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Godwin, Andrew --- "the Professional 'Tug of War': the Regulation of foreign Lawyers in China, Business Scope Issues and Some Suggestions for Reform" [2009] MelbULawRw 5; (2009) 33(1) Melbourne University Law Review 132

[*] BA (Hons), LLB (Hons), LLM (Melb); Senior Lecturer, Melbourne Law School, The University of Melbourne; Associate Director (Asian Commercial Law), Asian Law Centre, The University of Melbourne. The author practised as a foreign lawyer with an international law firm in China for 10 years between 1996 and 2006. The author would like to thank Nicholas Rudd for his research assistance and also the anonymous referees for their constructive comments and suggestions. All errors and omissions are the author’s alone. Unless otherwise attributed, all translations of Chinese material are the author’s own, including the text of legislation and titles of journal articles. This article is based on a paper that was presented by the author as ‘The Professional Tug of War: The Regulation of Foreign Lawyers in China, Business Scope Issues and Insights from Developments in Competition Law’ (Paper presented at Unleashing the Tiger? Competition Law in China and Hong Kong: A Gilbert + Tobin – Melbourne Law School Conference, Melbourne, 4 October 2008).

[1] For the purposes of this article, the terms ‘China’ and ‘People’s Republic of China’ (‘PRC’) are used interchangeably and refer to Mainland China, and not Hong Kong and Macao.

[2] According to the Australian Trade Commission (‘Austrade’), ‘[e]ight or more Australian law firms maintain, or operate from a foreign law firm office in China (excluding Hong Kong SAR)’: Austrade, Legal Services Overview (2008) <http://www.austrade.gov.au/Legal-services-overview/default.aspx> .

[3] For background to the evolution of the regulatory framework in China concerning foreign law firms and the impact of China’s accession to the WTO, see generally Sida Liu, ‘Globalization as Boundary‑Blurring: International and Local Law Firms in China’s Corporate Law Market’ (2008) 42 Law and Society Review 771; Susan E Vitale, ‘Doors Widen to the West: China’s Entry in the World Trade Organization Will Ease Some Restrictions on Foreign Law Firms’ (2001) 7 Washington University Journal of Law and Policy 223; Richard Qiang Guo, ‘Piercing the Veil of China’s Legal Market: Will GATS Make China More Accessible for US Law Firms?’ (2002) 13 Indiana International and Comparative Law Review 147; Jane J Heller, ‘China’s New Foreign Law Firm Regulations: A Step in the Wrong Direction’ (2003) 12 Pacific Rim Law and Policy Journal 751.

[4] «司法部、国家工商行政管理局关于外国律师事务所在中国境内设立办事处的暂行规定» [Provisional Rules of the Ministry of Justice and the State Administration for Industry and Commerce on the Establishment of Offices in China by Foreign Law Firms] (PRC) Ministry of Justice and State Administration for Industry and Commerce, 26 May 1992. These Provisional Rules use the general term ‘office’ (‘办事处’) instead of ‘representative office’ (‘代表机构’), which appears in both the earlier provisions as well as the current regulations.

[5] «中华人民共和国国务院关于管理外国企业常驻代表机构的暂行规定» [Interim Provisions of the State Council of the People’s Republic of China on the Administration of Resident Representative Offices of Foreign Enterprises] (PRC) State Council, 30 October 1980 (‘Interim Provisions’).

[6] Provisional Rules art 3. This prohibition against involvement in legal service activities is repeated in the current provisions: see «外国律师事务所驻华代表机构管理条例» [Administrative Regulations on Representative Offices of Foreign Law Firms in China] (PRC) State Council, Order No 338, 19 December 2001, art 15 (‘Administrative Regulations’) and below Part III(A). For reference to violations of the Provisional Rules by foreign law firms in China, see Vitale, above n 3, 227 fn 19 (describing in particular the situation of Coudert Brothers in 1995); Shin‑yi Peng and Benjamin Y Li, ‘Facilitating Market Access for Taiwanese Lawyers in China’ (2006) 23 UCLA Pacific Basin Law Journal 172, 180–1, citing Ann Davis, ‘Shanghai Exit for Coudert’ (1995) 17(22) National Law Journal A6.

[7] See below Part III(A) for the position under the current rules.

[8] The original Chinese text is ‘代表机构’.

[9] For discussion on Japanese regulation in this area, see 何敏 [He Min], «外国律师事务所在中国本土化问题的争鸣» [The Contentions Surrounding the Localisation of Foreign Lawyers’ Offices in China] (2001) 7 中国律师 Chinese Lawyer 58; Misasha Suzuki, ‘The Protectionist Bar against Foreign Lawyers in Japan, China, and Korea: Domestic Control in the Face of Internationalization’ (2003) 16 Columbia Journal of Asian Law 385, 393–8; Leonardo Ciano and Drew Martin, ‘The Foreign Lawyer Law of Japan: Legitimate Complaints or Red Herrings?’ (2002) 76 Journal of Inquiry and Research 121.

[10] The original Chinese text is ‘代理中国法律事务’.

[11] The original Chinese text is ‘向当事人解释中国法律’.

[12] See 蔡永彤 [Cai Yong Tong], «WTO 服务市场开放研究及相关法律问题探析 — 以法律服务市场开放为视角» [Research on the Opening Up of the Services Market under the WTO and Analysis of Relevant Legal Questions — From the Perspective of the Opening Up of the Legal Services Market] (2004) 12(2) 山西经济管理干部学院学报 Journal of Shanxi Institute of Economic Management 60, 63.

[13] Accession of the People’s Republic of China, WTO Doc WT/L/432 (2001) (Decision of 10 November 2001) Annex 9 (‘Schedule of Specific Commitments on Services — List of Article II Exemptions’), incorporating by reference Report of the Working Party on the Accession of China, WTO Doc WT/ACC/CHN/49/Add.2 (2001) (Addendum — Part II: Schedule of Specific Commitments on Services — List of Article II MFN Exemptions) II(A)(a).

[14] See, eg, the comments of 王小耘 [Wang Xiao Yun] as reported in 田享华 [Tian Xiang Hua], «上海律协:揭秘外国律所违法执业» [Shanghai Bar Association: Revealing the Illegal Practices of Foreign Law Firms] (2006) 国法网 Law.com.cn <http://www.law.com.cn/lcs/program/

html/fazhijiaoliu_content.php?ItemID=10&ID=10423>. See generally 蔡永彤 [Cai Yong Tong], above n 12.

[15] See Heller, above n 3, 764, citing Commission of the European Communities (‘European Commission’), The Sino–EU Agreement on China’s Accession to the WTO: Results of the Bilateral Negotiations (8 April 2003) European Commission — External Trade <http://trade.ec.

europa.eu/doclib/docs/2003/april/tradoc_111851.pdf>.

[16] European Commission, above n 15, 4.

[17] See Administrative Regulations art 5 and below Part III(A).

[18] «外国律师事务所驻华代表机构管理条例» [Administrative Regulations on Representative Offices of Foreign Law Firms in China] (PRC) State Council, Order No 338, 19 December 2001.

[19] This is different from the wording in art 15 of the Provisional Rules, which referred to ‘international treaties, international commercial laws and international practice’ (‘国际条约、

国际商事法律和国际惯例的咨询’). The reference to ‘international commercial laws’ (‘国际商事法律’) was omitted in the Administrative Regulations.

[20] See 林华 [Lin Hua], «洋律师觊觎中国市场» [Foreign Lawyers Covet China’s Market] (1 December 2001) 观察新闻 [Observations and News] 49, 49–50. Lin argues that foreign law firms are in breach of the prohibition on undertaking Chinese legal services by packaging their advice as ‘information on the impact of the Chinese legal environment’.

[21] See above n 13 and above Part II(B).

[22] This is perhaps less curious in the light of the traditional perception in China that the role of lawyers is limited to issuing legal opinions and representing clients in court and arbitration proceedings: «中华人民共和国律师暂行条例» [Interim Regulations of People’s Republic of China Lawyers] (PRC) National People’s Congress Standing Committee, Order No 5, 26 August 1980, art 2. See generally Henry R Zheng, ‘The Evolving Role of Lawyers and Legal Practice in China’ (1988) 36 American Journal of Comparative Law 473, 504. As the experience of western commercial lawyers would confirm, however, the fees generated from such activities are often negligible compared with the fees generated from contract drafting, deal negotiation and transaction management, which would include instructing and coordinating foreign counsel in cross‑border transactions.

[23] «关于外国律师事务所在华设立办事处有关事宜的通知» [Notice on Relevant Matters Concerning the Establishment of Offices in China by Foreign Law Firms] (PRC) Ministry of Justice, Doc No 105, 30 October 1992 <http://www.hflib.gov.cn/law/law/falvfagui2/xzf/FLFG/

NWXZ%20SF/1188.htm>. See also Guo, above n 3, 169, who refers to the Provisional Rules as ‘Provisional Regulations’.

[24] These include Australia and the United Kingdom, where non‑lawyers in law firms are able to communicate directly with, and provide services directly to, clients.

[25] The employment of Chinese professionals by foreign law firms has proven to be a particularly sensitive issue to Chinese law firms: see below Part IV(C).

[26] «关于执行‹外国律师事务所驻华代表机构管理条例›的规定» [Rules for the Implementation of the ‘Administrative Regulations on Representative Offices of Foreign Law Firms in China’] (PRC) Ministry of Justice, Order No 73, 4 July 2002, as amended by «司法部关于修改‹司法部关于执行‘外国律师事务所驻华代表机构管理条例’的规定›的决定» [Decision of the Ministry of Justice on the Amendment of the Rules of the Ministry of Justice concerning the ‘Administrative Regulations on Representative Offices of Foreign Law Firms in China’] (PRC) Ministry of Justice, Order No 92, 2 September 2004.

[27] The original Chinese text is ‘中国法律事务’.

[28] The term ‘certification’ (‘证明’) is not defined. On one interpretation, it refers to verifying or certifying a state of affairs, such as providing a formal legal opinion to confirm the validity of a legal agreement under PRC law.

[29] This appears to be directed generally towards interpreting Chinese law.

[30] This appears to be directed generally towards advising on the application of Chinese law to specific facts.

[31] Prior to an amendment in 2004, this provision read as follows: ‘in the capacity of an agent, expressing an opinion on the application of Chinese law and facts that involve Chinese law in arbitration activities’ (‘在仲裁活动中、以代理人身份对中国法律的适用以及涉及到中国法

律的事实发表代理意见或评论’): «关于执行‹外国律师事务所驻华代表机构管理条例›

的规定» [Rules for the Implementation of the ‘Administrative Regulations on Representative Offices of Foreign Law Firms in China’] (PRC) Ministry of Justice, Order No 73, 4 July 2002. It is likely that the amendment (see above n 26) was made in response to concerns expressed by foreign lawyers that the original wording would unduly restrict the role of foreign lawyers in arbitration proceedings.

[32] For comments on the impact of this restriction in the area of competition law, see below Part IV(D).

[33] The original Chinese text is ‘提供有关中国法律环境影响的信息’.

[34] Among other things, this provides that when representative offices indicate to clients that they are able to conduct business in the PRC, they must state clearly that they do not possess the qualifications, licences or capacity to undertake PRC legal services.

[35] The original Chinese text is ‘中国法律顾问’.

[36] These concerns were reflected in communications issued by the American Chamber of Commerce in China and the Law Society of England and Wales to their respective members at the time.

[37] Based on the author’s own experience, other concerns that were expressed about non‑compliance with China’s WTO commitments included concerns about the application criteria for establishing a representative office, the three‑year waiting period for establishing a second office, and qualification restrictions on the personnel of representative offices of foreign law firms in China.

[38] The information that follows is based on the author’s attendance at this meeting and his personal experience while working as a foreign lawyer in Shanghai at the time.

[39] See above Part III(A).

[40] See below Part III(C).

[41] In discussions with the author, a representative of the Ministry of Justice stated that the intention behind the new rules was not to drive out foreign lawyers; instead, the hope was that foreign lawyers would involve local lawyers in their transactions more often and stay within the spirit of the rules.

[42] The term ‘formal legal opinions’ is used here to refer primarily to closing opinions in commercial transactions — namely, opinions confirming ownership of assets, the legal capacity of Chinese entities and the validity and enforceability of contractual obligations under PRC law.

[43] «关于外国律师事务所在华设立办事处有关事宜的通知» [Notice on Relevant Matters Concerning the Establishment of Offices in China by Foreign Law Firms] (PRC) Ministry of Justice, Doc No 105, 30 October 1992, [3] <http://www.hflib.gov.cn/law/law/falvfagui2/xzf/

FLFG/NWXZ%20SF/1188.htm>. See also Guo, above n 3, 169. Article 40 of the Implementing Rules provides a list of circumstances in which foreign firms will be deemed to employ Chinese practising lawyers.

[44] The first rules governing lawyers in China were issued in 1980 and defined lawyers as ‘state legal workers’ (‘国家的法律工作者’): see Guo, above n 3, 165, citing Qizhi Luo, ‘Autonomy, Qualification and Professionalism of the PRC Bar’ (1998) 12 Columbia Journal of Asian Law 1, 10; «中华人民共和国律师暂行条例» [Interim Regulations of People’s Republic of China Lawyers] (PRC) National People’s Congress Standing Committee, Order No 5, 26 August 1980, art 1. Several years were to pass before private partnership firms emerged: Guo, above n 3, 166, citing Virginia Kays Veenswijk, Coudert Brothers: A Legacy in Law — The History of America’s First International Law Firm (1853–1993) (1994). Domestic firms are now governed by the «中华人民共和国律师法» [Lawyers Law of the People’s Republic of China] (PRC) National People’s Congress Standing Committee, Order No 76, 28 October 2007 (‘PRC Lawyers Law’), which was amended in 2007 and came into effect on 1 June 2008. This defines lawyers as persons who have passed the PRC Bar examination and obtained a practising certificate: arts 2, 5.

[45] There is now an express basis on which PRC law firms may establish branches overseas: «律师事务所在外国设立分支机构管理办法» [Administrative Measures on Law Firms Establishing Branch Organisations Overseas] (PRC) Ministry of Justice, Order No 35, 13 January 1995. These measures also apply to PRC law firms that wish to establish branches in Hong Kong or Macao: art 13. At the date of writing, PRC law firms with offices outside Mainland China included the following: King & Wood (Hong Kong, Tokyo, Silicon Valley and New York), Grandall (Hong Kong), Jun He (Hong Kong and New York), Jincheng and Tongda (Los Angeles), Zhong Lun (Tokyo) and Chen & Co (Hong Kong).

[46] The frustration felt by Chinese lawyers at the willingness of foreign clients to instruct foreign law firms despite the regulatory restrictions is reflected in comments by 吕红兵 [Lü Hong Bing], the President of the Shanghai Bar Association in 2006, as reported in 田享华 [Tian Xiang Hua], above n 14: ‘Many companies only believe in foreign law firms; they don’t believe in Chinese law firms. They would prefer to pay rates of US$600 per hour or more to foreign law firms than to pay rates of US$300 per hour to local law firms’. The author’s own experience indicates that over the past five years or so a trend has emerged for multinational clients to favour local firms in certain areas of practice, such as advice on employment law. This is in line with the natural development of the local profession in China. In addition, the large local law firms in China are now actively competing with foreign law firms in the FDI market and in cross‑border transactions.

[47] See the website of the Japan Federation of Bar Associations (2002) <http://www.nichibenren.

or.jp/en/>. See generally Suzuki, above n 9, 407. See also the comments of 吕红兵 [Lü Hong Bing] as reported in 田享华 [Tian Xiang Hua], above n 14: ‘because foreign law firms are not members of the Bar Association, the Bar Association would like to supervise them but does not have any power. As a result, foreign law firms exist in a regulatory vacuum’.

[48] For example, the efforts of the EU negotiators: see above n 16.

[49] These forces are reflected in the attempts to achieve greater market access for the international trade in legal services under the General Agreement on Trade in Services (‘GATS’): Marrakesh Agreement Establishing the World Trade Organization, opened for signature 15 April 1994, 1867 UNTS 3, Annex 1B (entered into force 1 January 1995). A discussion of this is beyond the scope of this article.

[50] Anecdotal evidence suggests that the local Bar had lobbied hard to include drafting contracts governed by Chinese law in the scope of prohibited activities under the Administrative Regulations. For further comments on the practical difficulties in drawing the line between permitted and prohibited activities, see Liu, above n 3, 780–1.

[51] For a reference to the fine imposed on Coudert Brothers for appearances by Chinese assistants in arbitration proceedings, see 宋伟 [Song Wei], «外国律师中国执业状况调查:业务受限 生意兴隆» [Investigation into the Practice of Foreign Lawyers in China: Practice Is Restricted but Business Is Flourishing] (2006) 邦道律师事务所 George Wu & Partners Law Firm <http://www.bdlawoffice.com/english/ShowArticle.asp?ArticleID=1134> .

[52] 市律协宣传部 [Shanghai Bar Association], «法律服务风险提示(一)» [Notification of Legal Services Risks (No 1)] (2005) (‘SBA Notification (No 1)’) (on file with author).

[53] One Chinese lawyer is reported as suggesting that a class action could be taken by local law firms against foreign law firms on the ground that foreign law firms had engaged in unfair competition: 田享华 [Tian Xiang Hua], above n 14.

[54] SBA Notification (No 1), above n 52.

[55] Ibid.

[56] Ibid.

[57] Shanghai Lawyers Association, ‘The Situation of Illegal Business Activities Practiced by the Foreign Law Firms in Shanghai Is Severe: The Foreign Law Services Market Needs Regulating’ (Shanghai Lawyers Association News Brief No 9/150, 17 April 2006). Note that ‘Shanghai Lawyers Association’ and ‘Shanghai Bar Association’ can be used interchangeably. The author has obtained an unofficial English translation of this memorandum from the website China Law Blog, A Blog about Chinese Law and the Legal Issues of Doing Business in China <http://www.chinalawblog.com/> , which obtained it from a Chinese lawyer. It has not been possible to verify the translation against the original document, however the contents are consistent with the details as reported in other sources: see, eg, 田享华 [Tian Xiang Hua], above n 14. For further commentary on the SBA Memorandum and the circumstances surrounding it, see Liu, above n 3, 795–801. Liu’s article (referring to it as a ‘brief’), which examines data from in‑depth interviews conducted with lawyers in Beijing and Shanghai, explores the blurred boundary between foreign and local law firms in China, particularly in relation to the competitive dynamic that this has generated, and provides insights into the consequences for the practice and career patterns of Chinese corporate lawyers.

[58] See 田享华 [Tian Xiang Hua], above n 14.

[59] SBA Memorandum, above n 57, 2.

[60] Ibid 2–3. For further details on these activities, see the comments of Chinese lawyers as reported by 田享华 [Tian Xiang Hua], above n 14.

[61] SBA Memorandum, above n 57, 2. The prohibition is contained in Administrative Regulations art 16.

[62] SBA Memorandum, above n 57, 2. The SBA Memorandum did not identify the basis on which drafting contracts and participating in negotiations were in breach of the rules. These activities are not expressly prohibited by the Administrative Regulations or the Implementing Rules.

[63] SBA Memorandum, above n 57, 2. The term ‘due diligence’ services appears to be referring to the services that lawyers provide when they undertake a comprehensive investigation of the legal issues concerning a company or a business.

[64] Ibid. This appeared to be a reference to the practice adopted by foreign law firms of undertaking watching briefs on behalf of clients in litigation and arbitration proceedings in China. The reference to ‘[using] Chinese lawyers in courts only’ suggests sensitivities on the part of the local profession concerning the perceived marginalisation of Chinese lawyers by foreign lawyers.

[65] Ibid 3.

[66] The SBA Memorandum did not detail the circumstances in which foreign law firms were establishing and controlling Chinese law firms. Such Chinese law firms have been described as ‘puppet law firms’: see 田享华 [Tian Xiang Hua], above n 14. See also Liu, above n 3, 783.

[67] SBA Memorandum, above n 57, 3. This probably refers to the ways in which foreign law firms promote their Chinese law expertise in marketing materials.

[68] Under art 26(2) of the Administrative Regulations, the fees that the PRC offices of foreign law firms receive from clients must be settled in China (for example, the fees must be paid into the bank accounts of the PRC offices in China).

[69] SBA Memorandum, above n 57, 4.

[70] 市律协宣传部 [Shanghai Bar Association], «外事委员会2006年工作总结» [2006 Work Summary by the Foreign Matters Committee] (2007) (on file with author).

[71] Ibid. It was reported in December 2007 that there had not been any official response from the Ministry of Justice to the SBA Memorandum. This was accompanied by the suggestion that the activities of foreign firms would be seen as a barometer for the further liberalisation of the market: see 袁铭良 [Yuan Ming Liang], «抓一手最好的律师: 2007年国际律师行中国指南» [Grabbing the Best Lawyers: 2007 Guide to International Law Firms in China] (2007) <http://bbs2.ustc.edu.cn/cgi/bbscon?bn=Economic & fn=M4764E51E & num=7189> . See also 宋伟 [Song Wei], above n 51, who suggests that the lack of a response from the authorities is due to the sensitivities involved.

[72] The local Bar associations around China are all members of the All China Lawyers Association (‘ACLA’), which was founded in 1986 pursuant to art 19 of the now repealed «中华人民共和国律师暂行条例» [Interim Regulations of People’s Republic of China Lawyers] (PRC) National People’s Congress Standing Committee, Order No 5, 26 August 1980, and describes itself as ‘a social organization … and a self‑disciplined professional body for lawyers at national level which by law carries out professional administration over lawyers’: ACLA, Law Committees (2000) <http://www.chineselawyer.com.cn/html/union/englishunion/briefintro

duction.html>. The author is not aware of any formal position taken by the ACLA in relation to the 2006 controversy surrounding foreign lawyers in China.

[73] 北京市司法局律师工作管理处干部 [Lawyer Management Cadre, Beijing Bureau of Justice] (prepared by 段耀州 [Duan Yao Zhou] and 陈玲 [Chen Lin]), «关于外国、香港律师

事务所驻京代表处执业情况的调研报告» [Investigative Report into the Practice Situation of Representative Offices of Foreign and Hong Kong Law Firms in Beijing] (2006) (‘Beijing Bureau of Justice Investigative Report’).

[74] Ibid part 2(2).

[75] For an analysis of this issue, see Patricia Ginsberg, ‘An Ethical Dilemma of American Attorneys in China: The Conflict between the Duty of Confidentiality to Clients and the Requirement of Disclosure to the Chinese Government’ (1999) 12 International Law Practicum 47.

[76] Beijing Bureau of Justice Investigative Report, above n 73, part 2(2).

[77] Such measures, the report suggested, included the compulsory participation of local lawyers in major projects: ibid part 4(1).

[78] Ibid part 4(2). The original Chinese text reads ‘解释中国法律’ and ‘提供有关中国法律

环境影响的信息’ respectively.

[79] This, the report suggested, included providing training to foreign and Hong Kong law firms on professional ethics and discipline: ibid part 4(1).

[80] See, eg, 何敏 [He Min], above n 9.

[81] See above n 51.

[82] See 何敏 [He Min], above n 9, 59. See also 李仁真 [Li Ren Zhen], «WTO 与中国法律

服务市场的对外开放» [The WTO and the Opening Up of China’s Legal Services Market] (2004) 11 中国司法 Justice of China 25, 26; Hongming Xiao, ‘The Internationalization of China’s Legal Services Market’ (2000) 1(6) Perspectives [Zhimin Wen trans] part 4 <http://

www.oycf.org/oycfold/httpdocs/Perspectives2/6_063000/internationalization_of_china.htm>; Liu, above n 3, 798–9.

[83] 何敏 [He Min], above n 9, 59. See also 李仁真 [Li Ren Zhen], above n 82.

[84] 何敏 [He Min], above n 9, 61.

[85] Ibid 59–60. See also Xiao, above n 82, part 4, who refers to the ‘brain drain’ that would result from allowing foreign law firms to hire Chinese lawyers.

[86] This is currently limited to lawyers qualified in Hong Kong and Macao and to their employment in local law firms: see below Part V for the relevant provisions.

[87] See below Part V for more information in relation to the employment of lawyers from Hong Kong and Macao by Chinese law firms.

[88] 何敏 [He Min], above n 9, 61.

[89] One lawyer, 王小耘 [Wang Xiao Yun], has stated, ‘it appears that foreign lawyers do not feel that they have anything to fear from breaking the law’: 宋伟 [Song Wei], above n 51.

[90] An ‘edge ball’ is a ping-pong term to describe the situation where the ball shaves the edge of the table and is consequently very difficult to return. See 田享华 [Tian Xiang Hua], above n 14.

[91] See ibid.

[92] 林华 [Lin Hua], above n 20, 49.

[93] See 田享华 [Tian Xiang Hua], above n 14, reporting comments of 吕红兵 [Lü Hong Bing], President of the Shanghai Bar Association.

[94] See, eg, Liu, above n 3, 792, on the effects of recruitment of middle‑level associates.

[95] The author’s own experience indicates that over the past five years or so, a reverse trend has emerged as many Chinese professionals have moved from foreign law firms to Chinese law firms in response to the greater career opportunities at Chinese law firms. It has been suggested that local firms have not always done their best by local lawyers: see 蔡永彤 [Cai Yong Tong], above n 12, 62. Cai notes the eagerness of many domestic law firms for instant success and their exploitation of law graduates, which has encouraged an exodus of talent to foreign firms. Liu’s empirical research suggests that the exodus of Chinese lawyers to foreign law firms has made local law firms less willing to invest in their training: Liu, above n 3, 792.

[96] This has been described as ‘snatching the food‑bowl from Chinese lawyers’: 宋伟 [Song Wei], above n 51.

[97] This argument often stems from the perception that the activities of lawyers involve the ‘execution of public duties’: see Guo, above n 3, 154, quoting Canadian Bar Association, Submission on the General Agreement on Trade in Services and the Legal Profession: The Accountancy Disciplines as a Model for the Legal Profession (2000) 1 <http://www.cba.org/

cba/submissions/pdf/00-30-eng.pdf>. See also 蔡唱 [Cai Chang], «中外法律服务承诺

比较研究» [A Comparative Study of Commitments in Respect of Legal Services by China and Foreign Countries] (2003) 10(6) 湖南商学院学报 Journal of Hunan Business College 106, 107. Similar concerns have been expressed in Japan, particularly in relation to the loss of ‘pure’ Japanese law firms: Suzuki, above n 9, 396–7.

[98] 林华 [Lin Hua], above n 20, 51.

[99] 方建伟 [Fang Jian Wei], «试论入世后中国法律服务业的开放» [Examining the Opening Up of China’s Legal Services Sector after WTO Accession] (2004) 行政与法 [Administration and Law] 121, 122. Fang suggests that allowing foreign lawyers to sit the Bar examination is not possible in the foreseeable future ‘because of the great differences in terms of the legal systems between east and west … and the fact that China regards the legal profession as part of a country’s sovereignty.’ However, Fang accepts that the trend towards further reform cannot be reversed: ‘China’s legal profession must develop and cannot rely on government protection; the key is for the legal profession to strengthen itself and its competitiveness.’

[100] For the comments of one foreign‑qualified lawyer in this regard, see 陶景洲 [Tao Jing Zhou], «现代律师事务所的扩展、合并及中外律师事务所的合作» [The Expansion and Merger of Modern Law Firms and Cooperation between Chinese and Foreign Law Firms] (2002) 1 中国律师 Chinese Lawyer 24, 28. See also 何敏 [He Min], above n 9, 61. It is interesting to consider the experience in Singapore, where many local firms consider that full liberalisation would have an adverse impact on the development of the local profession. One of the reasons cited by local firms is that international firms would attract Singaporean lawyers on the basis of the higher salaries, but they would still be getting them on the cheap compared with lawyers from other jurisdictions. In such circumstances, the local firms would not be able to offer competitive salaries and this would result in most of the lucrative Singaporean law work in areas such as finance law going to the international firms: Committee to Develop Singapore’s Legal Profession, Final Report of the Committee to Develop the Singapore Legal Sector (2007) (‘Rajah Report’) 69, 89 <http://notesapp.internet.gov.sg/__48256DF200173A1F.nsf/LookupMediaBy

Key/GOVI-79LDSM/$file/Justice%20V%20K%20Rajah%20report.pdf>. The author would argue, however, that China is in a different position in view of the extensive Chinese law expertise that foreign law firms already have.

[101] See Suzuki, above n 9, 396–7, arguing this in relation to the Japanese market.

[102] See above n 45 and accompanying text.

[103] This reality, as it relates to domestic law firms in Singapore, was acknowledged in a review of the legal profession commissioned by the Singaporean government, which was conducted by Justice V K Rajah: Rajah Report, above n 100, 89.

[104] 何敏 [He Min], above n 9, 61. See below Part VII.

[105] «中华人民共和国反垄断法» [People’s Republic of China Anti‑Monopoly Law] (PRC) National People’s Congress Standing Committee, Order No 68, 30 August 2007. This law, together with the «中华人民共和国反不正当竞争法» [People’s Republic of China Law against Unfair Competition] (PRC) National People’s Congress Standing Committee, Order No 11, 2 September 1993, forms the core of China’s evolving body of competition law.

[106] Contentious matters would include applying under AML art 53 for administrative review or undertaking an administrative lawsuit if there is an objection to a decision made by an anti‑monopoly law enforcement agency.

[107] This includes relocating competition law experts from Europe and the United States to Hong Kong and Mainland China: see, eg, ‘China: Law Firms Prepare for Tough New Anti‑Monopoly Laws’, Asianlaw (online), April 2008. <http://www.asialaw.com/Article/1970752/Channel/

16707/China-Law-firms-prepare-for-tough-new-anti-monopoly-laws.html>.

[108] «关于外国投资者并购境内企业反垄断申报指南» [Guidelines on Anti‑Monopoly Filings where Foreign Investors Acquire Domestic Enterprises] (PRC) Ministry of Commerce, 8 March 2007.

[109] The original Chinese text is ‘申报人’. In principle, the notifying party is the acquirer, although it may also be the party being acquired subject to the specific circumstances.

[110] See above Part III.

[111] One example is the strategic alliance between King & Wood and the Australian law firm, Gilbert + Tobin. For further details, see Gilbert + Tobin Lawyers, King & Wood (2007) <http://www.gtlaw.com.au/gt/site/articleIDs/DB2D55C64C0BA247CA25738D0079C26A?open & ui=dom & template=domGT> .

[112] PRC Lawyers Law art 12 provides that personnel of PRC law firms who have not obtained a lawyer’s practising certificate may not engage in legal services business in the name of a lawyer. The effect of this is that a lawyer who is qualified in a foreign jurisdiction and who does not hold a PRC practising certificate cannot be held out as a lawyer if employed by a local law firm.

[113] The terms ‘legal consultant’ (‘法律顾问’) and ‘lawyer’ (‘律师’) are referred to in PRC Lawyers Law art 29. For reference to similar issues that have arisen in Japan and South Korea, see Suzuki, above n 9, 390, 392.

[114] «香港、澳门特别行政区律师事务所驻内地代表机构管理办法» [Administrative Measures on Representative Offices of Law Firms from the Hong Kong and Macao Special Administrative Regions in the Interior] (PRC) Ministry of Justice, Order No 70, 13 March 2002.

[115] See Administrative Regulations art 15.

[116] The term ‘association’ is the word adopted in the English version of the Closer Economic Partnership Arrangements: see below n 119. The literal translation of the Chinese term for ‘association’ (‘联营’) is ‘joint operation’.

[117] The word ‘interior’ (‘内地’) is used instead of ‘Chinese’ to reflect the fact that Hong Kong and Macao are part of the PRC.

[118] Hong Kong and Macao Administrative Measures art 15(3).

[119] Mainland and Hong Kong Closer Economic Partnership Arrangement, signed 29 June 2003 (entered into force 1 January 2004) (‘Mainland and Hong Kong CEPA’); Trade and Industry Department (HK SAR), CEPA (2005) <http://www.tid.gov.hk/english/cepa/legaltext/

cepa_legaltext.html>; Closer Economic Partnership Arrangement between China and Hong Kong, China, WTO Doc WT/REG162/N/1 S/C/N/264 (2004) (Communication circulated by the Committee on Regional Trade Agreements). Mainland and Macao Closer Economic Partnership Arrangement, signed 17 October 2003 (entered into force 1 January 2004) (‘Mainland and Macao CEPA’); Government Printing Bureau (Macao SAR), Mainland and Macao Closer Economic Partnership Agreement (CEPA) (2009) <http://www.imprensa.macau.gov.mo/edicoes/

en/dse/cepa>; Closer Economic Partnership Arrangement between China and Macao, China, WTO Doc WT/REG/163/1 (2004) (Communication circulated by the Committee on Regional Trade Agreements).

[120] This extracts three of the six commitments in Mainland and Hong Kong CEPA Annex 4 table 1 (‘The Mainland’s Specific Commitments on Liberalization of Trade in Services for Hong Kong’) sector 1(A)(a).

[121] «香港特别行政区和澳门特别行政区律师事务所与内地律师事务所联营管理办法» [Admin-

istrative Rules on Associations between Interior Law Firms and Law Firms from the Hong Kong Special Administrative Region and the Macao Special Administrative Region] (PRC) Ministry of Justice, Order No 83, 27 November 2003, as amended by «司法部关于修改‹香港特别行政区和澳门特别行政区律师事务所与内地律师事务所联营管理办法›的决定» [Ministry of Justice Amendment of ‘Administrative Rules on Associations between Interior Law Firms and Law Firms from the Hong Kong Special Administrative Region and the Macao Special Administrative Region’] (PRC) Ministry of Justice, Order No 109, 6 March 2008.

[122] Administrative Rules on Associations art 2.

[123] Administrative Rules on Associations art 9.

[124] Administrative Rules on Associations art 12.

[125] Administrative Rules on Associations art 3.

[126] Administrative Rules on Associations art 3. On this basis, each firm is liable to third parties for any negligent or unlawful act, although it is possible for the parties to apportion liability for meeting any compensation claims between themselves in accordance with the association agreement: art 17.

[127] Administrative Rules on Associations art 5.

[128] Administrative Rules on Associations art 6.

[129] See Mainland and Hong Kong CEPA Annex 4 table 1; Mainland and Macao CEPA Annex 4 table 1.

[130] See «香港法律执业者和澳门执业律师受聘于内地律师事务所担任法律顾问管理办法» [Ad-

ministrative Measures on Hong Kong Legal Practitioners and Macao Legal Practitioners Who Are Employed by Interior Law Firms to Act as Legal Consultants] (PRC) Ministry of Justice, Order No 82, 30 November 2003, art 4. Note that there appears to be no express basis on which Taiwanese lawyers may sit the PRC Bar examination or on which Taiwanese law firms may establish representative offices in Mainland China. Administrative Provisions art 34 envisages that Taiwan will form a separate tariff zone and thus be regulated differently. See generally Peng and Li, above n 6, 189–90. According to one report, 30 Taiwanese lawyers will be allowed to practise in the Mainland after passing the annual Bar examination in September 2008, following an announcement by the Ministry of Justice in April 2008 that it will relax the restrictions: see Rashid Yosufzai, Taiwan Lawyers to Practise in Mainland China (2008) ALB Business Legal News <http://asia.legalbusinessonline.com/news/breaking-news/31588/details.aspx> .

[131] See «取得内地法律职业资格的香港特别行政区和澳门特别行政区居民在内地从事律师职

业管理办法» [Certain Provisions on Residents of the Hong Kong Special Administrative Region and the Macao Special Administrative Region Participating in the National Justice Examination] (PRC) Ministry of Justice, Order No 81, 27 November 2003, effective from 1 January 2004, as amended by «司法部关于修改‹取得内地法律职业资格的香港特别行政区和澳门特别行政

区居民在内地从事律师职业管理办法›» [Ministry of Justice Amendment of ‘Certain Provisions on Residents of the Hong Kong Special Administrative Region and the Macao Special Administrative Region Participating in the National Justice Examination’] (PRC) Ministry of Justice, Order No 105, 1 December 2006.

[132] The scope of the reference to ‘representation activities in marriage and inheritance cases involving Hong Kong or Macao’ is not clear. On one interpretation, this operates as an exception to the prohibition on participation in litigation matters.

[133] Suzuki, above n 9, 405. South Korea is currently planning extensive reforms that would open up the legal services market to foreign law firms: Hyung Tae Kim, ‘Legal Market Liberalization in South Korea: Preparations for Change’ (2006) 15 Pacific Rim Law and Policy Journal 199.

[134] Xiao, above n 82, part 4.

[135] As previously noted, this would not allow profit sharing: see above n 126 and accompanying text.

[136] Under the current joint venture model in Singapore, joint law ventures (‘JLV’) are permitted to practise in commercial law areas (not including litigation) and the constituent law firms may share the profits of the JLV. However, the foreign law firm may not employ Singaporean lawyers and Singaporean lawyers may not become an equity or profit‑sharing partner in the foreign firm. In response to the recommendations of the Rajah Report, above n 100, annex B, the Singaporean government has decided to liberalise the legal services sector. The reforms include allowing the foreign law firm in an existing JLV to share up to 49 per cent of the profits of the Singaporean law firm and allowing ‘qualifying foreign law firms’ to employ Singaporean lawyers directly. For further details, see Ministry of Law (Singapore), ‘Government Accepts Key Recommendations of Justice V K Rajah’s Committee on the Comprehensive Review of the Legal Services Sector’ (Press Release, 7 December 2007) [7](iii); Singapore, Parliamentary Debates, 26 August 2008, vol 84 (K Shanmugam, Minister for Law) (second reading speech for the Legal Profession (Amendment) Bill 2008 (Singapore)).

[137] This model permitted foreign lawyers and Japanese lawyers ‘who possess separate and respective offices to co‑handle in the same facilities all matters, other than certain prohibited areas such as litigation cases, and to share revenues and profits derived therefrom’: Ciano and Martin, above n 9, 123 fn 11. Pursuant to amendments to the Act on Special Measures concerning the Handling of Legal Services by Foreign Lawyers (Japan) Act No 66 of 1986 [Ministry of Justice (Japan) trans], which came into effect on 1 April 2005, foreign lawyers may now employ Japanese lawyers and establish an enterprise jointly operated by a registered foreign lawyer and a Japanese lawyer or corporation under a partnership contract: arts 2(xv), 49‑3. However, business scope restrictions still apply: art 4. For the Japanese legislation, see Ministry of Justice (Japan), Gaikokuho‑Jimu‑Bengoshi (‘Gaiben’, Registered Foreign Lawyers) (2006) <http://www.moj.

go.jp/ENGLISH/information/gjb.html>.

[138] Such as the qualification requirements in respect of Hong Kong and Macao law firms that wish to enter into an association with a local PRC law firm: see above Part V.

[139] One of the reasons for this is the cost associated with maintaining a joint venture. In Singapore, the Rajah Report, above n 100, 87, acknowledged that the restrictions on economic union and profit sharing had impeded the growth of JLVs. In addition, the joint venture model often represents a less than ideal halfway house in terms of career opportunities for employees. In Japan, for example, anecdotal evidence suggests that the former Specific Joint Enterprise model was not very attractive to Japanese lawyers, since the tie‑up with one international law firm made it difficult for them to arrange overseas secondments with other international law firms, limiting their career development options.

[140] It is interesting to note that the recent developments in Japan introduced both of these options at the same time, giving foreign law firms a choice between the two: see above n 137 for the relevant legislation.

[141] Interestingly, one commentator has suggested that the legal services market could first be liberalised in Shanghai, because of its status as a financial centre, along similar lines to the way in which foreign lawyers have been attracted to London: 蔡永彤 [Cai Yong Tong], above n 12, 62.

[142] Under these reforms, qualifying foreign law firms will not be permitted to engage in litigation or domestic areas of law such as criminal law, retail conveyancing, family law and administrative law: see above n 136. This reflects comments in the Rajah Report, above n 100, 97, that ‘[t]here is no reason to allow [foreign law firms] to engage in any aspect of litigation, at least certainly not in the initial phase of liberalisation.’