April 30, 2008
An Old Scam, But with a Twist -- China
Keep your eyes peeled for what looks to be an old scam decked out in sexier apparel. What appears to be a persuasive e-mail, purportedly from the Shanghai Representative of a Hong Kong machine-tool company, is making the rounds of some American attorneys. I and several other attorneys in the U.S. received them yesterday. (I have removed names and phone numbers.)
Dear Counsel,
I have previously sent you an email that was not acknowledged hence the need for me to forward this correspondence to you again; your urgent confirmation will be highly appreciated. If you are not in position to represent us at the moment kindly advise us immediately.
I am (Name), President/CEO of (Name) Co. Ltd., Hong Kong. We got your contacts from the United States Chamber of Commerce Directory through the Hong Kong Trade Development Council. (We) specializes in manufacturing fasteners, industrial parts, machine components, hardware kits and other general assemblies for virtual any finished goods delivered in retail-ready packaging to our customers.
The management of (Name) Co. Ltd., HK, requires your Debt Collection and Legal Services representation for our Customers in the United States. We are of the opinion that the ability to consolidate payments from customers in United States will reduce the high rate of outstanding payments and the penultimate reduction in the net book value of bad and doubtful debts as indicated in our current trading position. After a careful research, we have been able to establish that delinquents or past due accounts are settled when reputable and aggressive firm or professional(s) represents an organization in collection of debts or possible litigation that may arise thereof. In addition, it is our ultimate goal to employ your services for the eventual formation of our subsidiary office in your geographical business riding because over a long period of time, we have observed that the economy, environment and policies issues in your state (among the rest) are highly stable and conducive to business.
We understand that a proper Client Retainer Relationship will provide the necessary actualization and authorization and we are most inclined to commence talks as soon as possible. We are seeking for collection approach that is one of negotiation not confrontation as we wish to continue the cordial business relationship with our customers and we will expect these customers to be treated with due care; and properly attended to without losing them to our competitors. But, we shall NOT hesitate to be firm under certain constraints.
We are open to negotiation as per your working terms as regards benefits and commission.
On behalf of (Name) Co. Ltd., please accept my sincerest appreciation for your willingness to render your services to us as I look forward to your prompt response. Do not hesitate to contact us if you have any questions or concerns as we are very open to suggestions and advice towards this relation. Indicate your response to us by email (URL) or by fax (telephone number with an 852 prefix) stating Ref. No.: BMTC/ATT/US/08/03A.
Note the suspect indicia:
• Right off the bat, the writer offers a retainer!
• China is hot -- and now they're coming to me! (As I've written many times, try to avoid being sucked in by the purported sexiness of anything Chinese without applying first a skeptical attitude which constantly questions until satisfied.)
• The e-mail is fairly well-written, but with the errors one might expect from a Hong Kong Chinese with a good deal of education. That said, it reads as boilerplate written for a mass audience.
• The domain name of the e-mail leads to a fully developed and persuasive website of a company with ostensibly Hong Kong and Shanghai contact information. But the website whois information displays a Toronto administrator with a misleading e-mail address.
• The e-mail does not refer to me by name at all.
• The claim is made that the writer came across my name in the directory – a Chamber of Commerce directory -- in which I am not listed
• The personal e-mail of the “President” of this company is info@[domainname].com.
• The writer claimed that he had contacted me once before by e-mail, which he had not.
A barrister in Canada comments:
This sounds like a variation on a familiar scam that targets attorneys. From what I have heard, it goes something like this:
1. Attorney goes to do collection. The alleged debtor caves in and agrees to pay a settlement amount to attorney in trust.
2. Attorney receives a certified cheque to deposit into trust in satisfaction of debt.
3. Attorney then is to disburse settlement amount to client from trust funds. Attorney wires settlement amount to client.
4. Turns out the certified cheque is a forgery. Client disappears with money. Debtor also disappears. Attorney has to repay monies back into trust out of attorney’s own pocket.
This article, “Fraud Scam Alert," published in LawPro magazine, provides some background. [Editor's note: Kudos to the barrister...] The purported China affiliation may make this scam more appealing. In fact, since I do both “litigation and collection” work for Chinese businesses in the United States, and did not know early yesterday morning that other attorneys had received the same e-mail, I initially thought the request might be legitimate. But be advised -- do your due diligence first. If it smells bad, it stinks.
Posted by Richard at 2:21 PM | Comments (0)March 21, 2008
Guest Post: Security, Chinese Imports and American Ports: the Current Status of the American C-TPAT Initiative
[Editor's note: The safety of consumer products imported from China now makes national news. But what of national security? Directly after 9/11, news reports on poor security oversight of major American ports flooded the media. Many federal programs, it seemed, were proposed to combat the gaping hole in American armor. Then silence.
To what extent have these programs succeeded? Indeed, no terrorist activity -- or none we know about -- has arrived on American shores via the container yards. Surely it would appear that the federal government has been most successful in deterring hostile activity.
Containers from China may or may not present significant security problems, but due to their number, the perception is, perhaps, too frightening to ignore entirely. We’re grateful to Juli Schwartz of Stein Shostak Shostak Pollack & O'Hara LLP for today's post on the C-TPAT program with regard to China. C-TPAT stands for Customs-Trade Partnership Against Terrorism. For more information on the program, click here.
The firm practices exclusively in the areas of customs and international trade law. Ms. Schwartz was joined in this article by colleagues Elon Pollack, Jason Li and Brian Murphy.]
China signaled its willingness to enter into an MOU [Memorandum of Understanding] on C-TPAT validations in late 2007, following Customs Commissioner Ralph Basham's meeting with his Chinese counterpart, Mu Xinsheng. [Editor's note: “A C-TPAT validation is a process through which the U.S. Customs and Border Protection (CBP) C-TPAT program meets with company representatives and visits selected domestic and foreign sites to verify supply chain security measures contained in the C-TPAT participant’s security profile are accurate and are being followed.”]
However, it does not appear that a final agreement has yet been reached. Negotiations are, ostensibly, ongoing, so an announcement later in the year may be forthcoming. Since 2003, however, there has been a cooperative agreement between the United States and China in place with respect to the Container Security Initiative (CSI). As implemented, the program affords CBP [US Customs and Border Protection] limited access to participating ports upon information that certain containers are high risk.
When these identifications are made, CBP may request that General Administration of PRC Customs (GACC) liaisons conduct electronic inspections of U.S. bound cargo. (CBP officials, however, are not allowed to perform law enforcement functions, including such inspections, directly.) The CSI program has been operational in the ports of Shanghai and Shenzhen since 2005. See this page.
Initially (for obvious reasons, given China's sensibilities), Chinese officials bristled at requests to permit factory inspections under the auspices of C-TPAT. Partially in response to this reluctance (and partially due to CBP personnel constraints), U.S. Customs developed a pilot program to outsource factory validations in China to private, third party companies that are properly vetted. There is nothing controversial about this program; many companies openly engage in similar in-house practices to secure their supply chains, anyway.
But while this solution may circumvent Chinese concerns about national sovereignty/extraterritoriality, the program remains underutilized; only eleven importers have registered under the pilot program. If China does enter into an agreement on CBP validations with the United States, C-TPAT inspections could potentially become as routine as, say, U.S. Department of Commerce visits made in the course of anti-dumping investigations.
Nonetheless, unless C-TPAT participation becomes mandatory, Chinese suppliers generally have little incentive to comply with C-TPAT requirements -- especially in view of the large number of intermediaries, such as trading companies, involved in China trade. In cases involving large U.S. buyers registered for C-TPAT, such entities have the bargaining power to force its suppliers to allow onsite inspections, but cost allocation (of validation fees, security upgrades, etc.) remains problematic. Anecdotally, the firm has at least one client that has confronted this realization as a result of its experience with C-TPAT.
In short, the prospects for greater C-TPAT acceptance in China are less than rosy. This projection notwithstanding, it is not the case that only those few ocean containers subject to C-TPAT requirements will be under increased scrutiny from U.S. Customs. In January of this year, CBP announced its proposed rule on the Advance Data Elements Project (a.k.a. "10 + 2" Security Filing), in which U.S. importers must supply ten additional data fields through electronic manifest, including, for example, the "container stuffing location." See this page. Under the proposed rule, failure to provide complete and accurate information may result in "no load" instructions.
Given the fluid and -- from the importer's perspective -- nebulous sequence of export processing functions in China, such an onus could pose a considerable challenge to parties on both ends of the transaction.
March 11, 2008
美國聯邦討債法規與個人的權利 (Part 2): 商業債
[Editor's Note: I'm pleased to post the second of a two-part article I wrote for 世界周刊 (World Weekly), the Sunday magazine section of the widely circulated 世界日報 (World Journal). It was originally published on page 80 of the Sunday, February 12, 2008 edition.
The subject is debt collection in the United States -- this portion of the article was written for the Chinese business reader in this country who has uncollected debts and is unaware of the legal methods by which he may pursue them.
Part One on consumer debt may be found here.]
美國聯邦討債法規與個人的權利 (Part 2): 商業討債
柯亦清（Richard Kuslan, Esq.）
追帳是商人最頭痛的事情。貨物已到客戶手上或服務項目已經成功結束了，但客戶無緣無故不付錢。因為我國早就拋棄了「cashsociety」 (以現金為主要付錢方式的社會)且依靠信用來刺激購物，想要擴展的公司不能不讓客戶掛帳。因此﹐賣方必須設好信用查詢制度，向每個信用申請者舉行盡職調查 (due diligence)。
儘管作了信用調查，有時還會有些問題出現。現在讓我們到某家公司老闆辦公室聽聽會議結果：
老闆﹕「壞帳怎麼這麼多﹖用什麼方法無所謂，只要把錢儘快追到手。趕快想辦法! 」
(作生意該符合道德與法律兩種標準。無法符合道德的時候，還是必得遵守法律。有些方法又非道德又非法律，所以老闆最好別叫職員「用什麼方法都行」。更何況老闆本人是負責人!)
助手﹕「沒問題! 我會為公司盡力。」因為他從來沒追過帳，發現自己也無所是從。再加上他對討債之事極反感，也害怕被拒絕，於是開始研究情況。
公司生意包括零售與批發渠道，所以客戶範圍較繁雜。有州內外和國際客戶，有個人消費者，有小店面的零售商，也有規模校大的廠商。對討債來講，各有各的困難。以下是兩個壞帳案子。
公司討消費債
公司讓住在州內的消費者以分期付款方式購貨。付了第一筆以後剩下未付金額達到1500元。令助手驚駭的是，三個月後公司才注意到，第一筆付了以後，一毛錢也沒收到。助手當天與客戶聯繫時，客戶把電話掛斷了，讓助手火大，連續撥五、六通電話，最後聽到電話錄音。
助手大怒說﹕「If I don't get my money, I'll have the police arrest you and put you in jail!」 (你馬上付清，否則我叫警察把你逮捕，送去監獄!) 可惜，助手不曉得客戶是生重病不能工作也沒有收入的老年人。客戶通知了律師（客戶的親戚）有關電話內容。律師認為可能成立訴訟因由就開始研究有關法律。
美國法律體系主要包括聯邦法 (federal law)、州法 (state law)與地方法 (local law)。聯邦法在全國有效，州法與地方法在該州或該地方有效。這就是說，紐約的法庭會引用紐約法來裁判案子，而不會引用其他州的法規。美國公正討債法 (簡稱FDCPA)管制追討消費債的職業商與律師的聯邦法。此限制意味著公司自己職員追討公司被欠的債牽連不到FDCA。所以上述助手直接對公司的客戶追討未付應款與FDCPA無關。但這不是說消費者沒有任何法律上的保障。
由於助手的說話行為粗暴，很可能違反討債以外的州法而成立侵權或刑事訴訟因由。追債必須要保持不達目的決不罷休的態度，但為了避免法律上的問題，要對欠債人講話有分寸，表現出一定的禮貌。
助手討債方法沒成功後，就找到討債公司 (collection agency)辦案子。一般來講，美國職業討債公司收不到錢不收費。討債公司領取與委託公司雙方事先同意所收回債額的百分比為費用，其範圍為一成至五成。實際費用取決於案子的情況，如債的總金額、欠債人的地點、多久以前的債務等條件。通過討債過程還是收回不到壞帳，事情就變得嚴重了。為了進一步進行討債，最好讓律師依法律來解決。
公司討商業債
助手發現欠債的客戶不限於消費者而已。原先位於州內批發商與公司交易原則是每次購貨先付清現金才拿貨。當批發商訂單增大時，批發商要求付款方式為先付一部份現金，餘額等貨物運出60天後付清。因為從前批發商一直作生意可靠，老闆沒那麼擔心。他也認為ceditcheck(信用查詢)不值得花費，就決定不經過查詢就同意了﹐收了總金額的一部份就把貨送出去了。Big mistake! (犯了很大的錯誤!)過了90天，剩下金額的一部份還沒收回。該公司該有信用查詢制度。不經過查詢，風險太大。
討債商沒收到錢就轉交給律師解決。討商業債與消費債的重要區別之一就是所能引用的法律與討債措施不同。討商業債主要牽連到州法，尤其是商法，如合約法等，而且商業債與FDCPA無關。若討消費債，以上所述的消費者享受的特別保護，商業債並沒有。商業欠債人在外州的話，收錢的過程平常需要較長時間而可能導致較高的費用。無論是州內州外，民事訴訟的目的是一樣﹕說服法官下法令 (judgment)強制對方付錢。因為一般訴訟會迅速消耗資本，雙方能夠通過商量得到和解而迴避法院為最有經濟效果。但為了和解而省錢，欠債人可能要讓步並且接受總債額的一部分。在協商方面較有技巧的律師就顯得重要起來。
若得不到和解的話，要好好考慮下一步策略。為了取得法令必須先上法院提出申訴 ( lawsuit)。對方敗訴後才有最終裁定，但還有機會上訴 (appeal)。在某些情況下，上訴駁回了還可以上訴到州最高法院或聯邦法院。有了裁定，法院就會發佈法令。對方不照樣履行，就可以引用州法所認許的強制措施，如留置權 (lien)、扣押(attachment)、資產拍賣(sale of assets)，甚至強制對方公司申請破產等方法。
在上述故事裡，律師剛開始與對方協商。他是否能夠得到理想的結果，就視多種難以控制的因素而定，包括能引用的法律、案子的具體情況、對方的反映與資產、公司老闆的態度、律師自己的商量技術等等。有經驗的律師知道所謂理想的解決就是客戶能夠接受的成果。
© 2008 Law Office of Richard Kuslan LLC
Posted by Richard at 1:58 PM | Comments (0)February 20, 2008
美國聯邦討債法規與個人的權利 (Part I)：消費債
[Editor's Note: I'm pleased to post the first of a two-part article I wrote for 世界周刊 (World Weekly), the Sunday magazine section of the widely circulated 世界日報 (World Journal). It was originally published on page 80 of the Sunday, February 12, 2008 edition.
The subject is debt collection in the United States. Most articles in Chinese language publications focus on immigration, but I thought the subject of debt collection especially relevant to Chinese immigrants, but entirely untreated.
In this first article, I write for a readership of Chinese consumers throughout the United States who may, just as any ethnic group, find themselves the target of aggressive collection agents. My hope is that this article clearly informs them that they have certain rights under the law.
The second part of the article, which I will post in a few days, is written for the business reader who has uncollected debts and is unaware of the legal methods by which he may pursue them.]
《法律之窗》
美國聯邦討債法規與個人的權利
柯亦清(Richard Kuslan， Esq.)
（這一篇文章分成兩個部分。這一部分的題目從一般消費者的角度來討論美國討債法規制定的個人權力。 下一部份就以討債的反面：從商業界的角度來討論合法與公正的討債措施。）
早上6點半第一個電話進來， 把你吵醒了。怎麼回事？是誰? 這麼早可能是國外或緊急電話，你朦朦朧朧地把話筒拿起來。
「喂？」
“When are you going to pay off the money you owe me？ For that new car you bought and didn’t pay off?” （你借了錢買來的那部新車錢沒付，什麼時候付清？）
欠什麼錢？什麼新車？在十幾年前買的二手車早就付清了。對方打錯電話了吧！說了句“Wrong number”後，你就把電話掛斷了。
不到一分鐘，電話又響了。
“Don’t ever hang up on me again! I want my money and I want it now.” （不要再掛斷！我要你立即還錢給我。）
對方粗暴加凶悍，讓你感到害怕。你幾乎扔了電話過去，馬上掛了。 但不管你掛了多少次，電話一直進來，總共來了十幾通，讓你怕接電話，怕平白無故遭陌生人痛罵。到底是誰敢對你這麼粗暴無禮呢？
上班時你希望生活可以恢復正常。不幸的是，一進去辦公室老板大怒咆哮：「怎麼可以讓討債公司的律師打電話到我們這裡跟你算賬？」 律師怎麼會打電話到辦公室找你呢？感覺十分冤枉丟臉，但不知道該怎麼辦。
說實在的，類似這場小戲在美國經常發生。為了促使國家經濟不斷成長，美國金融機構放寬了個人信用。現在几乎誰也能夠申請得到信用卡，甚至在某些情況下破產過的人亦可。以信用來購貨的消費者確實比以現金買方便得多。只不過以信用就有債，而債不能不還。不還債的結果就是被討債。
理所當然，有了easy credit (放寬申請者合格參數的信用)，也會有少數消費者領了信用後不還債。對商業界而言，討債業所供應的服務非常重要。隨着信用業的繁榮，討債業也發展到不可思議的程度。讓消費者感到吃驚的是，討債公司所接到的未付賬單或應收帳款經常有錯誤。而且，少數討債公司採用非法或不公正的手段，損壞整個行業的聲譽。
美國聯邦法規與州法規定消費信用者有些保障。討債人的語言行為必須受嚴格的限制，而討債中違規者在某些情況下會導致懲罰，甚至包括消費者的賠償和律師費。
公正討債行為規範(Fair Debt Collection Practices Act簡稱FDCPA)是美國聯邦法律。幾乎每個州都有類似法規，但為了簡便起見，我們以聯邦法來討論，聯邦法行諸全國有效。
首先把專用詞(欠債人、債權人、討債人)解釋如下: 欠債人借了錢要還給債權人； 討債人幫債權人從欠債人收債回來。
FDCPA禁止某些討債行業常用的手段，並且指定對欠債人的公正處置和措施。不過，需要注意的是FDCPA只限於消費債，包括各類個人貸款，例如信用卡、房子、車子、醫療費用等債。FDCPA適用於第三人討債則不適用於債權人本人直接向欠債人討債。譬如說，你為了買家電跟商店貸款，卻不還錢，商店職員直接向你要錢與FDCPA無關。反而債權人本人通過討債的第三人，如討債公司或律師向你要錢，這第三人必須遵守FDCPA.
讀者應該有所警惕，若你欠錢，FDCPA不會讓你逃避。自己招致的債仍然不能不還掉。
FDCPA究竟幫助誰呢?
討債人允許以電話，傳真和信件聯繫，不過聯繫時間必須對欠債人方便。以電話通知的話，應該從早上8點鐘到晚上9點鐘。在深夜或清晨打電話聯繫違反FDCPA的規則。所以，在我們故事裡早上6點半打來的討債者違規了。
討債人也允許與別人聯繫來查詢欠錢者住處，電話與工作地點，不過不可以告訴別人與欠債之事有關。在上述故事裡，討債人打到工作場所查詢基本資料不成問題，但明顯地告訴老板你欠債，就違規了。故事裡的老板也說是律師打來的。因為FDCPA禁止假裝律師或信貸評級機構的身份，討債人也同樣違規了。
按照FDCPA規定，討債人不允許有以下行為：
●為了恐嚇，連續來電
●暴力威脅
●使用猥褻或粗暴言語
●宣稱對方不還錢將會被逮捕
●追取錯帳，或曲解非為實際欠債人的債
按照上述的限制，在上述故事裡討債人在電話中的口氣與說話內容明顯違規了。不過美國法律體系相當重視書面的記錄，口頭的對話則留不下證据。
那麼可不可以錄音呢? 電話錄音不一定合法。目前38個州規定，需要對話的雙方都同意才可錄音，對方不同意的話，只能保留自己書面的記錄。記錄越仔細越能夠組成有說服力的證據，每次有來電，千萬別忘記的事項包括：CallerID (顯示來電號碼)，日期與時間、對方姓名、對方的口氣、 說話內容與你的反應。每次有來電但不接電話時，記下所顯示的CallerID，日期與時間。
可以指定討債人停止所有以電話的通知，要求對方以書面的方式聯繫。關鍵的事，儘管此消息該在電話中傳訊，但以上所謂「指定」需要補充以書面的方式為最有效。收到信件後，討債人所允許的聯繫機會就變少了。郵寄也該有證據， Certified, return-receipt requested的郵件就可以得到對方收到信件而簽名的收據.
頭一次與欠債人聯繫後五天，討債人該照法律規定，寄信件列下欠款金額、債權人姓名與提交反證的過程。如果欠債人收到信後30天以內用書面方式表示未欠款，討債人只可以提供債務的證據，例如信用卡收據等。能夠呈現自己的證據來證明債已付清，為最恰當又有說服力的方法。
以上最基本的解釋似乎隱匿了FDCPA的複雜性。討債人自己也不一定了解，再加上債務資料經常錯誤百出，討錯債的可能性相當高。討債違規後一年，被討債人有權利提出訴訟，如果符合FDCPA條件的話，訴訟成功可以收回損失，附加以1000為最高的裁決金額，法庭費用和律師費.
總之，下次討債人來找你，別提心吊膽，每個平民都有法規上的權利。
© 2008 Law Office of Richard Kuslan LLC
Posted by Richard at 1:20 PM | Comments (0)February 13, 2008
WTO Rules against China in Auto Parts Dispute
Someone has leaked this supposedly confidential WTO decision.
Posted by Richard at 8:30 PM | Comments (0)February 12, 2008
It's Not Outsourcing!
Just as we see in television commercials, Robert Ruyak insists that margarine is butter:
"It's not outsourcing," insists Robert Ruyak, managing partner and CEO of Howrey, describing his firm's new office in India. Of course, it's not lawyering, either, since an American firm practicing in India would violate Indian law. Instead, it's a new attempt by an American law firm to cut costs by creating an office in India that will handle document management in litigation, IP and arbitration matters pending around the world.
I find it hard to comment on this. Is any necessary?
Posted by Richard at 3:18 PM | Comments (0)February 7, 2008
Federal Indictments in the "Melamine in the Pet Food" Scandal
An update on this story from 2007. Claiming thousands of pet deaths on Chinese imported gluten, adulterated with melamine, the U.S. Attorney's Office in Kansas City has indicted three companies on a variety of counts. Two are Chinese; one is a Nevada company located in Las Vegas. Felony counts were brought against the Chinese companies; misdemeanor counts against the American company. [Indictments here and here, courtesy of WSJ.]
The U.S. Attorney's Office claims that the manufacturer's custom's broker purposely mislabeled the gluten in order to deceive the Chinese government. The likely of success appears negligible at best -- there is scant, if any, cooperation between American and Chinese governments by law or by practice:
[U.S. Attorney John F. Wood] added that Chinese authorities took Linzhun into custody at the time his company was shut down, but he said he didn't know if Linzhun was still in custody.
The government's case against the sole American company also appears weak.
[Wood] added that prosecutors aren't alleging that the Millers and ChemNutra knew that the product was toxic, only that they were aware the product had been shipped into the U.S. under false pretenses and failed to notify their customers.
Is it possible for someone to be aware that a product has been shipped under "false pretenses," but not be aware of what those pretenses are?
Posted by Richard at 1:48 PM | Comments (0)January 25, 2008
Legal Outsourcing -- Several Ethical Dilemmas
Where is the American Bar Association to nip legal outsourcing to India, such as this, in the bud? As of May, 2007, an ABA spokesman told LAW.com that no statement would be issued on the topic. [See that article's penultimate paragraph.]
Certainly, the ethics opinions issued by the Bars of several major markets are an indication that this is a hot-potato topic which the ABA may not wish to touch. Those Bar Committees have ruled that outsourcing legal work to attorneys unlicensed in any American state does not constitute the unauthorized practice of law. The New York City Bar's Ethics Opinion is a shambles -- a discussion led by its favorable conclusion.
Is "strict lawyer oversight" and "client agreement after disclosure" enough to dispel the ethical problems?
Because the Indian legal education system is different and the duty of confidentiality to clients is narrower than in the United States, it is dangerous to assume an Indian lawyer's understanding of applicable professional standards is the same as his or her American counterpart's, according to the Professional Lawyer (PDF), an ABA Center for Professional Responsibility publication.
Aside from the ethical problems to the client, what about the lowest paid lawyer laborer, upon whose dues the ABA also feeds? Mr. Neukom is quick to support lawyers in Pakistan. Where is his rally for the lowest wage lawyer-laborer in the American market?
This is not simply a business issue. Why is it that Americans apparently have no desire to support their own? Who are the partners willing to forego some of their earnings so that more of their own people can be profitably employed? Are there any?
ABA's tacit agreement by silence to legal outsourcing is an ethical dilemma in itself.
UPDATE (February 8, 2008): HSBC to outsource its "UK volume legal work" to Malaysia.
Posted by Richard at 1:08 PM | Comments (0)January 23, 2008
Legal Outsourcing to India and Its
More on the nascent outsourcing of legal work to India. One shudders to see it, if only for reasons of professional ethics.
Gregg Kirchhoefer, an outsourcing lawyer with Kirkland & Ellis who spoke at last week's LPO summit, said there were still no industry standards for how a mishap or mistake would be handled.
"With U.S. lawyers, you always have the rules of ethics," he said. "Going to a service provider offshore, you have to replace that gap-filler with contract."
Good luck monitoring outsourced labor -- it is difficult enough when your people sit in an office down the hall.
But beyond the ethical problem lies greater danger to the welfare of the working American. When manufacturing left the United States, the battle cry was "Retrain for Services!" This left the man who works with his hands in the proverbial lurch.
And now, as service jobs begin their trek to balmier climes -- radiologists in India, customer service reps in the Philippines -- what will we have left here for the man of average drive, intelligence and skill to do?
Cheap goods at the local megafranchise. Adults earning just above the minimum wage for mindless work with ever lessening opportunities to advance. Serfs captive to bureaucratic business units -- are you not frightened by what this portends for the future?
Posted by Richard at 12:07 PM | Comments (0)January 9, 2008
Illegal Securities Activities Targeted in New Year's Regulatory Action
Investors should note the following article, detailing "illegal securities activities," this past week made the target of apparently concerted regulatory enforcement. Specifically, activities include the issuance of stock as well as the offering of brokerage and investment research services without prior government approval, 90% of which are allegedly carried on with criminal intent to deceive. While the article quotes the authorities calling it a widespread problem, only 1,400 such cases were reported nationally in 2007. However, what interested me most was this:
突出问题是罪与非罪的判断，非法证券活动往往涉嫌擅自发行股票罪、非法吸收公众存款罪、集资诈骗罪等，但这些罪名如何区别、定性；非法经营罪与擅自发行罪在审理过程中是否应互为前提；非法证券活动受害人能否通过民事诉讼进行救济等等都不明确，阻碍了打击非法证券活动的效率。 [Editor's paraphrase: The problem that stands out is the delineation of what is legal and what is illegal...as well as how to distinguish between violations of the criminal law...whether a victim can proceed in a civil suit based on illegal securities activities, etc....all obstacles to effective securities law enforcement.]
Hence, perhaps, the issuance of this order 《关于整治非法证券活动有关问题的通知》(证监发［2008］1号, which may be found in its entirety here.
四部门扎篱合围非法证券活动
21世纪经济报道 2008-01-08 11:38:42
本报记者 于海涛 北京报道
非法证券活动将在今后一段时间内受到更加严厉和更有效率的“联合围剿”。
1月6日，最高人民法院、最高人民检察院、公安部、中国证监会四部门联合公布了《关于整治非法证券活动有关问题的通知》(证监发［2008］1号，以下简称“1号文”)，标志着又一打击违法、惩治犯罪的强有力武器的“亮剑”。
据悉，一段时间以来，非法证券活动出现了新动向，即通过网络非法发行股票和从事非法证券活动的案件时常出现。这类案件蔓延速度快、危害面广，已经引起了监管部门的高度重视。
此次四部门联合发文，将加强监管部门与公安、司法机关协作配合，在法规体系、工作机制上扎紧“篱笆”，更及时、高效地打击资本市场各类新型违法犯罪活动。
非法证券五大特点
“非法证券活动主要有两大类：一是非法发行股票；二是非法经营证券业务，主要是针对场外市场。”中国证监会有关人士表示。
非法发行股票包括未经证券监管部门核准而擅自公开和变相公开发行股票两种行为。而未经证监会批准，任何机构和个人从事股票承销、经纪(代理买卖)、证券投资咨询，均为非法经营证券业务。
据悉，与“带头大哥777”在证券市场上收费荐股方式的案件不同，此处所称“非法经营证券业务”主要有三类。一是以“证券投资咨询公司”、“产权经纪公司”等为名，未经批准非法买卖、代理买卖未上市公司证券；二是所谓外国资本公司或集团公司驻中国办事处，以给境内企业提供境外上市服务为名，未经批准从事未上市公司证券买卖；三是一些地方的“产权交易所”、“产权托管中心”等违规从事证券业务。
尤其值得注意的是，一些非法发行股票的公司，让当地产权交易机构给投资者出具股权托管文件或所谓的股权证，迷惑投资者。实际上，这些股权托管文件或股权证并不能证明其活动的合法性。
在上述人士看来，非法证券活动是一种典型的涉众型的违法犯罪活动，严重干扰正常的经济金融秩序。
从近期办理的一些案件看，非法证券活动具有五大特征。
一是按照最高人民检察院、公安部《关于经济犯罪案件追诉标准的规定》(公发［2001］11号)，绝大多数非法证券活动都涉嫌犯罪。据不完全统计，非法证券活动中90％以上都涉嫌犯罪，而从目前各地查处情况看，最终被追究刑事责任的，只占很小一部分。
二是花样不断翻新，隐蔽性强，欺骗性大，仿效性高。“有的通过亲戚朋友或熟人兜售股票，带有传销性质；有的采取股份置换方式；有的采用信托、集资等方式。”上述证监会人士说。与此同时，非法证券活动出现了新动向，即利用网络平台非法发行股票和从事非法证券活动。
三是案件涉及地域广，涉案金额大，涉及人员多，同时资产易被转移，证据易被销毁，人员易潜逃，案件办理难度大。从已立案调查的案件看，范围小的涉及几个省市，多的涉及二三十个省市；涉案金额大多在千万元以上，有的达到数亿元；牵涉到投资者少则上百人，多则数千人。这些非法证券活动一般都是有预谋、精心策划的，有的还有很高的反侦察手段，当公安机关收集到一定证据，决定实施抓捕时，经常是人去楼空，证据被销毁，赃款不知去向。“其中一些中介机构从事非法证券经营活动还带有明显传销性质，采取类似'洗脑'方式进行宣传，逐渐形成一张巨大的销售网络，且内部组织严密，对外界调查持高度警惕。”上述人士说。
四是不少案件涉及到境外资本市场，办理该类案件政策性强，专业水平要求高。现阶段主要是一些非上市公司编造虚假信息，以即将到国内或者国外上市、业绩优秀、已由政府批准、已经递交上市申请材料等名义为诱饵，以获得高额回报为幌子，以兜售所谓的“原始股”为形式，采取非法手段诱骗群众购买股票。
五是投资者多为离退休人员、下岗职工等困难群众，承受能力差，极易引发群体事件。
扎篱“合围”
“只有从重从快地审理一批大要案，才能震慑住犯罪分子，遏制住非法证券活动的蔓延势头。”上述证监会人士说。
目前，各部委正在扎紧篱笆，对非法证券活动实现联合围剿。
据悉，政策法律不明晰、适用标准不一致是导致此前大部分非法证券案件不能被追究刑事责任的主要原因之一。
突出问题是罪与非罪的判断，非法证券活动往往涉嫌擅自发行股票罪、非法吸收公众存款罪、集资诈骗罪等，但这些罪名如何区别、定性；非法经营罪与擅自发行罪在审理过程中是否应互为前提；非法证券活动受害人能否通过民事诉讼进行救济等等都不明确，阻碍了打击非法证券活动的效率。
“1号文”的发布，对上述问题均做了详细的政策法律界定，还明确了新老《证券法》的衔接问题和非法证券活动受害人的救济途径问题。从而与其它法规一起构筑起了打击非法证券的法治体系，从法规层面扎紧了第一道篱笆。
此外，“1号文”首次以四部门联合发文的形式，明确有关法律适用问题，尝试各部委协作配合，使得联合执法机制和快速反应机制更加顺畅地进行，也为今后相关部门及时、高效地打击资本市场各类新型违法犯罪活动，提供了新模式。
此前，中央成立了由证监会牵头，公安部、工商总局、人民银行、银监会并邀请最高法院、最高检院等有关单位参加的整治非法证券活动协调小组，全面负责打击非法证券活动的组织协调、政策解释、性质认定等工作。
而地方的非法证券活动查处和善后处理工作按属地原则由各省、自治区、直辖市及计划单列市人民政府负责，形成了联合打击的合力，为有力推进打击非法证券活动工作提供了制度保障。
在工作机制层面，协调小组办公室建立了协调小组定期工作会议制度、信息月报制度、工作简报制度、信息共享制度、大案要案的督办制度等。
数据显示，过去一年，证监系统全年共收到涉及非法证券活动的各类来信、来访1400余件，并将其中366件涉嫌犯罪线索移送公安机关；一批大案要案进入司法程序，证监会协助公安部督办的8起重点案件均已侦查终结，并移送检察机关审查起诉，其中4起已经法院一审判决。目前，8起案件共抓获犯罪嫌疑人48 人，取缔非法中介机构19家。
实际上，涉嫌犯罪的非法证券类案件从调查取证到审理终结，主要涉及证监、公安、检察、法院四个部门。此前有部分地区的一些案件久拖不决，有的甚至出现'踢皮球'现象，分工协作不甚顺畅，案件办理周期过长。
“1号文”对相关部门的工作分工及协调配合做了总体部署。
首先确定了证监系统的“督促、协调、指导”等核心功能，除对非法证券类案件及时出具性质认定意见外，还要创新办案模式，在当地政府的领导下，密切与其他行政执法机关的联合执法，提高快速反应能力。
同时根据工作需要，可组织当地公、检、法等部门相关人员进行业务培训或案情会商等。
“1号文”还要求公检法部门加强沟通衔接，以提高办案效率，为打击非法证券的工作机制提供了强有力的法律武器。可以预见，近期将会有一批涉及非法证券活动的大案要案进入司法程序，一批犯罪分子将会受到应有的惩处。
此外，记者获悉，在善后处理方面，证监会联合高法、高检、公安部等单位，正积极探索研究在现有法律架构内的投资者民事诉讼保障机制。
·链接·
从事非法证券活动承担的法律责任
关于非法发行证券，根据《证券法》第一百八十八条规定，不法分子将受到警告、罚款等行政处罚；如数额巨大，构成《刑法》第一百七十九条规定的擅自发行股票罪，不法分子将处五年以下有期徒刑或者拘役。
以发行股票为幌子，而以非法占有为目的，涉嫌犯罪的，依照《刑法》第一百七十六条、一百九十二条，以非法吸收公众存款罪、集资诈骗罪追究刑事责任。如果数额特别巨大或者有其他特别严重情节的，不法分子将处十年以上有期徒刑或者无期徒刑，并处罚金或者没收财产。
关于非法经营证券业务，根据《证券法》第一百九十七条规定，不法分子将受到警告、罚款等行政处罚；如情节严重，构成《刑法》第二百二十五条规定的非法经营罪，情节严重的，处五年以下有期徒刑或者拘役，并处或者单处违法所得一倍以上五倍以下罚金；情节特别严重的，处五年以上有期徒刑，并处违法所得一倍以上五倍以下罚金或者没收财产。
以股票承销、经纪(代理买卖)、证券投资咨询为幌子，而以非法占有为目的，涉嫌犯罪的，依照《刑法》第一百七十六条、一百九十二条之规定，以非法吸收公众存款罪、集资诈骗罪追究刑事责任。如果数额特别巨大或者有其他特别严重情节的，不法分子将处十年以上有期徒刑或者无期徒刑，并处罚金或者没收财产。
January 4, 2008
Editor Profiled By World Journal （世界日報）
I am honored to have been profiled by World Journal （世界日報）, a newspaper with the largest circulation among Chinese readers in North America, in their Sunday magazine section article on the teaching of Chinese in the U.S （《美國現象》中文課走紅美國大學 written by Jeff Han 韓傑 ）.
The interest, I think, and the reason for my inclusion in the article was, perhaps, the everyday usage of Chinese by a caucasian based in the U.S. in his legal practice, but also the value of learning to speak the language over and above the merely practical aspects.
The article begins here, and you are welcome read the interview with me here. [In Chinese.}.
Posted by Richard at 11:16 AM | Comments (0)December 12, 2007
FDA Inspectors Embedded in Chinese Food Production System?
From the New York Times: China Agrees to Post U.S. Safety Officials in Its Food Factories.
Embedded, like Judith Miller in Iraq?
Michael O. Leavitt, secretary of health and human services, said he expected that Food and Drug Administration officials would eventually be embedded in China’s food safety bureaucracy to help train Chinese officials and keep records on their inspections.
Did Mr. Leavitt make use of the word "embedded" in conversation with the interviewing journalist, Steven Weisman? Or did Mr. Weisman himself choose that word, pregnant with negative connotation, while lacking a direct quotation from Mr. Leavitt?
China and the United States, seeking to ease the furor over the safety of food exports, signed an agreement Tuesday calling for a greater American role in certifying and inspecting Chinese food products, including an increased presence of American officials at Chinese production plants.
This should help, shouldn't it? English speaking inspectors in an entirely Chinese environment. Many thousands of factories to be monitored -- extraordinary cost of bringing American inspectors to China, housing and feeding them, etc...
This agreement will provide an opportunity to have our people here on a continuous basis with expertise so that we can work with our Chinese colleagues in helping to develop good practices,” Dr. von Eschenbach said.
People is plural, meaning at least two. But the precise number of inspectors was not actually specified.
American officials said that the agreement did not cover all the food products sought for tighter inspections, but that it could be expanded. It is to cover some preserved foods, pet food ingredients and farm-raised fish, all products that the United States has said were tainted.
But, wait! Only a few food groups would undergo any inspection at all.
One may conclude that this initiative has been a major failure, from conception to implementation, on the part of American food and safety officials. Can one, however, consider this a public relations success?
Posted by Richard at 7:03 PM | Comments (0)December 10, 2007
And Wahaha Laughs...
We briefly posted on the Danone-Wahaha scandal in June. Now comes the sound of the other shoe dropping. From the Wall Street Journal:
A Chinese beverage maker won a trademark arbitration ruling against joint-venture partner Groupe Danone SA, the latest legal twist in a closely watched case and one that is unlikely to end the dispute.
The Hangzhou Arbitration Commission said the period had lapsed during which Danone was eligible to file its case against Hangzhou Wahaha Group Co. The case was aimed at forcing Hangzhou-based Wahaha to honor alleged obligations to transfer ownership of the Wahaha brand to the companies' joint ventures, a key aspect of Danone's effort to re-establish control over the Wahaha business in China.
Paris-based Danone said it is "shocked" by the result and is studying its options.
Shocked!
On a related note, a Harvard Business Review study of the supposed influences of Mao on modern Chinese managers, refers to the CEO of Wahaha:
High-profile Chinese business leaders who have used...Mao-style tactics to dominate their managers include Zong Qinghou, the founder and former CEO of Wahaha, the French-Chinese beverage joint venture. Zong recently circumvented the formal organizational procedures during a dispute and mobilized Wahaha employees to publicly denounce the French management. As of this writing, no settlement of the dispute was in sight.
Is it accurate to state that managers emulate Mao? Any case, apparently analogous, requires one to trace an influence from cause to effect, which the authors do not seem to attempt. And what is the benefit of an analogy so tenuously tied?
Instead, it is more accurate to say that mainland Chinese in positions of authority, and to a lesser degree Chinese outside of the PRC, share a purposefulness in their methods, often ruthless, usually creative, straightforwardly ambitious, enormously resourceful and extraordinarily authoritarian.
Posted by Richard at 9:21 PM | Comments (0)November 28, 2007
Law and Religion: A Western Perspective on China
Southern Weekly （南方周末）interviewed Harold Berman, author of " Law and Revolution," found here and here. That Berman, whose expertise extended to the religious foundations of Western law, should be the focus of a two-hour interview with an iconoclastic and popular Chinese language Sunday Magazine is in itself a wonder -- not solely for its political commentary. One is delighted to know that its readership is, in the minds of the editors, sufficiently well-educated and curious to wish to read it.
法的背後是什麼？
南方周末 2007-11-22 14:30:57
2006年1月31日，中國社會科學院美國研究所研究員、美國埃莫裏大學法學院法律與宗教研究中心客座研究員劉澎在埃莫裏大學法學院伯爾曼教授的辦公室采訪了伯爾曼教授。在這次長達2個半小時的訪談中，伯爾曼先生深入淺出地歸納了自己的法學觀，這是伯爾曼先生去世前單獨與中國學者進行的最為深入的一次學術對話。限於篇幅，本報對訪談有刪節。
劉澎(以下簡稱劉)：教授，您認為在宗教和法律之間存在共同之處嗎？
伯爾曼(以下簡稱伯)：是的，至少有四點：儀式、傳統、權威和普遍性。對法律的信仰是普遍的，就像一種世界宗教。我非常相信基督教和所有偉大的宗教，特別是儒教和佛教，以及所有世俗的信仰，包括共產主義在內，都有一個精神層面的東西。
劉：在一個國家，沒有宗教信仰基礎，法律自身能否單獨發揮作用？
伯：法律只有具備了精神上的效力才能發揮作用，如果每個人都認為違反法律是錯誤的，我們就需要這個法律。我知道這在哪裏都是如此。
劉：您的意思是說，在法律之上還有適用於全人類的某些普遍原則？
伯：對，它存在於人的內心之中。
劉：那麼，您認為對法律的信仰和對宗教的信仰之間是否存在主要的差別？
伯：我認為法律有一個精神層面的信仰，取決於你怎麼看。像《十誡》當中的第六、第七條戒律，已被納入到了所有的文明之中，無論在哪種文化中，盜竊、殺人、毀約等等都是錯誤的。
劉：在中國，我們沒有這種基督教背景、文化和傳統，因此有人強調法律的重要性，呼籲人民尊重法律。我們的問題是，我們有法律，但沒有人執行或遵從它，您有什麼解決辦法？
伯：我認為，如果他們改變自己對法律的理解，事情就會有轉機，因為法律不止是政府所說的話。人們知道的主要是習慣法，那是由人們自己在家裏制定出來的。他們恪守承諾、與鄰為善，他們認為應該如此。
劉：也就是說習慣法是基於人的內心。
伯：是的。子女應該尊重父母，父母應該照顧子女。
Read the interview in its entirety here.
Posted by Richard at 3:40 PM | Comments (0)November 9, 2007
Guest Analysis: Yunnan Province and the Hukou Registration System
[Editor's Note: I'm grateful to Carl Minzner, author of the China Law and Politics blog, for permitting the reposting of his analysis below. His post represents a scarce example in modern Chinese Studies of a laudable skepticism towards a claim, the import of which, if unquestioned, would have lead to an unfounded assumption regarding Chinese life, law and government.
The claim is that Yunnan Province will eliminate the hukou (户口) registration system, a development which, if true, would signal changes of significant magnitude in the administration of population movement, benefits distribution, registration for schooling and the like. What is the hukou system? Briefly,
China's hukou system has imposed strict limits on ordinary Chinese citizens changing their permanent place of residence since it was instituted in the 1950s.
Hukou registration, as a system of government control, has changed since that time, but it has not been eliminated. Fei-ling Wang's testimony to Congress in 2005 provides an excellent survey for those interest in reading on it. Carl's other posts on the subject are also worth reading for background: Is The Hukou System Really Disappearing? and Hukou Reforms Under Consideration.
Mr. Minzner is Associate Professor of Law, Washington University School of Law in St. Louis, and formerly Senior Counsel to the Congressional-Executive Commission on China.]
Is Yunnan "Eliminating" the Hukou System?
Short answer – no. At least one website has reported that recent reforms undertaken by the provincial government of Yunnan will "eliminate" the household registration (hukou) system. This isn't the case.
The announced Yunnan reforms will eliminate the distinction between "agricultural" and "non-agricultural" hukou status, according to an October 25 Xinhua article. Similar reforms have been announced by a number of other provinces and municipalities. But they do not affect the requirement that migrants obtain local hukou in urban areas to receive public services and benefits on an equal basis with other urban residents.
The proposed Yunnan reforms will require migrants to urban areas to have a "fixed place of living" and a "stable source of income" in order to shift their hukou registration to an urban area. According to the Xinhua article, the Yunnan reforms define "fixed place of living" as property ownership of a home in an urban area, or possession of one allocated by one's work unit prior to 1995. How many rural migrants satisfy that condition?
The Yunnan reforms actually look almost identical in content to those announced by dozens of other provinces and municipalities. For more information, see these posts (Is The Hukou System Really Disappearing?, Hukou Reforms Under Consideration), the topic paper of the Congressional-Executive Commission on China (CECC), and this list of similar reforms.
There is one interesting aspect of the Yunnan reforms. According to the Xinhua report, they define "stable source of income" as the ability to support oneself without resort to government minimum standard of living subsidies. Other local reforms I've seen define the term as professional employment or ownership of a business. The Yunnan reforms would seem to adopt a relatively less restrictive definition of this term. This may reflect new policy directions announced by Chinese central authorities over the summer.
Posted by Richard at 1:44 PM | Comments (0)October 12, 2007
Judicial Independence -- When Local Authorities Pay the Judiciary Scant Attention
Get a judgment somewhere in China. Then try to collect. There is little value in a judgment when the authorities flout its enforcement. Read this Washington Post article. The local government, against whom the judgment was entered, won't pay and can't be forced to.
Yuci township, the subject of the story, is not a rogue element (although it may be run by rogues); in fact, it displays typical administrative behavior. It might possibly disgorge its illegal gain if a superior authority compels it to -- a strategy used by a number of American bankers collecting on bad loans in China ("The governor of the province is a personal friend of mine, and if you don't give me my $23.6 million today I will be having lunch with him tomorrow). But then, the judiciary is once again circumvented by the power structure which would -- or would pretend? -- to espouse judicial independence in the first place
Posted by Richard at 12:06 PM | Comments (0)August 23, 2007
China Law Reporter Looking for Articles
Qiang Bjornbak, editor of the ABA's China Law Reporter, is soliciting articles on two timely topics.
1. China's much anticipated anti-monopoly law: its major features and potential for influence upon unfair competition behaviors, such as price fixing.
2. Product safety issues. Ideally, CLR is looking for two articles on this subject -- "one from a lawyer from the Chinese perspective and one from a non-China-based lawyer taking the importer's perspective. Lots of topic possibilities with this one.
For further information, contributors should contact Qiang directly with their proposal.
Posted by Richard at 10:35 PM | Comments (0)August 20, 2007
Registration and Enforcement of IP Rights in Korea: A Brief Introduction (Part 4)
[Editor's Note: We present our fourth and final installment of our review of the Korean intellectual property system. Prior installments: Part 1, Part 2, Part 3. Once again, let me thank Drambuieman, the author, whose bio you may read in Part 1 of the series.]
Common Scams
Speaking of cyber-squatters, I thought it might be useful to give some tips I have picked up on trademark squatting. Due to issue above with what is considered a famous mark, there are a few bad-faith registration scams in Korea that a company, especially a small or mid-sized one, should be aware of.
At one time, Korea was a very restricted market. Back then, about 10-15 years ago, a distributor, particularly one distributing a foreign mark, needed to be registered at KIPO as such. This aspect of Trademark Law has since been appealed and although the system is no longer mandatory, the registration system still exists in its dusty, bureaucratic, inert way.
While the numbers are declining rapidly, some bad actors still scan this distributor register to identify marks without a distributor listed. Lack of one either signals a mark vulnerable for counterfeiting, or a mark vulnerable for other actions to be mentioned later. So I recommend companies, partially ones without much business (for reasons you will see), register a Korean distributor with KIPO or at least raise the idea with their Korean attorneys.
Another common tactic is what I like to call distributor blackmail. In this a person who hopes to be a distributor of a foreign good (or even an existing one) registers the mark in THEIR name with KIPO. They then use this to gain a distributorship from the company, or use it as a tool to gain a better bargaining position with the foreign maker. Unfortunately the only protection against this is early registration and vigilance.
The last scam can be particularly deadly if used in combination with the two above. Korean law allows a trademark to be cancelled for non-use after three years. So if you register a mark and do not sell of market goods with the mark, the mark could be canceled by anybody and then they would have an exclusive right to apply for that mark for three months. So if you have minimal sales in Korea and are vulnerable, it can helpful if you have Korean sales materials, import records (even if only samples) and perhaps an officially registered Korean distributor (see above).
Like the guy waking up in a bathtub of ice in his Las Vegas hotel room missing a kidney, the above are not guaranteed to happen to you. However, these are some common scams you may want to be aware of. If you have specific concerns, contact your local Korean representation.
Back to the beginning
So what would I recommend to the parts maker? Well, the first idea is to assess what intellectual property rights he currently holds in Korea. If he does not own the trademark, register it as soon as possible. If the current maker owns the trademark, he could argue he is the rightful owner given the fame of his mark internationally, but you may gather from the above that I would not be hopeful of success.
If the parts maker does own the mark in Korea, first, I would contact the customs service with everything I know (name, part type, shipping information, etc.). This would help isolate the problem to Korea. Ideally, the Korean Customs Service will hopefully block any exports and imports of possible counterfeit parts used in the final product.
Second, would be to send a C&D to the Korean manufacturer for either IP infringement and anti-competitive acts (depends on the specifics). Lack of compliance would lead to a criminal complaint.
All this would hopefully stop the problem short to mid term. After that I would be very vigilant about local usage and exports. Unfortunately for Korea, if it happened once, it can happen again.
Posted by Richard at 1:08 PM | Comments (0)August 14, 2007
Registration and Enforcement of IP Rights in Korea: A Brief Introduction (Part 3)
[Editor's Note: We continue from Part 2.]
Quicksand and Other Surprises
First, a present surprise, again contrary to reputation due to the past: Korea’s IP system is largely free of corruption or domestic favoritism. In my five years of working in this field, both in and outside the Korean Intellectual Property Office, the number of times when I suspected there was something nefarious I could count on one hand. Most allegations boil down to either tough calls or a disagreement with the practice and administration of IP law.
One of those disagreements is what constitutes a famous trademark under Korean or International Law. In a nutshell, if your mark is sufficiently famous, you have a de facto defendable trademark. The crux however is what is “sufficiently famous”. Korea sets a very high bar in determining what’s famous. In addition, Korea is strict as well as to the type of goods.
I was involved in a case regarding a very famous copyrighted character with multiple derivative movies, TV shows, and cartoons (some of which did multi-million dollars worth of business in Korea). Yet we were unable to prevent the unauthorized registration of the mark for pet toys and novelties since KIPO determined the character was famous, but not sufficiently so for pet toys.
Since Rich mentioned it in his original post, I think it’s a good idea to bring it up here. Remember Korea is in Asia. This means any contract you may have to ensure confidentiality, like any other contract in Asia, is not in stone. Be sure to keep this in mind as you meet to discuss technical issues. There are trade secret laws, but as always they are hard to prove and may upset your business relations.
Finally, a topical grey area: domain names. Korea is still grappling with the legal and administrative means to resolve national level domain names (e.g. “co.kr”). To be honest, I do not know exactly what to recommend in a general sense, other than saying expect this to be a problematic area.
Posted by Richard at 12:49 PM | Comments (0)August 9, 2007
Registration and Enforcement of IP Rights in Korea: A Brief Introduction (Part 2)
[Editor's Note: We continue from Part I)]
Basic Overview of IP Enforcement Mechanisms
The first thing I can say about enforcing your IP in Korea is “forget civil courts and damages.” Such cases can be long, expensive, long, tedious, long, and can have anticlimactic rulings (oh, did I mention they were long?). For the latter, courts usually only award compensatory damages that can be meticulously accounted for and they almost never give punitive damages. To give you a time frame, an initial decision can take at least a year, and usually you can add another year or so for the appeals process to work out, and the latter makes the reward for patience rarely worth it. To make these options even more unattractive, while you may be able to recover legal fees, they are limited by law and rarely match the actual cost.
However, I actually should not be so dismissive. Civil courts can be a weapon in your arsenal. You will find your Korean lawyers treat it as a weapon of last resort. So should you.
A “dispute” could cover a variety of laws. It could be your standard patent or trademark case. In some cases, however, it may be better to proceed under fair trade laws, called anti-competition or unfair competition laws locally.
If you have an IP dispute, the first move you should normally make is to send a Cease and Desist letter to the infringer. An attempt to settle the manner amicably is seen as a good faith gesture by either the courts or prosecutors office (depending upon your route). It is also incidentally a good internal springboard for the next step, since in a C&D you have to explain what law was violated, how it was violated and show what evidence of the of the infringement you have collected. (You can always add violations and evidence later however if you need to).
The next normally recommended step would be to file a criminal complaint. While cases vary, you usually assert criminal offense based on the Patent Act, the Trademark Act, the Anti-Competition Act, or others (you can find the text at the Ministry of Legislation website). A criminal complaint is usually a statement made in person to the police covering much the same content as the C&D. The filing process for a criminal complaint can be rather involved, so do not be surprised at the cost quoted by local attorneys. Be assured the cost is to cover this time, not the enforcement itself as some erroneously conclude.
In a way, this is partly a negotiating step since it can be withdrawn. Being indicted in Korea is considered a social black eye, thus you may find people more willing to settle once an official criminal complaint is filed. As part of any settlement, you may ask for damages. However, my tip is to keep it minimal, if not a token.
Ultimately you will get an indictment, which is pretty much a conviction. Oddly the penalty the court will give will usually be slight, due to the Korean courts' penchant for lenience for first time offenders. (The conviction itself is usually seen as the big deterrent).
I have come across a few who think is an easy thing to conduct police raids (why, I do not know). In order to conduct a police raid, you need to have complied enough evidence and have a compelling argument to convince the Public Prosecutor’s Office to go before the court, and enough for a court authorize the police raid. I personally have never found a need to conduct one, but have heard that the burden of proof is quite high. A final note here, the cost for a raid is quite small, or even none, when conducted in conjunction with a criminal complaint.
And the last, but by no mean least, tool is the Korean Customs Service. Over the past few years the Customs Service has taken vigorous role in policing counterfeit goods going in and out of the country. If you have a suspicion your IP is being infringed either by import or export, you can inform the Korean Customs Service and they will do the best they can. You can approach them with a general concern, but obviously the more specific you are the more likely catch the goods. Such evidence can be used in a later criminal or civil action.
Posted by Richard at 12:30 PM | Comments (1)August 6, 2007
Registration and Enforcement of IP Rights in Korea: A Brief Introduction (Part I)
[Editor's Note: My scant treatment of Korea on this blog has not been intentional. Occasionally, I've dealt with the topic, blogging on fruitless plans to build highway and rail lines across the DMZ into the DPRK (North Korea); the now imprisoned flower-baron Yang Bin's involvement in resort casinos in Shinuiju across the border from Dandong （丹东）; and, if I remember correctly, something about bibimbap.
Alas, my mind has been elsewhere: in China, the case for these past 25 years. That is not to say that I am a sinophile. I am not. No - China made me a skeptic in the 1980s and I remain so, by experience, not by text. Nevertheless, the idea of it continues to tug gently at me. If ever there was a cauldron of fascination for those who seek to peer into it...
But readers of our next post will find somewhat more of Asia in Asia Business Intelligence than just China. Our next author prefers to remain anonymous, going by the happy epithet, Drambuie Man. You will find his bio in the first three paragraphs of his post. Those who may wish to contact him should contact me first.]
Registration and Enforcement of IP Rights in Korea: A Brief Introduction (Part I)
I first would like to thank Rich Kuslan for the honor of contributing this piece. His blog is one of my regular reads. I was asked by Rich to contribute something on IP law in Korea. As with anything you know a lot about, its tough to limit yourself to what is essential. Thankfully, one of the previous posts here as Chinese IP Law overview provides a good framework. Many parts of that post, particularly the discussion on business practices, goes for the Korean side as well.
The exact position I am in is somewhat unique, given I am not a Korean lawyer nor admitted to the bar anywhere. I started in the IP field on the practical end, first via working with high-tech companies in the US on Korea. While obstensibly doing marketing, I found my at the heart of matters relating to contracting, patents, IP valuations and IP transfers between companies.
For the past five years I have worked roughly as a paralegal (Korean has no exact analogous word in my experience) for the Law Offices of Book Chon, a Korean law firm specializing in all areas of Intellectual Property Law. Within that time, I have also worked for the Korean Intellectual Property Office, the Korean government office responsible for the review and registration of IP in Korea. While with the government, I worked on cooperative projects between KIPO, other national IP offices and multilateral groups, such as the World Intellectual Property Office, due to my knowledge of Korean IP law and the unique perspective I have as non-Korean. When I have time, I blog on Korean IP news at Dram Man, and on things in general at the Marmot’s Hole.
Below I may give what could be inferred as specific advice. It is not. Rather it is my unfortunately blunt style combined with my over eagerness to help when I can. If you have any practical concerns, contact Korean counsel. Your case is unique and special, and should be considered as such.
Rich’s original post found a US company in a problem. Somebody in Korea was counterfeiting its parts and shipping them to China. For obvious reasons, the story stopped there. However, I can give a practical conclusion for that story. First, an overview.
Korea has a certain reputation for bias against foreign intellectual property applicants and rights holders; sometimes that reputation is deserved in individual cases, but on the whole not true. Things in Korea have radically changed with respect to IP Law, and today Korea boasts one of the more advanced IP legal systems.
Korean patent documents are considered so essential that they were included as Patent Cooperation Treaty (PCT) minimum documentation last year, a distinction shared with the US, EU, and Japan. As part of the PCT minimum documentation, Korean patent information must be searched for all PCT applications (method for gaining early recognition of certain rights and later patents worldwide).
Also last year, the Korean Intellectual Property Office became an International Search Authority for the USPTO, an ability shared with the EU. This designation intends to relive some of the workload for the USPTO. PCT applicants can now indicate that their initial international search for a US filed application can be done by KIPO, thus giving confirmation that the quality of patent examination done by KIPO in this area is on par with US and the EU.
IP Registration: Promise, Despite Pitfalls
Unlike China, Korea has one main office handling IP registration, the Korean Intellectual Property Office (KIPO). KIPO handles the registration of patents, trademarks, and designs, but not copyrights. Korea is also part of the Patent Cooperation Treaty and the Madrid Protocol, allowing international applicants to gain early priority.
A pitfall, however, is the seductive similarity of KIPO and its procedures on paper when compared to the US and Europe. For example, drug companies have a hard time with patents because, among many other things, molecules cannot be patented. Korean trademark examiners read English language marks quite closely, and may fail to see a turn of a phrase or unique wording.
For the latter, consider the booming use of the “e” prefix by marketers today (eFile, eBay, eFriend, etc.). Under Korean law a simple letter is considered to be non-distinct. So if you combine it another descriptive or non-distinct word, a KIPO examiner will likely fail to grasp the coinage of the word and reject the mark for being two non-distinct or descriptive words. So for example, consider proposing the mark “e-Pet Quality Pet Shops” for pet shops. A native speaker grasps the uniqueness of the mark, but to a typical KIPO examiner there is little more than the descriptive “Pet Quality Pet Shops” components and a non-distinct common letter “e,” making the mark unregisterable in Korea.
This is not to say necessarily that you will definitely have these problems in trying to register your IP. However, if problems do arise, take a deep breath and realize that Korea is not the US, the EU or even Japan.
If any problems cannot be resolved with written arguments to the initial examiner, you will find you can appeal a decision to the Intellectual Property Tribunal (a KIPO appeals board), then to the Patent Court and finally to the Korean Supreme Court. (A brief note, the Korean Supreme Court is really the highest appellate court circuit; it is not a “Supreme Court” in an American judicial sense.)
Copyrights fall under the Ministry of Culture and Tourism. The system is remarkably similar to the US. There is no requirement to register your gain a copyright, but you can if you wish.
Read Part 2 here.
Posted by Richard at 12:49 PM | Comments (0)July 31, 2007
Price-Fixing in China? Case-in-point: the Aluminum Industry
[Editor's Note: Price fixing and industry collusion aren't generally considered hot topics among investors and lawyers, except when the discussion turns to China. Does Chinese business culture, whatever that may be, favor monopolistic behavior, eschewing competition? Or is price fixing, where it occassionally pops up, merely a symptom of inadequate regulation, incompetent administration or general chaos, regardless of the region?
Alas, these questions have been subject to endless disputation, often argued anecdotally, for lack of hard evidence, as mere unsubstantiated claim. We are thus grateful to Lou Schwartz for today's post, which provides us with the benefit of his lengthy experience analyzing and reporting on the Chinese aluminum industry. His bio may be found at the end of his post.]
Contrary to Lou Dobbs’s characterization of China as “Communist” or “Red,” China’s economy today is actually raw, unbridled capitalism. The Chinese aluminum industry, which I have followed closely for more than eight years, is very representative of the road that China’s economy has taken since the death of Mao and the beginning of the Reform Period. From an outdated and lethargic industrial base managed by an enormous government-run mega-corporation to a plethora of new companies whose world-class plants are financed with much more private capital than state-owned bank loans (in 2006 77.2% of the capital which the Chinese non-ferrous metals industry used for fixed asset investment came from non-bank sources), the aluminum industry represents how Chinese industry has become more like what is described in The Wealth of Nations than the Communist Manifesto. And if there still is a doubt that the Chinese economy has become the greatest example of pure capitalism -- with all its warts -- since Adam Smith described it, one need look no further than the aluminum industry again, which has been spotted organizing cartels in an effort to save themselves from their own excesses.
The Chinese aluminum industry largely has followed the same meteoric trajectory as a wide variety of Chinese industries. In the first forty years (1953-1992) of its existence, the industry’s capacity to produce primary aluminum grew to 1 million tonnes per year (tpy). It took just an additional 5 years for primary aluminum capacity in China to reach 2 million tpy. Assisted by the restructuring of the Chinese non-ferrous industry beginning in 1997, a plethora of new companies in this space has grown China’s aluminum smelting capacity to a projected 14.6 million tpy this year from 3 million tpy as of the end of 2001. By late 2005, a group of 23 primary aluminum smelting companies, smarting from growing losses caused by their unrestrained development of smelting capacity which had exceeded even the torrid ramp up of demand for aluminum in China, banded together and agreed to idle 10% of their capacity to stabilize the price of aluminum. This consortium was sufficiently disciplined in idling capacity that it was able to mostly stave off a series of projected insolvencies among Chinese aluminum smelters.
Perhaps the most significant reason why primary aluminum smelters felt compelled in 2005 to form a seller’s cartel and idle capacity was that the price of alumina, their most significant input, had more than doubled in price -- due to the rapid increase in capacity in the Chinese primary aluminum smelting industry. The world’s producers of alumina, including the remaining Chinese state-owned aluminum industry behemoth--the Aluminum Corporation of China Limited (Chalco) ((中国铝业股份有限公司 (中国铝业)) benefited royally from surging alumina prices: Chalco leveraged the squeeze that primary aluminum smelters found themselves in to acquire companies that were at the brink of insolvency.
As the world price of alumina rose, Chinese entrepreneurs ((including Xinfa Aluminum Industry (信发铝业) and Weiqiao Aluminum Industry (魏桥铝业)), now inhabiting a free-wheeling economy, leapt at the apparent opportunities in alumina refining and in early 2006 began a rapid multi-billion Yuan build-up of alumina refining capacity in China. As of the end of 2007, total alumina refining capacity in China is expected to reach 27.7 million tpy, an increase of 4.4 million-tpy over year-end 2006 and a 17 million tpy increase over year end 2005! Not surprisingly the price of alumina has dropped by two-thirds since late 2005 and the price of the alumina refining industry’s most significant input -- bauxite -- has increased precipitously. This turn of events caused a group of seven private alumina producers, to meet in early 2007 and agree to adjust output to support alumina prices.
Meanwhile, lured by outsized prospects in supplying aluminum sheet, coil and foil for the construction, automotive and packaging industries in China and easy access to capital, Chinese industrialists flocked to the aluminum rolling industry beginning in 2004, pushing capacity up from 1.5 million tpy in 2004 to 2.5 million tpy in 2005; when all the rolling mills under construction or in planning are completed as of 2010, China’s rolling industry will have more than 5 million tpy of rolling capacity. In the so-called “Double 0” segment of the rolling industry (named for the thickness in millimeters of the aluminum foil produced) which supplies aluminum foil to that part of the packaging industry serving the tobacco, food, beverage, pharmaceutical and cosmetics industries, the growth in capacity is expected to grow to a significant proportion of the 940,000 tpy in total aluminum foil capacity which will be in place by 2010. Once again the response of the thinner gauge segment of the aluminum foil industry was to form a cartel to attempt to control output and prices. According to a report in 中国铝业网, in February 2006 five of the principal producers of “Double 0” aluminum foil met at a “summit” meeting to agree, among other things, to hold their respective shares of the domestic market to a fixed amount, to export all output in excess of their agreed share of the domestic market, to adhere to a specified lowest domestic and export processing price and to refrain from selling their products for a price in excess of the imported price.
In the free-wheeling economic environment that is today’s China it is far from certain that the attempts to monopolize markets is likely to have more than short term benefits to the Chinese monopolists. Rather, the central dynamics which Adam Smith discussed with such acuity in 1776 are at work in China today and will ensure that the attempts at monopoly power by some of the actors in this panoramic economy will not permit the level of control that was a fixture of the pre-Reform period.
[Lou Schwartz is president of China Strategies, LLC and publisher of the China Renewable Energy and Sustainable Development Report, as well as the China Aluminum Industry Report. Mr. Schwartz earned degrees in East Asian Studies from the University of Michigan and Harvard University, as well as his J.D. from George Washington University Law School.
Fluent in Mandarin Chinese, Lou work includes matters dealing with China's legal system, economic development, trade and investment. After serving at a large U.S. law firm, Lou has for a decade taught at the University of Pittsburgh School of Law and College of Arts and Sciences.]
Posted by Richard at 9:00 PM | Comments (1)July 26, 2007
Humble Request for a Translation
UPDATE: We have a translation. Thank you (!) to the four readers who offered to provide one.
I've had a second reader request for a translation into English of the Chinese text of "Guangdong Court Applies Hong Kong Law in Commercial Lease Dispute." With apologies, I can't spare the time to do even a rough translation myself.
Would you (yes, you, one of my mandarin fluent readers) like to do the translation itself? The willing translator will get some exposure (I will post your name as translator, your bio and a link to your website along with the translation). My only caveat -- the translation must be faithful to the original.
Posted by Richard at 2:21 PM | Comments (1)July 17, 2007
What Happens When Your Chinese Supplier Says: Sure, Go Ahead, Sue Me!
Because American states must, in most cases, enforce a judgment issued by the court of any other American state, Yanks in business tend to take for granted that fabulous feature of our legal system, known as "full faith and credit." [A dear relative was wont to say "for granite," but the malapropism is nevertheless just as valid, i.e., written in stone.]
But nations do not fall within the American constitutional system: American court judgments aren't not often enforced outside of the U.S. Unless, of course, there is a treaty between the U.S. and a foreign nation, there is little chance a court of that nation will recognize and enforce an American judgment. And, lest we forget, vice-versa.
For this brief post to be of any value to you, I must mention Don Clarke, who teaches at Harvard. He's written a brief article, entitled "The Enforcement of United States Court Judgments in China: A Research Note," and even if you are not an attorney, it is worth your time. Don says, in essence, that Chinese courts do not recognize and haven't enforced an American judgment.
My point in recommending you read Professor Clarke's article is this: here lies an important lesson for American companies who do business with China. Don't expect you can take an American judgment against a Chinese company to China and sue upon it. Your American judgment will not be recognized. Your more likely remedy would exist when the Chinese company has established sufficient presence in the U.S., such that you can sue the company in an American court. But unless that Chinese company has assets in the U.S. upon which you can levy, you are unlikely to recover very much at all.
What implications does this have, exactly? For importers, for example, the Golden Rule is to guard your money carefully -- before you even enter into a transaction with a Chinese exporter. Do not pay up front and then expect to receive product. You may not receive it once the money has left your hands. You will simply have no recourse.
The wise prefer to spend the extra fee to open a letter of credit, payable upon your acceptance of the product, rather than resort to prayer. Now prayer is a good thing, but its efficiency in trade is yet to be proven. Who wouldn't spend the extra? Many inexperienced traders. Perhaps you. Especially if you are new to importing -- and some I've spoken with are sourcing via the internet without even visiting the physical location of your provider -- you should never blindly pay cash up front. [If you haven't visited your supplier, you are neglecting essential due diligence.] But even if you have longstanding relationships with your suppliers, I would not recommend anything but L/C based transactions, except in the rarest circumstances (emergency circumstances where a mold needs to be opened immediately, etc.). Continue to pray, by all means, but, with some recourse in your own country, you won't need to pray so very urgently.
More on the practical aspects of Don's article in upcoming posts.
June 22, 2007
The AFL-CIO and Chinese Unions
Today's post contains a few questions I'm hoping some of my readers might be able to answer.
This WSJ article on American labor union officials and labor activism in China is an interesting read.
The All-China Federation of Trade Unions (ACFTU) is a government department. Its management does not take its cue to any degree from laborer members, who, by the way, must, without exception, join. There are no benefits to speak of - except perhaps for the annual ticket to see a movie (forget a first run) and perhaps a box lunch.
[Here is a video interview with Andy Stern, President of the Service Employees International Union, speaking on his union's involvement with Chinese unions. Thanks to Bob Kapp for the onpass.]
It strikes me as incredible that American union officials have any sway without explicit approval and active participation of the Chinese Communist Party (CCP) at the highest levels – and certainly the encouragement of labor activism in general is not at the top of the Party's “to do” list.
So here are a few questions to my readers:
1) Can anyone point me to research on CCP control and oversight of the ACFTU? Is anyone working on AFL-CIO involvement in the Walmart “unionization?” The WSJ story does not refer to sources other than foreign union spokesmen, and I wonder if scholarship has been done on the subject.
2) This may be well out in left field, but it strikes me that there exists some American legal stricture upon union mobilization in connection with Communist controlled labor unions. Am I mixing something up? Call this a junior moment, if you will, but some legal thread somehow perhaps related to COCOM of years ago is telling me some federal prohibition exists.
Posted by Richard at 3:22 PM | Comments (0)June 21, 2007
Guangdong Court Applies Hong Kong Law in Commercial Lease Dispute
From Xinhua come reports of this case, in which a Guangdong court has, for the first time, decided a commercial leasing dispute by application of Hong Kong law. Thanks to Paul Jones, a barrister, solicitor and trademark agent in Canada, for making note of this article. You will find the original article in Chinese directly below the translation.
Our translation was graciously provided by ZHAO Chen, a patent examiner at the State Intellectual Property Office of the P.R.C. and a certificated translator. Zhao Chen, an M.E. graduate from Tsinghua University, blogs on China's intellectual property system: here (for readers in mainland China) or here. Two of his published commentaries may be read here and here.
Mainland Court Applies Hong Kong Law for the First Time
Contracting Parties are Both Hong Kong based Companies
June 13, 2007
By DENG Xinjian, WU Jiao, From Legal Daily
On June 11, Zhongshan Intermediate People's Court of Guangdong Province made the first instance judgment on a Hong Kong-related lease dispute. The case is said to be the first one where Hong Kong law is applied by a mainland court. Plaintiff Diamond Lease Ltd. (hereinafter referred to as “Diamond”) and one defendant Ronghui Technology Ltd. (hereinafter referred to as “Ronghui”) are both Hong Kong based companies. The court ordered the lease contract between the parties to be terminated, and the lessee Ronghui to return rental equipment.
The dispute is reportedly due to defendant Ronghui’s violation of the lease agreement. Plaintiff Diamond claimed that, on November 22, 2002, it entered into a lease contract with Ronghui agreeing that Ronghui leased certain machine equipment from Diamond. Diamond delivered the equipment to Ronghui for use under the agreement, although the actual user was Ronghui Electronics (Zhongshan) Ltd. (hereinafter referred to as “Ronghui II”). However, Ronghui did not fulfill the rental payment requirements set out in the contract, and failed to pay any rental ever since September 2003. Diamond alleged Ronghui’s contractual violation, and requested the court to order the contract dissolution and the return of rental equipment from two defendants.
“This contract shall be governed by, and interpreted and construed in accordance with the Law of Hong Kong. The Lessor and Lessee consent to the jurisdiction of courts in Hong Kong, and the Lessor may turn to courts in any other competent jurisdiction for compulsory enforcement of this contract.” The contracting parties agreed upon the application of law for dispute resolution under Article 16 of the Lease Contract.
Since Diamond and Ronghui concurred the law of Hong Kong as the governing law, Zhongshan Intermediate Court ordered Diamond to proof concerning the application of law. In response, Diamond filed a legal opinion rendered by Deacons Law Firm, Hong Kong, proposing opinions concerning certain provisions of the lease agreement. According to this legal opinion, Diamond may, in the case that Ronghui fails to pay rental timely pursuant to the terms and conditions of the agreement, immediately terminate the contract through written notification under the agreement, and be liable correspondingly for breach of contract.
Zhongshan Intermediate Court found that the legal opinion filed by Diamond was provided by qualified attorney in Hong Kong, attested by appointed attesting officer recognized by the Ministry of Justice, and delivered through China Legal Services (Hong Kong) Ltd. The opinion was thus not only presented via a sound, legal channel, but the legal content within Hong Kong thereof was in accordance with the judicial principles of the Basic Law of Hong Kong, and was neither contrary to basic principles of mainland law nor against social public interest. Therefore, the opinion could be adopted.
Zhongshan Intermediate Court so determined at first instance that 1) the lease contract between the plaintiff and the defendant terminate, 2) Ronghui return all the machine equipment leased from Diamond within three days after the ruling takes effect, 3) the two defendants bear the Case Acceptance Fee, RMB 36,500 Yuan.
CHEN Wei, Judge of No. 4 Civil Division of Zhongshan Intermediate Court, stated that extraterritorial application of law in hearing cases is available under two circumstances. One is where both parities in dispute have clearly agreed upon the application of law provided the agreement is valid, the other happens where the most related law with the dispute is extraterritorial law based upon the most significant relationship principle if the disputing parities fail to identify any governing law.
More Words from the Judge
Concerning the jurisdiction of this case, presiding judge CHEN Wei points out that Diamond and Ronghui have agreed upon the jurisdiction over disputes, i.e., the lessor and lessee consent to the jurisdiction of courts in Hong Kong, and the lessor may turn to courts in any other competent jurisdiction for compulsory enforcement of the contract. This means the lessor can make the contract enforceable in other dispute-related jurisdiction besides the jurisdiction of Hong Kong’s courts. Thus, the jurisdiction of courts in Hong Kong over their dispute set out in the contract is actually a non-exclusive jurisdiction, or in other words, does not preclude the jurisdiction from competent courts of other countries.
This is further clarified in the purchase agreement, an annex to the lease contract, signed by the contracting parties on the same day. The agreed upon jurisdiction set out in the agreement is that both parties consent to the “non-exclusive jurisdiction” of courts in Hong Kong concerning any litigation and legal proceedings of certain agreement. Hence, Diamond has the right to litigate this case before other courts with competent jurisdiction besides courts in Hong Kong. Through financing lease, Ronghui leased machine equipment (commodities) from Diamond in compliance with its purchase requirement for the purpose of Ronghui II’s use. As a result, the place of performance of this contract is mainland China where Ronghui II is located; meanwhile, machine equipment, object in dispute of this case, is also located in mainland China. The litigation brought by Diamond before Zhongshan Intermediate Court, therefore, is in accordance with Article 24 concerning territorial jurisdiction and Article 243 of the Civil Procedure Law of P.R.C, and Zhongshan Intermediate Court has jurisdiction over this case.
合同双方为香港企业 内地法院首用香港法律判案
2007年06月13日 08:26:09 来源：法制日报
昨天（11日），广东省中山市中级人民法院对一宗涉港租赁合同纠纷案作出一审宣判，据了解，这是内地法院首例适用香港法律判决的案件。原告钻石租赁公司和被告之一荣辉科技公司都是香港企业，双方的租赁合同被法院判令解除，承租人荣辉科技公司被判令返还租用设备。
据了解，双方的纠纷因被告荣辉科技公司违反租赁合同约定而起。原告钻石租赁公司诉称， 2002年11月22日，双方签订《租赁合同》，约定由荣辉科技公司向该公司租赁有关机器设备，该公司已依合同约定将租赁物交付被告使用，而实际使用人为荣辉电子(中山)有限公司。但荣辉科技公司却违反合同关于支付租金的约定，自2003年9月开始就未支付任何租金，其行为已构成根本违约。钻石租赁公司向法院请求判令解除合同及两被告交还租赁物。
“本合同在各个方面均受香港法律管辖，并按香港法律诠释。出租人与承租人愿受香港法庭司法管辖权的管辖，而出租人可在任何其他主管的司法管辖区法庭强制执行本合同。”双方在《租赁合同》第16条对解决纠纷适用法律作了约定。
由于钻石租赁公司和荣辉科技公司对双方发生纠纷适用的管辖法律约定为香港法律，中山市中级法院要求钻石租赁公司就法律适用进行举证。钻石租赁公司提供了由香港“的近律师行”出具的《法律意见书》，对租赁协议的相关约定提出了法律意见。对于违约责任，该《法律意见书》认为，根据香港法律，荣辉科技公司没有根据该协议的条款按时支付租金时，钻石可根据该协议的条款以书面通知立即解除该协议，并承担相应的违约责任。
中山中院认为，由钻石租赁公司提供的经香港注册专业律师作出、并由司法部委托公证人见证、法律服务公司转递的《法律意见书》，不仅提供途径规范、合法，其阐述的香港法律内容，也符合香港基本法规定的司法原则，并且没有违反我国法律的基本原则和社会公共利益。由此，可以采信。
中山中院遂作出一审判决，判令解除原、被告签订的《租赁合同》，荣辉科技公司于判决发生法律效力之日起3日内返还向钻石租赁公司租赁的所有机械设备。36500元的案件受理费，由两被告共同承担。
据中山市中级法院民四庭法官陈薇介绍，适用域外法审理案件有两种情形：一是如果争议双方明确约定适用域外法且约定有效的；二是争议双方没有约定，但根据最密切联系原则，与纠纷有最密切联系的法律是域外法的，也可以适用。（记者 邓新建 通讯员 吴娇）
法官说法
关于本案的管辖权，主审法官陈薇指出，钻石租赁公司和荣辉科技公司在《租赁合同》中有关于双方纠纷司法管辖的约定，即出租人与承租人愿受香港法庭司法管辖权的管辖，而出租人可在任何其他主管的司法管辖区法庭 “强制执行”本合同，意思就是双方因《租赁合同》而产生的纠纷，出租人除接受香港法庭的司法管辖外，还有权在其他与纠纷相关的司法管辖区域使合同得以强制履行。由此，该合同约定的香港法庭对其争议享有的管辖权，实际是一种非排他性管辖权，即并没有排除其他国家有管辖权法院的管辖权。
这一点，在双方同日签订的作为《租赁合同》附件的《购买协定》中有更进一步的明确：协定对管辖约定为双方同意接受香港法院对有关协定的任何诉讼及法律程式行使“非专有的司法管辖权”。因此，钻石租赁公司有权向除香港法院以外的其他有管辖权的司法管辖区法庭提起本案诉讼。荣辉科技公司以融资租赁的方式，向钻石租赁公司租赁由其指定购买的机械设备(货品)，以供荣辉电子公司使用。由此，本案合同的履行地在荣辉电子公司所在的中华人民共和国内地；同时本案争议的标的物机械设备也位于我国内地。因此，钻石租赁公司向中山市中级法院起诉，符合《中华人民共和国民事诉讼法》第二十四条关于地域管辖以及该法第二百四十三条的规定，中山市中级法院对本案享有管辖权。
Posted by Richard at 4:32 PM | Comments (4)June 7, 2007
Check Your June Issue of the ABA Journal
Those of you who are members of the American Bar Association may wish to check your June issue of the ABA Journal, where your editor, Rich Kuslan, is quoted. See Terry Carter's article, "A Chinese Puzzle," on page 30. Interesting compilation of ideas, focusing on ethics as they appear to apply to foreign firms in China, but touching briefly on marketing. Dan Harris of China Law Blog and Matt Adler of DLA Piper were interviewed as well. Here's the link.
Posted by Richard at 2:21 PM | Comments (3)May 29, 2007
Conference in Beijing: U.S.-China Trade: Legal and Policy Issues and Opportunities
[Editor's Note: Carol Kalinoski, who will speak at the conference, has kindly provided this overview.]
"The Fourth Annual Conference of the Asian Legal Studies Program, co-sponsored by DePaul University School of Law (Chicago, Illinois) and Beijing Foreign Studies University School of Law will be held Wednesday, May 30, 2007, at the Japanese Studies Center, Beijing Foreign Studies University, Beijing, China.
"The theme of this year's conference is "U.S.-China Trade: Legal and Policy Issues and Opportunities". The panelists will focus on a number of practical issues facing the every-growing, economically interdependent U.S.-China trade in a highly-charged political environment in Washington. Topics include developments in Chinese antitrust law, Chinese Customs and tariff issues, hot topics in U.S. export controls affecting China, managing trade risks, and trade conflicts in the textile and apparel industry.
"Speakers have been drawn from the U.S., China, and the Asia Pacific region, and include prominent Chinese government officials, American jurists, trade practitioners and experienced consultants, industry representatives and scholars.
"Additional information about the conference is available from Jerald A. Friedland, Director Asian Legal Studies Program, DePaul University College of Law, e-mail: jfriedland@depaul.edu."
April 19, 2007
American Bar Association To Hire a Program Officer in Beijing
[Editor's Note: This is clearly a search for a Chinese national, while not so stated, for obvious reasons. Unless you are the rare foreigner with a Chinese law degree -- how many are there? Any?]
The American Bar Association (ABA) seeks candidates for a Chinese legal PROGRAM OFFICER position in the Beijing program implementation office of the ABA Rule of Law Initiative.
The ABA Rule of Law Initiative is a public service project that provides technical assistance in support of legal reforms in over 40 countries around the world. ABA's program office in Beijing, with support from Washington, D.C.-based staff, supports a variety of legal reform and legal training projects in mainland China, with a particular focus on issues of public interest law, criminal justice, and good governance.
The new Program Officer, working under the supervision of ABA's China Director and Deputy Director, will be responsible for managing and implementing law-related cooperative training, symposium, research, and networking projects with Chinese institutions and organizations. The position entails management of financial and administrative aspects of cooperative projects and subgrants; monitoring and reporting on project activities and project impact; conducting research, monitoring media reports and attending conferences and meetings to follow important legal developments related to current and potential future projects; developing new program initiatives; legal research and analysis related to project and office needs; and such other duties as may be assigned from time to time. The work requires an ability to manage multiple projects at the same time; the project portfolio for this position is expected to include environmental law, criminal law, labor law and property law. Travel within China is required as necessary for meetings and program activities.
Required Qualifications:
* Chinese law degree and foreign JD or other graduate law degree
* Fluent in both Mandarin and English
* Ability to maintain and develop relationships with high-level Chinese government officials, bar association leaders, local and international NGOs, and legal academics
* Excellent legal analytical and organizational skills
* Strong sense of responsibility and ability to work independently
* Ability to multi-task and to keep the Directors fully informed of program developments
* Commitment to public interest work
Preferred Qualifications:
* Previous experience managing NGO projects or government exchange and cooperation projects
More information about the ABA Rule of Law Initiative China program is available at www.abarol.com. Interested candidates should send a cover note in English explaining their interest and qualifications, along with a brief (1-2 page maximum) resume in English by email to Ms. Ding Xia at: abadingxia@yahoo.com. Candidates will only be contacted if invited for an interview.
March 21, 2007
More on American Law Firms Chasing Chinese Business
Just a quickie today -- this superb article on Vinson & Elkins, its Chinese government clients and the argument to change the Commerce Department's countervailing duty policy. [Site registration required - here.]
Posted by Richard at 2:41 PM | Comments (1)March 19, 2007
Sheppard Mullin's China Saga Beginneth
Americans must be working from a script because yet another fellow is auditioning for the same part:
Chairman Guy Halgren of Sheppard, Mullin, Richter & Hampton on plans for a China office:
"It's a giant legal market and we're getting in the middle of it," said Chairman Guy Halgren, who announced last week that the firm had opened a Shanghai office as expected.
A giant legal market? China will never become a giant legal market. China means some additional business for American firms whose clients do business there, but, unlike shoe manufacturing, law will not grow to American-like proportions over time just because an impoverished population has finally made productive use of its human capital.
Chinese businesses -- the market law firms would hope to target -- are unreachable, given the prohibition against legal practice by foreigners. One must also doubt whether Chinese would consider a foreigner competent, as compared to a native-born and educated Chinese, to represent them in China. But even more significantly, Chinese businessmen consider law to be of little importance: it is an afterthought to be avoided always, unless it is impossible to do so. Ask a Chinese businessman to be proactive about legal matters and you will get a laugh.
And besides, Chinese do not and never will pay American rates. American companies in China generally do. (And I've heard more than one rumor of large discounts given by law firms to American clients in China because of the heated competition.) They, the Americans, appear to be Sheppard's target, just as they are everyone else's.
Tell me again how many American firms have offices in China now? 60? 90? (Ever increasing, it seems.) And selling legal services to a few thousand American multi-nationals with sufficient business. Just how many apples can you fit into one pie?
We represent almost every major film studio in the country, and studios are making major investments in China," Halgren said. The firm will ideally work on intellectual property issues related to distribution in Asia, particularly China, he said.
Okay, IP in China is a big deal for Americans. But it's not for Chinese. Is there a market for IP work for anyone but Americans? And lest we forget, the American clients a firm goes over with may jump ship, stranding attorneys with an office, little business and little idea how to market. Attorneys in China who read this know what I mean. So, then, quo vadis, Sheppard?
It appears as if the ex-Coudert people who landed at Sheppard have managed to convince the firm to open an office, perhaps simply to retain current clients. Given the Coudert contacts in Chinese government (if they still have them), perhaps Sheppard may even capture one or two large Chinese clients whose American business interests they might represent. But it doesn't shake up to be the giant legal market pie in the sky. Of course, I hope otherwise for the firm.
Mr. Holmgren stated:
We're going to establish ourselves and show we have the best product. Let the best person win.
To this curious expression of loyalty to market forces (whatever that may mean) where non-market forces reign (government influence, personal networks, a belief in fortune), one can only wish the best.
Posted by Richard at 12:05 PM | Comments (0)March 13, 2007
Guest Column: China Adopts New Franchise Regulation
[Editor's Note: We are grateful to Paul Jones for today's post on China's new franchise regulation, in which he delineates the differences between it and previous franchise regulations. Mr. Jones is a franchise and intellectual property lawyer in Toronto, Canada, and a Chinese speaker. The international law program at John Hopkins University currently uses his paper on the interpretation of the previous Commercial Franchise Measures to illustrate the differences between common law and civil law. He may be contacted at this address.]
China has just released a new franchise Regulation (商业特许经营管理条例) to come into effect on May 1, 2007. It replaces the existing Commercial Franchise Measures (商业特许经营管理办法) that came into effect on February 1, 2005. [In Chinese.] The new regulation (hereinafter, "Regulation") is significantly different from previous Measures that had caused considerable concern amongst international franchisors and led to intervention by the U.S. Trade Representative.
The Regulation tries to balance a variety of international and domestic concerns and there is some question as to whether it manages to satisfy the needs within China for intervention to prevent fraud and abuse, and the international desire for easier access to the China market. The new Regulation has clarified that it will apply to all franchises operations in China equally. The Measures had a separate chapter (第七章外商投资企业的特别规定) that had requirements for Foreign Invested Enterprises (FIE), but it was not clear from the text what triggered the requirement to set up an FIE, and some questioned whether these separate requirements were in line with China’s WTO commitments. The Regulation has eliminated this issue by eliminating separate requirements for FIEs.
Another international concern was the requirement for a franchisor to have owned and operated two locations in China for at least one year. The requirement to have owned and operated two locations has been retained in the Regulation, but the requirement that they be in China has been removed. Foreign franchisors that have met this requirement in their home market will now be eligible to franchise in China.
But there are also restrictions to try to curb the rampant fraud in the domestic market for franchises. The State Council’s Legislative Affairs Office and the Ministry of Commerce (国务院法制办、商务部) also released a set of questions and answers on the new Regulation. [In Chinese.] They describe the Regulation as having five aspects that are designed to deal with problems in the franchise market.
Firstly, only corpo