Had a nice conversation yesterday with a bunch of my firm's China lawyers and litigators, mostly on what is causing the increase in litigation and arbitration against Chinese companies and about some of the pitfalls peculiar to suing Chinese companies. The impetus for this discussion was my having signed on to speak (twice) about how to avoid litigation against Chinese and how to deal with litigation and arbitration against Chinese companies if it occurs.
Because litigating and arbitrating against Chinese companies is rife with so many issues specific to China and to Chinese companies, I am going to make this the first post in an indefinite series on China Litigation and Arbitration. If you have any questions regarding litigating or arbitrating against Chinese companies, please leave them as a comment below or please email us and we will try to incorporate answers in future posts within this dispute resolution series.
My first litigation related talk is going to be at the Los Angeles Athletic Club (in Los Angeles) on February 25 at 3:15 and though entitled, Manufacturing in China/Asia: Keep Your Eyes Wide Open, its focus is going to be almost exclusively on preventing and handling litigation with Chinese companies. Its "official" bullet points are as follows:
- How to source products from China and other emerging Asian economies
- How to source products so as to avoid product liability lawsuits
- How to prevail in litigation against your Asian manufacturer
- Cross-claiming against your Asian manufacturer
Immediately following my speech I will be participating on a stellar panel discussing "Claims and Coverage Involving Foreign Products." For more information regarding this seminar, go here. And to secure a really good discount to this event, please contact me at my firm directly. My next China litigation talk will be in Chicago in May and I will provide more information on that shortly.
In the meantime though, back to why we are seeing such a rapid increase in litigation and arbitration involving Chinese companies. Why is this occurring? We see two obvious reasons for this increase. First, the mere fact that the relationship between so many US and Chinese companies has become more mature. Ten years ago, Chinese companies didn't want to rock the boat by suing American and European companies and American and European companies believed (generally rightly) that many of their Chinese counterparts did not have sufficient assets to pay any judgment anyway. On top of this, the contracts between the Chinese companies and their Western counterparts were so often so poorly drafted as to make prevailing on a lawsuit a crapshoot.
In the last few years, however, as both Western and Chinese companies want good international contracts to protect themselves, the risks of litigating (though always present) have declined. On top of this, many Chinese companies have become more financially stable and some of them now even have assets outside China.
The second reason for the recent uptick in litigation and arbitration involving Chinese companies is the economic downturn in China. Companies that are making money hand over fist on their core business often view litigating or arbitrating as a time-sucking nuisance that can impede their growth trajectory. But companies with economic problems are often more open to pursuing new ways (like litigation and arbitration) to acquire funds.
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