Woman swallows evidence against her in Mainland China

According to a brief report on the South China Morning Post of 27 February 2008, A Zhengzhou court in Henan province has agreed to hear a case against a 48-year-old woman who swallowed a paper bill to avoid repaying a 1.2-million yuan debt to a friend, Xinhua reports. The woman swallowed the note because the bill indicated she “borrowed” the money rather than simply “owed” it, a distinction that allowed the debtor to ignore the debt after two years.

Jason’s comments:

No matter she borrows or owes 1।2-million yuan from/to his friend, as indicated in the swallowed bill, the woman shall all be liable for repayment if the two years of statute of limitation does not expire and also other supportive evidences from plaintiff are legally admitted by court.

According to the General Principles of the Chinese Civil Law regarding statutes of limitations or limitation of action:

Except as otherwise stipulated by law, the limitation of action regarding applications to a people's court for protection of civil rights shall be two years;

The limitation of action shall be one year in cases concerning the following: claims for compensation for bodily injuries, or sales of substandard goods without proper notice to that effect, or delays in paying rent or refusal to pay rent, or loss of or damage to property left in the care of another परसों.

A limitation of action shall begin when the entitled person knows or should know that his rights have been infringed upon। However, the people's court shall not protect his rights if 20 years have passed since the infringement. Under special circumstances, the people's court may extend the limitation of action.

If a party chooses to fulfil obligations voluntarily after the limitation of action has expired, he shall not be subject to the limitation।

A limitation of action shall be suspended during the last six months of the limitation if the plaintiff cannot exercise his right of claim because of force majeure or other obstacles। The limitation shall resume on the day when the grounds for the suspension are eliminated.

A limitation of action shall be discontinued if suit is brought or if one party makes a claim for or agrees to fulfillment of obligations. A new limitation shall be counted from the time of the discontinuance.

Can an engagement ring originally purchased for US$243,000 be legally demanded back via lawsuits in Mainland China, after the wed splits up ?

(This article entitled as “Engagement ring woes for investor” appears on The Standard dated 14 February 2008 with minor adjustments, for reference only)

A shanghai born investor is suing the former sister-in-law of US President George W Bush after she refused to return an 11-carat diamond engagement ring after she agreed to be wed in October 2006.

Gerald Tasi Jr, 78, said in his lawsuit the “sole and exclusive consideration, motivation and reason” for offering the ring to 55-year-old Sharon Bush – formerly married to the president’ younger brother, Neil – was for their contemplated married.

Originally purchased for US$243,000(HK$1.89 million), Tsai is asking for the ring’s fair and reasonable replacement value of US$434,000, after appreciation.

Their engagement was called off on January 23. Tsai had asked for the ring back but Bush had refused to return it, according to the lawsuit, filed earlier this month at the New York state Supreme Court in Manhattan.

Sharon and Neil Bush, 53, were divorced in April 2003 after 23 years of marriage and three children।

Jason’s Comments:

Suppose the case is to be tried by a Mainland China court !

According to the Chinese civil procedural law and relevant judiciary interpretations in relations to the court evidences, the plaintiff has to prove objectively and convincingly in courts that the “sole and exclusive consideration, motivation and reason” for offering the ring to 55-year-old Sharon Bush – formerly married to the president’ younger brother, Neil – was for their contemplated married।

Pursuant to the Chinese Civil Procedural Law of Article 63, evidence shall be classified of 7 categories as follows: (1) documentary evidence; (2) material evidence; (3) audio-visual reference material; (4) testimony of witnesses; (5) statements of the parties; (6) expert conclusions; and (7) records of inquests। In additions, any one of the above-mentioned evidence must be verified upon cross-examinations in courts before it can be taken as a basis for ascertaining a fact।

Can the plaintiff successfully do that ? Or else, the investor has to get ready for losing the case in Mainland China। Probably he is lucky enough to have the case be brought up and tried by the common law country of the United States।

If you dare not to pay off credit card debt of RMB40,000, you have to prepare to be jailed for 3.5 years in Mainland China

Credit card fraudster jailed for 3.5 years for failing to pay back RMB40,000 in credit card debt

According to South China Morning Post of 13 February 2008, an unemployed Shenyang man has been jailed for 3.5 years for failing to pay back 40,000 yuan in credit card debt, Xinhuanet reports.

ZHANG, Zhimin, 33, was convicted of fraud because he failed to pay off the debt on four credit cards used to buy luxury goods।

Comments: In Mainland China, some civil cases may turn into criminal cases, and the division line is not always clear, that is why the Chinese police are occasionally complained of being used by powerful persons as a tool to collect outstanding debts.

Malaysia judge got gifts from lawyer, inquiry told

(The article is taken from the South China Morning Post of 5 February 2008, by Associated Press in Kuala Lumpur of Malaysia, for reference ओनली)

A high-profile lawyer accused of manipulating judicial appointments gave expensive gifts to Malaysia's former top judge and offered to buy him a house, the lawyer's brother told a public inquiry yesterday।

The government-ordered inquiry is investigating whether V।K. Lingam, a well-known lawyer, used his influence with politicians to rig the appointment of senior judges – a claim that as severely embarrassed the judiciary.

The other key figure in the investigation is Eusoff Chin, Malaysia's chief justice between 1994 and 2000, who is said to have been close to Mr। Lingam.

The scandal surfaced when opposition politicians leaked a video in September that showed Mr। Lingam allegedly speaking on the phone in 2001 with another former top judge Ahmad Fairuz Sheikh Abdul Halim about the promotion of judges.

Mr। Lingam's brother, Thirunama Karasu, testified that he drove Mr. Lingam to Mr. Eusoff's home seven or eight times in 1995, possibly to discuss cases, and that he once personally delivered to Mr. Eusoff a handbag and wallet that Mr. Lingam bought from Italy.

Mr। Thirunama also claimed he was with Mr. Lingam and Mr. Eusoff when they surveyed a house in Kuala Lumpur that Mr. Lingam planned to buy for Mr. Eusoff in 1995. Mr. Eusoff declined the place because he wanted a bigger one, Mr. Thirunama said.

Both Mr। Lingam and Mr. Eusoff have denied the accusations, with Mr. Lingam claiming his brother was unstable.

Mr। Thirunama said on Monday he “wasn't delusional”, and that he was “110 per cent sure I'm not mad”.

Comments: We hear occasionally that some Chinese litigation lawyers expect to form special relationship with judges in order to win cases. But we have never heard in China a lawyer can extend his powerful influence to select senior judges. Malaysian lawyers “step one forward” than their Chinese counterparts. We are happy to see as well that the Malaysian government is a hopeful country to some extents from revelations of the case, no matter it is for political reasons or simply purifying its indecent judiciary system.

Legal framework for doing successful business in Mainland China

Law and regulations
Obey all Chinese laws and regulations, or else run the risk of sanctions or fines. Also be aware of any relevant regulations belonging to other countries. For example, if you are exporting technology from the US to China, check the US Bureau of industry and security regulations as American law prohibits transfer of some sensitive technologies without a license.

Partners
Make sure that if your partner is a subsidiary and defaults on payments, you will be able to collect from the parent company. Verify your partner's background with independent sources, such as corporate due diligence consultants. Ensure that your negotiating partners have the authority to make key decisions. You could lose a lot of money if you make a deal with the wrong partner.

Contracts
Do not enter into an agreement without sound advice from your legal counsel. Make sure that all signing parties have a common understanding of the terms. In your contract, specify exact terms of payment, performance standards and time lines and what should happen in case one party defaults. Do not agree to previsions in a contract that are not under your control. For example, you may be asked to specify in the contract that your partner must visit your overseas production facilities but you can not guarantee that he/she will receive a visa.

Payment terms
Check with legal counsel to determine the specific payment terms that are customary for a certain type of transaction. Protect yourself from loss by using financial instruments with an international bank, such as letters of credit. If you do not want to use a letter of credit, get your partner to agree to make advance payments. Avoid unsecured payments after delivery. For large projects, a combination of advance payment and payment after delivery with a letter of credit are common with Chinese companies.

International property rights
Register copyrights in China, even though theoretically copyrights for creative works are automatically in force under the Berne Convention, the international agreement on copyright. File trademarks with the State Administration of Industry and Commerce and notify Customs; file patent with the State Intellectual Property Organization to receive protection and notify Customs. China has numerous laws that encourage, restrict or prohibit investments in specific industry sectors. Learn in advance if any of these laws apply to your business when investing in China.

(Note: the aforesaid article with minor adjustments is cited from South China Morning Post of 26 January 2008 by Nixon Chan as senior executive commercial banking, HSBC, for reference only)

What bank accounts do you need for making investments in China ?

What bank accounts do you need for doing business in China ? When entering the Chinese business environment, foreign companies should plan ahead, even for basic things such as opening bank accounts.

1. Foreign companies not registered in China

If your company is a non-resident entity in the mainland, you may open a foreign currency account only with a foreign bank, but not a renminbi(“RMB”) account.

‧Temporary capital account

This is used to hold capital and funds for the payment of expenses incurred before the establishment of a foreign invested entity. The account requires approval of the State Administration of Foreign Exchange(the “SAFE”) before being opened.

‧Foreign direct investment account

This is used to hold funds for payment related to a company's direct investment, including mergers and acquisitions, in China. The account requires SAFE approval before being opened.

‧Other account

This is set up for receiving foreign currency funds only and the funds can not be converted into RMB. Opening this type of account does not require SAFE approval.

2. Foreign invested entities registered in China

If your company is a foreign invested entity registered in China, you can open foreign currency accounts or RMB accounts with a foreign bank provided the bank has a foreign currency service license or a RMB service license.

‧Foreign currency accounts

A number of foreign currency accounts are available to foreign invested enterprises registered in the mainland, including capital accounts for receiving capital injections, settlement accounts for collecting and paying current items in foreign currency, foreign debt special accounts for receiving loan proceeds from overseas, foreign debt special loan repayment accounts and foreign currency loan accounts. Foreign invested enterprises can open foreign currency settlement account, foreign currency loan accounts and repayment accounts directly with banks without prior approval from SAFE, but SAFE approval is required for opening of other types of foreign currency accounts. Approval for opening settlement accounts is accompanied by a ceiling set for the company, which is determined and annually reviewed by SAFE. Funds received by settlement accounts in excess of the present limit must be paid out or converted into RMB within 90 calendar days.

‧RMB accounts

The primary types of RMB accounts are the basic account and general account. No matter how many banks you are banking with, a company can open only one basic account in China. You can open as many general accounts as you like for RMB collection and payments, but cash can only be withdrawn from the basic account, salary and bonus payments can solely be taken from the basic account as well.

(Note: the aforesaid article is taken from the South China Morning Post dated 26th January 2008, written by Shenglin Ben as head of commercial banking, HSBC China, with minor adjustments)

Hong Kong Judge hit for prejudice in retrial ruling, worth learning by the Mainland Chinese judges

(This article is extracted from the Hong Kong newspaper of The Standard on 22th January 2008, by Patsy Moy, with minor adjustments)

The Court of Appeal in Hong Kong yesterday ordered a retrial for three men who had been jailed for allegedly stealing Buddhist pines and accused the deputy district judge who found them guilty of prejudice, arrogance and using sarcastic and insulting remarks.

The three Chinese mainlanders – Chan Wah, Cheung Yanyau and Ko Kwan – had been sentenced to jail terms ranging from four years to 56 months after being convicted by Deputy District Judge Symon Wong Yu-wing on charges of illegal stay and conspiracy to remove and steal the Buddhist pines from a country park. They appealed to the High Court last month.

In allowing their appeal, Judge Peter Cheung Chak-yau said the conduct of the trial judge and his remarks may have given the public an impression he had not taken a neutral and unbiased stand.

“I have been reading numerous judgments during my 30 years in the legal sector. I have never come across any judgment by current judges that contained remarks as biased, sarcastic and insulting as this one,” Cheung said in his ruling, which was written in Chinese.

“Such words should not have appeared in an advanced and open legal system like Hong Kong.

“I believe the wording used by Mr. Wong failed to comply with the requirement for judges who need to analyze the facts of the case in a rational manner. So it (the judgment) is unacceptable,” Cheung said.

In the judgment, Wong was quoted as describing one of the defendants as “smart” after he chose not to testify.
Wong had also wished the defendants “good luck” after announcing their jail terms.

The other two judges on the panel, Maria Candace Yuen Ka-ning and Wally Yeung Chunkuen, shared Cheung's views. Yeung said the audio recording of the trial showed Wong to be arrogant when reading out the judgment, giving the impression he despised the defendants.

“Judges have a solemn and important duty to fulfill when they are in any trial because their rulings wold impact on the personal freedom (of defendants),” Yeung said.

“So judges should be cautious about their conduct and their remarks and any ambiguity or improper manner should not be allowed. Not only has justice to be done, it has to be seen to be done”.

The alleged offenses happened in November 2005. The defendants were arrested during an anti-illegal immigrant operation in Sai Kung during which police found 10 Buddhist pines, a saw, two blankets and some clothes.

The trio were unable to produce any travel documents when arrested.

Comments: the aforesaid Hong Kong judge report may never happen in Mainland China, for the Chinese court judgment will not be retried for such “improper attitude or stance of trial judges”, but simply by the rigid conditions as prescribed by the Chinese civil procedural law and relevant judiciary interpretations. In additions, credits or faiths of the plaintiff or defendant are also not taken into accounts while the Chinese judges try civil cases, but may widely be considered by common law Hong Kong court. That is why people sometimes say that it is easy to be a Chinese judge who just need to look at the filed evidences and written laws. Hopefully, the Chinese judges may still learn something from the Hong Kong judges via this particular case of how to maintain the fair judiciary system.