“Chinese Law Prof” challenges Yahoo’s claims on Shi Tao emails

Was Yahoo under legal constraints to hand over information on now-imprisoned jopurnalist Shi Tao to China’s secret police? Chinese Law Prof Blog says “No.”

In a news release dated Sept. 6, Reporters Without Borders has criticized Yahoo! because Yahoo! Holdings (Hong Kong) Ltd. (hereinafter “Yahoo HK”) “provided China‚Äôs state security authorities with details that helped to identify and convict” journalist Shi Tao….

This post is not going to examine the merits of the case against Shi. What I want to discuss is an interesting sentence in the news release, where it says, “[T]he company will yet again simply state that they just conform to the laws of the countries in which they operate . . . . But does the fact that this corporation operates under Chinese law free it from all ethical considerations?” According to a Reuters report, Yahoo! did indeed subsequently make precisely this claim in a statement emailed to Reuters by Yahoo HK:

“Just like any other global company, Yahoo! must ensure that its local country sites must operate within the laws, regulations and customs of the country in which they are based,” Yahoo spokeswoman Mary Osako said in a statement e-mailed to Reuters by the firm’s Hong Kong arm.

RWB may have accepted Yahoo’s claim too easily. Assuming that Yahoo HK is, as it appears to be, a Hong Kong entity, then it is not generally subject to PRC law. It is, of course, subject to Hong Kong law. But Article 18(1) of the Basic Law, the PRC statute that serves as Hong Kong’s constitution, states: “National laws shall not be applied in the Hong Kong Special Administrative Region except for those listed in Annex III to this Law.” Annex III to the Basic Law lists the following laws:

1. Resolution on the Capital, Calendar, National Anthem and National Flag of the People’s Republic of China
2. Resolution on the National Day of the People’s Republic of China
3. Order on the National Emblem of the People’s Republic of China Proclaimed by the Central People’s Government
4. Declaration of the Government of the People’s Republic of China on the Territorial Sea
5. Nationality Law of the People’s Republic of China
6. Regulations of the People’s Republic of China Concerning Diplomatic Privileges and Immunities

None of these would seem to provide any basis for requiring a Hong Kong company such as Yahoo HK to hand over information to the PRC authorities, and the company has not to my knowledge claimed that any Hong Kong law required it to do so. If Yahoo HK were a wholly-owned subsidiary of a PRC-domiciled company (let’s call it “Yahoo China Parent”), then there would be a plausible case for saying that Yahoo China Parent could be required by the Chinese government to cause its wholly-owned HK subsidiary to do certain things. But since Yahoo HK is listed as a subsidiary of Yahoo!, Inc., the US parent, in the latter’s most recent Form 10-K (Annual Report for 2004, dated March 11, 2005), then it seems that no entity in the chain of control is under PRC jurisdiction and required to comply with PRC law. Whether or not to comply with a request or demand for information becomes just a business decision. [Emphasis added.]

The facts here are complicated and I may have got some wrong. I am opening this post to comments if anyone can add more factual details or legal analysis…

Of course, Yahoo insists they had no choice in the matter, but it seems very few are lining up to defend them. Shi Tao is now going to serve 10 years for leaking a document widely distributed to Chinese newsrooms – innocuous, well-known BS about the need for reporters to help preserve “stability.” I can’t defend Yahoo and suspect from a PR perspective this will haunt them for a long time.

Via CDT.

Update: I appreciate what Rebecca MacKinnon has to say on this topic, especially the PR ramifications.

In Shi Tao’s case, Yahoo! had to be evil in order to be legal.

But as the discussion on my last post reveals, Yahoo! had a choice. It chose to provide an e-mail service hosted on servers based inside China, making itself subject to Chinese legal jurisdiction. It didn’t have to do that. It could have provided a service hosted offshore only. If Shi Tao’s email account had been hosted on servers outside of China, Yahoo! wouldn’t have been legally obligated to hand over his information.

When providing information and communications services in countries where political dissent is illegal, companies like Yahoo! need to ask themselves tough questions about whether they can realistically operate “within the laws, regulations and customs of the country in which they are based” while still upholding their ethical values. Assuming they have some. Even if they don’t, they must recognize that helping put dissidents in jail is pretty bad for the corporate image. Is the damage to Yahoo!’s reputation, credibility, and consumer trust really worth whatever money they’re making on that Chinese-language e-mail service?

I don’t think so.

The Discussion: 12 Comments

I’m not so sure why is it so important that Yahoo HK is headquartered in Hong Kong. Can a company ignore local laws simply because it’s headquarter is in a different country or territory? Can a foreign company operating in the US choose to disobey US laws simply because their headquarter is not located on US soil?

September 11, 2005 @ 2:02 pm | Comment

The issue seems to be whether Yahoo! Holdings (Hong Kong) Ltd. is actually doing business in mainland China inasmuch as it provides email accounts for people living in the mainland. Do their transactions with their customer Shi Tao take place in Hong Kong or in the mainland?

September 11, 2005 @ 6:14 pm | Comment

Can a company ignore local laws simply because it’s headquarter is in a different country or territory?

This is a touchy subject. There are gambling companies in the Carribean that ignore US laws all the time. The US can’t seem to get to them.

However, eBay has self-censored itself in Europe. It’s French and German sites no longer allow Nazi memorabilia.

September 11, 2005 @ 7:24 pm | Comment

Targeting Yahoo is misguided. What do those people want? Do they want Yahoo get out of china. If Yahoo choose to decline inquiry request and its service could be blocked. Either way Yahoo is out of business in China. The service from Yahoo can be easily replaced.

The key of this issue is the definition and range of national secrets. If you do not like the law, the correct way is to try to change it, instead of breaking the law. People should petition national congress to clarify the range of national secret and initiate an discussion on this issue.

The involvement of people hating CCP in this case is making situation even worse. All of you are proud of the press freedom in US. However, just imagine if the defense paper during vietnam war was not obtained by US reporters. Instead, they were supplied to CCP and published by CCP newspaper. Do you think US court would look at the situation kindly from the perspective of press freedom?

September 11, 2005 @ 7:53 pm | Comment

“People” (mainly law experts and other academics) have been petitioning the NPC to get real about defining “state secrets” for years steve. Nothing has changed. Why? Because the NPC isn’t a real legislature genuinely accountable to the people, its first masters are the CPC. If ‘state secrets’ were rigidly defined then all of a sudden the security police would have to invent a new way to entrap people who do not follow the ‘one truth’.

September 11, 2005 @ 9:09 pm | Comment

Whoever wrote the article should know that one primary grievance against former western colonial powers is their insistence that their companies be above Chinese laws, even when operating in China.

September 11, 2005 @ 10:20 pm | Comment

But the Internet is not located in one country. That is the point about bringing up the location of Yahoo HK. So something posted on Yahoo HK should be bound by the laws of HK. And if someone from the PRC happens to read it, well, that is tough. It would be different if the Yahoo in question was located on the mainland. Imagine if China got upset about something posted on Yahoo US…. Yahoo HK seems to not be under legal obligation to the PRC in the case above.

September 11, 2005 @ 11:17 pm | Comment

Chinese Law Prof’s analysis of HK law is nice but irrelevant. Of course as HK company it is not subject to directions from PRC authorities as a matter of law.

But the yahoo.com.cn site in question is clearly operated by a PRC company, Beijing Yahoo Network Consulting Services Co. Ltd. (check out its SAIC registration ) which IS subject to PRC law.

I’m guessing this is a WFOE wholly-owned by Yahoo HK.

So how this works is simple: Yahoo HK, you have information that I, PRC government want. If you don’t give it to me, I will shut down Beijng Yahoo and your operations in China.

At that point, as both Chinese Law Prof and Rebecca McK point out, it’s purely a business decision.

September 12, 2005 @ 12:27 am | Comment

“Reporters Without Borders” indeed. Would that be the same as “Dictatorship of Media”? I suppose that next would come “Government Without Borders?”, followed by “Dictatorship of Govt Without Borders”?

September 12, 2005 @ 11:03 am | Comment

Do you Yahoo? Meet Shi Tao …

Over the weekend, I posted this item on my personal blog, after reading in Sunday’s Washington Postthat Yahoo founder Jerry Yang had defended Yahoo’s decision to turn over information to Chinese security forces that helped a Chinese reporter get 10

September 12, 2005 @ 4:40 pm | Comment

It would be like if the PRC wanted an IP address from the logs of Yahoo Inc (US). There is no legal requirement for Yahoo Inc (US) to respond to the PRC request. And most US ISPs require a US court order to release information of this sort, and the PRC hasn’t pursued such an order either in the US or in HK courts.

(and thanks for the link, Richard. Though I understand not forcing your readers to click through 3 sites to get the pertinent information.)

September 12, 2005 @ 6:17 pm | Comment

and thanks for the link, Richard. Though I understand not forcing your readers to click through 3 sites to get the pertinent information

Tom I’m confused; what are you referring to?

September 12, 2005 @ 6:59 pm | Comment

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