Zen & The Art of Legal Networking : Lawyers & Attorneys in an International Legal Network for Relationships & Referrals

See Kiat Toh from Goodwins Law Corporation in Singapore wondered about inflation in Vietnam, and Phan said that it was widely accepted that there are two parallel statistics systems, the official one and the actual one. He thinks the real inflation rate is 18%, while the official one was reported as 12%. For 2010, the government is saying it will be 8 or 9%, but the Vietnamese people don't believe that. 

Samir Salloum from Salloum & Company in Abu Dhabi asked both the Chinese and Vietnamese delegates about the justice systems in their respective countries, whether justice was delivered swiftly and fairly.  

Scott Guan said that generally speaking, the Chinese legal system is improving, and has improved a lot over the past two decades.  He said that in China, legal cases are handled in a two instance procedure - the first instance starts from the official acceptance date of the case and has approximately a six-month timeline.  However, this can be extended for another six months for a difficult case. The second instance is the appeal proceeding, which takes another three months. 

Scott mentioned that an important factor in lawsuit cases in China is protectionism - when going into a remote area in China, to smaller cities or towns, the local companies involved in the suit may have a lot of local influence, because they are the taxpayer, know the officials, and know the judge. He said that the jury system is China is not independent, but is supervised by the government. So if a company has influence on the government, the government will, in turn, have influence on the judicial system. 

He suggested that firms try to avoid having their clients' disputes resolved in these smaller places, because the courts are not transparent, the judges are not well-trained, and then tend to be relatives or friends of the companies that may be sued. 

Instead, Scott recommended going to larger cities or to CIETAC (China International Economic and Trade Arbitration Commission), which has a relatively good international reputation, with headquarters in Beijing and branches in Shanghai and Shenzhen. As a member to the 1958 New York Convention, CIETAC is a good choice for commercial arbitration. 

To illustrate China's fair legal results, Scott offered a case that they handled successfully within the past two and a half years in the intellectual property area. The firm had an American client, a NJ-based manufacturer of computer parts with a fairly well-recognized trademark. The company failed to register their trademark early enough in China, and it was registered in bad faith by a Chinese company in 2004. In late 2007, early 2008, the Chinese company started to take legal action against the American company, making requests of the Chinese courts as well as the government authorities in charge of trademarks, asking them to forbid the US company from using the trademark in China. 

The company was in a crisis-type situation and came to Jade & Fountain, who managed to challenge the legitimacy of the registration of the trademark by the Chinese company in front of the trademark board in Beijing. Based on that, they were able to put the other cases filed by the Chinese company on hold. 

At the same time, they filed another case against the Chinese company in Beijing based on the merits of anti-competition law and trademark law, because the logo was first designed by their client. They won that case, and as a result, although the money awarded was only RMB 50,000, there were important effects established that were useful for the trademark review board proceedings.

They won that case as well and although both of the cases filed by them and the review board case were appealed, they received a final decision from the High Court in Beijing confirming that now the trademark belongs to their client. So they are now working to request that the courts around China dismiss the other lawsuits brought against their client.

Phan said that again, Vietnam is like China, though they do follow a Western management system. The legal system in Vietnam is still evolving, and the court system has three levels - district, city provincial, and Supreme Court. Phan said as with China, he could not say that the court system was independent from influence. In many cases, the jury, judge, and the proceedings are influenced by politics.

However, in the past ten years, Vietnam has started to work more in the international sector, particularly in the IP area. They recently joined the international treaty on the Rome Convention and the Madrid Protocol. A Vietnamese court also recently rendered a favorable verdict to a foreign trademark holder suing a Vietnamese company for infringement. But Phan admitted that there are some corruption cases happening in the court. 

Samir then offered his perspective from Abu Dhabi, saying that the UAE is a seven-emirate state, following the federal laws issued by the government. But in a surprising move, the capital of Abu Dhabi recently decided to handle their own court cases. So slowly, the federation courts are remaining only for issues at a federal level. Samir added that justice is beginning to become as quick, as Scott described in China, and commented that all documentation for cases tried in Abu Dhabi must be translated into Arabic.

A final comment came from Lorna Patajo-Kapunan, the delegate from Kapunan Lotilla Garcia & Castillo Law Offices in the Philippines. She emphasized that for firms doing business internationally, they cannot discount the effect that a particular culture will have on the law. She said that in the Philippines, everyone is related and it has a great impact on the way that they do business. When doing business with some Westerners, who are very exact, they sometimes discount the "paternalistic" way of doing business in Asia. She encouraged everyone to learn about each others' cultures by developing relationships.

Our Chairman, Peter Altieri of Epstein Becker & Green, mentioned that he has a client who has been concerned about getting supply out of China and labour issues, touching on one of the hot topics.  He referenced a comment that Scott had made earlier in the morning, that the firm is seeing three times as many labour cases, and wondered whether the firm is seeing a major impact in terms of the changes in labour conditions in China and their ability to continue to produce cost-effectively, such that the demand from all over the world will still be there.

Scott said that labour costs are increasing in China, which was inevitable, because of the cost of resources and the cost of living. Today, there are more stringent supervision and regulations on a company's practice in terms of hiring people, signing contracts, minimum wage, and labour protection, fringe benefits, etc. so a lot of industries are gradually moving to lower cost neighboring countries like Vietnam.  

Scott added that they see a lot of internal migration within China from Shanghai and more wealthy coastal areas inland. He thinks that China has come to the point where the government will have to do something to maintain its legitimacy, because the disparity between the rich and the poor is so great. He thinks they will see an increase in labour costs and hopes to see things that are "created in China" in the future, so that they can climb higher on the food chain and maintain their competitiveness.

His colleague, Steven Huang, added that although the new labour law has been seen as a drawback, the Chinese government is trying to achieve more of a balance in its practical application. The courts have made revised explanations, so the impact of the law is not as severe as the media makes it out to be. Scott agreed, and said that through jurisprudence, they will gradually impose a more stringent way of interpretation to mitigate the negative impact on employers.

Because the top story in the morning's paper in Singapore had been about recent labour strikes and suicides in China, David Russell of Harrison & Moberly in Indiana asked Peter whether his client's concerns were related. Peter agreed that it was one aspect, but that his client was more concerned about his ability to get product and the revised costs and timelines they were now having to offer their clients. Scott mentioned that there had been two major strikes recently, with several workers committing suicide because of the conditions.  

C.K. Kwong offered the Hong Kong perspective from Sit, Fung, Kwong & Shum, adding that these issues have larger ramifications on the smaller factories, because rising wages in larger factories drive up the overall labour costs. He said that his firm is handling a proposed IPO right now for a company whose operating profit is around 10-20%. If the labour costs were to go up by 30 or 60%, this would eat up their entire profit margin. So the concern is that the ramifications are imminent. He added that another aspect of the wage increase in mainland China is that a lot of companies will move back to Taiwan. 

On the legal practice side, C.K. said that the situation in Hong Kong is similar to what Scott had described in China. In intellectual property, they are much less affected by the world economy, because companies still have to protect their patents. However, they see that the finer strategy is different, and clients are more focused on what they want to protect. They may appeal fewer adverse decisions or accept the second best at a more reasonable budget.

As far as litigation and the commercial side, he said that the commercial side is still quite busy and they too have the opportunity to bring in lawyers who have been laid off from lager firms. He added that it's also easier to retain attorneys that they have trained, who previously may have been enticed away by larger salaries at the larger firms. 

In terms of how they are helping their clients through the economic crisis, C.K. said that they are giving them more options. He said, for example, they may give them three ways to do something - one will give them the perfect result, another will be the second best, and another will be the third best. Then their client can decide what is the best option for them given their restrictions. 

Part II, including the perspective from Vietnam, will follow in a separate post.