CLB April 2012

Devil in the details: The amended Criminal Procedural Law 刑诉法修订：细节决定一切

april2012 WWW.LEGALBUSINESSONLINE.COM

亚洲法律杂志 - 中国版 CHINA

ALB INTELLECTUAL PROPERTY RANKINGS

2012 ALB 知识产权排名

ONLINE UNION More M&As in the TMT sector? 视频网络洗牌时代？

PAGE 14

OFFSHORES AT THE GATE A look at offshore firms’ China strategies 离岸律所中国战略

PAGE 16

PEARL RIVER DELTA

INSIDE

Preparing for opportunities amidst an economic crisis 应对危机，备战未来

n Deals SPOTLIGHT

PAGE 24

04

n THE BIG STORY

05

n LAW FIRM LEAGUE TABLES

08

n SUNDRIES

48

LOOKING FOR A CHANGE?

POST YOUR CV ONLINE AND LET YOUR NEW LIFE COME TO YOU

CONTENTS

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24

“Being in China is helping us build our profile. I believe more firms will be following us into the market because certainly, our findings for China clearly show this as a growth area for offshore. We are here where our clients need us.”

Kristy Calvert, Ogier

1

20

REUTERS/China Photos

COVER STORY ALB IP Rankings 2012

The first of our brand new rankings with enhanced methodology and greater transparency; these rankings identify the best intellectual property firms across Asia.

36 NEWS

FEATURES Online union The sudden merger of Youku.com and Tudou.com may bring the ongoing litigation between China’s top two online video sites to an end, and create a market leader with about one-third of the total market share.

Now, lawyers are ready for more M&A news in the competitive internet video market of some 450 million netizens, finds Liu Zhen

14

Offshores at the gate With two key offshore firms on the ground in China now, the rest of the market players are monitoring their experiences and reanalysing strategies. Although for now, most of them are satisfied with their offerings and are looking for alternate opportunities to shore up business, including tapping into the growing sophistication of clients and riding the waves of wealth planning and aircraft financing. Candice Mak reports

16

Pearl River Delta: Renaissance amidst crisis The Pearl River Delta has cradled the birth and the growth of China’s legal business over the past 30 years with its pioneering economic opening and reform. In the global economic gloom, in which the highly exportdependent manufacturing industries were damaged, law firms find their chances to prepare for the next boom, reports Liu Zhen

24

Malaysia focus An in-depth look at the nation confirms that the environmental, banking and energy sectors are steadily bringing in increasing levels of foreign interest, solidifying Malaysia as an investment hotspot for 2012, write Seher Hussain and Ranajit Dam

28

DEALS

4

BRIEFS

5

LEAGUE TABLES

8

APPOINTMENTS

10

INDEX

48

SPONSORED UPDATES — International Tax AzureTax — Singapore Loo & Partners — Shanghai

Victory Legal Group

SPONSORED PROFILES — — — — —

Tahota Law Firm Guantao Law Firm Shanghai Young-Ben Law Firm Guangsheng & Partners Cadwalader, Wickersham & Taft LLP

SUNDRIES

44 45 45

7 9 11 13 27

48

ASIAN LEGAL BUSINESS April 2012

2 ON THE COVER

MANAGING DIRECTOR Andrew Goldner andrew.goldner@thomsonreuters.com NORTH ASIA REGIONAL EDITOR Candice Mak candice.mak@thomsonreuters.com SOUTHEAST ASIA REGIONAL EDITOR Ranajit Dam ranajit.dam@thomsonreuters.com MIDDLE EAST REGIONAL EDITOR Shaheen Pasha shaheen.pasha@thomsonreuters.com

ALB INTELLECTUAL PROPERTY RANKINGS

2012 ALB 知识产权排名

JOURNALISTS Seher Hussain seher.hussain@thomsonreuters.com Zhen Liu zhen.liu@thomsonreuters.com Kathryn Crossley kathryn.crossley@thomsonreuters.com Kanishk Verghese kanishk.verghese@thomsonreuters.com copy editor Vasundhara Chatterjee vasundhara.chatterjee@thomsonreuters.com HEAD OF SALES May Wong may.wong@thomsonreuters.com

THOMSON REUTERS TRUST PRINCIPLES 01

That Thomson Reuters shall at no time pass into the hands of any one interest, group or faction;

02 That the integrity, independence and freedom from bias of Thomson Reuters shall at all times be fully preserved; 03

That Thomson Reuters shall supply unbiased and reliable news services to newspapers, news agencies, broadcasters and other media subscribers and to businesses governments, institutions, individuals and others with whom Thomson Reuters has or may have contracts;

04 That Thomson Reuters shall pay due regard to the many interests which it serves in addition to those of the media; and 05 That no effort shall be spared to expand, develop and adapt the news and other services and products so as to maintain its leading position in the international news and information business.

Please contact Andrew Goldner with any questions. andrew.goldner@thomsonreuters.com

DIRECTOR, EVENTS Lucinda Maguire lucinda.maguire@thomsonreuters.com ACCOUNT MANAGERS Yvonne Cheung (Senior Account Manager, China) yvonne.cheung@thomsonreuters.com Rebecca Ng (Account Manager, North Asia) rebecca.ng@thomsonreuters.com Brenda Lau (Account Manager, North Asia) brenda.lau@thomsonreuters.com Mark Schroeder (Director, Business Development) mark.schroeder@thomsonreuters.com Wendy Tan (Account Manager, Southeast Asia) wendy.tan@thomsonreuters.com Alison Towle (Account Manager, Middle East) alison.towle@thomsonreuters.com DESIGNERS John Agra Yvette Chiu TRAFFIC MANAGERs Ivy Tsang (Hong Kong) Rozidah Jambari (Singapore)

ASIAN LEGAL BUSINESS is available by subscription. Please call +852 3762 3269 (Hong Kong), +65 6775 5088 (Singapore) for details or visit www.legalbusinessonline.com Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor.

Contributions are invited, but copies of work should be kept, as ALB can accept no responsibility for loss.

THOMSON REUTERS 10/F, Cityplaza 3, Taikoo Shing, Hong Kong T (852) 3762 3269 | F (852) 2154 6425 www.thomsonreuters.com

EDITORIAL

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3

Rankings reloaded This issue marks a return to rankings following a hiatus of a few months, and there was a reason for the break: Following the ALB 50 and M&A rankings in the October 2011 issue, we went back to the drawing board to look carefully at rankings and see how they could be improved. No aspect was left untouched; right from the way we solicited submissions to how we put the final list together. The results, as evident in our IP rankings in this issue, are quite visible in that we have a far more clear process with well defined criteria, resulting in a more credible list. Note that this is just the start. As we continue to evolve and learn from experience, so will we be able to eliminate the remaining minor kinks in the ranking process. In the meantime, we look forward to your feedback on the same.

To the rankings, then: We took a conscious decision to create just one list of Asia’s best IP firms instead of splitting it according to jurisdiction, as we did earlier. The reasons are twofold. For one, we thought it would do more justice to the pan-Asian practices, rewarding them for the work they are doing across countries.

Secondly, it seemed a more relevant approach, given how much cross border work is occurring in Asia today as the regional market continues to evolve. As a result, it is no surprise that a number of the usual suspects made to the top tier of firms; congratulations to Baker & McKenzie, Bird & Bird, Hogan Lovells, and Jones Day for that. Apart from these heavy hitters, two domestic Chinese law firms 1 2011-8-13 made aALB_186x119.5mm_bleed5mm.pdf strong showing in tiers three and17:12:41 five respectively: Jun He

C

M

Y

CM

MY

CY

CMY

K

Law Offices and Run Ming Law Office.

Apart from our IP rankings in this issue, you’ll find a report on the Pearl River Delta region and the winds of change that are driving the direction of business for law firms. The Youku-Tudou merger made headlines as it created an online video behemoth – and we tell you why this marriage has not triggered antitrust violation concerns, and how the two formerly warring parties are now at peace with each other. In another feature, ALB explores the China strategies of the offshore law firms in Asia and why so far, only two have forayed into the mainland.

This April issue is the third one of the “new” ALB China. While we have received a significant amount of feedback on the changes we have made, we would love to hear from more of our readers about what you think. Please e-mail us, call us or tweet to us; we’d love to hear from you.

CANDICE MAK North Asia Regional Editor, Asian Legal Business Thomson Reuters

DEALS

4

ASIAN LEGAL BUSINESS april 2012 n your month at a glance

$1.5 billion M&A Shandong Iron & Steel’s investment into African Minerals • Shandong set to acquire a 25 percent stake in African Minerals’ Tonkolili iron ore project in Sierra Leone.

• Shandong to have the right to buy 25 percent of Tonkolili’s future production at market value, as well as a guaranteed annual off-take of iron ore.

• Transaction underscores China’s steady appetite for African commodities.

Firm

Value ($ mln)

Jurisdiction

Deal name

China/Sierra Leone

Shandong Iron & Steel’s investment in African Minerals

China

Morgan Stanley Private Equity Asia’s investment in Tianhe Chemicals

China

Bank of Communications’ private share issuance

China/Hong Kong

China Daye Non-Ferrous Metals’ reverse takeover of Prosper Well Group

China/Hong Kong

China Minsheng Bank’s share placement

1,440 (£906 million)

Equity

China/Canada

Chalco’s takeover bid of SouthGobi Resources

929 (C$925 million)

M&A

China

China Export-Import Bank’s dim sum bond issuance

635 (RMB 4 billion )

Debt

China

Youku–Tudou merger

Sullivan & Cromwell

China

China Cinda’s equity sale to UBS, Standard Chartered, CITIC Capital and National Social Security Fund of China

1640

Equity

White & Case

China/India

Syndicated financing to Reliance Communications

by Chinese banks consortium

1000

Banking and Finance

Cleary Gottlieb Steen & Hamilton Linklaters

1500

Deal type

M&A

Clifford Chance Commerce & Finance Law Offices Conyers Dill & Pearman Haiwen & Partners

580 Private equity

Ogier Paul, Weiss, Rifkind, Wharton & Garrison Simpson Thacher & Bartlett King & Wood Mallesons

8900 Equity

Conyers Dill & Pearman

$917 million M&A China Daye Non-Ferrous Metals’ reverse takeover of Prosper Well Group • Deal sported complex regulatory and legal issues, including a reverse takeover and whitewash waiver application.

• China Daye purchased shares from the controlling shareholder of its parent company, Prosper Well Group, China Times Development and China Cinda (HK) Asset Management Co, and issued new shares and convertible bonds.

Haiwen & Partners Legal Consulting Group Paul Hastings

917

M&A

Norton Rose Zhong Lun Law Firm Clifford Chance Freshfields Bruckhaus Deringer Clifford Chance Jincheng, Tongda & Neal Fasken Martineau Herbert Smith Kirkland & Ellis Skadden, Arps, Slate, Meagher & Flom

$1 billion+ M&A Youku-Tudou merger • Union creates China’s largest online video portal.

• New entity to be named “Youku Tudou Inc” and set to capture one-third of China’s online video market share.

• Deal expected to close in the third quarter, with approvals pending from both companies’ shareholders.

Conyers Dill & Pearman

1000+ M&A

Maples and Calder Fangda Partners TransAsia Lawyers

04.2012

BRIEFS

05

the big story

Amended Criminal Procedural Law Devil in the details

By Liu Zhen

W

ith the National People’s Congress’ (NPC) approval on the revision of the Criminal Procedural Law (CPL) on March 14, China’s reform to balance the power of the judicial authorities and the rights of defendants and lawyers has again come back as a topic of public discussion. The legislation’s reforming gesture has been welcomed by legal practitioners. But there are still considerable doubts on the enforceability.

Human rights Among the over 100 revised and 66 added items to the previous version of the 225 articles of the CPL, which was last updated in 1996, the phrase “respecting and protecting human rights” attracted the maximum media attention as it was for the first time that this sort of a thing was written in the law in the opening chapter, “Aim and basic principles”. Such a principle was explicitly mentioned only in the Constitution of the People’s Republic of China eight years ago.

The CPL was first enacted in 1979, when the country was trying to draw the influence of the Cultural Revolution (between 1966 and 1976) to an end by replacing the class struggle philosophies with the “rule of law”. But the priority was unaltered from the revolutionary idea - that of cracking down on crime. Illegal restrictions, detentions and arrests are exerted; torture during interrogations is not rare; cases of innocent people being convicted due to forced confessions have been widely reported over recent years.

However, the 2012 version of the CPL is making an “unprecedented effort” to prevent torture, according to Yi Shenghua, head of the criminal litigation department of Yingke Law Firm. On the other hand, a certain degree of restriction will be applied to powerful public security departments in their investigations.

The major changes concerning torture prevention include the articles to prohibit forced self-incrimination by public security officers, and the exclusionary rules on evidence, testimony and statements extracted through illegal means, state media quoted Professor Chen Weidong of Renmin University Law School, one of the drafters of the amendment as saying.

Besides articles on illegal evidence, provisions on the procedure of collecting evidence and summoning witnesses to court will also

REUTERS/Jason Lee

effectively curb torturing practices, according to Chen. Another notable revision strategy for the same objective aims at increasing the involvement of lawyers, as lawyers’ rights are derived from defendants’ rights, says Zhao Yunheng, head of the criminal litigation practice of Dacheng Law Offices. For instance, a lawyer cannot “advocate” for a defendant until the case enters the stage of prosecution. Instead, the lawyer can only “provide legal assistance” till such time. However, under the amendment, the lawyer will be able to represent the suspect from the beginning of the investigation.

Also, the new CPL amendment says that a lawyers’ request for meeting the client does not need approval any more. Instead, the detention places have to arrange the meeting within 48 hours, so long as the lawyer presents necessary documents. The meeting is supposed to be free from monitoring, and lawyers have been granted the right to obtain and review evidence from the police and the procuratorate. They can now appeal against the impediments of the judicial agencies, says Yi. “As of the defence right, the amendment fully engages the relevant contents in the Law on Lawyers (2007), and even moves further to some extent,” says Chen.

FORUM What does the new amendment to the Criminal Procedural Law mean for lawyers?

“Many of us think we don’t even need to make the new amendment. Only to fully implement the 1996 CPL would be a great progress from the present reality.”

Zhao Yunheng Dacheng Law Offices

“The strengthening of the lawyers’ role at the same time means the increase of lawyers’ risk in practice. Official judicial interpretations are needed to clarify the rights of the lawyers.”

Yi Shenghua Yingke Law Firm

Obscurity However, lawyers are reserved about how much easier their job could become because of the amendment owing to the vagueness of the provisions.

(Continued on p.47...)

6

BRIEFS

ASIAN LEGAL BUSINESS april 2012

emerging asia paCifiC p/e ratio Price to earnings Current – Feb 26, 2012 Philippines Taiwan indonesia malaysia China Thailand india South Korea 11.1 05

10

Vietnam 15

20

25

Source: Thomson reuters reuters graphic/Christine Chan

Steady growth

GC INTERVIEW

Wilfred Ong Managing Corporate Counsel, Asia-Pacific Avaya

01/03/12

As the financial graphic indicates, Asia’s emerging markets as a whole are performing strongly, with P/E ratios above 10. Investors may expect higher growth rates in the most highly valued countries. Filipino economists are expecting a minimum gross domestic product growth rate of 4.2 percent (up to the government’s forecast of 5 or 6 percent), up from last year’s bleak 3.7 percent. According to the Philippine Board of Investments and the Philippine Zone Economic Authority, foreign investment is booming, and the country’s banks remain strong and unaffected by uncertain global market conditions.

‘You need to read people well’ ALB: What can in-house counsel do to make themselves an indispensable part of the organisation?

ONG: In Asia in particular, you need to establish a good track record for getting things done effectively. Once you’ve built on that reputation, you need to maintain it. With that, half the battle is won. Truly, actions speak louder than words while marketing yourself.

work smart; when to be granular and when to take a macro view of issues.

Then, you need to read people well – be it people you are recruiting, customers you are negotiating with on the other side, your constituents, or your bosses.

Additionally, integrity, and walking the talk are very important. Always see things in perspective, and do not let your emotions get the better of you.

Then, you can’t hole yourself up in your ivory tower, dispensing legal advice in the abstract. You need to get off the fence, roll up your sleeves and understand exactly where the company wants to go, appreciate the real risks involved, take a position, and chart an uncomplicated course in order to achieve those goals. Therefore, understanding business goals, models and trade-offs is very important. Providing solutions in simple language that your clients can understand quickly is key.

ALB: How would you describe your strategy for the legal team?

ONG: Always be seen to be adding value to the business, and never be perceived as a legal roadblock. As timely exchange of information is key, the legal team needs to position itself as a “trusted adviser” to their clients so we can preempt problems before they arise.

ALB: What are the most important qualities someone in your role must possess?

ONG: First, a good sense of balance – you need to know when you start worrying, and when you shouldn’t; you need to know when to give up a war in order to win the battle; you need to know when to work hard, and when to

In the very competitive and unpredictable IT industry, the team needs to be adaptable and evolve with the company as it shifts its goals, as different leaders come and go, as the performance of the company shifts in cycles, and as new paradigm shifts take place with the introduction of new technology.

ALB: In relation to the work that you are doing, what are the main trends you expect to see over the next 12

months in China?

ONG: I see an uptick in the activities of the major umbrella unions, like the ACFTU, to push companies’ labour unions to be more engaged to protect workers’ rights. In this regard, I see legal teams having to partner closely with HR and labour negotiators to protect the companies’ interests. Protection of intellectual property will continue to be an issue at the forefront of many Western companies operating in China.

ALB: What is the best advice you have ever received?

ONG: Someone once repeated to me the adage that “the grass is always greener on the other side.” If we keep comparing, we’ll never be satisfied. It is only natural that younger in-house counsels tend to move quite quickly from one job to another – to get better experience, exposure, more money to support their young families, etc. But we must not lose sight of the intangible benefits that our current jobs may sometimes bring – fair and supportive bosses who walk the talk and whom we can respect; the sense of belonging and collegiality in our organisation; and the hard-earned respect and recognition our organisation has earned with the company. These are equally important.

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Our Network Headquartered in Beijing, and extends to all of coastal ports, air gateways in China and main ports abroad As sole member of WSG, we could cooperate with partners worldwide via WGS global network expediently

LEAGUE TABLES

8

ASIAN LEGAL BUSINESS april 2012

CHINA ANNOUNCED M&A LEGAL RANKINGS

CHINA Announced M&A Financial Rankings

Allen & Overy

2,570.9

DEALS: 5 RANK

Credit Suisse

6,022.7

VALUE ($mln)

DEALS: 3

MARKET SHARE: 5.9

LEGAL ADVISOR

VALUE ($ MLN)

DEALS

MARKET SHARE

RANK

VALUE ($mln)

MARKET SHARE: 13.9

LEGAL ADVISOR

VALUE ($ MLN)

DEALS

MARKET SHARE 7.6

2

Slaughter and May

2,531.4

1

5.9

2

CITIC

3,304.8

7

3*

Fulbright & Jaworski

2,500.0

1

5.8

3

Deutsche Bank AG

3,304.4

6

7.6

3*

Vinson & Elkins

2,500.0

1

5.8

4

HSBC Holdings

3,048.9

3

7.0

5

King & Wood Mallesons

2,134.1

4

4.9

5*

Somerley Ltd

2,531.4

1

5.9

6

Paul, Weiss

1,940.3

2

4.5

5*

Rothschild

2,531.4

2

5.9 5.4

7

Jingtian & Gongcheng

1,797.3

5

4.2

7

Caitong Securities Co Ltd

2,334.6

6

8

Sullivan & Cromwell

1,640.3

1

3.8

8

UBS

1,765.3

2

4.1

9

Baker & McKenzie

1,580.6

5

3.7

9

Morgan Stanley

1,688.9

2

3.9

10

Skadden

1,256.9

5

2.9

10

Citi

1,433.1

4

3.3

(*tie) Based on Rank Value including Net Debt of announced M&A deals (excluding withdrawn M&A)

(*tie) Based on Rank Value including Net Debt of announced M&A deals (excluding withdrawn M&A)

HONG KONG Announced M&A Legal Rankings

HONG KONG Announced M&A Financial Rankings

Allen & Overy

4,089.4

DEALS: 5 RANK

Moelis & Co

4,278.7

VALUE ($mln)

MARKET SHARE: 24.0

LEGAL ADVISOR

VALUE ($ MLN)

DEALS: 2

DEALS

MARKET SHARE

RANK

VALUE ($mln)

MARKET SHARE: 25.2

LEGAL ADVISOR

VALUE ($ MLN)

DEALS

MARKET SHARE

2

Slaughter & May

2,531.4

1

14.9

2

Morgan Stanley

3,617.4

2

21.3

3

Sullivan & Cromwell

1,936.4

1

11.4

3

HSBC Holdings

3,064.9

4

18.0

4

Freshfields Bruckhaus Deringer

1,275.1

1

7.5

4

Goldman Sachs & Co

2,836.2

9

16.7

5

Linklaters

533.5

2

3.1

5

Deutsche Bank AG

2,795.4

10

16.4

6*

Rajah & Tann

494.0

1

2.9

6

Rothschild

2,752.2

2

16.2

6*

Machado Meyer Sendacz & Opice

494.0

1

2.9

7

Somerley Ltd

2,535.1

2

14.9

8

Paul, Weiss

300.0

1

1.8

8

Credit Suisse

2,531.4

1

14.9

9

Baker & McKenzie

260.6

3

1.5

9

JP Morgan

2,003.4

3

11.8

10

Mayer Brown JSM

216.3

5

1.3

10

Citi

514.8

2

3.0

(*tie) Based on Rank Value including Net Debt of announced M&A deals (excluding withdrawn M&A)

(*tie) Based on Rank Value including Net Debt of announced M&A deals (excluding withdrawn M&A)

ANY CHINESE INVOLVEMENT ANNOUNCED M&A ACTIVITY - QUARTERLY TREND 80

Rank Value US$ billion

70

No. of Deals

60

46.7

50 40 30 20 10 0

83.5

8.3 9.5

16.6

10.6

15.7

12.4

17.0

23.3 21.1 22.3 22.4

1,200

76.5

39.6

42.4

36.4 27.1 16.9

46.2

42.5 40.3 43.6 45.2

1,000 800 44.3 43.1

34.3

600 400 200

No. of Transactions

Rank Value US$ Billion

90

0

1Qdeal 05 list are 3Qbased 05 on the 1Qnation 06 of 3Q 06the target, 1Q 07 07 ultimate 1Q 08 3Q 08 1Q 09 parent3Q 10transaction.

3Q 10Announced 1Q 11M&A transactions 3Q 11 NOTES: League tables, quarterly trend, and either acquiror,3Q target parent, or acquiror ultimate at 09 the time 1Q of the excludes withdrawn deals. Deals with undisclosed dollar values are rank eligible but with no corresponding Rank Value. Non-US dollar denominated transactions are converted to the US dollar equivalent at the time of announcement of terms.. Data accurate as of April 18, 2012

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Sponsored Profile

9

GUANTAO law Firm

Added Value of Legal Service for Overseas Engineering Project

N

Jiang Wei, Partner

Beijing Headquarter Office A: 17/F, Tower 2, Yingtai Center, No. 28 Finance Street, Xicheng District, Beijing 100033, China T: +86 10 6657 8066 F: +86 10 6657 8016 E: jiangwei@guantao.com

owadays, for Chinese engineering companies actively responding to the “Going Global� Strategy advocated by the Chinese central government, risk management methodologies have become an important consideration in their efforts to expand the overseas market.

For an overseas engineering project, the legal services provided by lawyers are no longer confined to the traditional realms. Aside from assistance in engineering contract drafting, review of the RFB and other bidding documents, participation in contract negotiations and involvement in dispute settlements as an attorney, the companies have shown a greater need for an experienced lawyer in helping them effectively manage various risks.

Even though Chinese engineering companies are unlikely to pay expensive legal fees to local legal practitioners for an all-around report on the legal environment for one potential project, we shall not exclude the possibility that they are hoping we Chinese counsels engage in the evaluation of the legal environment in case and remind them of the relevant potential risks. These actual needs provide invaluable

opportunities for competent Chinese law firms. In fact, with mastery of the professional methods and an international cooperative network, a proficient lawyer can always come up with satisfactory legal advice to their clients.

In addition, Chinese engineering companies have come to realize the crucial role risk management plays. Those companies already enjoying a fair share of the overseas market, as well as those regarding overseas expansion as a major growth driver are endeavoring to identify and control risks through effective internal administration procedures and directives. However, the aforementioned procedures and directives, if not scientific and effective, may become a systematic risk to these companies. As a result, there has been an ever greater need for our legal advices relating to the formulation of a functional risk management mechanism and the reduction of exposure to systematic risks.

In our view, the expansion of overseas business for Chinese engineering companies is bound to result in the prosperity of the market for high added-value legal services as well as the increasing internationalization of Chinese local lawyers.

10

APPOINTMENTS

ASIAN LEGAL BUSINESS April 2012

Lateral hires NAME

GOING TO

PRACTICE

LOCATION

Davis Polk & Wardwell

Wilson Sonsini Goodrich & Rosati

Corporate, PE, FDI, M&A

Shanghai

Chi, Yongquan

Bae, Kim & Lee

Global Law Office

M&A, Real estate

Beijing

Fyfe, Tom

Clyde & Co

Simmons & Simmons

Dispute resolution, Litigation

Hong Kong

Kim, Jong-gil

Bae, Kim & Lee

Global Law Office

M&A, Fair trade, FDI

Beijing

Ligorner, Lesli

Paul Hastings

Wang, Jing

Allen & Overy

Chen, Zhan

Wang, Xiaogang (Sean)

White, Ying

Yang, Vivien

Leaving

White & Case

Akin Gump Strauss Hauer & Feld

Clifford Chance

Simmons & Simmons

Norton Rose

Shearman & Sterling

Employment, Anti-corruption

M&A

Project finance

Shanghai

Beijing

Shanghai

Clifford Chance

Corporate

Beijing

Simmons & Simmons

Corporate, Energy, Natural resource

Hong Kong

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Sponsored Profile

11

Shanghai Young-Ben Law Firm

Enforcement-Orientated: Key strategy for a CrossBorder Commercial Litigation or Arbitration in China

T

Vincent Sun, Partner T: +86 21 6148 4911 E: sunwei@young-ben.com

Fran Ye, Partner T: +86 21 6148 2997 E: yefeng@young-ben.com

Shanghai Young-Ben Law Firm A: Room 1405-1407, Fortune Times Plaza, No. 1438, North Shaanxi Road, Shanghai,

200060, PRC. F: +86 21 6148 4899 T: +86 21 6148 4900 E: info@young-ben.com

he rapidly globalizing economy in China has seen more and more Cross-Border disputes arising from international trade or transactions. Some foreign companies as well as attorneys may prefer selecting Forum or Jurisdiction in their own states or western countries, but the reality sometimes shows huge discrepancies in what they thought. Winning on a piece of paper can be meaningless.

From a practical point of view, given the relative difficulty of enforcing a foreign commercial judgment or arbitral award in China, as significantly different from what it is likely to be in most western states, the key strategy for Jurisdiction or Forum selection for disputes must be “EnforcementOriented”, instead of “Forum Conveniens”.

Litigation or Arbitration?

It is common for an experienced attorney preparing an international commercial contract, even some attorneys who may suggest exchanging a preferred Jurisdiction Clause with sacrifices on other aspects. According to the experience in western countries, especially in the US, a Commercial Arbitration may be more preferred for the efficiency and cost-saving purpose. Would it be different if a Cross-Border dispute is involved with a Chinese counterpart?

Enforcement of a Judgment from a foreign Court would be more difficult than an International Arbitration Award. Keep it in mind that China has ratified the New York Convention in 1986 which leads an International Arbitral Award to be recognized and therefore enforced in China – this being emphasized several times by the Supreme People’s Court of China. Conversely, a commercial Judgment from a foreign court will be recognized and enforced by a Chinese court ONLY if there is a bilateral treaty for judicial assistance or reciprocal relationship between China and the county where the foreign court sits. The reality is that commercial judgments from courts in most foreign countries, including US, UK, Germany, Canada, Holland, Japan and Korea, are not recognized by China, while only Judgments from Courts of a few developed countries, including France, Italy and Australia, are recognized by China according to bilateral treaties. Stated simply, most Judgments from foreign Courts have virtually no value in China.

But it should be noted that, under PRC laws, domestic disputes with no foreign element, including a dispute between a Chinese party and the Chinese subsidiary of a foreign party, must have their seats of arbitration inside mainland China.

Hence if you prefer Jurisdictions over potential disputes outside China and you are not sure whether a bilateral treaty exists, an Arbitration Clause shall be definitely better than a lawsuit. But even with an international Arbitration, some functional tools provided by PRC laws may still be unavailable to applicants to help ensure the outcome of Enforcement.

Surrender Jurisdiction to China?

Here is another issue - is it better to surrender the Jurisdiction over the disputes to a Chinese Court or Arbitration Institution?

On one side, many foreign companies are concerned that impartiality will be hard to achieve in Chinese Courts

and Arbitration Institutions due to the lack of transparency and independence; and on the other side, because the crucial influence of the Property Preservation and Evidence Preservation (named “interim or conservatory measures” in some other countries) in deciding the outcome of the case and enforcement, surrendering the Jurisdiction outside China will also be troublesome if the assets for the coming Enforcement are mainly within China. If your adversary is not a giant company with sufficient assets enabling you not to worry about the Enforcement, such as some SOEs or MNCs, without Property Preservation the difficulty of the Enforcement will dramatically increase.

Therefore, without assets aboard to satisfy the Enforcement of a foreign Judgment or Arbitral Award, one must be cautious in pursuing Litigation or Arbitration against a Chinese company abroad. And in fact, the professionalism of the courts in urban areas of China has greatly improved in recent years, especially in the metropolitan areas such as Shanghai, Beijing and Shenzhen.

Golden Rule of “Property Preservation” Property Preservation is a Golden Rule for filing a case in China in order to have a successful outcome against a Company owning assets in China. Collection on judgments in China is improving, but due to the lack of a mature Credit Mechanism, it is more convenient for a Chinese company to transfer its assets during a long period for Litigation or Arbitration. Any Plaintiff or Applicant filing a case in local institutions is entitled to apply to local Courts for “Property Preservation”, meaning that any money, real estate, vehicle, asset, even credit from a third party owned by a Defendant or Respondent could be frozen or seized until the Enforcement stage. In addition, the “Property Preservation” will also put a great pressure on Defendants or Respondents, which sometimes forces them to make a compromise or settlement with the Plaintiffs or Applicants shortening the period for dispute resolution.

Thus, Property Preservation is a great tool from the perspective of Enforcement. But it should be noted that, a deposit shall be required by the Court in order to ensure any potential compensation if there is damage caused by mistaken Property Preservation and the cost shall be considered in the planning stage.

Mediation and Negotiation on the Settlement As an old Chinese proverb says “harmony creates wealth”.

Keeping your flexibilities during a negotiation or mediation with your adversary will be very helpful even when you are most likely to win the case. There is a procedural requirement to have a Mediation process whether in Court or Arbitration in China. To some extent, the foreign companies are reluctant to make compromises because they believe the final decision shall be in their favor. However, without an effective Enforcement, winning on a piece of paper will be meaningless. You must also take into consideration the reality and difficulty of the Enforcement. A well designed Settlement frame will ensure your receipt of the money in months, instead of a futile search for assets. There is a high possibility of similar compromises being made during the Enforcement process as well.

12

BRIEFS

ASIAN LEGAL BUSINESS april 2012

REUTERS

China growth seen slower in 2012, recovery mild: World Bank

By Nick Edwards

The World Bank cut its forecast for China’s 2012 economic growth to 8.2 percent on April 12, 2012 and said a rebound might not begin before the third quarter of the year as slack foreign demand and a government-induced real estate slowdown restrain a recovery.

“There is the potential for growth to be bumping along the bottom for longer,” Ardo Hansson, the World Bank’s lead economist for China, told a news conference to release the multilateral lender’s quarterly update on China.

The Bank’s new growth forecast for the world’s second-biggest economy would mark a 13-year low, compared with an 8.4 percent, 11-year-low estimate in November 2011.

An 8.2 percent expansion would mean China’s economy was growing slightly below its potential rate, Hansson said. In economic terms, it implies Beijing has space to tweak policies to boost growth without igniting inflation.

“We see cyclical weakness continuing, but that the prospects for a soft landing remain high,” Hansson said, adding that Beijing had considerable fiscal resources available to help bolster the economy if risks to the downside accelerate.

The Bank’s economics team believes that when recovery does come, most likely by the middle of the year, but possibly not before the third quarter, its shape would be somewhere between a vigorous ‘V’ and a flat ‘L’ .

Though the report characterises the

bounce as mild, it is faster than expected in November, when 2013 growth was estimated at 8.4 percent compared with 8.6 percent in the latest report.

The World Bank forecast China’s export growth at 9.7 percent this year and 11.6 percent in the next, with import growth likely at 12 percent in 2012 and 12.5 percent in 2013.

That outcome would see external demand having a negative contribution to growth for a second successive year, with trade subtracting 0.3 percent from GDP in 2012 and adding nothing at all in 2013, according to the Bank’s forecasts.

REAL ESTATE RISKS While risks to overseas demand for goods from China’s vast factory sector were seen as a key external restraint on growth in the near term, the bigger problem was domestic real estate.

The report welcomed the gradual cooling of a sector that had been in the grip of a speculative frenzy before the government unveiled a slew of policies to calm it two years ago. But it cautioned that downside risks were centered on that adjustment.

“Given the significance of the sector in the overall economy, continued vigilance will be required to contain negative spillover effects,” the report said. “A more amplified downturn could REUTERS/Jianan Yu have negative economy-wide impacts.”

Real estate investment made up about 13 percent of China’s GDP in 2011 and directly affects about 40 different industries.

Premier Wen Jiabao has pledged to keep the curbs until home prices return to what he says is a reasonable level. Prices in major cities have fallen for five straight months, but remain elevated after rising 10-fold in the past decade.

China’s average home prices will probably fall between 10 and 20 percent this year, a

pace modest enough to prevent a hard landing of the economy, according to a Reuters poll in January.

Hansson said that property tightening so far had not been overdone when looking at things on a national basis, though developments in specific cities might require particular policy responses to prevent wider fallout.

“This is a sector that is difficult to micromanage and fine tune. There’s a lot of uncertainty about the timing of the effects after you pull the policy levers,” he said.

Fine-tuning monetary and fiscal policy has been Beijing’s mantra in fighting a downturn that has put China on its worst run of quarterly sequential slowing since the depths of the 2008/09 global financial crisis and likely in for its weakest full year of growth in a decade.

POTENTIAL FOR POLICY ACTION “Further monetary support would be appropriate if the economy slows down further. To support access to credit and facilitate refinancing, further reserve requirement and policy rate action would be called for,” the report said.

The People’s Bank of China has cut the proportion of deposits banks must keep as reserves by 100 basis points in two moves since late 2011 in a bid to keep credit growing in the face of a recent slowdown of foreign capital inflows, which had underpinned money supply growth for much of the last decade.

Analysts polled by Reuters last month expect a further 150 bps of cuts this year, though the consensus view is that the central bank will eschew outright cuts to policy lending rates.

The World Bank’s revisions to its outlook for the Chinese economy come ahead of China’s official first-quarter growth report due on Friday at 0200 GMT, which is expected to show the country suffering its slowest three months of growth in three years.

Economists polled by Reuters in March forecast first quarter GDP growth at 8.3 percent versus a year earlier. The highest estimate in the range was 8.6 percent, half a percentage point lower than the highest forecast in a poll taken in January.

The slowing economy, though, has helped cap upside inflation pressures. The Bank forecasts full-year inflation of 3.2 percent in 2012 and 3.6 percent in 2013 and Hansson said consumer prices now appeared to be “on a controlled path.”

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Sponsored Profile

13

广盛律师事务所 Guangsheng & Partners

私募基金及资本市场业务助广盛再展英姿

中

刘新辉, 管理合伙人, 私募基金及上市业务负责人 电邮 : jasonliu@gslaw.com.cn Jason Liu, Managing Partner, Head of Private Equity and Capital Market Practice E: jasonliu@gslaw.com.cn

国的私募基金、并购及资本市场业务近年来风起云涌， 广盛律师事务所作为中国一家较早设立的大型律所，在 此领域早有涉猎并已积累大量业绩。 广盛私募基金及上市团队近年来表现尤为抢眼，广盛仅2011 年就协助13家私募基金完成设立（包括美元基金、中外合资基 金和纯人民币基金）；代表KTB、JAFCO、赛富、鼎晖、九鼎等 境内外基金完成12宗私募投资交易（包括境外红筹、合资及纯 内资架构）；代表盛世神州第一家地产基金于国家发改委备案 并助其完成多起地产投资；代表首创合资基金于北京第一家进 行外资基金QFLP试点申请；代表美国纽交所上市公司飞鹤国 际完成1.318亿美元的股权出售，并协助央企完成超过20亿元 人民币的数起矿业并购。 凭借于私募基金及并购业务的出色表现，广盛获清科“2011 年最佳私募基金律师事务所”提名，以及ALB 2012年度“最 佳私募股权投资律师事务所”提名；获选投中集团（China

Venture）“2011年中国并购市场最佳法律服务机构（境内）”，以 及汤森路透“5000万美元以下并购项目”中国区全球法律顾问排 名第3名及中国律所第1名。广盛团队成员亦获得钱伯斯亚太区“ 最佳贸易法律师”、及2011和2012年度Corporate International中 国“最佳反垄断法律师”。 作为具有国际视野、深悉中国法律实践的专家团队，广盛多 名合伙人及律师曾就职于国际律师事务所，亦具有中国中央政 府部门工作经验。他们曾就多部投资法规制定提供立法建议， 与中国政府部门保持良好的沟通渠道。 广盛与多家国际律师事务所保持着良好的合作关系，共同寻 找项目、推动交易顺利交割；分工协作、创造共赢的法律商业机 会，是广盛的宗旨。广盛亦在积极在吸收优秀合伙人加入，以共 同打造高端、专业的法律服务平台。

PE/Capital Market practice leads G&P ahead with full speed

G

广盛律师事务所 地址：中国北京市朝阳区东三 环北路甲19号嘉盛中心6层 电话：+86 10 5967 0111 传真：+86 10 5967 0135 网址 : www.gslaw.com.cn Guangsheng & Partners A: 6th Floor, Tower A, Nexus Center, East 3rd Ring Road North, Chaoyang District, Beijing, China T: +86 10 596 70511 F: +86 10 5967 0135 W: www.gslaw.com.cn

uangsheng & Partners Law Offices (“G&P”) has maintained both its scale and practice for over a decade in areas of fund formation, PE/VC investment, M&A, IPO, real estate, international trade, banking and finance, all of which are at the forefront of its domestic and international face. Many partners in G&P have over ten years practicing experience in law firms of United States, Canada, UK and Japan, some of them have ever worked at PRC central government, including Ministry of Commerce (“MOFCOM”).

The private equity and capital market practice group has taken the lead for the firm’s quick development.

G&P in year 2011 helped with the formation of 13 private equity funds (including pure RMB funds, Sino-foreign joint venture fund and offshore parallel fund) with a total capital commitment of US$659.1 million (around RMB4161 million); as well as the closing of over a dozen PE/VC deals (both offshore and onshore) with total investment amount of US$412.32 million (around RMB2603 million). G&P also helped with multiple merger & acquisition transactions (for listed companies and real estate funds).

The excellent performance of G&P has helped it in building a brand for itself: G&P ranked No. 1 in China law firms in Chinese Involvement Small-Cap Ranking (below US$50 million) in the Legal Advisors Review for year 2011 released by Thomson Reuters. Besides, G&P was nominated finalist in Private Equity Law Firm of the Year at ALB China Law Awards 2012, as well as finalist by China Venture in “Best Legal Service Provider for China M&A market” for year 2011.

It is noteworthy that G&P adds its international exposure to its strong presence in China. G&P intends to create more awareness to its clients about three things in particular: G&P’s international working quality, cost effectiveness of its services, and the channel and resources it can extend to its clients. Contrary to competing with international law firms, G&P understands well its role and function in cross-border transactions; G&P maintains sound relationship with international law firms in PE/VC and IPO deals.

To build a better platform in the legal industry, G&P is also looking for partners to join the firm.

Analysis

14

ASIAN LEGAL BUSINESS april 2012

Online union

By Liu Zhen The sudden merger of Youku.com and Tudou.com may bring the ongoing litigation between China’s top two online video sites to an end, and create a market leader with about one-third of the total market share.

Now, lawyers are ready for more M&A news in the competitive internet video market of some 450 million netizens

T

here has been speculation on whether the recent merger of China’s top two online video companies is to possibly create a “YouTube” of Chinese language, particularly when access to the latter is still blocked in mainland China. It seems quite close to that immediately - at least in terms of the name. How does “Youtudou” sound to you?

Don’t worry. In fact there won’t be any Youtodou in spite of the jokes that are being circulated online. The official name of the combined entity of Youku.com and Tudou.com is simply “Youku Tudou Inc”.

Nevertheless, the joint force of the two will indeed result in the largest internet video site in China, and change the landscape of the entire market. Youku currently leads the fragmented Chinese online video market with a 21.8 percent share, ahead of the second ranked Tudou’s 13.7 percent, according to Internet research firm Analysys International.

In the deal worth over $1 billion, NYSE-listed Youku has purchased all the shares of its smaller rival Tudou. The latter is expected to delist itself from the Nasdaq after the closure of the transaction in the third quarter of this year.

Under the terms of the deal, Youku stock and ADS holders will own around 71.5 percent of the new company, with the rest being held by Tudou shareholders and ADS holders. The new company will be headed

by Youku founder, chairman and CEO Victor Koo, while Tudou’s CEO Gary Wang will join the new entity’s board of directors.

“Youku Tudou Inc will represent a differentiated leader in the online video market in China with the largest user base, most comprehensive content library, most advanced bandwidth infrastructure, and strongest monetisation capability within the sector,” said Koo in a statement.

Antitrust The closure of the deal now depends on the consent of the shareholders of the two parties and the supervisory authorities.

According to the current regulations, any one single company which takes more than half of the market or two companies which together take over two-thirds of the market could be regarded as holding dominant position in the relevant market, and under antitrust risk.

Despite being the largest currently, the combined one-third share of Youku Tudou Inc might not be large enough to trigger an antitrust procedure.

“If there is any concern of antitrust, the two companies should voluntarily report to the Ministry of Commerce. The completion of the merger would be subject to the approval of antitrust department of the Mofcom after relevant investigation,” Zhong Lun Law Firm partner

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Chen Jihong tells ALB. “But this has to be verified and decided by the authorities officially, and the product and the market in this case are both to be identified,” says Chen.

With at least 10 major online video service providers, including general portal Sohu.com Inc, search engine Baidu Inc, and instant messenger Tencent Holdings Ltd, the battle for China’s more than 450 million internet users is largely a money-losing game as it battles rising costs.

Both Youku and Tudou have reported a net loss for 2011 in March this year owing to rising Internet bandwidth, and content and mobile video services costs.

But one thing is certain: if the merger happens smoothly, it could at least save them the money that was been spent by both parties in taking legal action against each other.

Bitter rivalry Not too long ago, Youku.com and Tudou.com were each other’s arch enemies, engaged in cut-throat competition for every bit of business – from content purchasing to user engaging; from advertisements to mobile apps.

In December 2011, Tudou accused Youku of infringing the copyrights of a popular TV show the former had bought, and asked for 150 million yuan ($23 million) in compensation. Youku responded earlier this year by filing a lawsuit against Tudou seeking 4.8 million yuan ($762,000), saying Tudou’s claim had made it suffer losses.

After the merger, the rights and liabilities of both parties will hopefully get consolidated. Such civil disputes will no longer exist, according to Chen.

The disputes over copyrights between the sites have been growing prominently as the competition intensifies. Given the fact that the user generated contents remain relatively a minor part in China, the video sites have started paying huge amounts of money to secure commercial productions to lure viewers.

“The larger the services providers become, the more attention they have to pay to the legitimacy of their products. They are responsible to make sure their materials are authorised. We can expect this merger to make a new leader in the copyright market,” says Chen. “As Youku and Tudou will remain two separate legal entities, they might continue purchasing copyrighted materials on their own but could share the copyrights in some ways.”

Meanwhile, the rivals also regard the merger as a positive move.

“From an industry perspective, Youku and Tudou’s deal is conducive for the healthy development of the sector,” iQiyi, Baidu’s online video platform, said in an e-mail to Reuters. “The cost of purchasing copyrights in the market will be more effectively controlled with fewer ... online video companies. It will also reduce the competition for bandwidth and market talent.”

Consolidation Further consolidation of internet companies is not only beneficial, but also necessary, says Xie Xianghui, partner at Grandall Law Office. In his opinion, the vicious competition among large numbers of small-scale

Analysis

15

“The current moneyburning behaviours in the online video services are only shortterm phenomena, and not sustainable.”

Chen Jihong, Zhong Lun Law Firm

companies would eventually end with consolidation and elimination. What Youku and Tudou have done is a sign of a good start to that.

“In the regard of the current fragmented situation, there is an old Chinese saying – unavoidable union comes after long separation,” he says. “Mergers will create stronger players…Their capability of price negotiation will be enhanced, either with the copyrights holders or with the advertisers.”

A few big service providers, each with unique specialties, will be the final result, he adds.

“The entire internet economy will benefit from such moves,” he says.

Chen noted that the bringing together of smaller companies is driven by both external competition and the internal demand for profit.

“We can expect an increase of mergers and consolidations. The merger of Tudou and Youku is a stimulating factor. As the market leaders strengthen their control, the rest of the players will have to join forces to react,” he says. “The current money-burning behaviours in the online video services are only short-term phenomena, and not sustainable. The venture capital investors want profit. The purpose of such big amount spending of the online video companies is gaining more market share, and their ultimate goal is making profit.”

Michael Clendenin, managing director of Shanghai-based RedTech Advisors, believes there should only be one or two providers to emulate the monopoly YouTube has enjoyed.

“So even though this is a step in the right direction in terms of consolidation, there’s still a long way to go,” Reuters quoted Clendenin as saying.

16

Offshore Law Firms

ASIAN LEGAL BUSINESS April 2012

Offshores at the gate With two key offshore firms on the ground in China now, the rest of the market players are monitoring their experiences and reanalysing strategies. Although for now, most of them are satisfied with their offerings and are looking for alternate opportunities to shore up business, including tapping into the growing sophistication of clients and riding the waves of wealth planning and aircraft financing. Candice Mak reports

Offshore Law Firms

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17

firms are in Hong Kong to serve the booming Asian markets, and China is the key focal point.

Nobody denies this. But if China is as crucial a market as they say, then why have only two of the offshore players set up physical offices in the mainland?

A number of the firms that have not made the move say in unison that there are two main reasons for this: Firstly, that no legal work can take place and secondly (and most importantly), clients have not requested or required their presence on the ground in China.

“Ultimately, it has to be driven by the need of the clients; we’re not in a rush to have an office just for the sake of having one,” says Arwel Lewis, a Hong Kong-based partner at Walkers.

“It’s very dependent strategically on when and what sort of office we want.”

“What it (increased sophistication of Chinese clients) has meant for us is that we almost have to be ahead of the curve in providing value. Now there’s an educational role we have to take up, where we have to show clients the advantages before it’s too late.”

Christine Chang, Maples and Calder

REUTERS/Aly Song

I

n the beginning, there was one. Now, there are two. Offshore law firms have begun to sprout up in China, with Ogier blazing the trail in July 2011 and Appleby launching its Shanghai post in April 2012.

The question is: Who’s next? For nearly 20 years, Hong Kong has been the Asian home base for a roster of the world’s finest offshore law firms like Maples and Calder, Conyers Dill & Pearman, Walkers, Appleby, Harney’s, and Ogier. In the last five years, the offshore offering has become a more saturated space with smaller, boutique firms joining the race, from Thorp Alberga and Arendt & Medernach to a European powerhouse like Mourant Ozannes, which took root in Hong Kong a few months ago in late January this year. All the offshore law

Trail blazers Ogier and Appleby believe being available to clients on the ground is an invaluable component of their business strategies. China is still a market where relationships are nurtured through face to face meetings. In this context, Ogier’s Shanghai managing partner, Kristy Calvert, explains that the firm’s move to China was welcomed by existing PRC clients “because they have really considered this local office to be helpful in bridging the cultural gap in international transactions, and offering Mandarin capabilities.” Though neither Ogier nor Appleby have law licences to practice in China, both operations were set up to provide local support to existing clients and to serve as points of contact as Chinese clients mature in their understanding of the uses and benefits of offshore structures.

Frances Woo, the managing partner of Appleby, says the time is ripe now for her firm to launch on the mainland. “We needed to wait for the market’s understanding of offshore to be sophisticated and mature enough to jus-

18

Offshore Law Firms tify us opening up a physical presence there, because it would need that type of volume of work in order for us to be there.” She says that as the professional market has developed in Greater China over the past decade, the market is now “at the point where not everything is coming through Hong Kong, and the China market is developing its own culture and a life of its own,” she says. “It’s important to develop those relationships, and be even closer on the ground in China than in Hong Kong.”

Building new client relationships and bolstering existing ones are the key messages of the two on-the- ground offshore firms. Calvert says Ogier’s move to China “has really fostered a lot of new client relationships, and these new client relationships have been developing very fast”. Woo reiterates the importance of the face-to-face culture in China to explain part of Appleby’s push into the Shanghai space.

“China is still a market where face to face meetings are important as opposed to other markets like Hong Kong, London or New York where even just a block away, everyone e-mails and does everything virtually,” she says. “We are there to meet clients face-to-face, develop a trust element, and really help the market understand that there are Cayman Islands, Bermuda, British Virgin Islands (BVI), and Mauritius advisers who are credible people

“We needed to wait for the (China) market’s understanding of offshore to be sophisticated and mature enough to justify us opening up a physical presence there, because it would need that type of volume of work in order for us to be there.”

Frances Woo, Appleby instead of fly by night operations they just found on the internet. In China, you still have an environment where people are quite concerned with whether things are real or not, and that extends to products and services, including professional and administration services.”

Right now, Ogier’s and Appleby’s Shanghai offices are small in terms of headcount.

However, they work closely with their Hong Kong counterparts. Both firms emphasise that the role of the professionals in China is mainly to build relationships with clients, and that any legal work is referred back to Hong Kong, where it is executed. Ogier has hinted that more may join its Shanghai office soon. Woo says that an expansion could happen down the

ASIAN LEGAL BUSINESS April 2012

“Each time someone opens up there (China), we have to reanalyse it. We analysed it before, and we have been analysing it for the past seven years.”

Christopher Bickley, Conyers Dill & Pearman road for Appleby. “Our plan is for it to grow more substantively, but when everyone first dips their toe into China, it’s initially smaller,” she says.

“If past examples are anything to go by though, they ramp up quickly.”

Waiting game All the other firms have been keeping a close eye on their competitors in the China space. “Each time someone opens up there, we have to reanalyse it,” says Christopher Bickley, a partner at the Hong Kong office of Conyers Dill & Pearman. “We analysed it before, and we have been analysing it for the past seven years.” The Hong Kong-based managing partner of Maples and Calder, Christine Chang, confirms the firm is “still monitoring the need for a presence on the ground. That other firms have chosen to have a type of presence there has brought it into focus, but at the moment, we are just taking things step by step.”

As the actual legal work can only be done outside China, Hong Kong remains the most important office for all the offshore players. Lawyers who spoke to ALB believe that due to the nature of their work, it is about having those who can sit behind a desk, man the phones and e-mails, and provide appropriate advice to clients expeditiously that is most crucial to their firms’ success. Having critical mass on the ground is important as well, and stretching their resources too thin to cover both Hong Kong and China would not be wise in this current financial climate. Even Woo says that though it has been part of Appleby’s strategy to move into China, it may not be a suitable decision for everyone as it really depends on each firm’s unique game plan. “With every new office or new establishment, you need a period to bed that down because the capital investment is quite substantial,” she says. “You need the resources to back it up. Certainly, I think in this environment when markets are volatile and opaque, it’s not an easy call.”

“Obviously, we have to balance a series of factors, and in a nutshell, we’re saying in terms of alignment of the different factors here, we feel that how we are progressing on this path is sufficient for now,” says Chang on whether Maples is considering setting up shop up North. “But it doesn’t mean that we aren’t monitoring closely and aren’t constantly listening to clients’ requests and demands.”

Despite not having offices located on the mainland, many of the offshore firms continue to dedicate ample resources and time to connect with PRC clients. Everyone mentions constant visits to not just Beijing and Shanghai, but also to the rapidly-growing second tier cities such as Nanjing, Chongqing, and Dalian. The Conyers team holds regular quarterly meetings (in addition to at least one China visit per month), Maples’ China contingent – headed by Jenny Nip – has someone on the ground in one of the major cities at any given moment, Walkers sends up partners at least a few times a month, and even the new kid on the block, Mourant Ozannes, had its managing partner Paul Christopher travelling to Beijing within two months of the firm’s arrival in Hong Kong.

“We’re keen to go up, investigate the market, and shake the trees to see what falls out,” he says.

Maturing clients The maturation of PRC clients as sophisticated buyers of legal services

Appleby is the world’s largest provider of offshore legal, fiduciary and administration services. With an unparalleled presence in eight of the major offshore jurisdictions, we are uniquely placed to offer clients a comprehensive range of services, and to to deliver advice that best meets their business needs.

Our award-winning team has been servicing local and international clients in Asia for over 20 years.

We are proud to announce the opening of Appleby Shanghai. This office will provide Chinese clients with local access to fully integrated fiduciary services of all our offshore jurisdictions including company formation and administration services for the BVI, Cayman Islands, Seychelles and Mauritius.

For further information, please contact: Frances Woo, Managing Partner, Hong Kong Tel: +852 2905 5720 Email: fwoo@applebyglobal.com Scott Reid, Head of Business Development, Fiduciary Appleby Corporate Services (China) Limited Tel: +8621 6032 1630 Email: sreid@applebyglobal.com

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20

Offshore Law Firms is one of the driving forces of the offshore firms’ strategic decisions. Education has been a critical component of reaching out to clients, who may not have an understanding of the options, benefits and facility of utilising offshore vehicles. “We want to help the clients understand why they would want to use a neutral vehicle that is well regarded and recognised by both investors and regulators, and that gives the international community confidence in the laws of that jurisdiction,” says Woo. “There’s a lot of cross border work involving China, so foreign entities from outside China may not want to use a Chinese, English or U.S. entity and the use of offshore is something everyone is comfortable with.”

Lewis of Walkers explains that part of his team’s role is to “hold the client’s hand” through the offshore process so clients can learn about the function of an offshore law firm, how offshore jurisdictions operate, and what benefits they can bring to a transaction.

“It’s something we do regularly, and it’s satisfying to watch the relationship with the client and their understanding of how we can help them grow. It helps build up that trusted business advisor relationship,” he says. With the popularity of Cayman Islands law and British Virgin Islands law among PRC dealmakers growing over the past five years, all the offshore lawyers say their Chinese clients and the general business community are gaining a better understanding of how offshore centres can work in their favour. “Success breeds success,” says Hong Kong-based Walkers partner Ashley Davies. “Because the Cayman or BVI vehicles are seen as successful, people want to be involved as they know these are cost-effective and efficient countries for their transactions. That in turn means we have more exposure, and are able to do more work for these clients, and they will use us more in time.

It’s a nice virtuous circle to be in.” Christopher of Mourant Ozannes mentions that it is not just about educating clients for his team, but also about educating the whole range of service providers, including intermediaries. “We are

“Being in China is helping us build our profile. I believe more firms will be following us into the market because certainly, our findings for China clearly show this as a growth area for offshore. We are here where our clients need us.”

Kristy Calvert, Ogier

ASIAN LEGAL BUSINESS April 2012

trying to get people to understand the legitimate uses for offshore centres, and clearly that is going to ultimately lead to an increased use of those, and subsequently, more work for us.”

Additionally, offshore firms provide various seminars to Chinese clients on market trends and how their offshore platforms complement the deals they are contemplating. “We have an ongoing series of training seminars that we roll out to clients, “says Chang. “That will be the focus of our next visit to China; to roll out these seminars where we invite clients to come and listen about IPOs, funds and trusts.”

Based on her experience, the Maples managing partner shares an interesting twist on how the offshore legal advisor role has morphed in recent years in line with the growing sophistication and understanding of her PRC clients. “What it has meant for us is that we almost have to be ahead of the curve in providing value,” she says. In the past, the role of offshore counsel was limited to ancillary involvement after the onshore lawyers had structured a deal. “Now, there’s an educational role we have to take up, where we have to show clients the advantages before it’s too late. So, rather than simply having offshore counsel involved at the end of a deal and everyone’s in a frenzy, we now need to go in before anything takes place and say ’why don’t you think about this and see if it works for you? It may not work for everyone, but we do see a lot of these deals, these are the trends we’re seeing and it may be helpful for you’.” Being proactive, she says, is what offshore lawyers will need to start doing more often to engage and win over clients.

Another example of how the Maples and Calder team is reaching out to create the work they hope to win is rooted in a trend in the aviation sector in China. Every lawyer points out the boom in this area, especially aircraft financing. Chang highlights how her team is promoting the use of offshore structures with the local governments in certain free trade zones, like Tianjin. The free trade zones are designed to make the registration of aircraft highly tax efficient. “We have been talking to the authorities in the free trade zones to inform them if they want to attract more business - in particular business from international players - they should allow investors to use a Cayman entity,” she says.”It would attract more business because people, especially international parties, are familiar with these vehicles and would want to take advantage of the flexibility and common law legal framework of the offshore jurisdiction.”

The Maples managing partner says her team is not trying to break into the specialised area of onshore aviation work, but that its objective is to allow the firm’s clients to enjoy “the best of both worlds”- by enjoying the tax benefits of the free trade zones and the flexibility of a recognised offshore structure. She reports that the local authorities have been very receptive to her firm’s proposals. “This is an illustration of ways we’re thinking ahead, and bringing more value to the table,” adds Chang.

Staying busy Private equity, M&As and the potential listings (or relistings) on the Hong Kong and domestic Chinese bourses will keep the offshore crowd busy in the coming eight months. However, there are two areas that have emerged in particular for the firms which have drummed up new business, and which many of the lawyers predict will only grow hotter in the coming few years: Wealth management and trust planning, and aircraft financing. “Another trend is with the increased sophistication of the entrepreneurs and founders of Chinese businesses, before they go ahead with a transaction, they want to put into place business continuity planning and wealth planning,” says Chang. “More inquiries are coming through to our trust and wealth planning department.”

Walkers’ trust practice is based in Singapore, and is led by Lee Syin Long who joined the firm in August 2011 as its Asia Head of Trusts.

According to Davies, she has been very busy and is looking to grow her team. “She (Lee) is very busy working on trust structures, asset

22

Offshore Law Firms

ASIAN LEGAL BUSINESS April 2012

REUTERS/Lucy Nicholson

protection structures, succession planning and long-term wealth planning. A lot of that is coming out of the PRC and its wealthy individuals,” he says. Woo has noticed increased activity at her firm as well in this area. “We get to understand their needs, currently and going forward, help them establish trusts and other structures, and administer them on an independent basis,” she says.

Aircraft financing in China has really taken off as well, with more commercial jet financing and private jet financing (accompanying the rise of the wealthy in the PRC). “One of the key areas of growth is the buying and building of airplanes,” says Davies. “Overall, Chinese banks are in a better position than European banks, so more activity is coming out of this part of the world.”

On Feb. 14, Reuters reported that Chinese aircraft leasing company BOC Aviation had ordered 20 C919 aircraft from China’s stateowned plane maker, a deal that will help the country’s first home-grown large passenger jet gain access to new markets. Then on Feb. 29, Reuters said that while airline carriers are expected to have sufficient loans available to buy new planes this year, the field of lend-

ers is shifting from Europe to Asia. Former leading players like RBS, Germany’s HSH, BNP, Societe Generale and Credit Agricole are exiting or downsizing their aircraft financing businesses. The gap is being filled in part by Asian lenders like DBS, United Overseas Bank and OverseaChinese Banking Corp.

Major Chinese airlines, China Development Bank Corp’s CDB Leasing, General Electric Co’s GE Capital Aviation Services, the leasing arms of Industrial and Commercial Bank of China and the Bank of Communications have also ordered C919s. BOC Aviation, a 25-year industry veteran, ordered 15 Embraer SA E190 aircraft last November worth $642 million at list price, in a bid to meet demand from airlines for smaller passenger jets to develop new markets. BOC Aviation managing director and chief executive Robert Martin said in September last year that problems faced by European banks provided an opportunity to grab market share in the aircraft financing industry.

The road ahead With a choppy, unpredictable year ahead, the offshore law firms are carefully considering their China strategy. Those that have not forayed into the mainland proper with a physical office space are adopting a “wait and see” approach, keen to learn from the experience of Ogier and Appleby. As for the two firms in China, they will continue to pound the pavement and leverage off their first mover advantage. “Being in China is helping us build our profile,” says Calvert. “I believe more firms will be following us into the market, because certainly our findings for China clearly show this as a growth area for offshore. We are here where our clients need us.”

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24

spotlight: pearl river delta

ASIAN LEGAL BUSINESS april 2012

Pearl River Delta Renaissance amidst crisis

By Liu Zhen The Pearl River Delta has cradled the birth and the growth of China’s legal business over the past 30 years with its pioneering economic opening and reform. In the global economic gloom, in which the highly export-dependent manufacturing industries were damaged, law firms find their chances to prepare for the next boom.

Chinese cyclists in full rain gears speed past a juncation in Guangzhou. REUTERS/China Photos

G

uangdong is described as a smaller scale sample of China’s overall legal market landscape, where the inland mountainous areas are equivalent to the underdeveloped West and the prosperous Pearl River Delta (PRD) acts as the province’s Beijing and Shanghai to host the most modern and international business .

It was the PRD region that pioneered the “Opening and Reform” of the rigid and poor communist China some three decades ago. With the country now becoming the world’s second-largest economy, Guangdong has also topped the national GDP ranking for years. As for legal business, the PRD region, which consists of the provincial capital Guangzhou, the two Special Economic Zones of Shenzhen and Zhuhai, and six other industrial cities scattered around, is once again where the relaunch and burgeoning happened .

“The business of the lawyers is undividable from the overall economic development,” says Xue Yunhua, the executive partner of Guangda Law Firm in Guangzhou.

“There were many historical number ones taking place here, in terms of both the state administrative system and the actual practice,” he tells

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spotlight: pearl river delta

“The market volume of the PRD region is still big enough to hold enough firms. The clients require different level(s) and types of services…and different firms have different positioning(s) and plans to acquire the living space.”

Zhang Jianwei, Jun He Law Offices

ALB, recalling his experience since 1986 when he started practice in a state-operated law office like everywhere else in China at that time.

Soon enough - only two year later - Guangdong started to pilot the partnership-type firms run by private practice lawyers. But it was not until 1992 that the Ministry of Justice approved such type of firms to be established nationwide. The first ever firm with a foreign practice was also located in this region.

‘The first ever case to have lawyers handle a non-litigation property deal was in Guangzhou; also the first case of lawyers involved in a SOE’s restructuring into a public company. The latter was first suggested by the government, But eventually, the rule was set up that all IPOs have to be advised by lawyers,” he says.

“The 30 years of opening and reform(s) made the PRD one of the world’s largest and most active economic rims, which has paved (for) us legal practitioners a solid ground to develop upon and provided us a market with great potential,” says Laurence Chen, the founding partner of Guangdong Chen Liang & Co in Dongguan city of this region.

However, the PRD firms have their “birth defects”, according to Chen. The pressure for survival had never been significant in the good old times. A lack of foresight, bad planning, low-efficiency operation, unprofessional acts, insufficient competition and so forth, were not big issues because the booming regional economy covered them all up. But with the growth cooling down during the global economic crisis and the competition intensifying, such problems might prove to be fatal.

“The legal industry in this region was like a premature infant in the incubator. It was protected by the good environment,” Chen says. “But

“The business of the lawyers is undividable from the overall economic development.”

Xue Yunhua, Guangda Law Firm

there is great uncertainty whether this infant can survive and grow facing the harsh conditions like now.”

Big or strong One of the changes in the environment is the expansion of national firms into this region.

“There is (a) significant presence of our colleagues from surrounding regions and provinces, including Hong Kong, Beijing and Shanghai…and other advisory bodies like consulting and accountant agencies are virtually expanding into the legal consulting market,” says Chen.

“We local firms are in difficult defence,” says Tong Xin, a partner at Shenzhen-originated Guanghe Law Firm.

“The top national firms have the brand to attract the best lawyers, and the famous lawyers once again make their brand more attractive,” he tells ALB. “Our advantage is we know the client bosses better. But we are not good at branding.”

Xue also sees the competition for talent getting tighter and tighter.

“It has been much more obvious that the firms are taking experienced lawyers from each other. And from my own experience, we had strong appeal to our own lawyers in the past. But over the recent years, I see some people leaving,” he says.

Brand does not only appeal to lawyers, but also to clients. In biddings against national firms, local firms are feeling the pain of being far from the central authorities, who decide and approve all the deals, according to Tong.

“When it comes to financial(s) and securities, the client would think the Beijing firms have the advantages as all the relevant government authorities are in Beijing,” says Xue. “You know, in China, the businessmen are always keeping a close eye on government conduct,” Tong adds.

The same as in other regions, local firms

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spotlight: pearl river delta

ASIAN LEGAL BUSINESS april 2012

“If we utilise the time window and opportunities brought by the crisis to proactively address the problems before, we can again recapture a leading position in China’s legal business.”

Laurence Chen, Guangdong Chen, Liang & Co

have an advantage in litigations and arbitrations, thanks to their deep local connections.

The exception is Shenzhen, the newly built city after the “Opening and Reform ” with most population immigrated afterwards where old network does not work . On the other hand, the national firms benefit from their wide network and are aiming at the high end markets of finance, securities, and corporate practices, according to Zhang Jianwei, partner at the Shenzhen office of Jun He Law Office.

“As a national firm, our resources can be allocated nationally. The key concern is the need of our client. For those in the PRD, our nearby office can provide services of higher efficiency and at a lower cost. Our internal system can guarantee the fairness of interest distribution,” says Zhang.

The Guangdong Lawyers Association is trying to push the merger of local firms to form some giants which are adequately competitive, given the fact that national industrial leaders, such as King & Wood Mallesons, had started international mergers, according to Xue. But the mission was difficult and the campaign has yet to be very successful – none of the top five firms in Guangzhou have had such initiatives.

“The big firms with a long history have their own concepts, culture, practices, working style, and distribution system. Unless we break down everything and start again from scratch , a merger is difficult,” says Xue. “Solely becoming big is pointless if it makes nothing stronger.”

He adds that presently in China, sometimes smaller is better because over 70 or 80 percent of practices can be done by individual lawyers, and even better not by a team .

“Many practices needs personal networks or ‘guanxi’, and are not easy for a team,” says Xue. However, Zhang does not believe that competition makes the PRD a ruthless battlefield.

“The market volume of the PRD region is still big enough to hold enough firms. The clients require different level(s) and types of services.

The legal market is built on the economic and

legislation environment, and different firms have different positioning(s) and plans to acquire the living space,” Zhang said.

Crisis A general threat to all firms, national or regional, though, is supposed to be the ongoing global economic crisis. The PRD region, known for its active small and medium export-oriented manufacturing, was the worst affected area.

However, as many firms observe, the impact of the crisis on the legal business has not been direct or obvious. Actually, many of them have recorded steady growth despite this.

“Generally, our business has been growing year by year. Although not as fast as before, but basically it’s been good,” says Xue of Guangda.

Tong of Guanghe says his firm reported a revenue rise and a headcount increase in both its Shenzhen and Guangzhou offices. He thinks there might be a lag in time for it to show. But a more important reason was that the legal business is not very dependent on manufacturing industries, which was normally lowly charged. When the export drops, the legal service does not necessarily go down.

Nevertheless, the crisis-stricken industries would unavoidably worsen the overall economic environment in the region. And the firms have made their adaptations .

“Although the general economic situation and the property policies have caused an overall effect, as an incorporated firm, we have (a) stronger ability to mitigate the crisis. Loss here can be compensated there.

The controlling measures resulted in more disputes. So, our litigation and dispute resolution practices are growing,” says Xue. Lu Xiaoguang of Commerce & Finance Law Offices thinks that over the past two years, the market is recovering gradually. Zhang of Jun He shares the thought. But none of them would take a chance.

“We also changed our practice by introducing new teams, such as dispute resolution and IP. As a result, our revenue has been steadily growing,” says Zhang.

Xue adds that they will not sit and wait.

“We used to wait passively for clients to come. But now we proactively go out to look for new clients,” he says, “At the same time, we are expanding our existing services. We emphasise the professionalism. We further divide our practices, and staff every department with a team with a good combination of all age groups.”

A new plan for the next 10 or 30 years to match the legal industry’s development with the type and pace of local economic growth would prepare essential fuel for the next rapid run of PRD legal business, suggests Chen.

“If we utilise the time window and opportunities brought by the crisis to proactively address the problems before, we can again recapture a leading position in China’s legal business,” says Chen.

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Cadwalader, Wickersham & Taft LLP

Opportunity to Invest in China’s Securities Market: The Accelerated Approval Process for Foreign Financial Institutions

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Rocky T. Lee, Asia Managing Partner, Head of Greater China Corporate Practice

oreign investors are permitted to invest in China’s stock markets, provided that an investor is a Qualified Foreign Institutional Investor (“QFII”). Recent reforms have significantly reduced the application processing time from one to two years to six months or less, creating a window of opportunity for foreign investors to deploy capital and invest in China’s burgeoning stock market. This article summarises the QFII statutory framework, and gives a comparison between the old timetable and the now revised timetable.

The QFII Scheme in the PRC A QFII refers to any overseas (i.e. non-Chinese) fund manager, insurance company, commercial bank, securities firm, or asset management firm (generally referred to as “financial institutions”) approved by the China Security Regulatory Commission (“CSRC”) to invest in China’s stock markets within an investment quota set forth by the State Administration on Foreign Exchange (“SAFE”).

The Application for QFIIs: A Comparison Between the Old Timetable and the Recently Enacted Reforms Historically, the timetable for approval of a QFII application was one to two years. However, the recent policy change has reduced this approval time from nearly two years to six months or possibly shorter for banks and firms capable of managing such an accelerated timetable . However, Cadwalader, Wickersham & Taft LLP (“CWT”) expects this window of opportunity to be short, as it has seen a surge in QFII applications in response to these new developments. CWT therefore suggests that an application be filed sooner rather than later with the CRSC before the waiting time becomes too long again.

QFII Qualification and Requirements Under the QFII scheme, foreign investors may invest in ‘A’ shares, bonds and warrants listed on China’s domestic stock exchanges, securities investment funds, and other instruments permitted by the CSRC. A QFII must entrust either a domestic commercial bank or a foreign-funded bank operating inside China qualified and approved by both the CSRC and SAFE, to act as the custodian of its assets. The maximum investment quota that a single QFII can obtain is USD1bn, while the minimum is USD50m.

Figure 1 details certain requirements such as minimum assets under management and minimum years of business operations for different types of institutions.

Cadwalader, Wickersham & Taft LLP A: Beijing

2301 China Central Place Tower 2, No. 79 Jianguo Road, Beijing 100025 China T: +86 10 6599 7200 F: +86 10 6599 7300

Hong Kong Suite 2702, 27th Floor,

100QRC, 100 Queen’s Road, Central

Central, Hong Kong T: +852 2946 1100 F: +852 2946 1200 E: rocky.lee@cwt.com W: www.cadwalader.com

Figure 1: Requirements to Qualify as a QFII Type of Institution

Years of Experience

Paid-in Capital

Securities Assets Under Management

Fund Management Institutions

> 5 years

-

USD $5 bn

Insurance Companies

> 5 years

-

USD $5 bn

Securities Firms

> 30 years

USD $1 bn

USD $10 bn

Commercial Banks

-

Total assets ranked among top 100 globally

USD $10 bn

Other Institutional Investors (Pension Funds, Trust Companies, Charitable Foundations, Donation Foundations, and GovernmentInvested Institutions)

> 5 years

-

USD $5 bn

In order to encourage middle and long-term investments, promote the steady growth of capital markets, and consider the effect of reciprocity between the PRC and other countries, preference is given to applicants in any of the following three circumstances: • An application from a country that is applying for the

first time; • Applicants from Taiwan, for the purposes of

encouraging cross-strait QFII investments; • An application from world known enterprises, such

as financial conglomerates in banking, insurance

companies, securities firms, church pension funds,

charity funds and government investment

management companies.

There has not been a better time for foreign fund managers and financial institutions to become a QFII to invest in China’s stock markets or in Chinese securities. However, foreign investors should apply for QFII status as soon as possible to avoid queues that might develop from an increase in applications. Given the complexities and the time-sensitive nature of the application process, CWT recommends that any foreign investors interested in applying for QFII status retain experienced legal counsel.

About Cadwalader Cadwalader, Wickersham & Taft LLP is one of the oldest law firms in the United States. The firm was founded in New York in 1792 and boasts more than 200 years of service to many of the world’s most prestigious institutions, maintaining a long-standing tradition of providing our clients with unparalleled service and legal expertise. As one of the United States’ oldest law firms (and the oldest continuing Wall Street law practice in the U.S.), our growth and development often paralleled the major economic, social, and political events that have shaped the world.

We represent some of the world’s largest and best-known hedge funds and asset management firms, financial institutions, private equity firms, venture capital funds, insurance companies, mid-size funds, investment institutions, strategic investors, and emerging managers with the potential for significant growth. We are proud of our history, and we have earned a reputation for crafting innovative business and financial solutions and developing precedent-setting legal strategies to achieve our clients’ goals. The result is simple: We stand out from our competition because we help you stand out from yours.

With more than 500 attorneys in eight offices—New York, London, Charlotte, Washington, Houston, Beijing, Hong Kong and Brussels – we offer innovative solutions to issues in a wide range of areas including antitrust, alternative investments and funds, banking, broker/dealer, business fraud, corporate finance, corporate governance, derivatives, environmental, foreign direct investment, foreign exchange, healthcare, insolvency, insurance and reinsurance, intellectual property, litigation, mergers and acquisitions, private equity, real estate, regulation, securitization, structured finance, tax, and private client.

28

Malaysia country report

Investment soars to

ASIAN LEGAL BUSINESS april 2012

new

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Malaysia country report

heights

29

in Malaysia

In the midst of national election fervour, Bank Negara Malaysia has announced a bundle of financial liberalisation measures aimed at developing the domestic banking market, and enhancing the competiveness of the economy. But with the global economic slowdown, will these measures be enough to solidify Malaysia as an investment hotspot? Seher Hussain finds out more

T

he beginning of 2012 saw Bank Negara Malaysia issue a statement announcing several liberalisation measures aimed squarely at developing the domestic financial markets. While the nation is consumed with election fever, these measures tie into national sentiment by closely adhering to Prime Minister Najib Razak’s New Economic Model which aims to turn Malaysia into a developed country by 2020. Specifically speaking, restrictions have been relaxed on interest rate derivatives, as well as debt and foreign exchange trading.

A slowdown, but no slump Asian economies across the board are expected to slow down in 2012. However, they will be able to avoid a slump, according to Reuters reports. Elaborating on the trend, the RHB Research Institute stated that the Business Conditions Index had dipped in the last two quarters, signifying that Malaysia was unlikely to remain unaffected by a crisis-ridden euro zone. A Reuter’s poll, meanwhile, predicts GDP to grow at 3.8 percent, down from 4.9 percent last year.

Several market sources have made a strong argument that the government should move up the 2013 election date, and swiftly dispel any uncertainty that is currently surrounding the investor environment. Foreign investors may be holding back due to their apprehension about the political situation. In that light, Bank Negara Malaysia’s announcement of these measures is a clear sign that the country is committed to creating a vibrant economy.

REUTERS/Bazuki Muhammad

The lowdown One of the most significant measures concerns foreign exchange rules. From now on, licensed foreign banks will be permitted to trade one foreign currency against another. Some caveats do apply, such as the bank must be a licensed onshore bank, and that trading is only allowed between one foreign currency and another, and not against the ringgit.

30

Malaysia country report

ASIAN LEGAL BUSINESS april 2012

“There has been a natural progression in the measures announced to open up the market.

The government is making it easier for domestic companies to borrow and raise financing from abroad now.”

Jal Othman, Shook Lin & Bok

For now, residents are only allowed to trade a foreign currency against the ringgit on a spot and forward basis at a licensed onshore bank. At the moment, licensed banks include investment banks, Islamic banks, and commercial banks currently operating in Malaysia.

Further, restrictions have been relaxed on domestic interest rate derivatives, with licensed banks now allowed to offer ringgitdominated interest rate derivatives to a non-resident.

“Now investors and major corporates will be able to manage some of their foreign exchange costs more efficiently, and those risks associated with extreme exchange rate volatility which has been quite pronounced recently,” says Lee Taylor, corporate M&A partner at Clifford Chance’s Singapore office. “It will be interesting to see if certain currency-linked products are developed for the retail sector, and whether the regulator will respond with increased consumer protection.”

It is likely that this relaxation of restrictions will have a dual effect; one in helping international financial institutions expedite their transactions in Malaysia, and two in prompting domestic banks to expand into regional markets.

“We expect we will be supporting more and more of our Malaysian banking and corporate end-user clients with product innovation and other transactions,” says Taylor.

Leon Koay, country head of global markets at Standard Chartered Bank, told local Malaysian media that: “Malaysia continues to grow as an important reference point for investor portfolios for Asia, and this measure offers increased flexibility to investors and institutions that wish to include ringgit assets in their investment portfolios. It also widens and deepens the pool of participants in the onshore interest rate derivatives market, and is conducive to enhanced market liquidity.”

A knock-on effect is expected for legal practitioners, who will see more work.

Speaking in this regard, Ronald Tan, head of

debt capital markets at Tay & Partners, says: “Now, there is an opportunity for Malaysian banks to offer more financial services and products to investors. So, the private banking and wealth management services will send a lot of work flowing through the legal market.”

Opening up the market Industry watchers are also closely following the opening up of the market in terms of permitting foreign banks to operate in Malaysia.

“In the past, the government has been quite strict on issuing licenses to foreign banks,” says Mohamed Ridza Abdullah, partner at Mohamed Ridza & Co. “But six years ago, they started giving licenses to Islamic banks, a clear liberalisation in the banking sector. Now, Chinese banks and a Japanese bank (Mizuho Corporate Bank) are being allowed to enter the market. So the trend is there.”

Taylor says: “These measures, together with other announcements last year allowing foreigners to hold higher stakes in banks (currently capped at 30 percent), and more banking licenses for foreign banks, have certainly put Malaysia in the spotlight and drawn the interest of foreign investors, particularly banks.”

Jal Othman, partner at Shook Lin & Bok’s Kuala Lumpur office, details this and says: “There has been a natural progression in the measures announced to open up the market. The government is making it easier for domestic companies to borrow and raise financing from abroad now.”

However, some investors still feel some amount of trepidation.

Commenting on this phenomenon, Tan adds: “When it comes to clients, especially foreign ones, some still have this stigma about Malaysia and capital controls. Though it happened in 1988, and it’s almost 15 years ago, people are still worried about capital controls.

So the liberalisation has further cemented the fact that there are no capital controls left in Malaysia apart from the non- internationalisation of the ringgit.”

Islamic Finance The government is also keen to promote Malaysia as a hub for Islamic finance, as growth stays steady in this area. According to Thomson Reuters data, Islamic bond issuance globally rose from $13.9 billion in 2010 to $23.3 billion last year. A recent example is Malaysia’s biggest toll expressway company announcing that it will issue $9.7 billion in Islamic bonds in what will be the world's largest sukuk offering.

“There’s a lot of liquidity in the market, so we are seeing plenty of Islamic financing. The interest in the sukkuk market is coming back and the MRT project, worth 40 to 50 billion ringgit, is currently being worked on, creating a lot of spin-off financings,” says Ridza.

Alongside these “soft” measures to liberalise the market, the government is also pursuing “hard” options; most notable among which is the Kuala Lumpur International Financial District. Covering about 75 acres of land adjacent to the central business district, the

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Malaysia country report

new project will bring together international and domestic financial institutions under one roof. Although in the nascent stages, it is part of the country’s drive to become a financial hub and make business easier.

pital group Acibadem by Malaysian statelinked investor fund, Khazanah Nasional, as reported by Reuters, is one such headline grabbing news in this regard.

Outbound and inbound interest Practitioners remain busy. In this context, Tan says: “We have seen quite a few really serious and interested bidders for Malaysia assets.

So, there is (a) lot of inbound foreign investment work.”

Taylor adds to Tan’s thoughts when he says: “Beyond increased banking and financial services work, we have noticed an increase in foreign interest in the real estate sector and the oil and gas/ petrochemicals sector.”

Ridza points out that opportunities have now arisen for foreign companies to partner with local businesses. He highlights several smart partnerships between Singaporean and Malaysian companies as well as the development of the special economic zone of Iskandar, which is currently being constructed in the southern Johor area, and is expected to promote foreign direct investment. Modeled after the Pearl River Delta Economic Zone in China, it has already attracted outposts of Pinewood Studios, Southampton University and Johns Hopkins University.

The increase, however, is not only one way. Malaysian companies are also keen to explore regional markets. “There has been an encouraging trend towards foreign listings by Malaysian companies, and quite a lot of outbound work in my practice,” says Othman of Shook Lin & Bok. For instance, the recent purchase of Turkish hos-

What lies ahead?

“The new rules should improve cross border investment, and will allow some of the domestic banks to expand their product offering and cater to different investor appetites, while deepening their franchise base and enhancing their regional influence,” sums up Taylor. “ This is particularly the case with many of the established international players who are looking at withdrawing or repositioning their product offerings given today's increased capital costs, restricted liquidity, and leverage requirements.”

Generally welcomed across the board, many legal professionals feel positively about the results of the liberalisation measures. The measures clearly give more freedom to the markets, increase the amount of international work, and help shore up the economy against the global economic downturn.

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REUTERS/Bazuki Muhammad

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Malaysia country report

ASIAN LEGAL BUSINESS april 2012

The Future is Malaysian authorities have recently announced plans to set up specialised environmental courts in the country in 2012. As interest steadily grows in one of Asia’s most dynamic economies, these new legislative measures are expected to inspire investor confidence, boost public awareness, and help regulate offences, reports Seher Hussain

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Malaysia country report

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Green C

hief Justice of Malaysia Tan Sri Arifin Zakaria recently opened the Legal Year and Judges Conference by contrasting the punishment meted out to a man in 2005 found guilty of illegal possession of a dead tiger in Kelantan, with the punishment served to a man in 2010 convicted for the theft of 11 cans of Tiger Beer and Guinness. The former paid a RM 7,000 fine, while the latter was sentenced to five years in prison. “Clearly, our values were misplaced. Surely our tigers are worth more than the 11 cans of beer,” said Zakaria, who used the example to announce a new, progressive focus on environmental law for the country.

The move is a timely one, given the “perfect storm” of factors heightening the importance of environmental regulations in Malaysia right now. Energy deals are booming, foreign investors are pouring in, and the banking market is in a state of liberalisation; all trends that are predicted to increase the amount of environmental work being undertaken as both domestic and international companies capitalise on this resource-rich nation.

State of play At the moment, “the environmental law market is peculiar in Malaysia; there are very few lawyers who deal with these issues on a regular basis, it is often part and parcel of a lawyer's general practice,” says Dhinesh Bhaskaran, partner at Shearn Delamore & Co. Legal work generally falls under two categories − compliance and prosecution – under the main piece of legislation relating to the environment; the Environment Quality Act. “Environmental issues in this country primarily relate to pollution and in the last decade we have seen an upsurge in advisory work,” continues Bhaskaran. The influx of foreign companies into the country has contributed to this trend, as any entity that is looking to set up manufacturing facilities needs to comply with the regulatory measures.

Recent trends indicate that awareness of environmental issues is not just confined to multinationals, but “local companies, who previously rarely used to seek advice on these sorts of issues are now seeking advice regularly,” reports Bhaskaran.

In the last year, Malaysia has made a concerted effort to improve its global environmental performance. In Yale-Columbia University’s Environmental Performance Report (EPI), project director for the 2012 EPI, Angel Hsu, says: “Malaysia has seen some very notable improvement, specifically for air quality, as well as water, and reduced child mortality.”

“It is clear that Malaysia’s government is starting to be more active in trying to improve environmental conditions,” continues Hsu. “What we’ve seen in other countries is that although income is usually a predictor of high environmental performance, it’s not always the case.

Some middle to low-income countries have had success in controlling air pollution and improving environmental health conditions, and Malaysia’s overall high score in the Environmental Health category is testament to this.”

The improvement in the country’s air and water quality has a direct link to the tightening of environmental regulations, precipitating the increase in both foreign and local companies seeking regulatory advice.

REUTERS/Bazuki Muhammad

Boosting investor confidence A significant producer of oil and natural gas, Malaysia consistently attracts a large amount of energy companies looking to enter the market.

Most recently, international oilfields services company Halliburton teamed up with Malaysian oil and gas company Petronas to open up a shale gas technical facility in Malaysia, as reported by Reuters. Holding the third-largest oil reserves in Asia-Pacific after China and India, the

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Malaysia country report Southeast Asian nation pulled in $10 billion (RM 31 billion) in foreign direct investment in 2011; second only to Indonesia in the region, as reported by the Straits Times.

Energy companies are naturally concerned about environmental regulations, especially in emerging markets. “They are always the leaders in this area because of their international experience,” explains Janet Looi, corporate partner at Skrine. “They are usually on the environmental committees and in Malaysia; they are generally further ahead in terms of awareness of regulations than other companies.”

Alongside oil, gas, renewable energy and mining corporations, the international investor community is also closely following the evolution of environmental measures in the nation. The prospect of dedicated environmental courts will “bring us in line with international standards,” says Looi. “It will increase foreign direct investment and give investors confidence in Malaysia. We will become even more investor friendly because we will be able to evaluate the problems,” she adds.

Elaborating on the subject, Looi says: “Environmental offences can be deliberate or accidental and the question of whether or not the crime was preventable turns on technicalities, which depends on an in-depth understanding of the operations. Specialised courts will feature trained judges who will be able to make these distinctions.” Additionally, she says: “At the end of the day, it will definitely increase our profile among the international investment community, especially with those companies that are already in compliance.”

The environmental courts are expected to join the dedicated intellectual property and maritime courts already present within the Malaysian judicial system.

The people’s voice There has been a perceptible rise in public awareness regarding environmental issues in recent times. “The public and the non-governmental organisations (NGOs); they’ve gotten much more vocal in recent times,” says Toh Beng Suan, projects partner at ZicoLaw. “Sometimes, a big project could already have obtained initial approval but if the public and NGOs strongly object, they will have demonstrations and there is a chance that the project could be scrapped.”

The most recent example of this has been Australia’s Lynas Corp rare earths plant, a project that has been mired in controversy since its inception. Built in the state of Kuantan, the $200 million plant has attracted the ire of the public and the NGOs alike, who question

ASIAN LEGAL BUSINESS april 2012

the facility’s safety procedures in handling radioactive material. With a temporary license granted by the Malaysian government, Lynas Corp is awaiting a final decision from Prime Minister Najib Razak.

“Recent publicity pertaining to the construction of a nuclear power plant and the Lynas Advanced Materials Plant in Malaysia has underscored the necessity for companies to obtain proper environmental advice “says Bhaskaran. “Companies have become very cautious before they enter into a deal.”

The dispute is not without historical precedent: In 1992, another rare earths plant in Malaysia was shut down by a unit of the Japanbased Mitsubishi Chemicals Corp, after residents there blamed the plant for birth defects and a high rate of leukemia cases, according to Reuters reports.

Given the increase in public scrutiny of potential offences, Chief Justice Zakaria’s announcement of a renewed legislative focus on Malaysia’s environment dovetails with national sentiment, and provides clear-cut safeguards for foreign investors.

Nuts and bolts Currently, environmental offences are dealt with at the state court level. “What we find is that from state to state, there is a difference of approach and a range of fines that are imposed,” says Bhaskaran. “The advantage of having a specialised environmental court is that you get far more consistency in the imposition of fines and penalties.”

This uniformity of penalties is crucial to both companies and lawyers.

“I’ve had situations where companies that discharge effluents have a huge difference in fines imposed on them simply because of where the court is located. So the judges don’t have a clear picture of what the norm is,” says Bhaskaran.

Dedicated environmental courts, on the other hand, will give legal practitioners the ability to provide their clients with unambiguous advice as to the amount of potential penalties. As a result, they will be generally welcomed by lawyers in the field as such.

However, there is some concern that another, more pressing issue, is being overlooked. “The actual problem is the lack of enforcement officers,” says Toh. “I want more people on the ground to find out who the culprits are. We have pollution in the rivers. So you need to monitor and trace who is the polluter. So before it even reaches the court, we need to have more trained officers to catch the offenders.”

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Future outlook Realistically speaking, environmental courts will not appear overnight. “I think it will actually

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take some time for this project to be fully implemented nationwide,” says Bhaskaran. “That lead time is good because its helps to institutionalise these courts and train judges.”

A definite long-term project, most practitioners agree on the fact that the introduction of environmental courts will result in increased advisory work, as more companies enter the country looking to set up manufacturing facilities.

“As there are not that many of us, it’s a definite pick up in work. The Department of Environment will also be able to increase its focus, and it will mean an increased emphasis across society in general on the environment,” says Looi.

“It is a good idea,” concurs Bhaskaran, “bearing in mind that the environmental legislation here covers everything from sea to land to air pollution, there will be more issues arising in the future.”

Increasing industrial activity raises the risk of environmental damage, necessitating more regulatory measures. The Malaysian government has boldly balanced public sentiment and foreign investor interest by announcing the introduction of these courts.

Chief Justice Zakaria resolutely declared in his speech that “environmental crime is a threat to our very existence. We must be serious in protecting our mother earth.” It remains to be seen how his legislative measures will play out.

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IP RANKINGS

ASIAN LEGAL BUSINESS April 2012

ASIA INTELLECTUAL PROPERTY RANKINGS FIRMS

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TIER 2

TIER 3

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- Baker & McKenzie - Bird & Bird** - Hogan Lovells - Jones Day

- Deacons - Kim & Chang - King & Wood Mallesons - Mayer Brown JSM - Morrison & Foerster - Ropes & Gray - Wilkinson & Grist

- Allen & Gledhill - DLA Piper - Drew & Napier - Freshfields - Norton Rose - Tilleke & Gibbins - Vivien Chan & Co - Yulchon

- Amica Law - Jun He Law Offices - Luthra & Luthra - Rodyk & Davidson - Skrine - Winkler Partners

- Colin Ng & Partners - Mori Hamada & Matsumoto - Run Ming Law Office - Tay & Partners - WongPartnership

* Firms are in alphabetical order within the groups ** Bird & Bird and Singapore associate law firm ATMD Bird & Bird are considered collectively for this ranking

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IP RANKINGS

37

Introduction

By SEHER HUSSAIN

L

ooking back over the last year, it is clear that intellectual property has never been hotter. Whether it was the headline grabbing dispute between Proview and Apple in China, Samsung v Apple in Korea, or Novartis suing the Indian government over a cancer treatment drug, intellectual property matters have grabbed the limelight across Asia.

Several significant trends have emerged, and will continue to define the intellectual property landscape throughout 2012. The most notable is a flurry of activity in China; hardly a new phenomenon, but intellectual property practitioners continue to report that IP-related litigation is on the rise here, as PRC companies flex their muscles against multinationals, in both the trademark and patent sectors. Sources report that patent litigation in China has also become increasingly sophisticated. Another noticeable area of growth is enforcement actions. As online investigations gain popularity, lawyers are becoming more creative and inventive in their race to catch infringers. Legislative developments have also come up fast and furiously, as the Chinese government tries to keep up with the rapid pace of growth in the country.

As the United Nations World Intellectual Property Organisation reports, international patent filings grew by 11 percent in 2011 as compared to 2010, and China, Japan and the U.S. were responsible for 82 percent of this growth. It comes as no surprise then, that the company which filed the most patent applications in 2011 was Chinese telecommunications company ZTE Corp.

While in two other key markets, Korea and Japan, significant developments are underway, practitioners report. The Korea Fair Trade Commission has been actively reviewing the intellectual property industry, and undertaking several investigations which are being watched closely by local and international companies. Across the Korea Strait in Japan, lawyers affirm an increase in Japanese companies filing patents, as well as a corresponding rise in litigation. Legislative measures include the amendment of the Patent Act, which will take effect from April 1, 2012, enhancing protection for licensing agreements and facilitating dispute resolution procedures.

Hopping across to India, all eyes are on the pharmaceutical industry. The legal world affirms that multinationals, especially in the pharmaceutical space, continue to ramp up their interest in their Indian operations, and are adopting aggressive strategies to protect themselves. Indian companies are also getting into the act, and are steadily increasing their portfolios outside India.

In the Lion City, a mature intellectual property marketplace has ensured little dramatic change over the last year. Lawyers report that interest in patents and franchising continues to grow as local Singapore companies license and franchise their trademarks and business models, while the proposed changes to the positive grant system promises increased clarity in terms of registering ability.

Thailand and Vietnam saw similar increases in patent filings, especially in the former country, as they enacted new intellectual property legislations.

Enforcement activities in the two markets continued to expand as well, particularly in Vietnam, given its lengthy land border with China and associated smuggling problems.

Lastly, in Malaysia, lawyers describe several positive developments for the industry, including the government’s efforts to update legislation with a new Copyright Amendment Act coming out in March. Online filing has also gained popularity in the marketplace.

Overall, it has been an undeniably busy 12 months, and it is safe to say that the rest of the year will see intellectual property lawyers in the region continue to be inundated with work. Stay tuned for our continuing coverage of the IP marketplace in upcoming issues.

People walk past an Apple billboard advertising the iPad 2 in downtown Shanghai REUTERS/Carlos Barria

RANKINGS METHODOLOGY OUR RESEARCH ALB‘s professional legal journalists spoke to a wide variety of lawyers and clients who were drawn from firm submissions, our own resources, and market suggestions. All the interviews were off-the-record and confidential, and have been conducted entirely for research purposes.

Only firms that sent in a submission by the deadline were considered for ranking.

OUR RANKINGS Our rankings are based on the following metrics: • Portfolio of clients • Client feedback • Firm’s visibility and profile in the marketplace • Volume/complexity/size of work • Presence across Asia The intellectual property rankings are divided into five tiers, with the first tier identifying the strongest intellectual property firms across Asia.

Below the five tiers, ALB has identified firms that are the “ones to watch”.

These are practices that are making a push in the market, but don’t otherwise rank in the tiers.

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IP RANKINGS

ASIAN LEGAL BUSINESS April 2012

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BAKER & MCKENZIE This global juggernaut holds a top tier position in the market, and offers a full service which covers transactional matters including portfolio management as well as litigation, dispute resolution, anti-counterfeiting and unfair competition work. With an unparalleled presence across Asia, the firm has offices in Shanghai, Hong Kong, Tokyo, Taipei, Bangkok, Vietnam. It also has member firms of its global network in Indonesia, Malaysia, Philippines and Singapore.

Highlights from the last year include counseling the LVMH Group on the enforcement of a $3.5 million judgment; successfully representing Clinique Laboratories, a subsidiary of Estée Lauder Inc, before the Singapore Court of Appeal; acting for Abbott Laboratories and Abbott GmbH on obtaining a groundbreaking court judgm e n t w h i c h r e co g nised infringement of a pharmaceutical patent through the importation of samples of generic LOKE-KHOON TAN pharmaceutical drugs.

Other notable clients include Polo Ralph Lauren, Microsoft, Li & Fung and K-Swiss.

Peers report that the firm is considered a “front runner and a full-service competitor,” as well as a “top

BIRD & BIRD IP TEAM IN HONG KONG

“The service is efficient, responsive and very to-thepoint. Their local knowledge on particular nuances of the law is excellent.” tier global name.”Clients affirm that “the service is efficient, responsive and very to-the-point. The advice is commercial and that’s very appreciated.” One client adds that “they know our business well, and always go the extra mile to offer pertinent tailored advice which adds value to their service. Their local knowledge on particular nuances of the law is excellent.”

Loke-Khoon Tan leads the Asia- Pacific Region IP Group in Hong Kong.

BIRD & BIRD A well established presence in the market, Bird & Bird is sought after for its expertise in a wide range of transactional and contentious matters.

With offices in Shanghai, Beijing and Hong Kong as well as Singapore associate law firm ATMD Bird & Bird, the firm is well placed to offer comprehensive advice across the region. The team has in-depth knowledge of the life sciences, aviation, media, communications and electronics industries, and it frequently advises on trademark, copyright, design protection, patent protection and litigation matters. Recently, the team has been expanding, and has been welcoming new arrivals at its Singapore and Hong Kong offices as part of this move.

Notable work from the last year includes counseling

“They have a good network around the region, and provide quality advice.”

Yahoo! Southeast Asia in a lawsuit regarding alleged copying of news articles and fair dealing, and representing Microsoft in coordinating a multijurisdictional raid in Singapore, Malaysia and Australia in which over 1,000 pieces of counterfeit software were seized. The group also advised Singapore Airlines on the branding and registration of its new budget airline, Scoot. Key clients include Fuji Xerox, ESPN Star Sports, Cisco Systems and Nestle Singapore.

Peers describe the group as “a standout international firm doing a lot of work in China,” as well as “a strong competitor with a good reputation.” Clients reveal that “that they are generally professional, efficient with a fast turn-around time, and knowledgeable of IP matters.” One source further adds that “they have a good network around the region, and provide quality advice.”

The team is led by Matthew Laight in Hong Kong, while the Singapore associate firm ATMD Bird & Bird is helmed by Alban Kang.

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HOGAN LOVELLS This intellectual property titan maintains a leading position in the market due to a deep bench of exceptionally experienced lawyers, and a strong geographic reach across the region.

With over 70 lawyers spread across Japan, Hong Kong, China and Vietnam, the team is sought after for its comprehensive knowledge of both transactional and litigation matters.

It has specific expertise in trademark and patent portfolio management, HENRY WHEARE trademark prosecution and enforcement, patent and trade secret advice, and litigation and copyright-related matters.

In China, the team continues to handle brand protection and trademark/copyright matters, recently advising Levi Strauss & Co, Amazon.com and ExxonMobile (China) Investment Co Ltd. In Hong Kong,

“A very strong presence, especially in pharmaceuticals and brand enforcement.”

IP RANKINGS

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“The group is definitely top tier, and the lawyers have all the necessary technological background.” patent litigations. The firm has handled multiple complex trade secret, copyright, criminal prosecution, and civil litigations in the last year. The Hong Kong group has also seen a growth in licensing and franchising matters.

Peers affirm that the “group is definitely top TONY CHEN tier, and the lawyers have all the necessary technological background.”

Marketplace sources further add that “they are strong in brand protection and see a lot of work.”

Tony Chen helms the team in China and Hong Kong, Nobutoshi Yamanouchi is the main contact in Japan, and Jason Chen heads the Taiwan team.

the firm counseled Merck in relation to all its Hong Kong patent dispute work regarding pharmaceutical products. In Tokyo, the group represented NEC in cloud computing issues across 35 countries, as well as patent litigation and arbitration in Germany, Italy and the UK. In Vietnam, the firm acted for Caterpillar in several trademark matters, and also advised Aviva on trademark licensing.

Peers hail the group as “a very strong presence, especially in pharmaceuticals and brand enforcement,” and note that “we see them often on the other side of cases.” Clients describe the team as “very impressive in handling litigation.”

The IP group is led by Henry Wheare in Hong Kong, Hanoi and Ho Chi Minh City. Other key contacts include Gabriela Kennedy, also in Hong Kong, Eiichiro Kubota in Tokyo, and Gregory Buhyoff in Vietnam.

JONES DAY Positioned at the high end of the intellectual property market, this group has a strong reputation for litigation matters, especially those regarding patents. It is well known for trademark infringement and counterfeiting issues, while portfolio management and regulatory work also featured on the team’s workload in the last year. The firm has a presence in China, Japan and Taiwan.

In China, the team has particular knowledge of the biotechnology and pharmaceutical sectors, having recently advised several multinationals on extensive

REUTERS/Nicky Loh

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IP RANKINGS

ASIAN LEGAL BUSINESS April 2012

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DEACONS This firm has a well respected intellectual property practice, and is strong on complex patent trademark work. It has expertise across a broad range of matters from handling cross border patent litigations, patent invalidation actions, copyright, data privacy and internet issues to trademark infringement actions and unfair competition issues.

Sp r ea d a cr o ss B e ijin g, Shan ghai, Guanghzou and Hong Kong, the team recently advised a U.S. IT solution provider serving the global hospitality industry on cloud computing and relevant data piracy issues in China. The team is “top of the list for prosecution work,” according to peers.

Notable lawyers in Hong Kong are Christopher Britton and Annie Tsoi.

KIM & CHANG This Korean powerhouse has over 75 intellectual property partners on board who handle a vast range of matters including patent infringement suits, patent invalidation actions, and trade secrets work.

The team frequently counsels high-profile multinationals; in the last year, it advised Caffe Bene Co, Scholastic, BASF, 3M and GM Korea.

One impressed client noted that “the team brought a wealth of legal and technical knowledge to deal with a very complex litigation, and provided excellent strategic advice over an extended several-year period of time.”

The intellectual property practice head is the highly experienced Jay (Young-June) Yang.

KING & WOOD MALLESONS

Going from strength to strength after the recent merger, this group has an established reputation for a wide range of intellectual property work. In the last year, the firm has been sought out for its cutting-edge patent litigation skills. However, the team also handles portfolio management and commercial IP transactions. It frequently counsels multinational clients in China, offering them a seamless service across the country considering that they can now draw on additional

REUTERS/Aaron Tam

resources throughout the Asia-Pacific region.

The recent arrival of former Chief Intellectual Property Judge at the Supreme People’s Court, Jiang Zhipei, has also bolstered its market position.

Peers say that it is “a prolific and standout firm in the marketplace for intellectual property work.”

Nongfan Zhu is a key contact in Beijing.

MAYER BROWN JSM In addition to complex contentious work, this Hong Kong-based team also has significant strength in handling trademark, patent and design matters. The firm is often sought out for its commercial

intellectual property skills, and its frequent handling of heavy M&A transactions.

Recent highlights include counseling Wynn Resorts Holdings on their trademark filings in Asia and enforcement matters in Hong Kong and China. Other notable clients include the HSBC Group, Procter & Gamble and Ann Taylor.

Clients say that “we’re very happy with the way the firm handles our portfolio.”

Kenny Wong, who heads the practice, is based in Hong Kong.

MORRISON & FOERSTER This strong global intellectual property practice earns

IP RANKINGS

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accolades for its Japan focus, often advising regional and international clients on patent licensing, litigation and technology transactions. The team also has a presence in China and Hong Kong.

High profile work from last year includes counseling Huawei Technologies and its U.S. subsidiary Futurewei Technologies on the defence of a patent infringement case, and representing Harbin Pharmaceutical, a Chinese stated-owned enterprise, in its acquisition of Pfizer’s swine vaccine business in China - the first such divestment resulting from a MOFCOM antitrust conditional approval.

Peers say that the firm is “a very strong player for patent litigation,” and is “a long established group that we go head to head with all the time.”

Max Olson leads the team in Japan, while Gordon Milner is the contact for China.

ROPES & GRAY A force when it comes to patent, trademark and copyright disputes, this team has a presence across Japan, China and Hong Kong. The intellectual property practice also has a reputation for handling complex transactional matters, especially those with highly technical IP components.

Notable work from last year includes acting for NEC Japan and its U.S. subsidiary against allegations of infringement brought in the United States District Court by VirnetX Inc, a publicly traded patent licensing entity.

The firm also advised Honeywell in developing its China IP protection and overall strategy projects. Sources say that “the team has the technical background necessary, and is energetic and quick to respond.”

Hiroyuki Hagiwara is a key lawyer in Japan, while Geoffrey Lin is the contact for China.

WILKINSON & GRIST This longstanding intellectual property team is known for handling the full range of transactional and litigation matters. Spread across Beijing and Hong Kong, the team frequently handles patent prosecutions, infringements, portfolio management and domain name protection.

Key work from last year includes issuing nearly 50 court actions in Hong Kong on behalf of two clients against companies suspected to be “shadow” companies on the basis of trademark infringement/ passingoff. Peers say that the firm has “a large and respectable IP practice.”

Anne Choi is the key contact based in Hong Kong, and Howard Tsang handles Chinarelated work from the Beijing office.

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age the whole of HSBC’s trademark portfolio.

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ALLEN & GLEDHILL In Singapore, this talented intellectual property group handles contentious and non-contentious work, often advising clients in the technology, biosciences, pharmaceutical and telecommunications sectors. Key work includes representing Martek in two patent revocation proceedings, marking the first and second time that a patent invalidation made by the Patent Registry has been overturned.

DLA PIPER Spread across Hong Kong, Japan, China, Singapore and Thailand, this team is highly regarded for its patents, licensing and litigation skills. The group recently acted for HSBC on its trademark opposition and litigation work in Hong Kong and PRC, as part of the firm’s worldwide mandate to man-

DREW & NAPIER Drew & Napier has a strong track record in advising clients on litigation matters. The Singapore-based team handles patent, trademark and copyright matters, with niche expertise in counseling life sciences clients. In the last year, it acted for AstraZeneca AB on patent infringement proceedings against Ranbaxy (Malaysia).

Sources say “they have a well established reputation, and are commercially practical.”

YULCHON With offices in Korea, Vietnam and China, this dynamic group has rapidly grown its presence throughout last year. Headline work includes representing Samsung Electronics in an intellectual property infringement action filed by Apple against Samsung in Korea. Clients report that “we found the team to be brilliant as well as precise in their work.”

FRESHFIELDS This dynamic group is extremely well regarded for multijurisdictional, complex IP work. The team focuses on trademark portfolio strategy, copyright protection,

An Apple Inc’s iPhone 4 smartphone and a Samsung Electronics’ Galaxy S smartphone are seen in this picture illustration taken in Seoul. REUTERS/Truth Leem

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IP RANKINGS

ASIAN LEGAL BUSINESS April 2012

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4 REUTERS/Shannon Stapleton

patent and trademark litigation, unfair competition, and commercial IP disputes. The firm recently counseled PepsiCo on its strategic alliance in China with Tingyi-Asahi to increase the former’s market share.

NORTON ROSE This group has broad experience in intellectual property and technology matters, and advises on contentious and non-contentious issues. In the last year, the team counseled Siano Mobile Silicon on several patent litigation proceedings in the Beijing Intermediate People’s Court. Clients affirm that “they responded quickly and efficiently to our time-critical issue, and their advice is always precise and easily understood.”

AMICA LAW This Singapore-based team is sought out for its broad IP and technology expertise in handling trademarks, patent, franchising and enforcement work.

Notable clients include Warner Brothers Entertainment, Raffles International and Burger King Asia Pacific.

JUN HE LAW OFFICES This China-based group has grown rapidly in the last year, and its close ties with its Silicon Valley office ensure a steady stream of patent work from California companies and universities.

Clients report that “they provide exceptional representation, especially for complex projects.”

LUTHRA & LUTHRA Headquartered in India, this 24-strong IP team handles litigation, transactions, trademark prosecution and

regulatory advice. Headline work includes counseling Tata Global Beverages on its joint venture to bring Starbucks to India.

RODYK & DAVIDSON Highly regarded for IP litigation, this Singapore-based group is also strong in transactional matters. In the last year, the team advised Asahi Glass Co in a patent infringement action, the first case regarding a selection patent and involving Japanese companies litigating in Singapore.

SKRINE A strong player across Malaysia, this team handles patent and trademark work with a particular emphasis on litigation. Regulatory and licensing matters are also practice strengths. Notable clients include sanofi-aventis, Bruan and Abbott Laboratories. One client says “I was very impressed by the high quality of the work done.”

WINKLER PARTNERS In Taiwan, this team is best known for handling the IP portfolios of several global brands as well as trademark, copyright and infringement matters. The firm recently counseled one of the world’s largest semiconductor companies in obtaining favourable judgments from Taiwan’s Intellectual Property Court and the Supreme Court against a local company.

TILLEKE & GIBBINS A Southeast Asia powerhouse, this IP team focuses on trademark and patents, and advises on enforcement, franchising and trade secrets work. The team is noted for its expertise on the technical side, frequently counseling clients from the pharmaceutical and technology sectors. Of note was its representation of Magnequench (Korat) in trade secrets litigation, in which it won the largest amount of damages ever awarded by Thailand’s Central Intellectual Property and International Trade Court.

VIVIEN CHAN & CO F e e d b a c k f r o m clients indicates that this attentive team provides practical solutions to a variety of intellectual property issues. The 20-strong team is spread across Shanghai, Beijing and Hong Kong, and offers expertise in litigation and trademark infringement. The team also handles IP portfolios for international clients.

Notable clients include Research In Motion, Ikea and Ford.

President of Starbucks China and Asia Pacific John Culver attends a news conference in Mumbai Jan. 30, 2012.

Starbucks Corp said it will open its first outlets in India in August or September and plans to have 50 stores in operation by the end of the year in a joint venture deal with Tata Global Beverages. REUTERS/Danish Siddiqui

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IP RANKINGS

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REUTERS/Fred Prouser

TIER

5 ONES TO WATCH COLIN NG & PARTNERS This compact team is based in Singapore, and frequently advises companies on trademark portfolios.

Notable clients include Elsevier Properties, Zouk Holdings and Stun Services. Clients reveal that “the team is supportive, responsive and always provides clear communication.”

MORI HAMADA & MATSUMOTO With a presence in Tokyo, Beijing, Shanghai and Singapore, this team undertakes licensing, trade secret, trademark and patent litigation matters. Recent work includes representing a high-profile Japanese company in a copyright and trade secret infringement case in the Tokyo District Court, which was filed by a Taiwanese company.

RUN MING LAW OFFICE Trademark and patent litigation is this team’s forte. Over the last year, the China-based group advised

Johnson & Johnson China on a series of trademark infringement and unfair competition litigation cases in Beijing and Shenzhen.

TAY & PARTNERS This Malaysia-based group has seen a significant growth in its workload over the last year. High-profile work includes representing the Recording Industry Association of Malaysia in action for negligence against landlords, who have continued to allow their tenants to sell pirated material on their premises.

WONGPARTNERSHIP This Singaporebased firm made headlines recently by representing Singapore Press Holdings (SPH) in the Singapore High Court action against Yahoo! Southeast Asia for alleged copyright infringement in relation to unauthorised reproduction of news content from SPH.

The firms listed here are being recognised for making a push in the intellectual property market, and are the players to keep an eye on in the future.

• Allen & Overy • Eagle IP • Gateway Law • Khaitan & Co • Lee Hishammuddin Allen & Gledhill • MMLC Law Group • MdME Lawyers • Nagashima Ohno & Tsunematsu • Rahmat Lim & Partners • Raja, Darryl & Loh • Stephenson Harwood

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ASIAN LEGAL BUSINESS April 2012 Sponsored Update

International tax UK Budget 2012 - UK Residential Property Implications

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T

he UK Budget on 21st March 2012 made significant changes to the UK Stamp Duty Land Tax (‘SDLT’) regime and, in particular, concentrated on ownership of UK residential property through “non natural” ie corporate or partnership vehicles.

The changes Currently the top rate of SDLT is 5% payable on residential property purchases above £1 million. This will now change: • From 22 March 2012 purchases of residential property above £2 million by individuals will attract SDLT at 7%.

• From 21 March 2012 purchases of residential properties above £2 million by ‘non-natural persons’ will attract a penal rate of SDLT at 15%.

• From 6 April 2013, non-natural person owners of residential properties worth above £2 million will attract an annual charge at rates between 0.3% and 0.7% per annum depending on the property value.

• From 6 April 2013, non-resident non-natural person owners of residential properties worth above £2 million will be subject to capital gains tax on a sale of the property.

The term ‘non-natural person’ is not yet defined, but will certainly include companies and unit trusts. However, it may also extend to certain partnerships and trusts.

These changes will significantly alter the planning landscape for individuals looking to purchase high value residential property in the UK. Prospective purchasers of shares in property owning companies There does not appear to be any proposal to introduce a charge on the purchase of shares in property holding companies and therefore there may be no reason why such a transaction should not proceed. However, beneficial owners should consider: • The possibility of a charge on such transactions being introduced in future with retrospective effect; • Whether they will be willing to bear the annual charge and the potential capital gains tax charge on a future sale of the property; or • Whether they will be able to restructure the company before 2013 to avoid the annual charge and CGT charge on sale, without incurring any substantial costs as a result of that restructuring.

Current owners of shares in property owning companies Existing owners of property owning companies will need to undertake an urgent review of their existing arrangements to determine how and if they should be restructured before the April 2013 deadline, or alternatively if provision should be made for the future payment of the annual charge.

As above, the detailed legislation has not yet been released and while there is only a limited period in which to restructure, time should be taken to reflect on the rules once they are published.

UK property developers and UK property owning trusts The Budget Notes promise that there will be exclusions from the charge for property developers and corporate trustees “in certain circumstances”.

Such persons will need to wait until the legislation in released on 29 March 2012 to see if they are caught by the annual charge.

AzureTax celebrating our 10th anniversary on 12/12/12.

Debbie Annells, CTA (Fellow) Managing Director A: AzureTax Ltd – Suite 1010, 10/F Lippo Centre, Tower Two, 89 Queensway, Hong Kong T: +852 2123 9339 (direct line), +852 2123 9370 (main line) F: +852 2122 9209 W: www.azuretax.com, a member of AzureTax Group Supervised by the UK Chartered Institute of Taxation for purposes of anti money laundering legislation.

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新加坡并购守则（2012年）修订版正式生效 2011年10月，新加坡证券业协会（Securities Industry Council, SIC）发布公众征询意见，对并 购守则（Take-over Code）进行相关修改。现修改 已经完成，且修订版自2012年4月9日起开始生效 （“新并购守则”）。新并购守则旨在提高并购程序 的透明度和效率，要求更高程度的披露义务，从而 可更好地保护小股东的合法权利。本文旨在再次 突出新规的重点。 1． 明确赔偿责任和处罚方式 并购守则授予SIC更大的权力和自由裁量权，即 SIC根据案情的严重程度确定处罚违规者的方 式。SIC曾在过去的案件中有命令违规者予以赔偿 股东，以救济不能寻求民事赔偿的股东，但并未明确适用赔偿 惩罚的案由。此次修订案中有所明确，可适用赔偿规定的条款 包括：第10条(无特别交易)；第15条(自愿要约)；第16.4（g）和 （h）条（拟取得目标公司50%以上投票权的部分要约）。 除了针对并购双方当事人，新并购守则同时明确了针对顾问机构 的处罚方式，包括禁止其在新加坡证券交易所进行交易，或不 得在新加坡从事并购工作。 2． 非股票型产品的适用原则 新并购守则就有关不动产投资基金和商业信托的适用进一步阐 释。 具有长期收益可能性的期权或金融衍生品的买卖和行权可能会 触动公开要约的义务（新并购守则第14条）。若存在此等可能 性，则当事人应当事先征询SIC的意见。 3． 披露义务 新并购守则对有关期权和金融衍生品的披露义务进行修订，在 注释12.3（e）款下将披露义务的主体扩大至金融衍生品，且对 部分证券的披露义务范围新型进行了修订。 新并购守则要求要约人披露其持有的目标公司的股份中属于被 质押、借入或借出的比例。 4． 调整关联人的定义 新并购守则将“关联人”定义的门槛从10%调整至5%，即持有并 购任一双方之5%以上的当事人即被视为关联人，且该关联人的 主要义务之一为应按照规定在处分股票后的的下一个交易日之 中午12点之前及时公布有关情况。 5． 豁免因回购股权导致的全面要约 在此以前，SIC原则上同意当事人申请在回购股权的情况下，豁 免因被动持股比例增加而造成的触发全面收购的情况，但要求 当事人按个案申请。为合理简化程序，在新并购守则下该豁免可 直接取得，当事人只须在回购股权授权书被批准之日起7日内递 交相应的表格。 吳艷娟, 企業事務部资深法律顧問 T: +65 6322 2232 F: +65 6534 0833 E: wuyanjuan@loopartners.com.sg 陈姝, 企業事務部资深法律顧問 T: +65 6322 2230 F: +65 6534 0833 E: chenshu@loopartners.com.sg A: 俊昭法律事務所 16 Gemmill Lane, Singapore 069254 W: www.loopartners.com.sg

45

Circular on Relevant Issues of Foreign Exchange Administration of Domestic Individuals’ Participation in Share Incentive Plans of Overseas Listed Companies

O

n 15 February 2012, the State Administration of Foreign Exchange of the PRC (“SAFE”) issued a new Circular on Relevant Issues of Foreign Exchange Administration of Domestic Individuals’ Participation in Share Incentive Plans of Overseas Listed Companies (this “Circular”). This Circular thereby repealed the other two relevant circulars with reference No. (2007)78 and No.(2008)2 previously issued by the SAFE. According to the Circular, domestic individuals (“Individuals”) refer to directors, supervisors, senior management staff and other employees who fall within the scope of article 52 of the Regulation of the PRC on Foreign Exchange Administration, who are Chinese citizens or foreign nationals who have resided in the PRC for more than one year on a continuous basis. Individuals may participate in the share incentive plans with his/her legal domestic funds, including his/her own foreign exchange or RMB deposited in his/her personal foreign exchange savings account.

Pursuant to the Circular, the Individuals who participate in the share incentive plans, shall, through the corresponding domestic company, jointly authorise a qualified domestic agent to handle procedures such as foreign exchange registration, account opening, transfer and exchange of funds, and an overseas trustee agent to deal with matters including exercise of options, purchase and/or sales of shares or options, and payment and/or collection of funds.

For the purpose of foreign exchange registration of Individual’s participation in the share incentive plan, the following documents shall be submitted to the local SAFE branch, through the domestic agent on behalf of the Individuals: 1) A written application and a Foreign Exchange Form of Domestic Individuals’ Participation in Share Incentive Plans of Overseas Listed Companies; 2) Documents proving the authenticity of the share incentive plan, e.g. relevant announcement issued by the overseas listed company. If it involves any state-owned enterprises and is required by any law or regulation to be approved by competent authorities, the relevant approvals shall also be submitted; 3) Letter(s) / agreement(s) appointing the main domestic agent for the registration procedures; 4) Proof issued by the participating entities in China of the employment or labor service relationship between the entity and the Individuals, including personal details of the Individuals and the type of share incentive awards given; 5) If there is any discrepancy in the contents of the above documents or those documents are not sufficient to prove the authenticity of the relevant transaction, the local branch of the SAFE may require further documents. 邹其鸽. 主任合伙人 T: +86 21 6211 2390 F: +86 21 6211 2387 E: jacky.zou@victorylegalgroup.com

陶丽, 合伙人 T: +86 1 39 1100 0063 F: +86 21 6211 2387 E: li.tao@victorylegalgroup.com

A: VICTORY LEGAL GROUP 双胜律师事务所 Unit J, 14 Floor, Huamin Empire Plaza, No. 726, Yan An West Road, Shanghai, 200050 PRC W: www.victorylegalgroup.com

46

SPONSORS

ASIAN LEGAL BUSINESS april 2012

Country / Regional editors

The Country / Regional Updates section of ALB is sponsored by the following firms:

China

Malaysia

Paul, Weiss, Rifkind, Wharton & Garrison LLP is a globally oriented, full-service law firm employing over 700 lawyers worldwide. Paul, Weiss is headquartered in New York and has offices in Tokyo, Washington, D.C., Wilmington, Beijing, Hong Kong, Toronto and London.

Wong & Partners is a Malaysian law firm dedicated to providing a quality and solution-oriented legal services to its clients. Wong & Partners has grown steadily with international standards of quality and experience and the Firm has a solid commitment to training its lawyers, and invests in training, professional development and quality management programs with the aim of producing lawyers of global standard.

The Philippines

Singapore

Established in 1945, SyCipLaw is the largest law firm in the Philippines, with its principal office in Makati City, the country’s financial and business center, and branches in Cebu, Davao and Subic Bay. SyCipLaw combines its tradition of professional integrity and excellence with a time-tested ability to break new ground. The broad range of the firm’s expertise is reflected in its client base, which includes top corporations, international organizations and governments.

Loo & Partners was founded in 1985 as a niche practice, handling mainly banking, corporate, securities and commercial work. With the support of a comprehensive network of correspondent law firms, the firm serves its clients in their regional needs.

Loo & Partners has been regularly noted for its IPO, M&A and general corporate work.

Vietnam

Shanghai

Indochine Counsel is a commercial law firm focusing on business law practice in the Indochina region. Our areas of practice include: Foreign Investment, Corporate & Commercial, M&A, Securities & Capital Markets, Banking & Finance, Property & Construction, Taxation, Intellectual Property, Information Technology & Internet, International Trade, Outward Investment & Offshore Incorporation, and Dispute Resolution.

Victory Legal is a boutique legal practice in Shanghai, focusing on general corporate, corporate finance and capital markets matters. Its clients include governmental authorities, State-linked enterprises, banking and financial institutions, MNCs, SMEs and foreign law firms. The firm has extensive network across the region. It serves clients’ domestic and regional needs.

fUIJIAN Sphere Logic Partners is a mid-sized business law firm known for its offering of value, sophisticated legal solutions in a leaner approach across a range of practice areas, critical to the success of clients. We maintain an established global network with numerous law firms and relevant service providers. Our seasoned and culture-ready professionals assist clients in cross-border investment, M&A and financing, governance and daily operations, identification of business opportunities and solving of complex legal disputes.

Outbound Investment Update

The Outbound investment Updates section of ALB is sponsored by the following firms:

Europe For many decades, SZA Schilling, Zutt & Anschütz has been one of the most reputable German corporate law firms. It advises clients in nearly all areas of corporate and commercial law. The main focus of practice is on corporate law, M&A, capital markets, labor law, antitrust law, intellectual property, competition law and trust law. Clients included nine of the 30 enterprises listed on the DAX.

PRACTICE AREA AND INDUSTRY EDITORS

tHE iNDUSTRY uPDATES section of ALB is sponsored by the following firms:

Emerging Markets

Energy & Resources / Employment

Kelvin Chia Partnership is a commercial law firm headquartered in Singapore with strong regional capabilities. With offices in Hanoi, Ho Chi Minh City, Yangon, Bangkok and Phnom Penh, and extensive experience all throughout Asia, we provide localized legal solutions consistent with international standards in emerging markets in Asia.

ATMD Bird & Bird is a dynamic and progressive firm with an established IP, corporate & commercial, competition and dispute resolution practice. The firm also has extensive regional experience advising both domestic and foreign clients on cross-border transactions.

ATMD Bird & Bird has been voted Singapore’s Intellectual Property Firm of the Year at the 2005 and 2006 ALB Awards and the 2005 AsiaLaw (IP) Awards.

International tax AzureTax Ltd provides transparent strategic and ethical tax advice. Through our professional corporate and International, tax advisory and trustee services your tax plan is comprehensively implemented. Our advice provides you with independent innovative and rigorous solutions which deliver results and long-term accountability.

We are qualified UK, U.S., Hong Kong and PRC tax advisors and complete tax filings for UK, U.S. and Hong Kong tax returns.

Alliances

ALB enjoys alliances with the following organisations:

ACCJ

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Established in 1948 by representatives of 40 American firms, the ACCJ, a fully independent chamber of commerce, has grown into one of the most influential business organizations in Japan, with more than 2,700 members representing more than forty countries and 1,000 companies.

Promoting the development of commerce between Canada and Japan since 1975, the Canadian Chamber of Commerce in Japan (CCCJ) is a private sector, not-for-profit business organization serving its members through communications, networking and advocacy. Representing some 33 business sectors, the CCCJ is a member-driven, member-focused organization and is the longest serving Canadian Chamber in Asia with over 300 members.

JICN

HKCCA

The Japan In-House Counsel Network (“JICN”) is a diverse and dynamic community of corporate legal professionals working in Japan. Its members give legal related advice to both large and small companies in a broad range of industries including banking and finance, insurance, health care, manufacturing, and technology. JICN seeks to enhance the competency and professional development of its members through regular continuing education courses and skills training seminars. It also offers members opportunities to network, and exchange ideas and information relevant to their work as corporate legal professional.

The Hong Kong Corporate Counsel Association is the pioneer association run for in-house counsel by in-house counsel in Hong Kong. It provides an efficient and effective range of benefits and services for its members’ professional development, including continuing legal education, a platform for networking and the exchange of ideas, information and experiences that are unique to the in-house role.

ssca

Corporate SCCA Singapore Counsel Association

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47

(...Continued from p.5)

“Many of those rights will be hard to realise because there isn’t any concrete item in the law to enforce,” says Zhao, noting the article on lawyers’ right to meet the suspect to be one of those difficult ones.

An “executable” provision is like the one on the witness’ obligation to testify before the court, says Zhao. The amendment allows the court to even arrest the witness who refuses to appear, but says nothing on how to deal with the detention house that refuses to let the lawyer see the suspect. Similarly, the monitoring-free meetings are not likely to happen without an article saying “the monitoring equipment must not be installed”.

“We all know the saying –‘no judicial remedy, no real rights’,” he says. “In practice, if there is no punishment for violation, it would not be taken seriously.”

Controversy has also surrounded the clauses that would allow police to detain suspects without informing families for up to six months, in spite of a provision to inform the detainee’s family within 24 hours. Being related to “state security, terrorism” or possibly to “impede an investigation” are the exceptions. Critics have questioned the discretionary rule, and worry about the possibility of police power being abused.

“The legislation concerned so much of the ‘unique conditions’ of the country and the social stability,” says Zhao.

Lawyers’ risk According to many practitioners, the amendment is bringing higher risk to lawyers instead of providing better protection. The insecurity comes largely from perverting the course of justice charges against lawyers in the CPL in addition to the Criminal Law and previous high-profile cases of imprisonment.

“The strengthening of lawyers’ role in the same time means the increase of lawyers’ risk in practice,” says Yi.

A-H

36, 41 Allen & Gledhill 8, 43 Allen & Overy 36, 42 Amica Law 17, 18, 20, 22 Appleby 17 Arendt & Medernach 8, 36, 38 Baker & McKenzie 36, 38 Bird & Bird 27 Cadwalader Wickersham & Taft 4 Cleary Gottlieb Steen & Hamilton 4, 10, 30 Clifford Chance 36, 43 Colin Ng & Partners 4, 26 Commerce & Finance Law Offices 4, 17, 18 Conyers Dill & Pearman 4 Dacheng Law Offices 36, 40 Deacons 36, 41 DLA Piper 36, 41 Drew & Napier 43 Eagle IP 4 Fangda Partners 4 Faskin Martineau Freshfields Bruckhaus Deringer 4, 8, 36, 41 8 Fulbright & Jaworski 43 Gateway Law 10 Global Law Office

Grandall Law Office Guangda Law Firm Guangdong Chen Liang & Co Guanghe Law Firm Guangheng & Partners Haiwen & Partners Harney’s Herbert Smith Hogan Lovells

15 24, 26 25, 26 25, 26 13 4 17 4 36, 39

I-P Jincheng Tongda & Neal 4 Jingtian & Gongcheng 8 Jones Day 36, 39 Jun He Law Offices 26, 36, 42 K&L Gates 48 Khaitan & Co 43 Kim & Chang 36, 40 King & Wood Mallesons 4, 8, 26, 36, 48 Kirkland & Ellis 4 Lee Hishamuddin Allen & Gledhill 43 Legal Consulting Group 4 Linklaters 4, 8, 48 Luthra & Luthra 36, 42 Machado Meyer Sendacz & Opice 8

“Official judicial interpretations are needed to clarify lawyers’ investigation rights. Otherwise, (the) lawyers might give up their rights to avoid any risk.”

Back in 2010, Li Zhuang, the lawyer for an alleged gang leader got a two and a half year sentence. Li was charged with persuading his client to falsely claim torture in detention during southwestern Chongqing’s campaign to crack down on organised crime. Despite the political sensitivity of Li’s case, the sentencing set a bad precedent, Beijing lawyer Zhang Kai told Reuters.

China is one of the few countries that still give no immunity to lawyers’ professional practice, says Zhao. Not only are the provisions on evidence fabrication vague, as complained by the lawyers, but the investigation and prosecution of lawyers’ suspected misconducts are also open to manipulation by the judicial agency.

“Lawyers had very little say in the making of the amendment in contrast to the academia and the judiciary.

The number of representatives from the legal industry was small, and their presence was insufficient throughout the process,” says Zhao.

Chen suggests the legislation be a gradual thing, in which improvements are made little by little. But Zhao says legislation might not even be the top priority.

“Many of us think we don’t even need to make the new amendment. Only to fully implement the 1996 CPL would be a great progress from the present reality,” he says.

Yi, among many other lawyers, called for more detailed legislation to match the CPL amendment as a guideline for practice, which was agreed upon by the Chief Judge of the Supreme People’s Court (SPC) Wang Shengjun.

“We must speed up the progress of completing the supporting judicial interpretations for the CPL to make sure the law is implemented consistently and correctly,” Wang wrote in state paper People Daily.

Maples and Calder 4, 17, 18, 20 Mayer Brown JSM 8, 36, 40 MdME Lawyers 43 MMLC Law Group 43 Mohamed Ridza & Co 30 Mori Hamada & Matsumoto 36, 43 Morrison & Foerster 36, 40 Mourant Ozannes 17, 18 Nagashima Ohno & Tsunematsu 43 Norton Rose 4, 10, 36, 42 Ogier 4, 17, 18, 20, 22 Paul Hastings 4 Paul Weiss 4, 8

Q-Z

Rahmat Lim & Partners Raja, Darryl & Loh Rajah & Tann Rodyk & Davidson Ropes & Gray Run Ming Law Office Shanghai Young-Ben Law Firm Shearman & Sterling Shearn Delamore & Co Shook Lin & Bok

43 43 8 36, 42 36, 41 36, 43 11 10 33 30

Simmons & Simmons 10 Simpson Thacher & Bartlett 4 Skadden 4, 8 Skrine 34, 36, 42 Slaughter and May 8 Stephenson Harwood 43 Sullivan & Cromwell 4, 8 Tay & Partners 30, 36, 43 Thorp Alberga 17 Tilleke & Gibbins 36, 42 TransAsia Lawyers 4 Vinson & Elkins 8 Vivien Chan & Co 36, 42 Walkers 17, 18, 20, 22 White & Case 4 Wilkinson & Grist 36, 41 Winkler Partners 36, 42 Wison Sonsini Goodrich & Rosati 10 WongPartnership 36, 43 Yingke Law Firm 4 Yulchon 36, 41 Zhong Lun Law Firm 4, 14, 15 ZicoLaw 34

48

SUNDRIES

ASIAN LEGAL BUSINESS April 2012 Compiled by SEHER HUSSAIN

“Linsanity” IN NUMBERS

$170

M ILLI O N The amount of business that Jeremy Lin has created, according to Forbes, since he was pulled off the bench

$800,000 Lin’s reported salary at the NBA for 2012

$710

The amount that Wuxi Risheng Sports Utility, a Chinese basketball manufacturer, spent to trademark Lin’s name back in 2010 prior to his meteoric rise ONE THAT GOT AWAY

REUTERS/Adam Hunger

4

M ILLI O N

From contracts to crime (fiction) Best-selling author Shamini Flint left Linklaters and ended up with a successful writing career, producing a series of crime fiction novels that span Malaysia, Singapore, Bali, Cambodia and most recently, India. Here, she chats to ALB about her accidental start in writing, being a better mother, and why a war crimes tribunal in Cambodia interests her.

The minimum amount former K&L Gates partner Navin Kumar Aggarwal allegedly transferred from client accounts to a Macau casino to fund his gambling habit, according to a suit filed by the firm against Melco Crown Entertainment

What inspired you to become a writer, and leave the profession of law?

I didn’t leave the legal profession to become a writer; I left it to be at home with my children and discovered within three months that it was the worst decision of my life. So, I started to write as a means of escaping. I’m not a failed lawyer; I’m a failed stay-at-home mom.

Lawyers run amok

Do you miss anything about being a lawyer?

I miss quite a lot about it. I enjoyed law as a subject, and so I miss the company because writing is a solitary pursuit compared to law.

Writing is also less lucrative than it used to be, and so I miss the remuneration as well.

The streets of Bangalore saw a ferocious clash in March, as reports poured in of lawyers hurling stones and bottles at journalists, alleging that local media had depicted them unfairly. Filled with a sense of righteous rage, lawyers barred the door to the Civil Court Complex, resulting in an unseemly scuffle on the very steps of the courts. The panic was eventually quelled by tear gas shells that were fired into the crowd. Law, a noble and honourable profession? Perhaps not for this lot.

What do you enjoy most about your career now?

It gives me a chance to talk about issues that I care about, and reach a wider audience! I do have complete flexibility in terms of my time and the freedom to go and watch my kids play football in the afternoon. So, I can pretend

to be a slightly better mother than if I was working 24/7 in a corporate firm.

Does your experience in the legal world inform your writing at all?

I’ve always been interested in legal issues, human rights issues, and issues affecting relationships between people that are governed by the law. It’s a natural change in my career and a natural change in my writing as now I don’t have to write about corporate law issues. Instead, I can write about far more interesting sorts of family law, criminal law or constitutional law issues that I didn’t get a chance to practice before.

So in Malaysia, I write about the civil courts and the shariah courts that are set up; in Singapore, I look at the laws on drugs and homosexuality; in Cambodia, I write about the war crimes tribunal, while Bali is all about terrorism. So, I have incorporated the law quite a lot into my writing.

TrustLaw Looking for high impact pro bono opportunities?

Or free legal assistance?

TrustLaw is a global service by Thomson Reuters Foundation to make it simpler for lawyers to access pro bono projects and for social entrepreneurs and NGOs to get legal support.

REUTERS/Arko Datta

TrustLaw is also a one-stop shop for news and information on good governance, women’s rights and pro-bono.

trust.org/trustlaw Š 2012 Thomson Reuters Foundation

Thomson Reuters Foundation, the charitable arm of Thomson Reuters, operates TrustLaw and TrustLaw Connect.

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