What you should know about foreign lawyer in China (2)
Published on August 29, 2014
Glimmers of hope
Recently some things have slowly started to change. During the last few years the Shanghai Bar Association has invited some European Chamber members to join as ‘special members’. Although this initiative is welcomed by the Legal and Competition Working Group, and the legal community in general, it is still not enough. At the moment, the status of ‘special member’ only allows foreign lawyers to attend training courses, meeting and seminars on Chinese law, and exchange experience and knowledge with Chinese ‘colleagues’.
In 1995, the Ministry of Foreign Trade and Economic Cooperation promulgated the first law on the Approval and Control of Resident Representative Offices of Foreign Enterprises, which was subsequently reviewed in 2012 by the State Council of the People’s Republic of China (PRC). It stated that foreign law firms can establish representative offices in China if they obtain the relevant business license from the Ministry of Justice. However, since the regulation is not enough clear, many foreign offices opted to set up consultancy companies instead.
On 29 August, 2013, Mainland China and Hong Kong signed Supplement X to the Closer Economic Partnership Arrangement (CEPA). It allows representative offices set up by Hong Kong law firms in Guangdong Province to hire qualified Chinese lawyers as consultants to advise on issues relating to Chinese law. Although Hong Kong lawyers in these offices are not allowed to practice PRC law, the representative offices can handle it and this will encourage businesses in Mainland China.
According to a new pilot work plan, which will only be in force in the China (Shanghai) Pilot Free Trade Zone (CSPFTZ) for the time being, Chinese and foreign law firms can establish cooperation on contractual basis. They will remain financially independent and separate entities but they can work together to provide better legal advice to their clients. Furthermore, representative offices of foreign firms can sign agreements with Chinese firms in order to second lawyers to each other’s offices. Still only PRC lawyers can provide legal advice on Chinese law, but this cooperation allows both sides to offer more value-added professional services.
These recent changes are certainly encouraging. They could indicate a willingness on the part of Chinese authorities to lift the current market restrictions placed on foreign law firms and allow them equal opportunities to practice law all over Mainland China.
The Legal and Competition Working Group has consistently made important key recommendations to the Chinese authorities regarding the current restrictions placed on foreign legal services:
Extend the CEPA between Hong Kong and Mainland China to foreign law firms and permit the creation of Joint Law Ventures between foreign and Chinese law firms.
Allow foreign law firms to practice PRC law through the employment of individuals who are qualified in PRC law and allow passport holders from European Union countries to sit for the bar exam in the PRC as long as they meet all required qualifications.
Allow lawyers in foreign law firms to represent their clients before Chinese government authorities.
These requests are not coming from just the legal community per se, they are also echoed by individuals and organizations across the entire foreign business community in China who are seeking more freedom and efficiency to conduct international business. As legal professionals it is our hope that the Chinese legislators will take these recommendations on board and push for the necessary reforms. In the meantime the legal community should continue to seek meaningful dialogue with Chinese authorities.
Article published on EURObiz magazine July/August 2014 issue:
This article is intended solely for informational purposes and does not constitute legal advice. Although the information in this article was obtained from reliable official sources, no guarantee is made with regard to its accuracy and completeness.
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