Legalized Hostage-Taking in China

At China Law Blog, Dan Harris writes about a disturbing feature of Chinese law whereby representatives of foreign companies owing money for judgments by Chinese courts may be denied permission to leave the country, essentially being held hostage against their employers' payment of the judgment.  Apparently the Chinese courts are not particular about who is considered a "representative."

Harris writes:

Richard [Wagner, in a 2011 article on the subject] goes on to explain how the term “Legal Representative” is a “term of art under Chinese law and easily determined from a company’s business license,” but the meaning of the term “responsible person” is “far more elusive” and “ultimately subject to court discretion.” According to the article, a foreigner need not be a senior executive to be stopped from leaving China; they need merely “be perceived by the court to have a high enough or important enough position in the company to be able to have some impact on the case (for example, some knowledge about the case or some influence on decisions concerning settlement.” 

I completely agree with Richard’s assessment but raise him one. In our experience, the courts can and will hold someone hostage in China if they believe that doing so will speed up resolution/settlement. And since most American companies will settle cases rather quickly when any of their employees are being prevented from leaving a particular Chinese city, China’s courts are willing to hold just about any foreigner in China.

On top of that, it is not at all uncommon for foreigners to be held in China over a debt without a court order. Our China lawyers have handled a number of instances where foreigners were being held over a debt and there was no court order. These people were being held by private parties, usually with local government and/or local police acquiescence. In other words, though it can be legal to prohibit a foreigner to leave China over a debt, much of the time, the alleged creditors (the Chinese parties claiming to be owed money) take the law into their own hands.

[Emphasis ours].  The entire article and those it links to are worth reading, particularly if you do business in the Middle Kingdom and are planning to set foot on Chinese soil any time soon.

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