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Over the past several months, individuals, companies and even U.S. states have sued China, Chinese officials, Chinese governmental entities, the Chinese Communist Party, and Chinese companies and their American subsidiaries for their alleged role in spreading the coronavirus. Last week, PetroChina International (America), Inc., an American subsidiary of the Chinese company, became the first defendant to make an appearance in any of these cases.
PetroChina may also be the last. Usually, defendants in American courts have no choice but to appear before a judge. But China—along with its subdivisions, agencies and instrumentalities—is situated differently than most defendants. As a foreign sovereign state, it can take a more creative approach to litigation. In other words, China has choices.
Political Context and Constraints
China’s choices are framed by the politics of the moment. Lawsuits never exist in a vacuum. That is especially true of lawsuits targeting foreign states, which by nature implicate political concerns and issues. But the lawsuits that have been brought against China occupy a hyper-politicized category of their own, standing as they do at the bustling crossroads of great power politics, populism and domestic partisanship.
Even before the first lawsuit, the Trump administration had already pointed the finger at China for failing to halt the novel coronavirus’s spread (a fact noted in many of the complaints). Since then, the bilateral relationship has taken a decided turn for the worse, with the administration adopting an increasingly hard line. For example, on July 22, the United States abruptly ordered China to close its consulate in Houston, citing attempts by Chinese diplomats to aid economic espionage efforts and help steal intellectual property. The next day, Secretary of State Mike Pompeo gave a hawkish speech about the Chinese Communist Party—one of four made in the past two months by high-ranking administration officials. In early August, citing China’s perceived attempt to abridge—and potentially extinguish—Hong Kong’s autonomy, the United States introduced new, stringent trade regulations on the former British colony. The United States has also dispatched a Cabinet secretary to Taiwan, opened fronts against Chinese social media companies, levied new rounds of human rights-related sanctions, escalated its fight against Huawei’s control of 5G networks and issued new sanctions against China for its activities in the South China Sea.
Nor is an increasingly hardline posture limited to the executive branch. Although China has demonstrated anger over the lawsuits, on July 30 the Senate Judiciary Committee approved the Civil Justice for Victims of China-Originated Viral Infections Diseases (COVID) Act, which would amend the Foreign Sovereign Immunities Act (FSIA) to permit lawsuits against China for its alleged negligence in spreading the coronavirus. Although the bill is likely to fail on the Senate floor, the committee’s approval sends a powerful message: At least some members of Congress are willing to risk diplomatic blowback in order to take action that they understand as holding China accountable.
Dozens of lawsuits are filed every year in the United States against foreign states, which typically decide how to respond to these suits by considering the practical and reputational consequences in light of the political context. States are more likely to contest a suit if they have assets that private litigants could potentially reach, whether in the country of suit or other countries where litigants could enforce judgments they win. At the same time, states may be less likely to respond if they think they can make the suits go away through nonlegal means, including diplomatic carrots and sticks. And states often also care about their reputations. Many are loath to appear as if they are trying to evade justice. Some consider the mere existence of suits against them an affront to their dignity.
China has not yet made an appearance in any of the coronavirus suits, but it will soon have to decide how it wants to defend itself and its subdivisions, agencies and instrumentalities. (We assume here that China will be coordinating the litigation on behalf of all government entities and officials that have been sued, and thus use “China” to refer to all nonprivate defendants other than the Chinese Communist Party.) As we see it, China has three basic options: (1) It can choose to litigate the suits; (2) it can choose to ignore them; or (3) it can choose a hybrid approach, in which it fails to formally appear in court but nevertheless makes its legal position known through other means. Each of these options has its advantages and disadvantages.
Option 1: Fully Participate in the Lawsuits
China has one excellent reason to litigate these suits: It is very likely to win them.
As we wrote previously, the Foreign Sovereign Immunities Act will likely be China’s first line of defense. The act presumptively deprives federal courts of jurisdiction over civil suits brought against foreign states. But this immunity is overcome if the plaintiffs can show that their suits fall into one of the act’s few narrow exceptions. Several commentators have clearly delineated how and why the FSIA likely precludes coronavirus-based suits against China, and the Congressional Research Service has indicated it holds the same view. We won’t go into the details here, but suffice it to say that the suits against China and its state agencies are likely to be dismissed because they do not fall within any of the act’s exceptions. (Whether the Chinese Communist Party is covered by the FSIA is a more complicated question that we won’t get into here.) Similarly, any claims against sitting state officials are also likely to be dismissed under a common-law theory of sovereign immunity for foreign officials.
Even if China were to lose on immunity grounds, there are several other affirmative defenses that it could assert. First, China could argue that the cases should be dismissed on the basis of the doctrine of forum non conveniens, which is based on the idea that suits should be litigated wherever it makes the most sense to hear the case. Courts are likely to at least consider dismissal on that basis in cases such as these, where the defendants are foreign and their alleged actions occurred entirely abroad. Second, China could argue that the cases should be dismissed on the basis of international comity, especially if it could demonstrate that Chinese courts have reviewed or are reviewing similar questions of liability. Third, China could argue for dismissal based on the act-of-state doctrine, which provides that federal courts should generally not second guess the actions of a foreign country taken within its own territory. Finally, China could argue that the court lacks personal jurisdiction over at least some of the defendants.
None of these arguments is a slam-dunk, and plaintiffs will likely have good rejoinders to some or all of them. But if China were to appear in court and make these arguments, plaintiffs would have to overcome each of them independently. Together, they would likely prove a high barrier to liability even if China’s immunity could be overcome.
There is yet another threshold hurdle for some of the federal claims and likely all of the state-law claims: Plaintiffs will need to prove that those laws extend to actions that allegedly occurred abroad. Federal statutes are interpreted with a presumption against extraterritoriality, which means that they are presumed not to apply outside of the territory of the United States. (Note that some of the plaintiffs are bringing claims under federal statutes that courts have interpreted to overcome this presumption and apply extraterritorially.) Similarly, most states also have statutory or common-law presumptions against extraterritoriality. The plaintiffs will need to overcome these presumptions by showing that the laws under which they are suing do in fact apply to acts that allegedly occurred abroad.
Finally, the plaintiffs will need to prove the actual merits of their cases. Most of the suits against China are centered on claims of negligence. In particular, most plaintiffs argue that China breached its so-called “duty of care”—an obligation to take reasonable precautions to avoid foreseeable harm to others—by allowing the coronavirus to spread. But to win, the plaintiffs must prove, first, that China had a duty of care vis-à-vis the plaintiffs at all (who are not citizens or residents of China and who were not located in China at the time the alleged harm occurred); second, that it breached that duty of care; and third, that the breach proximately caused the plaintiffs’ harms. Each of these elements will be a difficult lift, and China would be sure to point out that it is the United States, not China, that leads the world in the number of recorded COVID-19 cases and deaths.
Still, there are some good reasons why China may not want to pursue litigation, even if the odds of ultimately winning are in its favor. The first is that litigation is never a sure bet. Even though China is likely to win, nothing is a given. Suits against sovereign states are rare and the case law is not always well established. Here, the plaintiffs have cumulatively brought more than a dozen suits. Even if China’s odds are above 95 percent in each case, that still means that it has only a 50-50 chance of winning all the cases—a risk that’s undoubtedly magnified by the presence of the two suits being brought by states. (We are assuming that China will not try to consolidate some or all of the cases; if it does, that might affect both its odds and the total cost of litigation.) Considering the potential reputational harm, losing even one suit after litigating it through the merits could be a serious blow that China does not want to risk.
China also has to be willing to gamble that Congress will not pass the Civil Justice for Victims of COVID Act and strip China of its immunity mid-suit—though, admittedly, this seems unlikely. If that were to occur, it would not only take away China’s best defense, but it would also likely affect the strength of its other, nominally unrelated affirmative defenses. Doctrines such as international comity are rooted in public policy: Courts do not want lawsuits to disrupt American foreign relations. If Congress has already accepted, and indeed encouraged, the foreign policy implications of the coronavirus suits by passing a law explicitly permitting them, that public policy rationale may appear much less relevant.
There are also practical reasons why China may not want to appear. Litigating suits is expensive. China simply may not want to shell out for litigation costs, especially because it will have to prevail in each of these cases independently, and more suits could always be filed in the future. Litigation may also bring unwanted attention at exactly the time—the presidential campaign season—when China may least want to catch the American public’s eye.
Finally, to China, litigation may equal legitimacy. China has stated that it considers these cases an affront to its sovereignty. It may decide that regardless of the outcome, litigating the suits grants them a patina of legitimacy they don’t deserve.
Option 2: Ignore the Lawsuits
At the other end of the spectrum, China can choose to ignore these lawsuits entirely. At first glance, that may seem self-defeating—courts generally enter default judgements against defendants who don’t show up in court, and Beijing certainly doesn’t want default judgments totaling well over $20 trillion hanging over its head.
But default judgments work differently under the FSIA. The FSIA gives courts the power to hear a case against a foreign sovereign only if that suit falls within one of the act’s exceptions to sovereign immunity. Because federal courts have an independent obligation to satisfy themselves of their power over any case, they cannot enter a default judgment against a foreign state unless they first determine that an exception to immunity exists. Further, the FSIA states:
No judgment by default shall be entered by a court of the United States or of a State against a foreign state, a political subdivision thereof, or an agency or instrumentality of a foreign state, unless the claimant establishes his claim or right to relief by evidence satisfactory to the court.
So, even if China does not deign to appear in these suits, courts cannot just “take plaintiff’s word for it.” They will need to independently probe their jurisdiction and the merits until they are sure of both.
China can thus be reasonably confident that it will win even if it refuses to appear. Courts are generally unlikely to allow these suits to proceed for the reasons mentioned above (with the possible exception of claims against the Chinese Communist Party). Further, even if China loses a case, it can make a later appearance and argue that the court made a mistake. Ordinarily, courts don’t allow parties to make these kinds of belated arguments. But the FSIA is a jurisdictional statute; it gives courts the power to hear a case in the first place. Because immunity precludes the court’s power to hear the case, parties cannot waive it, and China can argue that it is immune even after a default judgment has been entered against it.
There are also practical and political reasons why China may choose not to appear. By not participating in the suits, China would not only save on potentially substantial litigation costs, but it would also signal that Beijing considers these lawsuits utterly illegitimate, a point that it’s already taken pains to make. And China’s nonappearance might help the country maintain a low profile (to the extent that’s possible) as the election season in the United States heats up.
Still, this strategy is not risk free. First, China has had default judgments entered against it in the past, and it may be reluctant to chance that again, especially when the stakes are so high and when China has so many assets around the world that could potentially be seized. At the same time, China may calculate that it will be difficult to enforce such default judgments abroad for reasons of law and policy. For example, China may decide that it can mitigate the risk by threatening to retaliate against any country that allows its courts to enforce such judgments.
Second, by not appearing, China foregoes an opportunity to present a compelling case for itself and to make good arguments that the court might otherwise miss. Even though China may still be able to make its immunity arguments at a later date, other nonjurisdictional arguments, like forum non conveniens, likely would be forever waived as a result of any initial nonappearance.
Third, rather than keeping China out of the spotlight during the American election season, the story of China’s nonappearance could potentially take on a life of its own—especially if one of the political parties or candidates saw value in highlighting it as an example of Chinese lawlessness.
Finally, China has already earned a measure of international disrepute for refusing to participate in foreign and international legal proceedings against it. It has never appeared in a contested case in the International Court of Justice, for example, and has frequently refused to participate in other international proceedings. China’s nonappearance in the coronavirus cases could reinforce that image, to the detriment of its promoted narrative of a power rising peacefully within the constraints of the international system.
Option 3: Formally Ignore the Lawsuits, But Participate Indirectly
China also has a third option: to not participate in these lawsuits as a formal matter but nevertheless try to shape their outcome through indirect means.
China has deployed this option in other legal proceedings. In 2013, the Philippines invoked a provision of the U.N. Convention on the Law of the Sea that obligated China to arbitrate its expansive maritime claims in the South China Sea. Beijing flatly refused to participate. But the Chinese Ministry of Foreign Affairs nonetheless published a so-called position paper that laid out—in meticulous detail—all the legal reasons why Beijing claimed the arbitral tribunal lacked jurisdiction over the case. Even more unusually, China actually sent copies of its position paper to the members of the arbitral tribunal for their consideration. One of us (Mirski) observed at the time that China was thus using the paper as a “quasi-brief” that “allow[ed] Beijing to submit its legal views to the tribunal without formally participating in the case.”
China seems to have done something similar in at least one case inside the United States as well. In 2006, several Falun Gong practitioners brought suit in New York against China Central Television (CCTV), a state-owned television station, alleging that the station aided, abetted and contributed to a variety of human rights abuses. China refused to participate, but an organization called the All China Lawyers Association nevertheless submitted some “suggestions” for the court’s consideration. Like the “position paper” in the South China Sea arbitration, these “suggestions” acted as a quasi-brief: The association used them to argue that the court lacked jurisdiction to hear the case and that China was protected by other defenses. Generally speaking, third-party organizations don’t spontaneously file “suggestions” on behalf of absent parties, so it seems possible that the association was spurred to submit the arguments by the Chinese government.
China may decide to pursue a similar approach to the coronavirus cases. For example, the Chinese Ministry of Foreign Affairs could publish a white paper that explains why, consistent with the FSIA and international law, the suits against it are meritless. (It would then have to tactfully get its arguments in front of the dozen-plus judges in these cases.) Or Beijing could attempt a subtler approach, directing a nominally unaffiliated organization to file an amicus brief in the country’s support.
This kind of hybrid strategy has a few clear benefits over the alternatives. Compared to the first option of full participation, this approach could allow China to avoid most of the expense of litigation. Rather than responding to multiple complaints in many jurisdictions and getting into the thick of motions practice in a dozen cases, China could simply draft one quasi-brief. It would also continue to signal its disdain for these suits through its nonappearance.
Compared to the second option of total nonparticipation, the hybrid approach would allow China to raise the probability that its strongest jurisdictional arguments are heard. Because courts must independently assess their power to hear a case, they would be obligated to consider China’s arguments on immunity, even if presented indirectly.
It’s also possible that the hybrid approach ends up borrowing from the worst of the other two options. China would still waive many of its defenses and reinforce an image of lawlessness. Simultaneously, by participating indirectly, China would still telegraph its concern about these suits.
China has a good chance of prevailing in the coronavirus suits regardless of what it chooses to do, thanks largely to its sovereign immunity. Because of that, its choice is going to depend on much more than a straightforward legal assessment.
China is undoubtedly also thinking beyond its legal strategy in the United States to other ways it can respond to these suits.
One of the most obvious possibilities is retaliating with its own, tit-for-tat lawsuits against the United States, a process that may have already begun. China’s leaders certainly have the grist they need to gin up more such cases. Some Chinese netizens have enthusiastically supported the conspiracy theory that COVID-19 originated not in China, but in the United States; more worryingly, some Chinese officials have been willing to publicly entertain that theory. Chinese commentators have also threatened that China could open up litigation against the United States about the adequacy of its own response to the epidemic—as well as its alleged responsibility for everything and anything from the 1918 Spanish Flu epidemic to the 2008 financial crisis.
If that fails, China can escalate. It can retaliate directly against U.S. interests by, for example, cutting off trade, restricting market access or interfering with the operations of U.S. companies in China. It can take a page out of the Senate Judiciary Committee’s handbook and strip the United States’s immunity in China. Or—as some have already threatened—China can go on the offensive, using its enormous economic heft to target the interests of the companies and states suing it.
The message is clear: Lawfare is a game at which two can play.