The Unsavory Origins of the Term "Chinese Wall"

The National Conference of Bankruptcy Judges has put out a statement on Inclusive Language which recommends using the term  "firewall," "screen" or "ethics wall" instead of "Chinese wall" to describe "an information barrier within an organization intended to prevent exchange of information or communication that could lead to conflicts of interest." It stated that the term "Chinese wall" was considered offensive without further elaboration. According to Bryan Garner's A Dictionary of Modern Legal Usage, the term refers to The Great Wall of China, while others have said that it refers to the screen walls used in internal Chinese architecture. 

In Peat Marwick Mitchell & Co. v. Superior Court, 200 Cal. App.3d 275 (Cal. App. 1988), Judge Peter Low wrote a concurring opinion objecting to the term "Chinese Wall" in which he stated:

The enthusiasm for handy phrases of verbal shorthand is understandable. Occasionally, however, lawyers and judges use a term which is singularly inappropriate. "Chinese Wall" is one such piece of legal flotsam which should be emphatically abandoned. The term has an ethnic focus which many would consider a subtle form of linguistic discrimination. Certainly, the continued use of the term would be insensitive to the ethnic identity of the many persons of Chinese descent. Modern courts should not perpetuate the biases which creep into language from outmoded, and more primitive, ways of thought.

The Second Circuit recommended the use of the term "Information Barrier" and noted the use of the term in Securities and Exchange Commission regulations. Lindsay v. Morgan Stanley (In re Morgan Stanley Info. Fund Sec. Litig.), 592 F.3d 347 (2nd Cir. 2010). 

Notwithstanding the efforts of legal reformers, the term remains in wide use. A LEXIS search found 605 uses of the term in the federal courts, including numerous opinions from 2020 and 2021. In contrast, the terms "ethics wall" and "information barrier" were mentioned just 33 times. 

While the term may be ubiquitous, it does a poor job of describing its subject. It would be thoroughly infeasible for a law firm to build an edifice on the magnitude of the Great Wall of China to cordon off information within the firm. On the other hand, the paper or silk barriers used in Chinese architecture could prove too insubstantial to prevent information from leaking through. 

In doing my research, the earliest usage of the term I could find did not concern ethics or confidentiality, but rather civil rights. In Fong Yue Ting v. United States, 149 U.S. 698 (1893), three Chinese laborers sought writs of habeas corpus after being arrested for failing to have a certificate of residence. The Southern District of New York granted the writs but was reversed by the Second Circuit and the denial of the writs was affirmed by the Supreme Court. 

In dissent, Justice Brewer wrote:

Whatever may be true as to exculpation, I deny that there is any arbitrary and unrestrained power to banish residents, even resident aliens. What, it may be asked, is the reason for any difference? The answer is obvious. The Constitution has no extraterritorial effect, and those who have not come lawfully within our territory cannot claim any protection from its provisions. And it may be that the national government, having full control of all matters relating to other nations, has the power to build, as it were, a Chinese wall around our borders and absolutely forbid aliens to enter. But the Constitution has potency everywhere within the limits of our territory, and the powers which the national government may exercise within such limits are those, and only those, given to it by that instrument.

149 U.S.at 738. Thus, in its first usage, it referred to the nation's first anti-immigration legislation and nativist attempts to exclude Chinese immigrants. This an unsavory origin and another reason not to use the term.