By: Michelle Ross, Pace International Law Review, Symposia & Submissions Editor

The Chinese government detained four employees of the Australia based ore mining company, Rio Tinto, on Sunday July 5, 2009.  The detainees, one Australian national, Stern Hu, and three Chinese nationals, are accused of stealing state secrets from China and bribing Chinese steel makers for information.  The accused were arrested during tense negotiations between China and Rio Tinto on ore prices.  This also came shortly after a $19.5 billion deal between Chinalco, the Chinese state-owned metal company, and Rio Tinto fell through, resulting in Rio entering into a deal with BHP Billiton, a rival of Chinalco’s.  Some Rio Tinto computers have also been confiscated in conjunction with the Chinese investigation.  As of July 16, 2009 the Chinese government communicated to the Australian Foreign Minister, Stephen Smith, that an investigation of whether the four Rio employees committed espionage was still underway.  Smith has stated that Australia recognizes that the employees, including the Australian national, are subject to Chinese investigation, laws and criminal or other judicial processes.
Iron ore is Australia’s second largest export behind coal, and China is Australia’s top trading partner.  Accordingly, Australia has been subtle in its response to the detentions and has only issued mild public warnings.  Prime Minister Kevin Rudd is fluent in Mandarin, but he has not contacted President Hu Jintao about the detentions.  Some opposition leaders in Australia, such as lawmaker Andrew Robb, criticize the Australian government’s response as a failure to defend an important Australian company abroad.  However, Australia’s Finance Minister, Lindsay Tanner, has represented that Australia will not engage in “megaphone diplomacy” to seek release of the Rio Tinto employees and jeopardize already strained negotiations between the two trading partners.

Liu Jieyu, the deputy director of the Foreign Ministry’s international department, has stated that the actions of Stern Hu would have been illegal in Australia also, and those that are criticizing China’s approach to the case should wait for the facts to be publicized.  Rio Tinto has released a statement maintaining that its employees did not engage in any industrial espionage.