A few days ago, I posted an article entitled "Hei, Be Careful. Your Trustworthy Lawyers May Probably Betray You Sooner Or Later"(see my blog dated 19 March 2008).
I received a phone call this afternoon from the Hong Kong bank staff, who told me that they are quite interested in the "dropping from the heaven" properties currently worth around HK$12,000,000, but expects to know where the properties are located and also wants to know how many percentage of claimed money(when the properties are ultimately sold out)may be used as professional fees if we help get back the properties or money.
The bank surely can not be informed now of whereabouts of the properties, for lawyers have to survive as well !
The bank emphasised, however, that even though they are interested in cooperation with lawyers on the project, they may not offer professional fees more than 30% out of the claimed money or worth of the properties on contingency basis, 30% is generally their maximum payment to lawyers, or else, no bank responsible or staff may dare to work with us, for over 30% payment as professional fees will be beyond their controls and is not the banker's normal practice, they may risk taking responsibilities for that ! If the bank does not cooperate with us on the project for sakes of over 30% as professional fees, they follow banking formalities and procedures, and may not have any potential liabilities upon themselves. What a strange way of thinking the bankers have? If the bank were a private owned or money making company, they would surely take different/practical actions or may give different responses.
The banking client is seemingly different from other individual and money-making corporate clients ! Lawyers should have to take different stances toward different clients in terms of professional fees charges !
3/31/2008
3/30/2008
M & A Deal Making in China – Getting in on the Action
(This article was previously published by LexisNexis® Martindale-Hubbell® Counsel to Counsel Magazine on January 2008, and was mentioned on 25 March 2008 by Dan Harris on his China Law Blog. According to Dan, a gross summarization of this article is that the basic questions to ask (due diligence) when doing a China acquisition are really not much different from those asked in a domestic US deal. The difficult and distinctive part comes in finding the answers)
Having a meaningful footprint in China has become a strategic imperative for multinational companies from around the world. The attraction is China's seemingly insatiable demand for products, services, capital and technology. George D. Martin, partner and chair of the Faegre & Benson...
Having a meaningful footprint in China has become a strategic imperative for multinational companies from around the world. The attraction is China’s seemingly insatiable demand for products, services, capital and technology. George D. Martin, partner and chair of the Faegre & Benson China Practice, sees the current acquisition boom in China as the logical culmination of foreign investment trends that he first observed when practicing in Shanghai in the mid-1990s. Martin expects this M&A trend to continue. But in the years to come, he advises, it won’t be just foreign companies on the buy-side of cross-border M&A deals involving China.
China’s accession to the World Trade Organization (WTO) in 2001 opened new sectors to foreign investment and eliminated many restrictions on structuring those investments. As a result, joint ventures that were in vogue among early China investors waned. Multinationals acknowledged the diligence and in getting local managers to accept the ways of their new owners.”
Martin believes, however, that thorough and realistic integration planning makes it possible for U.S. companies to achieve success with their new businesses in China.
Dave Sampsell, associate general counsel for Minneapolis, Minn.-based ADC Telecommunications, Inc., agrees. Sampsell has worked on acquisition and joint venture transactions around the world for ADC, a global provider of network infrastructure equipment and related services. He found that analyzing and negotiating an acquisition in China involves a range of issues either unique to China or more sensitive than they might be elsewhere.
“Above all, you need to think holistically about how to structure the purchase and how you will address diligence issues you uncover relative to the impact on future operations, including any ongoing relationship with the sellers of the business,” he says. “Obviously this is important in any deal, but the legal, cultural and language differences between the United States and China really heighten the importance of thinking not only about legal solutions to issues but the business impact of those solutions.” This involves deliberate fact checking during diligence, heightened attention to relationship-building and careful consideration as to how acquired operations will be overseen and integrated.
Love It or Leave It
The good news is that the number of viable targets in China is increasing. State-owned enterprises are being privatized and early investors in Asia are divesting to realize the rewards of their early market entry. But, “expect intense negotiations over price,” Martin warns. “The strategic imperative driving interest in China drives up valuation. In addition, local management is often pressured by their shareholders to explore an IPO on one of the booming Chinese stock markets. And, there are financial investors emerging on the scene.” As a result, Martin has seen instances where acquiring companies paid multiples of 12 to 18 times EBITDA—significantly higher than current valuations in the United States in comparable industries.
Martin recommends that buyers emphasize their strategic value. “Chinese companies are cross-cultural integration and operational problems with their partners. Initially, this realization, coupled with China’s market liberalization, led to the establishment of more wholly foreign-owned enterprises as foreign businesses were convinced that such problems could be avoided with their own “greenfield” start-up operations. While this proved true, many companies found organic growth to be a frustrating—and unacceptably slow—process.
More comfortable with market risk, facing aggressive plans for business in China by their competitors and determined to make this market a more significant component of their global operations, U.S. multinationals embraced M&A in China. While not free of risk, M&A has proved to be the best means by which to achieve strategic growth in China. Martin cites statistics indicating nearly 300 cross-border acquisitions of Chinese companies in 2006, up 16 percent from the year before; and M&A volume is highly motivated by the prospect of absorbing international best practices, worldwide branding and distribution, and accessing the deeper pockets of a strategic foreign buyer to help with expansion,” he says. At the same time, Martin cautions that Chinese owners take great pride in the companies they have built and may be reluctant to change their ways post-closing. “If the management of an acquired company does not embrace the new ownership culture within six to nine months of closing, it never will. The best solution is to part ways, cut losses and move on,” he asserts.
Look Before Leaping
The challenges associated with buying and operating a business in China make exhaustive legal and financial due diligence essential. Sampsell recalls, “It was impossible for us to do all the diligence ourselves. First, we don’t have many people who read and speak Mandarin, much less in areas of needed expertise.” He says that ADC invested more than a year negotiating and structuring a recently announced acquisition, relying on a multilingual team in China that included Faegre & Benson as outside counsel and a global accounting firm. ADC also retained a market research firm to verify the target’s market assessments and business plans. .
Even so, risks can’t be avoided entirely. Martin says that a buyer can mitigate those risks, however, by positioning its own managers to at least initially control finances, protect intellectual property and oversee operations. He also adds, “Being prepared to make a quick change is imperative.” For example, under PRC law, the chairperson is the company’s “legal up even more in 2007. Yet, achieving critical mass is not simple. Most acquisitions are small by developed market standards—a systemic challenge in China resulting from local companies operating in highly segmented and regional markets. Because of this, “foreign investors need to complete more deals for significant market penetration,” Martin says. “That means having a greater deal flow. The challenge is that buyers are largely on their own in finding targets. Investment bankers in Greater China tend to be focused on capital markets and only the very largest M&A deals.”
Thinking Holistically
“Acquisition targets in any emerging market usually have poor financial controls, inadequate record keeping, spotty regulatory compliance and a history of questionable business practices,” Martin cautions. “Buyers can also face very real cultural hurdles in obtaining full disclosure during representative”—a role with significant power. Martin recommends installing your own designee as the new chairperson to allow for swift action if problems occur. Still, reliance on expatriates is not a longterm solution. Martin recommends a transition period of no longer than three years, during which expatriates train local successors.
The Payoff
The frenzy surrounding China can be intoxicating. This is an exciting market, with many competitors hunting for the same targets. Committing to the market and engaging with a fully dedicated team is important. But, Martin notes, “the most successful buyers look at many deals, carefully choose which to pursue, undertake exhaustive diligence, make realistic valuation and risk decisions, and instill strong governance, with ongoing training and oversight of local management.”
Those who do so will find ample rewards in China for many years to come. And, they will be better positioned to fend off their rapidly emerging Chinese competitors, whose commitment to globalization—with increasing means to achieve it—will soon add additional buy-side pressures to this dynamic market.
Having a meaningful footprint in China has become a strategic imperative for multinational companies from around the world. The attraction is China's seemingly insatiable demand for products, services, capital and technology. George D. Martin, partner and chair of the Faegre & Benson...
Having a meaningful footprint in China has become a strategic imperative for multinational companies from around the world. The attraction is China’s seemingly insatiable demand for products, services, capital and technology. George D. Martin, partner and chair of the Faegre & Benson China Practice, sees the current acquisition boom in China as the logical culmination of foreign investment trends that he first observed when practicing in Shanghai in the mid-1990s. Martin expects this M&A trend to continue. But in the years to come, he advises, it won’t be just foreign companies on the buy-side of cross-border M&A deals involving China.
China’s accession to the World Trade Organization (WTO) in 2001 opened new sectors to foreign investment and eliminated many restrictions on structuring those investments. As a result, joint ventures that were in vogue among early China investors waned. Multinationals acknowledged the diligence and in getting local managers to accept the ways of their new owners.”
Martin believes, however, that thorough and realistic integration planning makes it possible for U.S. companies to achieve success with their new businesses in China.
Dave Sampsell, associate general counsel for Minneapolis, Minn.-based ADC Telecommunications, Inc., agrees. Sampsell has worked on acquisition and joint venture transactions around the world for ADC, a global provider of network infrastructure equipment and related services. He found that analyzing and negotiating an acquisition in China involves a range of issues either unique to China or more sensitive than they might be elsewhere.
“Above all, you need to think holistically about how to structure the purchase and how you will address diligence issues you uncover relative to the impact on future operations, including any ongoing relationship with the sellers of the business,” he says. “Obviously this is important in any deal, but the legal, cultural and language differences between the United States and China really heighten the importance of thinking not only about legal solutions to issues but the business impact of those solutions.” This involves deliberate fact checking during diligence, heightened attention to relationship-building and careful consideration as to how acquired operations will be overseen and integrated.
Love It or Leave It
The good news is that the number of viable targets in China is increasing. State-owned enterprises are being privatized and early investors in Asia are divesting to realize the rewards of their early market entry. But, “expect intense negotiations over price,” Martin warns. “The strategic imperative driving interest in China drives up valuation. In addition, local management is often pressured by their shareholders to explore an IPO on one of the booming Chinese stock markets. And, there are financial investors emerging on the scene.” As a result, Martin has seen instances where acquiring companies paid multiples of 12 to 18 times EBITDA—significantly higher than current valuations in the United States in comparable industries.
Martin recommends that buyers emphasize their strategic value. “Chinese companies are cross-cultural integration and operational problems with their partners. Initially, this realization, coupled with China’s market liberalization, led to the establishment of more wholly foreign-owned enterprises as foreign businesses were convinced that such problems could be avoided with their own “greenfield” start-up operations. While this proved true, many companies found organic growth to be a frustrating—and unacceptably slow—process.
More comfortable with market risk, facing aggressive plans for business in China by their competitors and determined to make this market a more significant component of their global operations, U.S. multinationals embraced M&A in China. While not free of risk, M&A has proved to be the best means by which to achieve strategic growth in China. Martin cites statistics indicating nearly 300 cross-border acquisitions of Chinese companies in 2006, up 16 percent from the year before; and M&A volume is highly motivated by the prospect of absorbing international best practices, worldwide branding and distribution, and accessing the deeper pockets of a strategic foreign buyer to help with expansion,” he says. At the same time, Martin cautions that Chinese owners take great pride in the companies they have built and may be reluctant to change their ways post-closing. “If the management of an acquired company does not embrace the new ownership culture within six to nine months of closing, it never will. The best solution is to part ways, cut losses and move on,” he asserts.
Look Before Leaping
The challenges associated with buying and operating a business in China make exhaustive legal and financial due diligence essential. Sampsell recalls, “It was impossible for us to do all the diligence ourselves. First, we don’t have many people who read and speak Mandarin, much less in areas of needed expertise.” He says that ADC invested more than a year negotiating and structuring a recently announced acquisition, relying on a multilingual team in China that included Faegre & Benson as outside counsel and a global accounting firm. ADC also retained a market research firm to verify the target’s market assessments and business plans. .
Even so, risks can’t be avoided entirely. Martin says that a buyer can mitigate those risks, however, by positioning its own managers to at least initially control finances, protect intellectual property and oversee operations. He also adds, “Being prepared to make a quick change is imperative.” For example, under PRC law, the chairperson is the company’s “legal up even more in 2007. Yet, achieving critical mass is not simple. Most acquisitions are small by developed market standards—a systemic challenge in China resulting from local companies operating in highly segmented and regional markets. Because of this, “foreign investors need to complete more deals for significant market penetration,” Martin says. “That means having a greater deal flow. The challenge is that buyers are largely on their own in finding targets. Investment bankers in Greater China tend to be focused on capital markets and only the very largest M&A deals.”
Thinking Holistically
“Acquisition targets in any emerging market usually have poor financial controls, inadequate record keeping, spotty regulatory compliance and a history of questionable business practices,” Martin cautions. “Buyers can also face very real cultural hurdles in obtaining full disclosure during representative”—a role with significant power. Martin recommends installing your own designee as the new chairperson to allow for swift action if problems occur. Still, reliance on expatriates is not a longterm solution. Martin recommends a transition period of no longer than three years, during which expatriates train local successors.
The Payoff
The frenzy surrounding China can be intoxicating. This is an exciting market, with many competitors hunting for the same targets. Committing to the market and engaging with a fully dedicated team is important. But, Martin notes, “the most successful buyers look at many deals, carefully choose which to pursue, undertake exhaustive diligence, make realistic valuation and risk decisions, and instill strong governance, with ongoing training and oversight of local management.”
Those who do so will find ample rewards in China for many years to come. And, they will be better positioned to fend off their rapidly emerging Chinese competitors, whose commitment to globalization—with increasing means to achieve it—will soon add additional buy-side pressures to this dynamic market.
3/29/2008
Only Time Can Tell If Tycoon Chan Is Guilty of Sour Grapes Or Is Going to Have the Last Laugh on His Rivals
To see a Hong Kong tycoon's fresh comments upon mainland China's deep-valley property market
Not so long ago, Hong Kong developers thought they were going to strike gold with mainland China's property and joined the stampede to build up land banks. Notable among them was Sino Land with its HK$4.4 billion auction win in Chengdu, followed by Wharf (Holding) with an even higher HK$7.24 billion.
Consider what happened next: most mainland property stocks have fallen more than 50 per cent from their peaks on worries that the central Chinese government will move to cool off the red-hot property sector.
We could not put it better than Hang Lung Group and Hang Lung Properties chairman Ronnie Chan Chichung, who vowed to spend US$4 billion in building his property empire but lost out in one of the high-priced Chengdu auctions.
In his letter to shareholders this week, Mr. Chan points out that previously sceptical Hong Kong players seem to have cast off all restraint in an effort to grab a slice of mainland property, pushing prices sky high.
He grumbled about a certain Hong Kong developer who bought a commercial plot in a thriving city in western China at a unit price that was some 20 times higher than Mr. Chan's Shenyang Doumugong property bought one year earlier.
"The two projects are very similar in almost every aspect," wrote Mr. Chan.
"Just as striking is the fact that the price paid by our Hong Kong friend is more than the totality of all of our land purchases in the mainland including those of our two Shanghai projects."
There is definitely a limit to developer's tolerance for land costs, he argued. So Hang Lung did not buy any land in the past six months and is patiently waiting for the market to get back to normal.
"Fortunately, the central government stepped in towards the end of last year and brought things back to a more sensible state. Some of those who bought land only a few short months ago might be regretting their decisions."
Only time can tell if Mr. Chan is guilty of sour grapes, or is going to have the last laugh on his rivals.
(Note: the aforesaid article is from the South China Morning Post of 29 March 2008)
Not so long ago, Hong Kong developers thought they were going to strike gold with mainland China's property and joined the stampede to build up land banks. Notable among them was Sino Land with its HK$4.4 billion auction win in Chengdu, followed by Wharf (Holding) with an even higher HK$7.24 billion.
Consider what happened next: most mainland property stocks have fallen more than 50 per cent from their peaks on worries that the central Chinese government will move to cool off the red-hot property sector.
We could not put it better than Hang Lung Group and Hang Lung Properties chairman Ronnie Chan Chichung, who vowed to spend US$4 billion in building his property empire but lost out in one of the high-priced Chengdu auctions.
In his letter to shareholders this week, Mr. Chan points out that previously sceptical Hong Kong players seem to have cast off all restraint in an effort to grab a slice of mainland property, pushing prices sky high.
He grumbled about a certain Hong Kong developer who bought a commercial plot in a thriving city in western China at a unit price that was some 20 times higher than Mr. Chan's Shenyang Doumugong property bought one year earlier.
"The two projects are very similar in almost every aspect," wrote Mr. Chan.
"Just as striking is the fact that the price paid by our Hong Kong friend is more than the totality of all of our land purchases in the mainland including those of our two Shanghai projects."
There is definitely a limit to developer's tolerance for land costs, he argued. So Hang Lung did not buy any land in the past six months and is patiently waiting for the market to get back to normal.
"Fortunately, the central government stepped in towards the end of last year and brought things back to a more sensible state. Some of those who bought land only a few short months ago might be regretting their decisions."
Only time can tell if Mr. Chan is guilty of sour grapes, or is going to have the last laugh on his rivals.
(Note: the aforesaid article is from the South China Morning Post of 29 March 2008)
Lawyers in Mainland China Or Solicitors in Hong Kong May Help Clients Generally, But May Not Help Themselves Sometimes !
1. A Chinese lawyer is ordered by a Beijing court to return groundless fees to his clients
According to a report by Beijing Youth Daily in earlier February 2008, Mr. XU, a lawyer of Beijing Heng Cheng Law Firm has recently been ordered by the Beijing Haidian court to be detained for 15 days.
Mr. XU is said to have illegally obtained agency fees twice while he represented clients, and were sued to the Haidian court thereafter. The court had issued two judgments for the lawsuits, demanding Mr. XU to return the illegal fees to his clients. Mr. XU, however, had not performed the judgments. The judgments plaintiffs alternatively in 2005 and 2007 applied to the court for their enforcements.
The court has issued an enforcement notice to Mr. XU, and also seized his property, but Mr. XU presented to the court stating that there were faults of the two judgements requiring judicial reviews, and expecting the court to extend enforcement periods. Thereafter, Mr. XU had no more contacts with the court, no speaking of returning of any judgments' fees.
2. A Hong Kong solicitor's request for anonymity is rejected by a Hong Kong Court
According to the Souch China Morning Post of 20 March 2008, the identity of a solicitor who is claiming damages from his former employer for psychiatric problems would not be protected, a Hong Kong District Court judge ruled.
The District Court judge David Lok Kai-hong dismissed the application made by Tam Kam-tong for an anonymity order in relation to his claim for employment compensation arising from an incident. He asked the court to conceal his identity fearing future discrimination, but the judge said it did not apply in this case.
According to a report by Beijing Youth Daily in earlier February 2008, Mr. XU, a lawyer of Beijing Heng Cheng Law Firm has recently been ordered by the Beijing Haidian court to be detained for 15 days.
Mr. XU is said to have illegally obtained agency fees twice while he represented clients, and were sued to the Haidian court thereafter. The court had issued two judgments for the lawsuits, demanding Mr. XU to return the illegal fees to his clients. Mr. XU, however, had not performed the judgments. The judgments plaintiffs alternatively in 2005 and 2007 applied to the court for their enforcements.
The court has issued an enforcement notice to Mr. XU, and also seized his property, but Mr. XU presented to the court stating that there were faults of the two judgements requiring judicial reviews, and expecting the court to extend enforcement periods. Thereafter, Mr. XU had no more contacts with the court, no speaking of returning of any judgments' fees.
2. A Hong Kong solicitor's request for anonymity is rejected by a Hong Kong Court
According to the Souch China Morning Post of 20 March 2008, the identity of a solicitor who is claiming damages from his former employer for psychiatric problems would not be protected, a Hong Kong District Court judge ruled.
The District Court judge David Lok Kai-hong dismissed the application made by Tam Kam-tong for an anonymity order in relation to his claim for employment compensation arising from an incident. He asked the court to conceal his identity fearing future discrimination, but the judge said it did not apply in this case.
3/26/2008
Magic Power of Money Let Father Kill Son in China !
We have heard at intervals or read on newspapers sometimes that family members or relatives argue or file writs in a court over unfair distributions of wills assets or corporate interests and properties and the likes, but we have never or seldom heard father kills his sons for sakes of money.
A Tongnan court in mainland Chinese northwestern Chongqing had to reschedule a hearing this Tuesday because of overwhelming interest in the case, which involves a man murdering his son for money.
No details are released, but some of the 300 observers who wanted to see the case said they had taken their children and husbands along for a "lesson".
The unbelievable story was reported by Chinacourt.org, and further printed on the South China Morning Post of 26 March 2008.
Are there any Chinese lawyers to defend the killing father for escaping capital penalty ? The answer is yes in legal sense, but no in moral sense !
A Tongnan court in mainland Chinese northwestern Chongqing had to reschedule a hearing this Tuesday because of overwhelming interest in the case, which involves a man murdering his son for money.
No details are released, but some of the 300 observers who wanted to see the case said they had taken their children and husbands along for a "lesson".
The unbelievable story was reported by Chinacourt.org, and further printed on the South China Morning Post of 26 March 2008.
Are there any Chinese lawyers to defend the killing father for escaping capital penalty ? The answer is yes in legal sense, but no in moral sense !
Good Lawyers Are Legal Supporters, Not Simply Money Takers from Clients !
One of my clients has recently introduced me a minor case with less money to claim, sincerely expecting that I can handle the matter. The story goes as follows:
A private-owned company in Guangdong province sued a Hong Kong company a few years ago at Zhuhai Intermediate People's Court(the "Zhuhai Court") and then appealed to the Guandong Provincial Higher People's Court, a judgment was ultimately issued in favour of the Guangdong company. The loser Hong Kong company, however, did not perform the judgment, the judgment was then duly applied to the Zhuhai Court for enforcement.
Given that Hong Kong and Mainland China adopts "one country two legal system" state policy, the judgment issued by any Mainland Chinese courts can not be legally admitted and acknowledged for enforcement in Hong Kong, the Guandong company Chairman has to come down to Hong Kong several times, expecting to have good talks for getting most of the money back
Since the judgment amount is just over RMB320,000(equivalent to US$45,000), not much not less for the Guangdong company boss, in additions, he has always been refused to meet with the Hong Kong company boss or management, even though it almost takes him a whole day each time to come down to Hong Kong and return home, the boss becomes extremely angry and is introduced to my firm. According to the boss, if I can help get back the RMB320,000 or whatever, all the claimed money can be used as our professional fees, for he just wants to get completely released of irrigation and upsets.
I am a Hong Kong based Mainland Chinese lawyer, having rights to issue Demand Letters and to have talks and negotiations with the Hong kong company boss or management,if they do not respond to us, we may cooperate with Hong Kong solicitor to make a new lawsuit at a Hong Kong court against the Hong Kong company by using the Chinese judgment as a cause of action or as a strong legal evidence. I reckon there is a great possibility to get back the money, for the Hong Kong company is still in operations and its boss or directors or management staff are said still frequently to travel to Mainland China, by the Chinese immigration rules and regulations as well as legal practices, their Home Return Permits for entering and leaving Mainland China may be detained via certain procedures(i.e. to apply to the Zhuhai Court at first and then the court may contact immigration departments), under such circumstance, they can not leave China after arrivals unless they settle the the judgement.
I have told my client that my firm can not accept his 100% offer, 50% of the successful claims is enough or at minimum, for good lawyers are legal supporters, not just money takers from clients, even though all lawyers like to make more professional fees but on good faith and in the best interests of clients as well. Sound correct ?!
A private-owned company in Guangdong province sued a Hong Kong company a few years ago at Zhuhai Intermediate People's Court(the "Zhuhai Court") and then appealed to the Guandong Provincial Higher People's Court, a judgment was ultimately issued in favour of the Guangdong company. The loser Hong Kong company, however, did not perform the judgment, the judgment was then duly applied to the Zhuhai Court for enforcement.
Given that Hong Kong and Mainland China adopts "one country two legal system" state policy, the judgment issued by any Mainland Chinese courts can not be legally admitted and acknowledged for enforcement in Hong Kong, the Guandong company Chairman has to come down to Hong Kong several times, expecting to have good talks for getting most of the money back
Since the judgment amount is just over RMB320,000(equivalent to US$45,000), not much not less for the Guangdong company boss, in additions, he has always been refused to meet with the Hong Kong company boss or management, even though it almost takes him a whole day each time to come down to Hong Kong and return home, the boss becomes extremely angry and is introduced to my firm. According to the boss, if I can help get back the RMB320,000 or whatever, all the claimed money can be used as our professional fees, for he just wants to get completely released of irrigation and upsets.
I am a Hong Kong based Mainland Chinese lawyer, having rights to issue Demand Letters and to have talks and negotiations with the Hong kong company boss or management,if they do not respond to us, we may cooperate with Hong Kong solicitor to make a new lawsuit at a Hong Kong court against the Hong Kong company by using the Chinese judgment as a cause of action or as a strong legal evidence. I reckon there is a great possibility to get back the money, for the Hong Kong company is still in operations and its boss or directors or management staff are said still frequently to travel to Mainland China, by the Chinese immigration rules and regulations as well as legal practices, their Home Return Permits for entering and leaving Mainland China may be detained via certain procedures(i.e. to apply to the Zhuhai Court at first and then the court may contact immigration departments), under such circumstance, they can not leave China after arrivals unless they settle the the judgement.
I have told my client that my firm can not accept his 100% offer, 50% of the successful claims is enough or at minimum, for good lawyers are legal supporters, not just money takers from clients, even though all lawyers like to make more professional fees but on good faith and in the best interests of clients as well. Sound correct ?!
3/24/2008
Could the Hong Kong Lawyers Charge Their Client If They Can't Duly Deliver Professional Legal Comments Or Opinions ?
As a Hong Kong registered Chinese lawyer, I have had a meeting with two Hong Kong solicitors(one Solicitor and one senior associate)this morning in a corporate client's office in Central of Hong Kong, as previously scheduled before the Easter Holiday. The meeting has lasted almost two hours, with 7 people present.
To my surprise, the two Hong Kong solicitors seem to know little about the Hong Kong civil and criminal procedural law as well as court practices or experiences, even though the meeting was originally designed to focus on listening to their professional legal comments and opinions. Several basic questions were raised at the meeting and their vague replies went as follows:
1. Can emails or emailed printouts/documents be used as legal evidences at Hong Kong court?(the solicitors' replies: it seems OK, probably should be all right)
2. What civil and criminal consequences can false signatures generally lead to ? Or to be more exact, if a person has signed some change of directors agreements, but refuses to sign more similar documents as necessarily required by governments for change of directors formalities, even though he has been informed again and again for 5 months via emails and middleman or via lawyers or even paid to consult independent legal opinions, the person still refuses to sign more necessary documents, and the relevant may be forced to cease operations, under such circumstances, what civil and criminal consequences may occur to the "false signer" in the best interests of the company on good faith ?(the solicitors' replies: not sure, have to check later, it seems criminal liabilities may happen to the "false signer")
3. Do you have any suggestions of what to do now and in the near futures ?(the solicitors' replies: to send Demand Letter at first to the refusal person in the name of law firm)
4. ...
The two Hong Kong solicitors may be familiar with documents work, but obviously have no experience in commercial litigation or court procedures, but with common sense. Can they still issue bills and charge the client two hours for their "professional" work ?
To my surprise, the two Hong Kong solicitors seem to know little about the Hong Kong civil and criminal procedural law as well as court practices or experiences, even though the meeting was originally designed to focus on listening to their professional legal comments and opinions. Several basic questions were raised at the meeting and their vague replies went as follows:
1. Can emails or emailed printouts/documents be used as legal evidences at Hong Kong court?(the solicitors' replies: it seems OK, probably should be all right)
2. What civil and criminal consequences can false signatures generally lead to ? Or to be more exact, if a person has signed some change of directors agreements, but refuses to sign more similar documents as necessarily required by governments for change of directors formalities, even though he has been informed again and again for 5 months via emails and middleman or via lawyers or even paid to consult independent legal opinions, the person still refuses to sign more necessary documents, and the relevant may be forced to cease operations, under such circumstances, what civil and criminal consequences may occur to the "false signer" in the best interests of the company on good faith ?(the solicitors' replies: not sure, have to check later, it seems criminal liabilities may happen to the "false signer")
3. Do you have any suggestions of what to do now and in the near futures ?(the solicitors' replies: to send Demand Letter at first to the refusal person in the name of law firm)
4. ...
The two Hong Kong solicitors may be familiar with documents work, but obviously have no experience in commercial litigation or court procedures, but with common sense. Can they still issue bills and charge the client two hours for their "professional" work ?
3/19/2008
Hei, Be Careful ! Your Trustworthy Lawyer May Probably Betray You Sooner Or Later !
An associate in my firm told me yesterday that there is a Guangdong lawyer who is eagerly approaching us for expectations of a possible cooperation on a Chinese court judgment enforcement case.
The Guangdong lawyer once represented a corporate client located in Guangdong province in 2003 as its defence lawyer, for his client was then sued by a Hong Kong bank at a Chinese intermediate people's court where his client was incorporated to repay outstanding loans of more than HK$60M in principal. Although the Guangdong lawyer worked hard to protect his client, they still lost the case, the judgment demanding his client to repay the Hong Kong bank HK$60M plus interests. The losing client was deep in financial troubles and soon ceased operations. The Hong Kong bank just got minor cash and some invaluable corporate interests in a faraway Chinese city.
As former trustworthy lawyer of his client, the Guangdong lawyer knows well that his client is still owning several properties in Macao worth at least for HK$12M. His client paid up to purchase those properties quite a few years ago while they had been underdeveloped, but had no time to get them then it became collapsed. The properties are being let out by the developers.
The Guangdong lawyer expects us to contact the Hong Kong bank as my firm has been in Hong Kong for over 10 ten years with good reputation and may know the bank. He is correct, I immediately picked up the phone today to call the Hong Kong bank once I received and looked at the judgment. The bank of course feels good to hear that, and has agreed to take into good considerations of how to cooperate with the Guangdong lawyer via us. It is understandable that the Guangdong lawyer expects to get highly paid on contingency basis.
Should I make congratulations to the Guangdong lawyer and feel thankful to him for referring the cooperative case to us, or shall the Guangdong lawyer be morally accused of ? This is a tough question worth thinking by most clients as well !
The Guangdong lawyer once represented a corporate client located in Guangdong province in 2003 as its defence lawyer, for his client was then sued by a Hong Kong bank at a Chinese intermediate people's court where his client was incorporated to repay outstanding loans of more than HK$60M in principal. Although the Guangdong lawyer worked hard to protect his client, they still lost the case, the judgment demanding his client to repay the Hong Kong bank HK$60M plus interests. The losing client was deep in financial troubles and soon ceased operations. The Hong Kong bank just got minor cash and some invaluable corporate interests in a faraway Chinese city.
As former trustworthy lawyer of his client, the Guangdong lawyer knows well that his client is still owning several properties in Macao worth at least for HK$12M. His client paid up to purchase those properties quite a few years ago while they had been underdeveloped, but had no time to get them then it became collapsed. The properties are being let out by the developers.
The Guangdong lawyer expects us to contact the Hong Kong bank as my firm has been in Hong Kong for over 10 ten years with good reputation and may know the bank. He is correct, I immediately picked up the phone today to call the Hong Kong bank once I received and looked at the judgment. The bank of course feels good to hear that, and has agreed to take into good considerations of how to cooperate with the Guangdong lawyer via us. It is understandable that the Guangdong lawyer expects to get highly paid on contingency basis.
Should I make congratulations to the Guangdong lawyer and feel thankful to him for referring the cooperative case to us, or shall the Guangdong lawyer be morally accused of ? This is a tough question worth thinking by most clients as well !
3/18/2008
Private Equity Firms Top Five in the World
1.Carlyle Group, with US$32.5 billion
2.Kohlberg Kravis Roberts, with US$31.1 billion
3.Goldman Sachs Principal Investment Area, with US$31 billion
4.Blackstone Group, with US$28.36 billion
5.TPG Capital(formally known as Texas Pacific Group), with US$23.5 billion
(Notes: the afordsaid rankings come from an recent report in the South China Morning Post of 17 March 2008)
2.Kohlberg Kravis Roberts, with US$31.1 billion
3.Goldman Sachs Principal Investment Area, with US$31 billion
4.Blackstone Group, with US$28.36 billion
5.TPG Capital(formally known as Texas Pacific Group), with US$23.5 billion
(Notes: the afordsaid rankings come from an recent report in the South China Morning Post of 17 March 2008)
3/17/2008
Private Equity Firms Hot in Hong Kong Today, Focusing on Greater China Investments
1. Baring Private Equity Asia
The Baring Private Equity Asia has recently been reported in the South China Morning Post on 11 of March 2008(Reuters) that it stuck a deal to invest US88 million in China CBM Investment Holdings(CCBM), a Mainland China's producer of coalbed methane. Chengwei Ventures is also an investor in the deal.
CCBM was formed from a management buyout of Asian American Gas, one of the first foreign companies to engage in the exploration, development and production of coalbed methane.
2. Rocket Capital Investment
The firm was established by the mainland basketball star Yao Ming's finder of Leslie Alexander, to cash in on his new mainland business connections. Mr. Alexander is its sole investor, and Forbes magazine estimates his worth at US$1.5 billion.
In 2007, the firm poured US$200 million into some of Hong Kong's biggest IPOs. In 2008, the firm is planning to invest another US$200 million to focus instead on buying listed shares and making other types of investments, but will be more careful this year, according to its managing director of Kenneth Huang.
Rocket Capital's investment are in Great China, focusing on the concessions and management of sports facilities, travel and leisure, which includes railways, airlines and the vehicle sector; and entertainment, such as sports televisions and other media, but avoids companies that it feels mistreats animals, based on Mr. Alexander's love for animals and support for the Humane Society. He once declined to invest in a national hot pot chain before it went public, for he prefers his lambs alive.
3. Harvest Capital Partners
Harvest Capital Partners was formed in May 2006 by the Chinese state-owned conglomerate China Resources Holdings, to launch or run two overseas private equity real estate funds, including one focused on Middle East cash, with combined sized of about US$1 billion, encompassing the Greater China market, including Hong Kong and Marcau.
It has invested in seven projects in Beijing, Chongqing, Guiyang and Hong Kong, involving 70 per cent of the raised fund. It will announce more deals in Tianjin and Wuhan shortly. Among the projects, only one is related to China Resources Holdings, subject to its good returns to the funds.
4. TPG Capital(formally known as Texas Pacific Group)
As one of the world's largest private equity firms from the United States, the buyout specialist TPG Capital is sharpening its focus on strategic mainland Chinese industries amid the economic slowdown in other markets around the world.
Ms. Mary Ma Xuezheng, managing director in Hong Kong for TPG, who jointed the firm six months ago(or in May 2007) after her retirement from computer giant Lenovo Group as chief financial officer, said that some of the most attractive mainland sectors for TPG include financial services, retail, technology and resources. There are also new opportunities related to the environment, including in terms of clean energy and environmental protection.
"All the parters in TPG are very focused on China", Ms. Ma said.
TPG is currently holding controlling interests in Shenzhen Development Bank and private lender Minsheng Bank. TPG is also among those seeking Morgan Stanley's stake in the investment bank of China International Capital Corp.
The Baring Private Equity Asia has recently been reported in the South China Morning Post on 11 of March 2008(Reuters) that it stuck a deal to invest US88 million in China CBM Investment Holdings(CCBM), a Mainland China's producer of coalbed methane. Chengwei Ventures is also an investor in the deal.
CCBM was formed from a management buyout of Asian American Gas, one of the first foreign companies to engage in the exploration, development and production of coalbed methane.
2. Rocket Capital Investment
The firm was established by the mainland basketball star Yao Ming's finder of Leslie Alexander, to cash in on his new mainland business connections. Mr. Alexander is its sole investor, and Forbes magazine estimates his worth at US$1.5 billion.
In 2007, the firm poured US$200 million into some of Hong Kong's biggest IPOs. In 2008, the firm is planning to invest another US$200 million to focus instead on buying listed shares and making other types of investments, but will be more careful this year, according to its managing director of Kenneth Huang.
Rocket Capital's investment are in Great China, focusing on the concessions and management of sports facilities, travel and leisure, which includes railways, airlines and the vehicle sector; and entertainment, such as sports televisions and other media, but avoids companies that it feels mistreats animals, based on Mr. Alexander's love for animals and support for the Humane Society. He once declined to invest in a national hot pot chain before it went public, for he prefers his lambs alive.
3. Harvest Capital Partners
Harvest Capital Partners was formed in May 2006 by the Chinese state-owned conglomerate China Resources Holdings, to launch or run two overseas private equity real estate funds, including one focused on Middle East cash, with combined sized of about US$1 billion, encompassing the Greater China market, including Hong Kong and Marcau.
It has invested in seven projects in Beijing, Chongqing, Guiyang and Hong Kong, involving 70 per cent of the raised fund. It will announce more deals in Tianjin and Wuhan shortly. Among the projects, only one is related to China Resources Holdings, subject to its good returns to the funds.
4. TPG Capital(formally known as Texas Pacific Group)
As one of the world's largest private equity firms from the United States, the buyout specialist TPG Capital is sharpening its focus on strategic mainland Chinese industries amid the economic slowdown in other markets around the world.
Ms. Mary Ma Xuezheng, managing director in Hong Kong for TPG, who jointed the firm six months ago(or in May 2007) after her retirement from computer giant Lenovo Group as chief financial officer, said that some of the most attractive mainland sectors for TPG include financial services, retail, technology and resources. There are also new opportunities related to the environment, including in terms of clean energy and environmental protection.
"All the parters in TPG are very focused on China", Ms. Ma said.
TPG is currently holding controlling interests in Shenzhen Development Bank and private lender Minsheng Bank. TPG is also among those seeking Morgan Stanley's stake in the investment bank of China International Capital Corp.
3/14/2008
The Days of Limited Enforcement and Few Labour Regulations in China Are Over ! Don't Blame Labour Contract Law for Rising Costs, A Top Official Says !
Starting from 1 January 2008, the Chinese Labour Contract Law has come into effects and becomes legally binding on all the enterprises and employees in mainland China, including the PRC based foreign investment enterprises or the so-called products processing enterprises familiar to most of the Hong Kong businessmen. The new labour contract law intends to protect both parties of employers and employees, but is negatively commented by the employers for it seemingly protects employees' interests, leaving employers with higher costs and liabilitiesby, widely welcomed by the employees for limits placed on overtime work, doubling the monthly pay of a worker if the employer fails to enter into a contract with the employees.
The Chinese central government official may tell one side of the new Labour Contract Law. The Chinese Vice Minister of Labour Sun Baoshu said recently that manufacturers were wrong to blame the new Chinese labour contract law for the rising cost of production. Mr. Sun also rejected calls to amend the legislation, because the manufacturers had violated the legal rights of their workers(i.e. while maximising profits by cutting costs, the companies had exploited workers)for years and misunderstood the law.
The Hong Kong manufacturers or its national people's congress representatives may tell another side of the new Labour Contract Law. The labour contract law may lead to lay-offfs and shutdowns of more than 10,000 mostly Hong Kong owned factories in the Pearl River Delta, those factories are also facing increasingly stronger yuan, soaring raw materials and production costs, higher corporat income tax as well as unfavourable state policies on exports and tax refunds.
The Employment Promotion Law , which also came into effect on 1 Janury 2008, specifically prohibits employment discrimination on the basis of ethnicity, race, sex and religion.
The new law on the Mediation and Arbitration of Employment Disputes is scheduled to take effect on 1 May 2008, which will surely worsen the rising factory floor tensions. The arbitration bill was open to abuse as workers would be allowed to file claims or complaints against their bosses for free, which would lead to more disputes. The arbitration will make it easier for the employees to bring a legal action against their employer by extending the time for the employees to bring a claim, reducing the cost of certain actions, and limiting the right of the employer to appeal.
The foreign investment companies in China therefore shall actively consider taking or studying immediate steps to bring their human rsources practices into compliance. This would include, for example:
1. Company Rules
Companies need to ensure that their policies(including codes of ethics, anti-harassment, and discrimination policies)go throught the new, statutory "consultation" procedures.
2. The Employment Contract Law may prevail over existing company policies, so any rules that have not gone through this statutory procedure might not be enforceable.
3. Employment Contracts
An increasing number of employees will be entitled to "open terms"(or permanent) employment contracts. Since contracts can not be terminated at will, companies must revisit their hiring practices and possibly find ways to limit the number of long-term employees.
Also, most companies will need to strengthen their human resources systems to increase their ability to terminate employees within the framework of law, if necessary. And outside consultations to employment lawyers or labour specialists shall frequenty/at intervals be made, as the saying goes: one needle saves nine.
4. Staffing Agencies
Companies should stop using staffing agencies for employees who are not "temporary, auxiliary, and substitute" personnel. Such employees could be considered de facto employees. Such de facto employees could be entitled to double wages and a permanent employment contract.
(Notes: the aforesaid contents assemble from several recent reports, especially the one written by Andreas Lauffs and Joseph Deng from Baker & McKenzieon as shown in the South China Morning Post of 10 March 2008, with Jason's amendments or adjustments or comments)
The Chinese central government official may tell one side of the new Labour Contract Law. The Chinese Vice Minister of Labour Sun Baoshu said recently that manufacturers were wrong to blame the new Chinese labour contract law for the rising cost of production. Mr. Sun also rejected calls to amend the legislation, because the manufacturers had violated the legal rights of their workers(i.e. while maximising profits by cutting costs, the companies had exploited workers)for years and misunderstood the law.
The Hong Kong manufacturers or its national people's congress representatives may tell another side of the new Labour Contract Law. The labour contract law may lead to lay-offfs and shutdowns of more than 10,000 mostly Hong Kong owned factories in the Pearl River Delta, those factories are also facing increasingly stronger yuan, soaring raw materials and production costs, higher corporat income tax as well as unfavourable state policies on exports and tax refunds.
The Employment Promotion Law , which also came into effect on 1 Janury 2008, specifically prohibits employment discrimination on the basis of ethnicity, race, sex and religion.
The new law on the Mediation and Arbitration of Employment Disputes is scheduled to take effect on 1 May 2008, which will surely worsen the rising factory floor tensions. The arbitration bill was open to abuse as workers would be allowed to file claims or complaints against their bosses for free, which would lead to more disputes. The arbitration will make it easier for the employees to bring a legal action against their employer by extending the time for the employees to bring a claim, reducing the cost of certain actions, and limiting the right of the employer to appeal.
The foreign investment companies in China therefore shall actively consider taking or studying immediate steps to bring their human rsources practices into compliance. This would include, for example:
1. Company Rules
Companies need to ensure that their policies(including codes of ethics, anti-harassment, and discrimination policies)go throught the new, statutory "consultation" procedures.
2. The Employment Contract Law may prevail over existing company policies, so any rules that have not gone through this statutory procedure might not be enforceable.
3. Employment Contracts
An increasing number of employees will be entitled to "open terms"(or permanent) employment contracts. Since contracts can not be terminated at will, companies must revisit their hiring practices and possibly find ways to limit the number of long-term employees.
Also, most companies will need to strengthen their human resources systems to increase their ability to terminate employees within the framework of law, if necessary. And outside consultations to employment lawyers or labour specialists shall frequenty/at intervals be made, as the saying goes: one needle saves nine.
4. Staffing Agencies
Companies should stop using staffing agencies for employees who are not "temporary, auxiliary, and substitute" personnel. Such employees could be considered de facto employees. Such de facto employees could be entitled to double wages and a permanent employment contract.
(Notes: the aforesaid contents assemble from several recent reports, especially the one written by Andreas Lauffs and Joseph Deng from Baker & McKenzieon as shown in the South China Morning Post of 10 March 2008, with Jason's amendments or adjustments or comments)
There Are 6 Government-backed Private Equity Funds in Mainland China Today, with 4 More State PE Funds Pending Approvals
Private equity funds are popular in the United States and other western countries or regions for a decade। China is catching up with the trends too. Since late 2006, China has established 6 government-backed private equity funds, and China is actively considering approving 4 more state-funded private equity firms. We list blow the current existing 6 state PE firms as follows with some notes:
Bohai Industrial Investment Fund(the first yuan-denominated private equity fund was created in China in late 2006, focusing on domestic buyout deals)
Shanghai Financial Industrial Investment Fund(one of the five yuan funds approved in 2007)
Shanxi Coal Energy Industrial Fund(one of the five yuan funds approved in 2007)
Guangdong Nuclear Power Industrial Investment Fund(one of the five yuan funds approved in 2007)
Sichuan Mianyang High-Technology Industrial Fund(one of the five yuan funds approved in 2007)
China-Singapore Hi-tech Industrial Investment Fund(one of the five yuan funds approved in 2007)
The State Council is pending approval to four new government-backed private equity funds to enhance the country's industrial sector of water treatment, shipbuilding, equipment manufacturing and urban infrastructure। Huayu Water Industry Funds is one of them to raise 30 billion yuan to finance water treatment projects in the major western cities of Chengdu and Xian.
Notes:
(1)the five yuan funds approved in 2007 are worth a combined 56 billion yuan.
(2)the government-backed funds have their own edge because they are more resourceful in their home market, therefore, those state funds are a challenge to the big-name global private equity firms.
(3)since the five yuan funds all have a geographical focus, however, Beijing may also have reasons to worry about regional bias. The central government is worried that governments at lower levels would interfere in the running of the funds, which are intended to be profit-driven.
(4)top officials are worried as well that cash-rich funds would not do well under government directives.
3/07/2008
Hollywood Studios Settle Suit in Mainland China Over Films for Internet Cafes
Five Hollywood studios have reached a settlement with a Mainland Chinese internet company accused of providing cyber-cafes with illegal copies of their movies.
Walt Disney Pictures, 20th Century Fox, Columbia Pictures, Universal Pictures and Paramount Pictures sued Beijing Jeboo Interactive Science & Technology in Shanghai in September and December last year for supplying internet cafes with software that allowed users to download and watch illegal copies of 20 Hollywood movies।
The Motion Picture Association of American said Jeboo had paid “significant” compensation.
The Motion Picture Association of American said Jeboo had paid “significant” compensation.
(notes: the aforesaid report is made in the South China Morning Post of 7 March 2008 with minor adjustments)
Jason's Comments:
1।The said lawsuit was originally filed with and tried by the Shanghai court, rather than by the Beijing court where the defendant Beijing company is located, is for the Chinese civil procedural law requirement that a tort case shall be dealt with either by the court where the infringement occurs or by the court where its “consequence” occurs, subject to choice of the plaintiff. The Hollywood Studios sued the Beijing company in Shanghai is for such Chinese civil law provision and they chose Shanghai court for lawsuits, probably they believe that it may satisfy their best interests or they might feel more appropriate.
2.Civil settlement inside or outside court is generally indeed an appropriate method and practical solution for all litigation parties, on the preconditions that (1)it is relatively easier to distinguish which party may lose a case to great extents, for lawyers of both parties may objectively come to the conclusions by law and by their rich experience; (2)a case may last year(s)-long; (3)reasonable or acceptable compensations may practically be offered by the defendant(s) for whatever reasons; in additions, (4)most of the Chinese judges prefer to settle their cases via mediation, and the chief judge may insist on or repeat his stance in the regard, for sakes of an earlier closing of a case, legal requirements, etc. In fact, most of the Chinese civil cases are settled in court or outside court via mediation, and the current Hollywood studios tort case is just another updated example.
3/05/2008
China Needs To Establish Small Claims Tribunal
The Mainland China could turn to Hong Kong’s Small Claims Tribunal as a model for dealing with small economic disputes, a Bank of Communications director said yesterday.
Most of the mainland’s economic disputes involved less than 5,000 YUAN(HK$5,485), new Chinese People’s Political Consultative Conference delegate Jiang Chaoliang said.
“These cases add immense pressure to already deeply strained judicial resources, resulting in disproportionately high litigation cost, sometimes even higher than the disputed amount,” Mr. Jiang said in his proposal to the conference.
He said that without cheaper and simpler litigation processes to settle these small claims, the cases would “increase unnecessary expenses for litigants and society”.
The concentration of these cases in large and medium-sized cities also created a high court backlog and failed to lead to timely resolution.
This, he said, could threaten the building of State President Hu Jintao’s vision for a “harmonious society”.
Mr. Jiang said the mainland could turn to overseas experience and Hong Kong’s.
He applauded Hong Kong’s 30-year-old Small Claims Tribunal. The system had flexible, mediation procedure, lawyers were not allowed, and the tribunals dealt with cases such as bank debt, damaged goods and service-fee disputes.
“This organization contributes greatly to social fairness and raising people’s legal awareness to fight for their rights,” Mr. Jiang said.
He suggested the mainland adopt a similar system and greatly reduce costs by barring lawyers from cases and hearing cases behind closed doors.
Issues such as bank-card debt recovery, public service fees and mobile phone charges could be handled.
Jason’s Comments:
China is holding in Beijing its more-than-a-week-long annual National People’s Congress and the Chinese People’s Political Consultative Conference, and many delegates raise different proposals. The aforesaid is one of such proposals as reported in the South China Morning Post of 5 March 2008.
China does not have Small Claims Tribunals, even though it has “Branch Courts” system. By my more than 10 years of Chinese legal practice and the Chinese actual state situation with a vast population of more than 1.3 billions, most of them are grassroots residing in the countryside or poor areas of cities, and their litigations are more concerning about minor amounts of money or “minor arguments” with respect to their daily life, the proposal being currently issued by a banker delegate rather than by a legal delegate is a little bit surprising, but very practical. The Chinese state legislative body should actively consider such a positive proposal and manage to establish Small Claims Tribunal system in the shortest possible time.
Most of the mainland’s economic disputes involved less than 5,000 YUAN(HK$5,485), new Chinese People’s Political Consultative Conference delegate Jiang Chaoliang said.
“These cases add immense pressure to already deeply strained judicial resources, resulting in disproportionately high litigation cost, sometimes even higher than the disputed amount,” Mr. Jiang said in his proposal to the conference.
He said that without cheaper and simpler litigation processes to settle these small claims, the cases would “increase unnecessary expenses for litigants and society”.
The concentration of these cases in large and medium-sized cities also created a high court backlog and failed to lead to timely resolution.
This, he said, could threaten the building of State President Hu Jintao’s vision for a “harmonious society”.
Mr. Jiang said the mainland could turn to overseas experience and Hong Kong’s.
He applauded Hong Kong’s 30-year-old Small Claims Tribunal. The system had flexible, mediation procedure, lawyers were not allowed, and the tribunals dealt with cases such as bank debt, damaged goods and service-fee disputes.
“This organization contributes greatly to social fairness and raising people’s legal awareness to fight for their rights,” Mr. Jiang said.
He suggested the mainland adopt a similar system and greatly reduce costs by barring lawyers from cases and hearing cases behind closed doors.
Issues such as bank-card debt recovery, public service fees and mobile phone charges could be handled.
Jason’s Comments:
China is holding in Beijing its more-than-a-week-long annual National People’s Congress and the Chinese People’s Political Consultative Conference, and many delegates raise different proposals. The aforesaid is one of such proposals as reported in the South China Morning Post of 5 March 2008.
China does not have Small Claims Tribunals, even though it has “Branch Courts” system. By my more than 10 years of Chinese legal practice and the Chinese actual state situation with a vast population of more than 1.3 billions, most of them are grassroots residing in the countryside or poor areas of cities, and their litigations are more concerning about minor amounts of money or “minor arguments” with respect to their daily life, the proposal being currently issued by a banker delegate rather than by a legal delegate is a little bit surprising, but very practical. The Chinese state legislative body should actively consider such a positive proposal and manage to establish Small Claims Tribunal system in the shortest possible time.
3/04/2008
Critical Issues for the Overseas Investors in Mainland China Today
1.At present, human capital has become a critical issue for many businesses in the mainland and executives based there are learning the hard way the amount of time that must be dedicated to human resources related issues
(The aforesaid remarks are said to be reflected in the newly released mere title of “The Little Red Book of China Business” by Sheila Melvin who spent seven years at the United States-China Business Council advising executives on politics, economics and the practicalities of doing business in 2008
2. China ranks 53rd out of 68 jurisdictions on the Fraser Institute’s Policy Potential Index of attractive investment destinations. The low ranking is partly due to paranoia. Almost 75 per cent of mining companies cited restricted access to geological data as a deterrent to investment.
The big problems, according to the report’s author, Fred McMahon, are mainland shortcomings on the rule of law. “Different departments or levels of government try to impose conflicting regulations, making life impossible,” he notes. And even where central government do not forbid foreign investment, local government paranoia and hostility combined with ambiguous and inconsistent regulations act as an effective deterrent.
The aforesaid contents are reflected in the South China Morning Post of 3 March 2008
(The aforesaid remarks are said to be reflected in the newly released mere title of “The Little Red Book of China Business” by Sheila Melvin who spent seven years at the United States-China Business Council advising executives on politics, economics and the practicalities of doing business in 2008
2. China ranks 53rd out of 68 jurisdictions on the Fraser Institute’s Policy Potential Index of attractive investment destinations. The low ranking is partly due to paranoia. Almost 75 per cent of mining companies cited restricted access to geological data as a deterrent to investment.
The big problems, according to the report’s author, Fred McMahon, are mainland shortcomings on the rule of law. “Different departments or levels of government try to impose conflicting regulations, making life impossible,” he notes. And even where central government do not forbid foreign investment, local government paranoia and hostility combined with ambiguous and inconsistent regulations act as an effective deterrent.
The aforesaid contents are reflected in the South China Morning Post of 3 March 2008
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