International Law

US Senate Goes After Foreign (esp. Chinese) Manufacturers

By Stan

Bipartisan legislation introduced in the U.S. Senate aims to help victims of tainted Chinese drywall hold foreign manufacturers more accountable for their defective products.

The Foreign Manufacturers Legal Accountability Act of 2009 would cut down on the red tape Americans face when they try to sue foreign companies. (Palm Beach Post)

No idea whether this is likely to go anywhere in the Senate, or the House for that matter. Might be just noise.

Anyway, take a look at a couple of the bill’s provisions. Hard to tell exactly how this would shake out without looking at the final language, including definitions of terms. You can easily tell, however, that the focus here is on litigation:

• A manufacturer who imports products into the United States would have to have a business representative in at least one state where it does business who could be served on any claims.

• Foreign manufacturers would agree to be held accountable by U.S. courts if sued.

Hmm. I assume that the second point there refers to jurisdiction. That can help, but for a lot of these producers, it’s the enforcement of a judgment or an arbitration award that is the real problem, at least in China.

I’m not quite sure these guys understand that:

“American businesses and consumers harmed by defective foreign products need justice, and they don’t get it when foreign manufacturers use technical legal defenses to avoid compensating those they have injured,” bill sponsor Sen. Sheldon Whitehouse, D-R.I., said in a statement.

I wonder what sort of “technical legal defense” the Senator is talking about? Perhaps a jurisdictional challenge. If so, this bill might do something about that.

However, unless the producer has assets in the U.S., an American court judgment against an uncooperative Chinese defendant might as well be recycled as scrap paper, because the document is pretty much worthless.

Seems like the impetus for all this was that defective drywall mini-scandal in Florida. Legal counsel for those folks said that:

[D]espite spending several months and thousands of dollars trying meet all the stipulations under the Hague Convention - including translating all the legal documents into German and Chinese - he was unable to formally serve notice of his lawsuit to the Chinese and German manufacturers.

Don’t know the details, but even if they were able to serve notice (through the Ministry of Justice), and even if they won their case, I don’t know how they expected to collect.

One final political note. If this type of legislation ever goes anywhere, consider this. Foreign companies selling in China enjoy a very nice products liability climate.

The distributor is primarily liable, and although foreign companies do get sued here once in a while, by and large they have little to fear.

If the US changes their laws to make it easier to sue Chinese exporters to the US, you think the Chinese government might think about tightening things up around here?

Nah, Beijing never cares about reciprocity . . .

© Stan for China Hearsay, 2009. | Permalink | 2 comments | Add to del.icio.us
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Full post as published by China Hearsay on August 12, 2009 (boomark / email).