Home -> Law Blog Directory -> International Law Blogs -> China Law Blog

International Law

: China Law Blog

China's Rio Tinto Arrests. A Rapid Fire Historical Perspective.

By Dan Harris and Steve Dickinson

Sometimes big events can be so complicated, controversial and unwieldy, there is hardly any point in reading current reports because they are likely to be so biased and/or inaccurate as to be of no value. In those instances, particularly when the underlying topic is not of huge interest to me, I generally pretty much stop reading articles on it and just wait for the dust to settle. I think the common wisdom is that real dust settling (and releasing of key documents) and gaining of perspective usually takes around 50 years. And though I would love to be able to look at China's recent Rio Tinto arrests from the perspective of fifty years hence, that is obviously not possible right now. So instead, I will turn to an excellent FT.com by Arthur Kroeber, somewhat mis-titled, "Rio Tinto arrests reveal China has growing-up to do." The thrust of the article is that China is a relatively safe place in which to do business, particularly as compared to Russia. I agree. China has done an amazing job making it clear to its higher level government functionaries that routine foreign company filings are strictly off limits for corruption. Here is what I mean by that. My firm has done hundreds of company and trademark registrations in China and not one single time have we ever been hit up for "extra" money and not one single time have we ever felt we were treated unfairly or differently for not making any such offering. Without naming names, I will just say that is absolutely not the case for other developing market economies in which my law firm is active. In one country, where a registration should take a month, we are often told that we should pay a couple thousand dollars extra to speed things up so that it does not take six months. Kroeber's article captures this:

Historically, China has done a good job of not letting its opaque authoritarian political system and vast legal grey areas get in the way of business. Annual foreign direct investment flows that now exceed US$100bn testify to China?s success in creating a stable and predictable business environment, despite well-advertised corruption problems.

He goes on to say that Rio Tinto has not really changed this:

The Rio Tinto detentions, which elevated an acrimonious but ultimately quite ordinary commercial dispute into a matter of national security, threatened to destroy, at one stroke, an imperfect but notable reputation for reliability built at great cost over three decades. The bland denouement averts that catastrophe. The coda will likely be a quick trial in which Stern Hu, Rio?s Australian-citizen iron-ore negotiations boss, will be convicted and then immediately repatriated to Australia, probably on some spurious health grounds; his three less fortunate Chinese-national colleagues will likely receive relatively light sentences of a couple of years.

I agree. For more on CLB's take on the Rio Tinto case, check out the following: -- China's Rio Tinto Arrests. Everyone Just Move Along.... -- "China's Rio Tinto Case. Everyone Move Along..."

Full post as published by China Law Blog on August 19, 2009 (boomark / email).