Chinese Law Prof Blog

Editor: Donald C. Clarke
George Washington University Law School

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Thursday, July 30, 2015

More Catholic than the Pope: UK government states Ai Weiwei has criminal conviction in China (he doesn't)

In an astounding cock-up of monumental proportions (because it could so easily have been avoided by spending a few minutes searching around the web), the UK government has accused Ai Weiwei of lying on his application for a UK visa. In a letter issued to Ai, the "Entry Clearance Manager" for Beijing stated:

It is noted that in answer to the question on the visa application form on whether you have ever had any of the following in the UK or a different country:

  • A criminal conviction, at any time
  • A driving offence, at any time, e.g. for speeding or no insurance
  • I was arrested or charged, and I am currently on or awaiting trial
  • A caution, warning, reprimand or fixed penalty notice
  • A court judgment, e.g. for debt
  • A fine for breaking UK immigration law (called a 'civil penalty')

You have stated: 'No, I have never had any of these'. It is a matter of public record that you have previously received a criminal conviction in China, and you have not declared this.

The ECM goes on to say that Ai will be granted a visa, but for less time than he had applied for. He or she urges Ai to respond truthfully next time, and notes that there is a place on the form to explain any answers.

Let me be clear about my own view: It is not unreasonable for the UK government to ask these questions, and applicants should respond truthfully. It would, of course, be unreasonable for the UK government to treat politically-motivated criminal convictions as equal to a genuine criminal history, but that's not what's at issue here. If Ai had had a criminal conviction, he should have said so.

The problem is that Ai does not have a criminal record in China. It is most emphatically not a matter of public record that he has previously received a criminal conviction in China. Anyone who claims this should be asked to produce this public record. (After all, it's public, right?) It's rather astounding that when the Chinese government, for all its harassment of Ai, did not see fit to charge and convict him on criminal grounds, the UK government should step up to the plate and do it for them. 

Some people say, "Oh, but didn't he have some tax troubles a while back?" And others respond, "Yes, but those were politically motivated." All beside the point. To the second group, I say that he should respond truthfully and then explain, even if only as a practical matter, given that not telling the truth about things that really are in the public record is just not going to work. To the first group, I say that the ECM did not state an objection to Ai's failures to mention (a) his 2011 detention, allegedly for investigation of tax issues, or (b) the assessment and fine levied as an administrative (not criminal) matter on his company (not him). The ECM's objection was to Ai's failure to state that he has a criminal conviction. But he doesn't have one.

The ECM might have been on firmer ground had he or she said something along the lines of, "Really? No 'caution, warning, or reprimand'? Ever?" I suspect Ai has received a lot of communications that would qualify. Of course they are politically motivated, but that's what the place on the form for an explanation is for. But that's not what the ECM said.

It's understandable that everyone's memory is a little fuzzy about what happened back in 2011. What's harder to understand is how someone could give legal effect to that fuzzy memory without bothering to take just a few minutes to google around to verify the facts. Even more disappointing is that the UK authorities seem to be digging in their heels and refusing to admit their mistake. A Foreign Office spokesman, confronted with questions on this issue, said, “This is a visa issue, where applications are decided by UKVI [UK Visas and Immigration] based on relevant legislation.” Yeah. thanks. We know it's a visa issue. And we know that UKVI is supposed to decide on applications on the basis of relevant legislation. Does the relevant legislation really call for decisions to be made on the basis of made-up facts?

By the way, if you think you've heard this kind of bland, bureaucratic non-answer before, you have. Here's Chinese Foreign Ministry spokesperson Hong Lei on questions about Ai's 2011 detention: “China is a country under the rule of law, and relevant authorities will work according to law.” And here's Chinese Foreign Ministry spokesperson Hua Chunying on questions about Pu Zhiqiang's detention: "The judicial authorities of China handle the relevant case in accordance with the law."

Well done, Britain!

POSTSCRIPT: I'm not yet willing to dismiss the theory that this is just a low-level bureaucratic cock-up: somebody thinks he's fibbing because they misremember; they ask their superiors what to do, precisely because they don't want to deny him a visa, not because they do; the superiors, who assume that their subordinates have got their facts right, say, "Well, just give him a slap on the wrist and tell him not to do it again."

July 30, 2015 in Commentary, News - Chinese Law | Permalink | Comments (1)

Thursday, July 23, 2015

China bans high-speed rail travel for people with outstanding judgments against them

Story below. I think this falls under the “be careful what you wish for” category. We always complain about the weakness of Chinese courts in enforcing their judgments, but this reminds us that if the state is well-organized enough, it can make your life miserable not only for good reasons (as here) but for bad reasons as well. Bullet trains today, credit cards tomorrow, and ATMs the day after. They won’t need to arrest the lawyers in that case.

http://english.caixin.com/2015-07-22/100831677.html

Bullet Trains Off-Limits to People Failing to Make Court-Ordered Payments

Country's highest court adds high-speed trains to list of banned services for individuals failing to repay debts or make compensation payouts

By intern reporter Shan Yuxiao

Debtors

Images of convicted debtors flashed across a giant digital billboard at the entryway of the Changsha Railway Station on the afternoon of January 20 / CFP

(Beijing) – People who do not make payments ordered by judges cannot ride on China's popular bullet trains, the highest court has said, adding to the list of services that are off-limits to individuals who fail to make child support payments or repay debts.

The Supreme People's Court said on July 21 the ban is intended to clamp down on people who have been ignoring rulings that they repay a debt or provide compensation for some wrongdoing. The order came into effect on July 22.

In 2010, the top court said that people who did not make payments ordered by judges could not buy airplane tickets, ride sleeper trains, or stay at rated hotels and resorts.

People in China must provide ID when they buy train tickets or check into hotels. To enforce the crackdown, the judicial system gives a list of people who have failed to repay debts or make compensation to airlines, train ticket sellers and hotels.

The country's judicial system is often seen as weak because its orders are often ignored. There is little cooperation between the courts and police regarding civil lawsuits, child support disputes and compensation for injuring someone, for example. This has meant that people who owe debts to others can go about their daily routines unaffected.

Liu Guixiang, who heads a division overseeing enforcement of rulings at the Supreme People's Court, said that adding bullet trains to banned services could prompt more people to make court-ordered payments because this form of transport has become very popular with travelers.

Nearly half of the country's train passengers in the first half of the year – about 2.9 million people – rode bullet trains, data from railroad operator show. China has been building a huge high-speed train network in recent years and is still adding to it. Bullet train travel is generally seen as affordable and comfortable, and the lines linking major cities, such as Beijing and Shanghai, are popular, especially on holidays.

The top court will also urge lower courts to hand out stiffer punishments for failing to repay debts, Liu said. Data from the highest court show that more than 58,000 people were detained from the beginning of 2010 to the end of June for failing to make good on a debt, but only 864 were charged with a crime.

July 23, 2015 in News - Chinese Law | Permalink | Comments (0)

Tuesday, June 30, 2015

Job opportunity: Human Rights in China seeks Senior Program Officer, Hong Kong

Post-doc position available at Leiden University: Researcher on Chinese law and governance

Sunday, June 21, 2015

E-commerce policy: who's in charge?

The Ministry of Industry and Information Technology (MIIT) has just issued a pronouncement stating that foreign investors will, in an exception from existing rules, be allowed to own 100% of companies engaging in e-commerce. Here's a post from the China Accounting Blog, which suggests that this offers an escape route for VIEs. (I think the post is incorrect in stating that the relaxation is limited to the Shanghai Free Trade Zone; the relevant language says, "On the basis of experimentation in the Shanghai Free Trade Zone, [MIIT] has decided to relax on a nationwide basis [the restriction on foreign ownership]" (我部决定在中国(上海)自由贸易试验区开展试点的基础上,在全国范围内放开在线数据处理与交易处理业务(经营类电子商务)的外资股比限制).)

I want to raise a different question: what authority does the MIIT have to relax this requirement? According to the MIIT's notice, the requirement seems to come from a State Council regulation, the "Rules on the Administration of Foreign Investment in Telecommunications Enterprises" (商投资电信企业管理规定). Or perhaps it can be found in the Guidance Catalogue for Foreign Investment, issued jointly by the National Development and Reform Commission and the Ministry of Commerce. As for the first, the MIIT has no authority to override a State Council regulation. As for the second, approval of foreign investment must come from the NDRC and the MOC, so if they aren't on board with this rule, the MIIT can't make them get on board. It's hard to believe we'd see this notice if other relevant ministries weren't on board. But if they are on board, why isn't this notice jointly issued with their signatures under it as well?

[UPDATE JUNE 22: Apparently it's not an exception to existing rules. The latest version of the Guidance Catalogue seems by implication to allow 100% ownership of e-commerce ventures - see Item 20 under "Restricted Industries" here.]

June 21, 2015 in Commentary, News - Chinese Law | Permalink | Comments (0)

Tuesday, June 2, 2015

Landesa seeks Attorney, Land Tenure Specialist for Beijing office

Landesa, a reputable Seattle-based NGO that does work on land issues in developing countries, is recruiting an Attorney, Land Tenure Specialist for its Beijing office. The applicant has to have to have full and complete authority to work in China, but they are open both to people located in the US who want to move back to China and people currently residing in China. Here's the job announcement. Please direct any questions to the email address in the announcement; I' m just passing this information on.

June 2, 2015 in Internships/Employment Opportunities | Permalink | Comments (0)

Monday, May 25, 2015

Jerome Cohen on Lee Kuan Yew, the rule of law, and China

Friday, May 15, 2015

More resources on the draft Overseas NGO Law

Here's a follow-up to my post of a few days ago on the draft Overseas NGO Law:

First, there's a very good set of comments by a number of experts at the Asia Society's ChinaFile web site. These are fairly big-picture in nature and not article-by-article.

Second, Anthony Spires has a web site where he has links to various resources, including a collection of Chinese-language comments from Hong Kong groups.

Third, here are some Chinese-language comments from the Shanghai 复恩社会组织法律服务中心.

May 15, 2015 in Commentary | Permalink | Comments (0)

Wednesday, May 13, 2015

China's draft law on overseas NGOs

The Chinese government recently released for public comment a draft of a proposed law on overseas NGOs. ("Overseas" is the standard translation for 境外, which means non-mainland, i.e., territories not under the direct control of the Chinese government, including Hong Kong and Macao as well as foreign countries.) The law's reach is very broad, prohibiting any activities within China by any overseas NGOs (meaning any organization that is neither governmental nor for-profit) unless they register with the police.

This goes way beyond making life difficult for NGOs now operating in China. It means that foreign universities, for example, can't have any "activities" in China unless they register with the police (and their registration is approved). It means that the Poughkeepsie Optometrists Association can't have its annual convention on the beach in Hainan without registering with the police. Oddly, it means that the US Chamber of Commerce can't (without registering) hire a consultant in China to do a marketing study, even though any of its for-profit members, or even the Department of Commerce itself, could. Can this result possibly have been intended?

Here are some links [see May 16 post for more links]:

Chinese text: http://www.npc.gov.cn/npc/xinwen/lfgz/flca/2015-05/05/content_1935666.htm

Translations:

China Development Brief: http://chinadevelopmentbrief.cn/articles/cdb-english-translation-of-the-overseas-ngo-management-law-second-draft/

China Law Translate: http://chinalawtranslate.com/en/foreign-ngo-draft-2/

Commentary:

China Law and Policy blog:

Part 1: http://chinalawandpolicy.com/2015/05/10/a-slow-death-chinas-draft-foreign-ngo-management-law/

Part 2: http://chinalawandpolicy.com/2015/05/11/the-future-is-already-present-how-the-draft-foreign-ngo-management-law-could-be-applied/

Part 3: http://chinalawandpolicy.com/2015/05/12/one-love-how-foreign-ngos-governments-should-respond-to-chinas-draft-foreign-ngo-law/

Prof. Jia Xijin 贾西津 (Tsinghua Univ.) (in Chinese): http://news.ifeng.com/a/20150511/43732232_0.shtml/

 

May 13, 2015 in Commentary | Permalink | Comments (1)

Saturday, April 25, 2015

Life as an official, from the inside

I just read an interesting essay by Zhang Xingxiang, currently a Practitioner-in-Residence at Indiana U.'s Research Center for Chinese Politics and Business, about his life as an official in China.

I was struck by one observation he made:

Although government agencies were required to abide by the stipulations of laws and regulations, the enforcement of laws was a big headache in China. The law itself did not have intrinsic mechanisms to ensure its implementation. The State Council usually issued regulations or circulars which specifying how to enforce the law. Without that, most of time the law was just a written piece of paper posted on the wall but never seriously executed. The Constitution and Legislation Law stipulate the rank of legal instruments: among laws, regulations, rules, circulars and decisions, from highest to lowest. In practice, however, it went in a totally different direction. Whenever companies or individuals had a legal issue, they did not just look up the law, but sought decisions from a mayor, a governor of a province, or even the Premier because they knew such disposition was more effective.

Zhang is not the first to observe that the actual hierarchy of norms is virtually the opposite of the formal hierarchy of norms; in terms of actual binding force, for example, the Constitution is far weaker than a rule on, say, severance pay issued by an urban district labor department.

But the process he describes for compliance is also interesting and worth discussing, because it goes to the issue of how far even rule by law can prevail, to say nothing of the grander idea of rule of law. [Subsequent text inadvertently omitted in original post; added on April 25, 2015] Consider how the norms of securities or tax law, for example, are enforced in the United States. A great deal of reliance is placed on voluntary compliance by regulated parties coupled with occasional audits and other after-the-fact means of detecting and punishing non-compliance. But taxpayers and issuers can't possibly know all the applicable law. How do those who want to comply do so? They ask their lawyers. The government has cleverly managed to make the private sector pay for its own compliance efforts, and by and large it secures a high level of compliance.

But think about what must be true for this system to work. There must be law for lawyers to become expert in. In other words, there must be a reasonably predictable and unified system of rules. Ad hoc, discretionary decisions by government officials cannot supply this kind of legal environment. Thus, regardless of what we think of ad hoc decision-making from a fairness perspective, it's important to see that it renders impossible a certain mode of governance that has the advantage, among others, of being a lot cheaper.

April 25, 2015 in Commentary | Permalink | Comments (1)

Wang Xixin named vice president of Administrative Law Chamber of Supreme People's Court

Wangxixin


I'm happy to announce that my friend and colleague Prof. Wang Xixin (王锡锌) of the Peking University Faculty of Law has just been named vice president of the Administrative Law Chamber of the Supreme People's Court. Congratulations!

April 25, 2015 in People and Institutions | Permalink | Comments (0)

Friday, March 20, 2015

Terrific Chinese law fellowship at the Leitner Center, Fordham Law School

Here's the announcement for the Asian Law and Justice Fellowship. You get to hang out with Carl Minzner and Martin Flaherty, do Chinese law stuff, and live in New York City - and get paid for it! Application deadline is April 13th.

March 20, 2015 in Fellowships/Research Opportunities | Permalink | Comments (0)

Monday, March 9, 2015

Human Rights Watch seeks China researcher

The headline says it all. They need a replacement for the irreplaceable Nicholas Bequelin, who is moving on to be the Regional Director for East Asia for Amnesty International. Here's the announcement.

March 9, 2015 in Internships/Employment Opportunities | Permalink | Comments (0)

Saturday, February 21, 2015

Chinese lawyers file freedom-of-information request for legal basis for ban on teaching of "Western values"

Here's the story, from the Fei Chang Dao blog.

February 21, 2015 in News - Chinese Law | Permalink | Comments (1)

Friday, February 20, 2015

First successful case against administrative monopoly

The Feb. 16th isue of the Legal Daily carries three articles (see below for links) about administrative monopolies, prompted by the recent decision by the Guangzhou Intermediate People's Court against the Guangdong Department of Education for requiring the use of a particular brand of software in a contest. This was not only the first court victory against an administrative monopoly; it was the first time such a case had even been accepted by courts and made it all the way to trial.

Among the issues in the case were (1) the role of expert witnesses (they were allowed), and (2) whether the designation in a notice issued by the defendant of a particular piece of software constituted concrete administrative action or abstract administrative action. (Under the Administrative Litigation Law (ALL), one can sue for the former but not for the latter, but since this case was not brought under the ALL, I'm not sure why the distinction was considered important.)

The court found that the defendant's acts were indeed concrete administrative actions and that the defendant violated Art. 32 of the Antimonopoly Law (AML), which states:

Administrative agencies and organizations authorized with administrative powers of public affairs by laws and regulations  shall not abuse their administrative powers by limiting, or limiting in disguised form, organizations or individuals by requiring them to deal, purchase, or use commodities provided by designated undertakings.

The reports don't say, however, what (if any) remedy the court provided beyond a mere declaration of illegality. Article 51 of the AML deals with the issue of remedies for administrative monopolies vaguely, but on one point it's pretty clear: courts can't order a remedy. The basic remedy is to hope that the offender's administrative superior will make it come into line:

The administrative agencies or organizations authorized with administrative powers of public affairs by laws and regulations shall be admonished by the superior authorities if they abuse their administrative power to eliminate or restrict competition; the individuals who are directly responsible shall be punished in accordance with the law.

This article shall not apply to cases in which other administrative regulations or laws provide for the regulation of the abuse of administrative power.  The Anti-monopoly Enforcement Authority may propose suggestions to deal with in accordance with the law to the superior authorities.

(Translation credit for the AML provisions above: T&D Associates)

Here are some relevant reports:

February 20, 2015 in Commentary, News - Chinese Law | Permalink | Comments (0)

Thursday, February 5, 2015

Big Four settlement imminent?

Here's the take of Paul Gillis at the China Accounting Blog on a possible settlement between the Big Four affiliates in China and the SEC over issues relating to access to their workpapers in SEC investigations.

February 5, 2015 in Commentary | Permalink | Comments (0)

Saturday, January 31, 2015

Shen Kui and his Three Questions

Just when you start getting depressed about the way things are going in China, along comes Shen Kui (沈岿), a professor and former vice dean at Peking University Law School, to show that at least some of China's thinking people are not going to take the government's policy of intellectual anesthesia in higher education lying down. [Feb. 1 update: A previous version of this post had out-of-date information about Prof. Shen, identifying him as an associate professor and current vice dean.]

On Jan. 30, Minister of Education Yuan Guiren (袁贵仁) spoke at a conference on ideological and propaganda work in higher education, declaring that it was necessary "to strengthen control over the use of original-edition [i.e., not processed through some Party-controlled mechanism] Western materials. We must by no means allow materials that propagate Western values into our classrooms; it is absolutely forbidden for all kinds of speech that attacks and slanders the Party's leadership and blackens socialism to appear in university classrooms; it is absolutely forbidden to have all kinds of speech that violates the Constitution and the law spread in university classrooms; it is absolutely forbidden for teachers to complain and vent in the classroom and to transmit all kinds of harmful moods to students." (加强对西方原版教材的使用管理,绝不能让传播西方价值观念的教材进入我们的课堂;决不允许各种攻击诽谤党的领导、抹黑社会主义的言论在大学课堂出现;决不允许各种违反宪法和法律的言论在大学课堂蔓延;决不允许教师在课堂上发牢骚、泄怨气,把各种不良情绪传导给学生。)

In response, Prof. Shen posed three questions. The first is especially subversive, since it reminds us of the obvious and exposes the whole anti-Western-values campaign for the ridiculous charade that it is:

How do we distinguish "Western values" from "Chinese values"? As everyone knows, the specter of Communism that hovered over haunted Europe almost two centuries ago, after crossing mountains and seas to get to China, helped bring about the birth of the Chinese Communist Party; the Marxism that our current Constitution stipulates we must uphold, and the education in internationalism, communism, dialectical materialism, and historical materialism that the current Constitution stipulates we must undertake, are all from the West and have influenced China. There are countless examples of Western learning traveling east. Let me ask Minister Yuan, would it be possible for you to clearly delineate the line between "Western values" from "Chinese values"? (如何区分“西方价值”和“中国价值”?众所周知,近两个世纪前游荡在欧洲的共产主义幽灵“跨洋过海”来到中国后,才促成中国共产党的诞生;我国现行宪法规定必须坚持的马克思主义,必须进行的国际主义、共产主义、辩证唯物主义和历史唯物主义等的教育,也是源于西方,影响中国的。西学东渐的例子数不胜数,请教袁部长,是否可以请您清晰划出“西方价值”和“中国价值”的分界线?)

Here's his second question:

How do we distinguish "attacking and slandering the Party's leadership and blackening socialism" from "reflecting on the bends in the road in the Party's past and exposing dark facts"? No political party would dare to declare that it never did and never would make errors, and no society, whether socialist or capitalist, would dare to declare that it has no dark side. Let me ask Minister Yuan, would it be possible for you to clearly give us the standard for distinguishing between "attack" and "reflect", and between "blacken" and "expose darkness"? (如何区分“攻击诽谤党的领导、抹黑社会主义”和“反思党曾经走过的弯路、揭露黑暗现实”?没有任何政党,敢于宣布自己是从不会也永远不会犯错,也没有任何社会,无论是姓“社”还是姓“资”,敢于宣称自己是没有任何黑暗面的社会。请教袁部长,是否可以请您清晰给出“攻击”与“反思”、“抹黑”与“揭露黑暗”的区别标准?)

And finally, the third question:

How should the Education Ministry that you lead implement the policy of governing the country according to the Constitution and the law? If you have a clear and understandable answer to the above two questions, please publish another speech in good time; if you still don't have a clear answer, then please henceforth be cautious in your words and actions, because the Education Ministry that you lead relates to "the scientific and cultural level of the people of the whole nation" (Constitution, Art. 19), "the development of the natural and social sciences" (Constitution, Art. 20), and the citizens' "freedom to engage in scientific research, literary and artistic creation, and other cultural pursuits" (Constitution, Art. 47); in short, it relates to the renaissance of the Chinese people. If you casually talk about what can be done and what can't be done, then the least bit of incaution could mean a violation of the Constitution or the law. (如何让您领导的教育部贯彻执行依宪治国、依法治国的方针?如果您本人对以上两个问题已有明显易懂的答案,还请您适时发表另外一次讲话;如果您本人尚无明确答案,还请您以后谨言慎行,因为您所领导的教育部,关系到“全国人民的科学文化水平”(宪法第19条),关系到“自然科学和社会科学事业”(宪法第20条),关系到公民进行“科学研究、文学艺术创作和其他文化活动的自由”(宪法第47条),归根结底,关系到中华民族的复兴。您如果轻言什么可为、什么不可为,稍有不慎,就会存在触犯宪法、法律的可能性。)

Good stuff.

 

 

January 31, 2015 in Commentary, People and Institutions | Permalink | Comments (2)

Wednesday, January 28, 2015

Chinese competition law: the anaconda in the chandelier

Back in 2002, the China scholar (and my first teacher of Chinese) Perry Link published in the New York Review of Books what has now become, at least in the world of China studies, a famous essay: "The Anaconda in the Chandelier" [NYRB link | non-paywalled Word version]. In it, he explored the mechanisms of self-censorship, conscious and unconscious, that operate not just among Chinese--for example, the vague dread of crossing an unstated line--but also among foreigners who comment on Chinese affairs, including the fear of visa denial.

That anaconda seems to be present again today (I won't say visible, because one characteristic of the anaconda is that you don't see it) at the hearings of the US-China Economic and Security Review Commission (the USCC) on the foreign investment climate in China, particular as regards competition policy.

China's competition policy has been very much in the news in the last several months; I blogged last September about a highly critical report issued by the US Chamber of Commerce. But although a lot of people want to talk about it, there are also a lot of people who don't, and the presence of the anaconda is manifested by their absence from the hearings.

Here's where I must regrettably get a little mysterious. I know some people who know something about Chinese competition law. One of them, my colleague Bill Kovacic, a former chairman of the FTC, knows a lot about Chinese competition law and is testifying today. Another, however, commented (as slightly edited by me):

Bill will have the courage to say important things. No business wanted to go on the record. [Having been able to pre-read the comments of some panelists], I can tell you that that everyone who has a potential business interest (law firm and consulting firm) will really soft-pedal some procedural fairness issues as well as mention of some industrial policy.

Not having read the comments and not knowing enough about competition policy, I do not know whether witnesses are in fact pulling their punches. But there are some academics who really know a lot about Chinese competition law other than Bill Kovacic, and they are not on the witness list. Obviously, I am not naming any names, but in at least one case the person concerned turned down the opportunity to testify because of visa concerns related both to the content of the testimony and to the fact that it would be before the USCC, which is viewed by the PRC authorities as hostile. (Personally, I don't think that an academic would get on the visa blacklist just for badmouthing the NDRC before the USCC, but everyone has to make their own judgment in these things, so I'm not criticizing.) This is a real shame. Not only is the USCC being deprived of good information, but the Chinese government itself has, as they say in Chinese, lifted a rock only to drop it on its own feet (搬起石头打自己的脚): the threat of visa denial for testifying before the USCC will disproportionately drive away witnesses who are less hostile to the Chinese government, since the more hostile ones have presumably already decided to accept the consequences or are on the blacklist already.

January 28, 2015 in Commentary | Permalink | Comments (0)

Tuesday, January 27, 2015

Dentons-Dacheng merger: some questions

The New York Times has a report today about a merger between Dentons and Dacheng, a Chinese law firm. According to the report, "[l]ike a number of other large law firms, the partnership will be structured as a Swiss verein, which allows for the companies to maintain separate profit pools." I would really appreciate comments on this post from knowledgeable readers, because I'm mystified by several aspects of the deal. I'll number the paragraphs for ease of reference in the comments.

  1. There have been previous deals between Chinese and law firms that were announced as mergers--for example, between Mallesons and King & Wood--and I don't know the details of those, or whether this one uses the same model. But it does raise interesting questions about whether it really makes sense to call this a "merger" as opposed to a simple agreement to share certain kinds of business.
  2. First, the report says that the firms maintain separate profit pools. It's a strange merger where the two parties don't merge their revenue streams and profit calculations.
  3. Second, if they maintain separate profit pools, then it pretty much follows that they are going to maintain separate decision-making structures. Dentons will continue to decide what clients Dentons will take, how much to charge, etc., and Dacheng will do the same for Dacheng. I don't know this for a fact, but it would be very unusual to separate profits from decision-making power. Again, a strange merger where decision-making remains separate and not unified.
  4. Third, surely Dacheng has not disappeared as a Chinese business organization. Foreign law firms--and although I know almost nothing about the Swiss verein, I'm pretty sure it's Swiss--cannot practice Chinese law, so there has to be a Chinese business entity that remains in existence to engage in the practice of Chinese law. A strange merger where the supposedly merging entities remain in existence.
  5. Fourth, some jurisdictions have rules forbidding lawyers from sharing certain aspects of law firm operations with non-lawyers. I suppose any rules against sharing profits are taken care of by the separate profit pools. I don't know if China has rules about Chinese firms sharing control with foreigners. Again, if the firms are sharing neither profits nor control, in what world does it make sense to call their arrangement a "merger"? The report also speaks of "a unified compensation system." Will that amount to profit-sharing, and is that allowed by all the relevant jurisdictions?
  6. Finally, how much information will be shared between the "merged" firms? Will they develop a unified client database that all attorneys can access? This raises serious issues of information security. It is an unfortunate fact that if the state security folks show up at Dacheng's offices and demand access to information that Dacheng attorneys can access, Dacheng attorneys are in no position to say no. If client information is vulnerable in this way, will Dentons clients feel comfortable about that?

Comments welcome and indeed earnestly solicited.

 

January 27, 2015 in Commentary, News - Chinese Law | Permalink | Comments (1)

Yirenping seeking summer legal interns

The Chinese public interest group Yirenping is seeking summer legal interns. Fluent Chinese is not a requirements; they have different jobs depending on Chinese language skills. For more details, see this informative announcement. The application deadline is Feb. 28.

January 27, 2015 in Internships/Employment Opportunities | Permalink | Comments (0)