Sany defends case against Obama

Updated: 2012-10-18 23:50

By WEI TIAN (China Daily)

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China's largest machinery manufacturer vowed on Thursday to "fight to the very end" in its attempt to sue US President Barack Obama for blocking its wind farm project in the United States over national security concerns.

Although the chances of manufacturing giant Sany Group winning the case are slim, it signals a new era for Chinese companies seeking to protect their interests in overseas markets through legal means, experts said.

They also warned that the case could have consequences on Chinese investment in the US.

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Wu Jialiang, deputy general manager of Sany Group and CEO of Ralls Corp, an affiliated enterprise of Sany in the US, told a news conference in Beijing that the action was "based on Sany’s confidence in the US legal system, as well as its belief that there is no threat posed to US national security of any kind".

Ralls, which is owned by two Sany executives, planned to install wind turbines, made by Sany, close to a naval site in Oregon which is used to test unmanned drones, a highly sensitive and prized US technology.

"All procedures and permits required before construction were in place and confirmed by specialist lawyers and the projects had received ‘No Hazards’ clearance from the Federal Aviation Administration," Wu said.

The project came to the attention of the Committee on Foreign Investment in the United States, which eventually led to an order mandating construction to cease and all equipment to be removed.

"This measure caused us more than $20 million in direct investment losses, excluding indirect losses.

"Even until today, we don’t quite understand why, in the first place, the committee wanted to launch its investigation," he said.

Ralls submitted the lawsuit to the US district court for the District of Columbia on Oct 1, citing Obama and the committee as codefendants after the US president issued a presidential order late last month to halt the project.

"Chinese people would normally choose not to engage in a lawsuit, especially in a totally unfamiliar country thousands of miles away … but this time we will fight until the very end," he said.

"If, in the end, Sany wins this lawsuit it will be a triumph of the US legal system and it will be the best demonstration to the world that the US is indeed a country where legitimate investment will be protected by the constitution regardless of where it comes from," he said.

The case will be heard on Nov 28.

Tim Tingkang Xia, an attorney representing Ralls, acknowledged that the case will be a tough one as the courts often agree with decisions made by the committee.

"The whole world sees the chance of winning at no more than 1 percent, but I think it should be more than that … I believe that in a society governed by the rules of law, nobody can be above the constitution of the United States, not even the president even in the name of national security," he told the news conference.

Obama’s order marked the first time since 1990 that a US president has formally blocked a business transaction on security grounds.

The decision to block the project came as a congressional committee urged US companies to stop doing business with two Chinese telecom equipment makers, Huawei Technologies and ZTE Corp, over security concerns.

However, a White House-ordered review of security risks found no evidence that either company had been involved in espionage.

Seven years after Sany established its presence in the US, the world’s sixth-largest machinery manufacturer has two bases, in Atlanta and Wisconsin. Its operations in the US have involved hundreds of millions dollars and created hundreds of jobs.

"Ours is a relatively small case, but it connects to the fundamental faith of thousands of Chinese investors… I firmly believe that mishandling this delicate matter will cause the US to lose thousands of job opportunities," Wu said.

Xiang Wenbo, a director of Sany Group, said "the process is more important than the outcome; dignity is more important than money".

"In China, we have critics who say China is not open enough and they worship the free market in the US but I want to tell them things are different."

Hao Junbo, a claims and litigation expert, said Chinese companies used to back away from international disputes.

"As a lawyer for Chinese companies, I know how they would often react passively when their interests were challenged," Hao said.

"Sany is the first but it will not be the last. Chinese companies are increasingly confident in dealing with legal issues," he said.

"The presidential order against Sany will hurt Obama’s image," Zhang Guoqing, professor at the Institute of American Studies, said.

"Besides damaging Chinese investor confidence, the Chinese government might come with similar measures against major US companies in China," he said.

Niu Xinchun, vice-president of the Institute of American Studies at the China Institutes of Contemporary International Relations, said there is a tendency for US politicians to believe that "whatever the reasons are, being tough to China is safe."

Wen Xinzheng in Changsha contributed to this story.