Disputes between Chinese investors pouring money into property development has led to Supreme Court guidance on how Asian cultural mores should be viewed in New Zealand courts. Many of these investors do not have written agreements setting out their respective rights; this is a western European tradition derived from countries where the courts can be trusted to enforce contractual rights. Many Asian investors come from countries where courts are not to be trusted; judges are corrupt or they lack independence simply following dictates of their political masters, ignoring what might have been agreed between investors.
Investor disputes in New Zealand courts now more frequently involve recent Chinese immigrants. There may be little or no written evidence of what was agreed. Investors may have shifted in and out of projects over time on the strength of oral agreements over who owes whom what. Guanxi or interpersonal connections are important. A need to trust fellow investors is paramount. Kinship links aid in enforcement of prior agreements.
This business model is not peculiar to Asian investors; similar principles apply in all cultures where there is no rule of law coupled with weak enforcement of property rights. Within traditional Maori culture, customary rights were dealt with by negotiation and failing that by use of physical force. Within pakeha culture, property rights are also first dealt with by negotiation, but failing that there is use of legal force; an appeal to independent courts for an enforceable ruling based on established legal principles.
Where disputed business agreements are based on conduct, rather than being in writing, New Zealand judges are left to assess the credibility and plausibility of individual witnesses who may present differing versions of the same event. The Supreme Court warned against trial judges applying their own cultural ‘rule of thumb’ assessments when assessing truthfulness of witnesses operating within a different cultural setting. Expert evidence can be used to explain the cultural ramifications of actions taken by a particular witness; what might seem to be inconsistent or insignificant behaviour in conflict with the story being told to the court may be explicable as part of the business relationship:guanxi. A cultural dimension provides context, the Supreme Court said.
Deng v. Zheng – Supreme Court (20.06.22)
22.107