Clash of Systems: Discovery in U.S. Litigation Involving Chinese Defendants

Peking University Transnational Law Review, Vol. 4, No. 2, 2016

Peking University School of Transnational Law Research Paper No. 17-1

49 Pages Posted: 24 Jan 2017  

Ray Worthy Campbell

Peking University School of Transnational Law

Ellen Claar Campbell

New York University (NYU), School of Law, Students

Date Written: 2016

Abstract

In recent years, substantial friction has been generated by United States litigation involving Chinese defendants. From the U.S. perspective, the litigation is primarily domestic in nature, seeking compensation for injuries caused on U.S. soil by parties that actively targeted the U.S. market. Aside from obtaining compensation for those injured, a purpose of the litigation is to create deterrence so as to discourage future violations. Obtaining discovery, which is critical to U.S. style litigation, is an essential part of that ‘after-the-fact regulation’ process.

From the Chinese perspective, foreign court systems imposing demands on Chinese defendants that need to be carried out on Chinese soil constitute an affront to Chinese sovereignty. Familiar with a system in which discovery is not at the core of the dispute resolution process, and in which litigant-driven discovery plays almost no part at all, they see no justification for U.S. courts requiring compliance with U.S. style discovery when that requires directing actions that must take place within China.

The different starting points have led the parties to an unstable standoff. By and large, neither the Chinese government nor the Chinese defendants have made it easy to get responses to discovery requests related to U.S. litigation. Finding Chinese responses to discovery requests made under the Hague Convention on the Taking of Evidence Abroad in Civil and Commercial Matters unhelpful, U.S. litigants and courts have often chosen instead to seek discovery directly from those defendants over whom the court finds personal jurisdiction. In order to get the attention of Chinese defendants who consider themselves outside the proper reach of U.S. courts, courts impose substantial sanctions on parties who fail to respond — involving large sums of money or even the banning of the defendant company from selling any goods into the U.S. market. Because U.S. litigation serves important purposes above and beyond resolving the instant dispute — including the making of new law and after-the-fact regulation of manufacturers who are given easy entry into U.S. markets — U.S. courts view the protection of their judicial power as imperative.

Part of what underlies the friction is a failure by each side to understand the terms of the dispute to the other side. Each country looks at discovery as discovery exists in its own system. Each system looks at discovery as a distinct feature, without understanding the overall system. This is a mistake. Each country operates under its own unique system of governance, and each model of procedure is designed to reinforce these systemic goals. Litigation, and the obtaining of discovery in the course of that litigation, performs radically different functions in the two systems. In addition, issues of state sovereignty and state control do not translate point for point across the two systems.

This article looks at the issue from a systemic standpoint, exploring the central role litigation plays in U.S. governance and regulation, and the central role of discovery in U.S. litigation. It then looks at the Chinese system, which rejects vesting in courts the kind of policy making functions U.S. courts exercise even in routine commercial cases. It is hoped that one contribution of this article is helping each side understand the stakes to the other side.

If there is to be a solution to the problem — and it is to be hoped there can be, because the ongoing disputes over discovery dissipate goodwill that might be needed to resolve other conflicts — it must begin at a systems level. Put differently, it is not appropriate for either system to impose its mores on the other. The two sides should work together to develop a richer understanding of the stakes to the other side, and explore whether a solution exists that serves the needs of both sides without unnecessary conflict.

Keywords: Discovery, China, Personal Jurisdiction, Sanctions, Drywall, Dry Wall, Chinese, Hague

JEL Classification: K10, K13, K30K40, K41, K42, K49, K4, k20

Suggested Citation

Campbell, Ray Worthy and Campbell, Ellen Claar, Clash of Systems: Discovery in U.S. Litigation Involving Chinese Defendants (2016). Peking University Transnational Law Review, Vol. 4, No. 2, 2016; Peking University School of Transnational Law Research Paper No. 17-1. Available at SSRN: https://ssrn.com/abstract=2904083

Ray Worthy Campbell (Contact Author)

Peking University School of Transnational Law ( email )

University Town,
Xili, Nanshan District
Shenzhen, Guangdong 518055
China
1-570-437-8758 (Phone)
1-707-371-7425 (Fax)

HOME PAGE: http://stl.pku.edu.cn/en/TeacherDetail.aspx?NodeCode=925006002001&Id=100000038037587

Ellen Claar Campbell

New York University (NYU), School of Law, Students ( email )

New York, NY
United States

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