A More Litigious China in Overseas Disputes

In its competition with developed economies, China is ahead in some places and behind in others. But in one area they are catching up quickly: the use of class-action law suits in international disputes.

In the wake of the two Malaysian Airlines disasters, in which many Chinese citizens lost their lives, Chinese individuals are turning to international dispute centers, including the U.S., Hong Kong, Singapore and London, and participating in class-action suits to pursue global companies that may be responsible for injuries to Chinese citizens or companies.

This represents a significant shift in attitude and tactics among Chinese individuals and companies and represents a potentially substantial risk to companies doing business or with assets in China. These global companies are advised to look closely at possible implications regarding global directors & officers cover as well as local liability protections wherever they have operations.

Law firms with expertise in international class actions, many of them based in the U.S., are aggressively expanding in China right now. These firms are building the infrastructure to recruit individuals to class actions that can then pursue legal action in applicable jurisdictions.

While China is becoming more litigious, a key point to note is that the change so far is primarily in overseas disputes. In domestic conflicts, more traditional Chinese methods of developing consensus are still preferred for conflict resolution – but that will be the subject of another blog posting and video. Watch this space.

About Lincoln Pan

Lincoln Pan is Head of Greater China for Willis Towers Watson, based in Shanghai.…
Categories: Asia, Directors & Officers, Executive Risk | Tags: ,

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