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What China's tainted milk may not bring: lawsuits

The government is giving families free care but may ban legal action over contaminated formula, which has affected more than 50,000 babies.

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"If their children recover, and the government has paid for their healthcare, how can they sue Sanlu?" asks Liu Renwen, a legal scholar at the China Academy of Social Sciences. "I don't think many will try."

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The 1986 principles of Chinese tort law do not allow citizens to claim damages for moral or spiritual suffering – what US lawyers call "pain and suffering" – only material damages to compensate for medical bills, for example.

That is changing, however, and Chinese courts are increasingly granting moral damages. Four years ago two families from the province of Anhui won damages from another infant formula manufacturer whose substandard milk powder was blamed for their babies' malnutrition.

Neither won more than $4,300 for their pain and suffering, however, which is hardly a large sum for major milk producers such as Sanlu.

"Damages are so low in China that companies can get away with it," says Dan Harris, partner in the Seattle law firm HarrisMoure, which specializes in Chinese business law. "Why bother to recall if only 20 people are going to sue you and win $20,000 each?"

At the same time, the Chinese government is nervous about the political impact of legal cases where plaintiffs might air their grievances openly. In the Sanlu case, victims' parents might ask why the company had been exempted from government inspection of its baby formula, for example.

When parents of children killed by their collapsing schools in the Sichuan earthquake tried to sue the local authorities, courts refused to hear the cases, and officials pressured families to accept out-of-court settlements as compensation for their children's lives.

"To the extent that they believe this could ventilate well-grounded frustrations with the [ruling Communist] party, the government will not be too eager to allow access to the courts," says Professor Cohen, the scholar of Chinese law.

"The record so far suggests that the Chinese government may be cautious in limiting access to the courts" in this case, Cohen continues. "Cases in very controversial areas and cases likely to cause class action litigation have not been allowed to proceed."

Li, as he contemplates the possibility of a lawsuit against Sanlu, says that because "this case has become politicized, it is unclear whether it can be resolved through a legal process.

"The government is trying to ensure social stability, and they do not want to see all the victims' parents to gather together, so they probably will not allow a class action suit," he expects.

"Individuals should be able to sue companies," Li argues, but in the interest of social stability "the government just takes money out of the national budget" to compensate victims of scandals such as the Sanlu incident.

"This kind of remedy will last for quite a while," he says.