From Deseret News archives:
Chinese firms hard to sue
U.S. competitors face myriad legal hurdles
Patmont Motor Werks Inc. accused the Chinese government and companies there of making it impossible for the company, based in Minden, Nev., to sell its products to Chinese. One aim of the lawsuit was to open China's doors to American-made products.
That improbable goal is now in ashes, when Patmont's lawyers couldn't even track down the companies they were suing to serve them court papers.
An increasing number of companies and individuals are likely to face similar frustration. The flood of Chinese imports has triggered a growing number of lawsuits, but individuals and companies often find it impossible to win damages or other legal redress, especially for lawsuits filed overseas. Foreign companies are also filing lawsuits in Chinese courts, and occasionally winning, against local companies caught violating trademarks, copyrights and patents.
The legal obstacles are unlikely to be removed soon, although China has pledged to curb its mounting trade surpluses with the United States and has carried out a nationwide campaign to improve product quality and safety.
Within a decade, however, China is likely to conform more closely to international legal standards, said Gary Hufbauer, a China expert at the Peterson Institute for International Economics, a Washington think tank.
"The drift is clearly toward a normalized situation," he said.
Current obstacles arise because the targets of lawsuits are often companies that are partly owned by the Chinese government or army, or are allied with provincial governors, said Hufbauer. As a result, their clout can outweigh efforts by the trade ministry to adhere to international agreements, he said.
In addition, he said the Chinese government sometimes obstructs litigation to retaliate when it believes the United States or the European Union is "poking it with a stick."
Washington's growing impatience over Chinese trade practices has prompted dozens of retaliatory bills in Congress, as the U.S. trade deficit with China for 2007 is expected to exceed a record $250 billion. The U.S. lawmakers view 2008 — when China hosts the Olympics — as an opportunity to highlight their grievances.
Experts in international law say they know of no case in which Americans collected any money from a verdict or court order against a Chinese company, although some have been paid through settlements.
A federal judge dismissed the Patmont lawsuit 2 1/2 years after it was filed because Patmont had been unable to deliver the lawsuit to the defendants, as court rules require.
