US legal system can be a trial for Chinese firms

As the Chinese increase investment in the United States, they are discovering the US legal system, which in turn is being schooled about an ancient culture and people. The result is a steep learning curve for both sides, according to legal observers.

Attorneys examined how Chinese companies are adjusting to securities laws and the challenges facing lawyers in the US who are involved in litigation with the Chinese at a recent seminar in New York with the theme "Chinese Companies and US Class Actions: Securities Litigation and Product Liability".

Panel members discussed how the tenets of US law are foreign to the Chinese, the problems associated with conducting bilingual proceedings and how the traits of Asian culture can affect a legal strategy.

"The whole concept of a class-action lawsuit - most of the world doesn't accept this," said Geoffrey Sant of Dorsey &Whitney LLP and director of the Chinese Business Lawyers Association.

Sant's colleague at Dorsey &Whitney, Richard Silberberg, who has been counseling Asian companies for more than 30 years, said US legal professionals need to ignore some popular myths about Asian clients, including one that claims Chinese companies will quickly settle existing or potential litigation because they do not have the resources allocated or they are frightened by the American legal system.

"They are not prone to settle," Silberberg said. "Asians in companies have elevated the importance of being right over the cost of litigation."

Christopher Seeger of Seeger Weiss LLP was the only plaintiff (representing the suing party) attorney on the panel. He has been involved in litigation over defective drywall that was sold in the US by Chinese companies (along with others) following Hurricane Katrina.

Seeger represents consumers who have had their homes ruined by drywall that may have had too much sulfur. A deposition involves lawyers from both sides questioning witnesses and it is a fairly standard procedure in US courts, he said. That is not the case in China.

"First of all, I had to do my depositions (for the drywall case) in Hong Kong. Depositions aren't allowed in the mainland," Seeger said. "When you set up a deposition in Hong Kong you need interpreters because it must be recorded in English and Mandarin. We had huge arguments over testimony because of disagreements over language."