As a litigator, I’m always interested in novel and more efficient mechanism for resolving disputes, especially where the transaction costs of fighting it out in court can trump the benefits to either party. This process (full article not available online) for resolving property damage claims in China is about as streamlined as it gets:
Near the Lama Temple, as we waited to make the last left turn of the day, we were hit by another car. The driver backed into our side and then pulled away. There wasn’t time to fumble with my crutches, so I hopped out on my good leg. Fortunately, traffic was backed up, and I caught him in about seven hops. I pounded on the window. “You hit my car!”
The driver looked up, surprised: a one-legged foreigner, hopping mad and smacking the glass. He stepped out and apologized, saying that he hadn’t felt the impact. Together, we inspected the Jetta–fresh dent above the left rear wheel. The man said, “I’ll give you a hundred.” That was about thirteen dollars.
In China, after a minor accident people usually settle the matter on the street, in cash. This routine has become a standard part of life–once, I saw two small children playing a game in which they repeatedly rammed their bikes and shouted, “Pei qian! Pei qian!” — “Compensate! Compensate!”
Leslie used her cell phone to call the rental company. Mr. Liu didn’t sound the least bit surprised to hear that we’d had another accident. All he said was “Ask for two hundred.”
“That’s too much,” the other driver said. “This is really minor.”
“It’s not our decision.”
“Well, then, we’ll have to call the police,” he said, but it was clear that he didn’t want to do this. A dozen bystanders had gathered around the cars, which were parked in the middle of the snowy street. With Chinese accidents, the crowd is more like a jury than an audience, and a middle-aged woman bent over to inspect the dent. She stood up and announced, “A hundred is enough.”
“What do you have to do with it?” Leslie snapped. “You can’t even drive!”
That must have been correct, because the woman shut up. But the driver refused to pay two hundred. “Should we accept one-fifty?” Leslie asked me, in English. Lao-tzu said it best: A man standing on crutches in the snow will not bargain long over a dent to a crappy Jetta rental. Later that day, Leslie returned the car and the one-fifty in cash. Mr. Liu noticed that another light cover had been broken when she hit the brick wall. He said, happily, “What did you kill this time?” When I hit the dog, the same cover was twelve dollars; this time, he asked for only three. It must have been a special price because we did so well at the Lama Temple.
I don’t think this system would work to resolve patent infringement disputes, but it might make sense for some of our domestic fender-benders.