Do PRC Blocking Statutes Excuse Chinese Entities from US Discovery Obligations?

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Summary

• U.S. courts will not excuse discovery obligations just because a foreign blocking statute puports to prohibit the disclosure of information.
• U.S. courts have consistently denied Chinese defendants' requests to be excused from discovery obligations.
• Chinese parties have struggled to prove that U.S. discovery obligations are "unduly burdensome" as there is little evidence of PRC blocking statutes being enforced. 
• U.S. litigation counsel should be vigilant about developments in Chinese authorities' interpretation and application of legislation governing the extra-territorial transfer of information. 

Rising tensions between the U.S. and China over economic, technological, and defense issues have made the exchange of information between Chinese and U.S. companies, judicial bodies, and enforcement agencies a hotly-contested issue. 

One such instance for information exchange occurs when U.S. judicial authorities require specific information located in China to be turned over for use in a U.S. trial as part of document discovery. But blocking statutes, broadly defined as laws enacted by one jurisdiction to prevent the application of a law enacted by another jurisdiction, endeavor to restrict the type of information that can be freely transferred overseas from China by imposing conditions and approval requirements as well as threatening significant penalties for breaches.

How, then, do U.S. courts address and resolve the possible international conflict between the new Chinese regulations and the need for document discovery in U.S. litigation?