powers, or laws that are used to keep the citizens subservient to leaders who are, needless to say, totally above any laws at all. We all know the answer to the question.

Ever since the end of 1979, when Deng announced with great fanfare that China would live under “the rule of law,” there’s been an awful lot of noise about this catch-phrase, and it’s interesting (if utterly unsurprising) to see how it works when put to the test. A fascinating, funny and scary article looks at The Rule of Law in action as it traces the arbitration case of a US firm trying to chase the China dream in Shanghai.

It’s too long and complex a story for me to distill here, especially as I’m getting ready to pack for the hospital, but this gives you an idea of what the process of arbitration in China can be like:

In April, more than a year after the arbitrators heard the case, Origon’s attorneys in China sent a letter to the arbitration commission alleging that officials from the Shanghai People’s Court had “improperly interfered.” The attorneys urged commission officials to “eradicate interference … to ensure an early impartial arbitration to this case.”

Two months later, Origon got an answer: Go elsewhere to resolve this dispute.

Yuan, Origon’s Beijing attorney, was furious. Not only had the arbitration panel refused to rule, but it also asked Origon to pay 95% of the arbitration fees, which could be tens of thousands of dollars.

“This is ridiculous,” Yuan said. “The reason we applied for arbitration is we want a resolution…. The ruling means nothing.”

Zhang Yue, an official at the arbitration center in Shanghai, said he couldn’t comment on the specifics of the case or the accusation of judicial interference. But he insisted that the panel was impartial and that the “rule of arbitration will protect the rights of both parties.”

It cannot be overemphasized: If you want to do business in China and you are expecting anything even faintly resembling traditional globally accepted business practices and standards you may be in for a serious shock. And don’t think that membership in the WTO has made much of a difference. And don’t think that that the much-touted Rule of Law b.s. will save your skin from unfairness, no matter how brazen or outrageous.

For now, as the article points out, you are at the mercy of mysterious forces (usually the Party or one of its officials), and if you try to control them or seek a fair resolution, you’ll most likely end up frustrated. And poor.

I also love the article’s ending, a rehash of the same old argument: The shell-shocked business owner says he has to be in China, it’s simply too big a market to ignore. And considering the nature of his business, he probably will make a profit eventually. But oh, the surprises and landmines along the way to reaching the China Dream.

The Discussion: One Comment

Hmmm. With nine billion in outstanding disputes on just one US Commercial Consul’s desk, suddenly, imperialism doesn’t look all that bad as an alternate method of arbitration.

December 27, 2003 @ 12:59 am | Comment

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