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Posts Tagged ‘china class action’

According to Deborah Mao in this article published today on businessweek.com, regulators for the city of Hong Kong has proposed new legislation that would permit representative actions for certain consumer class actions.  The legislation is reportedly a response, at least in part, to concerns about the difficulty of shareholders to seek collective redress for alleged acts of securities fraud, although the new law would not initial apply to securities fraud claims. 

The legislation would likely provide for class actions to be financed through a public legal aid program rather than through contingency fees, as is typically the case in the United States.  The proposal is still in the early stages, and specific legislation remains to be “drafted and introduced,” according to an official quoted in the article.

We’ll keep an eye on future developments relating to the proposed legislation.  Stay tuned…

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ConsumerAffairs.com issued this report Tuesday about a “class action” lawsuit being considered in China against an American manufacturer for importing allegedly contaminated shampoo products into that country. 

Recent attempts by Chinese litigants to seek a collective civil remedy in the Chinese courts against government-controlled Chinese companies for manufacturing allegedly tainted baby formula have met with serious government resistance (see various previous CAB entries summarized here).  It will be interesting to see how a collective products liability lawsuit against an American company will fare by comparison.

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A February 12 article by Dune Lawrence on Bloomberg.com offers several keen insights into the legal and political challenges  facing a group of victims seeking collective relief in the Chinese courts for injuries caused by melamine-tainted milk last year.  The article quotes a Chinese lawyer whose thoughts echo those made in previous commentaries about the impact of the government’s preference for “admistrative” action over private remedies (see previous CAB entries dated January 21, 2009, November 9, 2008, and October 1, 2008),

China’s government prefers to take administrative action rather than let courts handle politically sensitive cases, according to Ed Lehman, the founder of Chinese law firm Lehman Lee & Xu. . . .  After the government organized compensation and sentenced two dairy company executives to death over the matter, “they think they’ve done what needs to be done,” he says.

The article notes, that despite the Chinese government’s reluctance to allow private remedies through collective action, Chinese law does allow for group lawsuits and there have been cases in which successful group actions have resulted in monetary recoveries.  So far, though, efforts to obtain a private remedy with the China’s Supreme People’s Court in the tainted milk case have met with silence.

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Here is a follow up on a story of interest to anyone following the development of class and collective action procedures in developing markets.  As reported yesterday by the Winston-Salem Journal a new product liability lawsuit has been filed against 22 dairies in the Supreme People’s Court in Beijing on behalf of alleged victims of baby formula tainted with the toxic chemical melamine.  The move follows unsuccessful attempts to pursue collective actions in the lower courts for redress to children who were sickened or killed by the tainted milk  (see this November ClassActionBlawg entry).  According this Reuters article today by Emma Graham-Harrison,

The highly unusual intervention is within the court’s power, said Xu Zhiyong, one of the lawyers who submitted it, but added that they held little hope of it succeeding.

The Chinese Government’s official web portal describes the powers of the Supreme People’s Court as including:

Conducting trial of the following cases: first-hearing cases placed with the SPC by laws and regulations and those the SPC deems within its jurisdiction.

Source: Gov.cn (emphasis added).  (I’m by no means a Chinese law expert, but to my untrained eye this appears to say that the court can take any case if it feels like it.)

Efforts to seek collective relief in the Chinese courts reportedly have met repeated resistance from the government.  Immediately after the incident, officials tried to discourage resort to the Courts with the promise of government assistance.  (See this October 1, 2008 ClassActionBlawg entry).  According to Graham-Harrison’s article, parents of children allegedly poisoned were detained when they tried to attend the trial of executives of one of the companies accused of selling the tainted milk.  Graham-Harrison echoes the observations of previous commentators that the ruling Communist party’s influence over the courts has frustrated attempts to use the courts as a means of pursuing collective redress.

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The Christian Science Monitor published an interesting article on September 22 exploring the reasons why the scandal involving melanine-tainted milk that has killed at least four children and sickened tens of thousands more in China has not resulted in the flood of litigation that the incident would have caused in the United States. 

The article discusses several reasons why Chinese consumers have been slow to resort to the courts for redress, including that a government promise to provide free health health care for those affected, a societal predisposition to rely on government redress rather than the courts, the historical inability to collect damages for pain and suffering, and efforts by various parts of the government to prevent access to the courts, especially in politically sensitive cases.  While the article notes that the legal climate in China may be changing, pointing to an award of small amounts of noneconomic damages for “moral and spiritual suffering” awards in a recent case against another milk manufacturer, it quotes a prominent Chinese human rights lawyer as predicting that the current system of government compensation will last “for quite a while.”

Other commentators have pointed to the availability of compensation through government programs as a factor in why U.S.-style class action litigation has not yet become prevalent in Europe.  (See this previous ClassActionBlawg article).  Adding to this government safety net a totalitarian government intent on avoiding the perceived social instability that would come from having private injuries redressed through the courts seems to assure that U.S.-style class action and mass tort litigation is a long way away in China.

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