China may crack down on foreign law firms
(AP)
Updated: 2006-05-16 08:57 China may be preparing to crack down on foreign
law firms that violate restrictions on the type of business they are allowed to
do in the country, according to a document issued by the Shanghai Bar
Association.
Foreign law firms are barred from directly handling any business having to do
with Chinese law, though most are violating that rule, said a memorandum dated
April 17 and seen Monday on the bar association's Web site.
It warned that "their illegal business activities were becoming serious."
Foreign lawyers long have chafed at laws limiting them mainly to providing
consulting businesses regarding laws in their own countries and international
treaties and acting as liaisons between foreign companies and local law firms.
But like many Chinese laws, restrictions are vague. Foreign law firms are
allowed to provide information about China's legal environment, but not to
interpret the "applicability of Chinese laws," the memorandum says.
It urged government agencies to "take powerful measures to regulate and
restrict illegal activities practiced by foreign law firms in Shanghai." The
document also lists a local hotline for members of the public and local lawyers
to report alleged violations.
Among many allegations, the bar association accuses foreign law firms of
luring locally licensed lawyers with high salaries, conducting nonlitigation
business directly related to Chinese law and, perhaps most seriously, of evading
taxes on business related to their China operations.
A spokesman for the bar association was not immediately available for comment
Monday.
However, local lawyers said they were aware of the document and supported
stronger enforcement of the restrictions, meant to protect the fledgling local
legal services industry.
"They are doing business which they are not authorized to do in China so of
course that affects the business of local law firms," said Wei Zengming, a
member of the Shanghai Bar Association.
"The Ministry of Justice and our bar association should do something to clean
up the legal services market," he said. "If foreign firms are violating the
rules, of course they should be punished."
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