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Are China's laws up to the test?

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Are China's laws up to the test? article image

Last time we looked at the Stern Hu case. Some five weeks after being arrested, Rio Tinto executive Hu has now been charged with "using improper means to obtain commercial secrets about our country’s steel business". Does the Stern Hu case give you something to think about? If you are dealing with a company exporting from the People’s Republic of China (PRC), would you prefer the laws of the PRC or say Singapore, the United Kingdom, New York or Australia to apply in the event of a contract dispute? I agree with many of the points made by Dan in response to my last blog. But I guess it’s understandable that the China Law Blog sees virtue in having Chinese law and Chinese courts decide issues arising from a dispute between a Chinese business and an Australian or US business. I, however, find it difficult to reconcile a court system free from political control with the PRC. It is true that the courts of the PRC are becoming better and, dare I say, ‘professional’. Is that enough? Chris Nailer, a senior lecturer in International Business at the Australian National University and well known China expert, gave one description of the legal system of the PRC when he said: "There are situations which can arise in China where you can seek the advice of authorities, you can seek the advice of two or three different government officials and get two or three different answers about whether something is legal, or is not legal." You get the idea. Goodness me, whatever one says about a legal system, it needs to be certain and not arbitrary. Not only is the legal system of the PRC only now catching up with other nations, but there is ample evidence of political interference with the courts. Both judges and even lawyers often see themselves as serving the interests of the state. The concept of an independent legal system is simply foreign to Chinese tradition where the courts are there to serve the interests of the state. It is this last issue that the Stern Hu case raises in its most stark form. What is or what is not a state secret is a matter determined by the government of the PRC and what is and what is in the interests of local government officials in the PRC is determined by the local leaders of the ruling party of the PRC. While Dan, in his response, suggested that the courts of China are more reliable than those of its developing rival India, we at least know that in India we are dealing with a robust democracy where the courts are not representatives of the government and its ruling party. If there is anything that all countries need for both social stability and long term growth is the rule of law based on an independent robust legal system and judiciary. See also James' article on Choosing the right law -James Millea is a senior associate at Argyle Lawyers

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