Rio executives` trial to cast spotlight on China courts

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Four executives from global miner Rio Tinto will stand before a judge in Shanghai on Monday, in a trial that will also subject China's judicial system to international scrutiny.

The four from Rio's iron ore team, including Australian citizen Stern Hu, were detained last summer at the height of fraught negotiations over 2009 iron ore prices, creating a furore over China's opaque state secrets laws. They were ultimately charged with lesser charges.

The three-day trial comes as foreign business sentiment is souring against China. China has been the leading major growth market since the global financial crisis, but its potential is offset by foreign investors' ongoing frustrations with the courts and the way regulations are applied.

"It is critical that this case is carried out transparently," said Michael Barbalas, president of the American Chamber of Commerce, which releases a survey on Monday detailing member concerns about incentives that could disadvantage foreign firms.

Initial foreign and domestic disquiet over the Rio case lessened somewhat when the four were charged in August with accepting bribes and infringement of commercial secrets, rather than the heavier charge of what some media reported might be stealing of state secrets.

China accused the four of purportedly seeking industrial and production information about Chinese mines and steel mills. Foreign executives said labelling that a state secret could threaten any firms' need to know about the markets in which they operate.

Mindful of the international attention paid to the Rio case, China has stuck strictly to its own legal deadlines for moving the case from police to the court system.

Still, China's decision to bar Australian diplomats from a portion of the trial that officials have declared "closed" was a reminder that much in China's legal system still happens behind closed doors. Foreign journalists have been barred altogether.

The Shanghai government is likely to want the matter ended quickly, certainly before the 2010 World Expo opens in Shanghai in May.

REFORMS

China has been gradually building up a legal system over the 30 years since economic reforms began, reflecting the demands of an increasingly complex domestic economy for rule of law.

The Shanghai No 1 Intermediate Court, where the trial will be held, is in a modern glass and steel building, near an elevated highway in a well-off section of Shanghai.

China is increasing legal training for judges, often with the help of Western governments and institutions that believe a rules-based, transparent legal system will improve the operating environment for business and reduce social injustice and discord.

But the courts still ultimately answer to the Communist Party, meaning that in sensitive cases, political factors weigh more heavily than the evidence presented in court.

Many foreign investment contracts refer disputes to international arbitration courts rather than risking a trial in Chinese courts. Chinese individuals working for foreign firms remain particularly vulnerable to prosecution.

Chinese law is based on a continental tradition. That gives judges more power than in the jury-based system of the English tradition from which the US and Australian systems developed.

Chinese lawyers can object to evidence and defendants can speak in their own defence, but the lawyers' latitude is less than in other countries, said lawyer Tang Jitian, who is not involved in the Rio case.

"The law guarantees a free trial but because of the Chinese model, the police, procurators and courts make up 'a dragon's body'," Tang said, referring to the close ties and common interests of those bureaucracies.

Defence lawyers interviewed on Friday did not yet know in which order the charges would be considered, or which days would be open. The verdict may not be immediately announced.

Rio Tinto has launched a charm offensive, including sending chief executive Tom Albanese to Beijing this weekend for the second time in one month. Rio agreed last week with its shareholder Chinalco, one of China's largest state-owned firms, to cooperate on an iron mine in Guinea.