In our last post we talked about the problems homeowners have faced dealing with defective Chinese drywall. In this post we will talk about the difficulties of legally trying to tackle a products liability issue that began in a foreign country. As we have already discussed, the Consumer Protection Safety Commission has been assigned to figure out the problem.
Unfortunately, government agencies do not have the power to force foreign manufacturers to recall defective products because foreign companies are outside their jurisdiction. The Consumer Protection Safety Commission can ask foreign companies to issue voluntary product recalls or the federal agency can try to sue in a United States court but foreign companies that wholly reside in foreign countries have no legal obligation to participate in a United States court action.
If a foreign company does participate in legal action in the United States and loses the lawsuit, the company can refuse to pay the final judgment. According to the former director of compliance at the Consumer Protection Safety Commission, foreign governments do not have to enforce U.S. judgments on companies completely within their borders. One attorney that does regulatory work said that current consumer protection laws do not sufficiently protect against product liability in a globalized economy.
Congressional lawmakers tried to solve the problem by introducing a bill that would have required foreign companies that export products to the United States to post a U.S. based registered agent. The agent would be responsible for any product liability issues. Trade groups and the European Union argued the bill would be a trade barrier and that similar laws would be enacted against U.S. companies in other countries.
The Consumer Protection Safety Commission could file lawsuits against U.S. companies that distributed the Chinese drywall but the Commission says a health study would need to be conducted by the Centers for Disease Control. A health study has not been conducted yet.
Source: propublica.org, "Federal Probe of Chinese Drywall Falls Short," Joaquin Sapien, Aaron Kessler, 1214/10