China Issues Regulation on Foreign Law Firms

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Last updated at: (Beijing Time) Saturday, December 29, 2001

China Issues Regulation on Foreign Law Firms

The State Council lately issued a regulation on the administration of representative offices set up in China by foreign law firms, which allows them to engage in five kinds of legal activities outside Chinese legal affairs.

The State Council lately issued a regulation on the administration of representative offices set up in China by foreign law firms, which will came into effect on January 1, 2002.

Content of the regulation

The Regulation contains 35 clauses in 6 chapters, including general principles, establishment, alteration and cancellation of representative offices, business scales and rules, supervision and administration, legal liabilities and additional rules.

The Regulation stipulates that foreign law firms must get permission from relevant departments under the State Council before setting up China offices and sending representatives. Foreign law firms, other foreign organizations and individuals can not engage in law services under the name of consulting firms or others. The name of representative institutions should be in the form of "Representative Office of xx Law Firm (Chinese translation of the name of a foreign law firm applying for setting up branch in China) in xx (name of a Chinese city)."

What foreign law firms can do, and what not

According to the Regulation, the offices and representatives of foreign law firms in China can only engage in five kinds of activities outside Chinese legal affairs.

1. Lawyers are allowed to offer consulting services on legislation of the country or region where the lawyers are licensed, and on international conventions and practices.

2. They are also allowed to handle the legal affairs of the countries or regions where they gained permission to become lawyers.

3. On behalf of foreign litigant, they can entrust Chinese law firms to deal with Chinese legal affairs.

4. And foreign law firms can also enter into contract with Chinese counterparts to entrust them to deal with legal affairs.

5. They can also provide information on the impact of the Chinese legal environment.

The regulation bans foreign law firms to recruit Chinese lawyers, and employed assistant staff can not provide law services. The representative office should conduct law service activities in accordance with the Regulation and therefore is protected by Chinese law.

Opening legal service market step by step

Bans prohibiting the establishment of jointly funded law firms and recruiting Chinese lawyers by representative offices don't mean China refuses to open up its legal service market, said He Min, head of the Administration for China Offices of Foreign Law Firms under the Ministry of Justice.

"The opening-up is a step-by-step process that must be constantly adjusted according to the development of the domestic legal service market."

The large but fledgling legal service market in China has proved attractive to foreign lawyers in recent years. So far 20 foreign law firms have submitted applications for opening second branches on the Chinese mainland.

Overseas lawyers were officially allowed to practise law on the mainland in the early 1990s. A total of 131 overseas law firms already have branches in 11 cities on the mainland, with most clustering in Shanghai and Beijing.

Currently, foreign law firms are allowed to have just one branch each in the 15 cities listed by the Ministry of Justice. Now China has committed itself to lifting the geographic and quantitative ban within one year.

As well as setting out the parameters for foreign law firms practising laws in China, the regulation also stipulates obligations and punishments for judicial administrators when they fail to correctly carry out their job.

He Min said her section will soon start the drafting of specifics with regard to the ratification and administration of the Chinese branches of foreign law firms, supplementing the State Council regulation.

The ministry's own rules will deal with details concerning the business scope of foreign law firms in China, the integrity of the market and supervision and administration over their business, He said.

Apart from the foreign law firms approved by the Ministry of Justice, there are also some consultation and investment companies in China that illegally recruit foreign lawyers to provide legal services, which He said needs more co-ordination with other departments to bring them under control. (Source: China Daily)

Click here for full text of the regulation (in Chinese)

By PD Online Staff Li Heng

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