Since China's accession to the World Trade Organization ("WTO") on November 10, 2001, corporate China has been struggling to dismantle the inefficient management systems formed in the era of the planned economy, and it barely survives under the more competitive market economy environment that began to form in 1978. In order to become stronger, both before and after WTO admission, many corporations have been trying to restructure and grow by devouring others. Part I of this Essay provides a basic summary of the business judgment rule and the "defensive" business judgment rule. Part II discusses some of the difficulties that Chinese courts face in adjudicating takeover disputes, focusing on systematic problems within the judiciary: inadequate standards for judicial appointment, lack of judges' expertise in corporate law, and a lack of independence. Part III analyzes the utility of the business judgment rule for takeover adjudication in China, and argues that the business judgment rule should be transplanted to Chinese courts. Finally, Part III concludes with an examination of how the business judgment rule might be transplanted successfully. It calls for greater specificity within the rule itself to compensate for the lack of established and binding precedent in this area of Chinese law, and for a policy choice to adopt "pro-defender" rules for the adjudication process.
Charlie Xiao-chuan Weng,
Assessing the Applicability of the Business Judgment Rule and the "Defensive" Business Judgment Rule in the Chinese Judiciary: A Perspective on Takeover Dispute Adjudication,
34 Fordham Int'l L.J. 124
Available at: http://ir.lawnet.fordham.edu/ilj/vol34/iss1/5