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What Lawyers MUST Know About China

Posted in Legal News

I gave a talk to the Alaska Bar Association’s International Law Section a couple of weeks ago. My topic was What Lawyers MUST Know About China, but if I had given it a subtitle, it would have been “the biggest mistakes foreign lawyers make when dealing with China.”
Here’s the outline I used, with a few additions/clarifications in italics. This is very much a bare-bones outline, but it does highlight some of the most common and dangerous mistakes one can make by thinking “China’s laws just can’t be that different.”
1. Company Formation
– Spend after formation — Companies too often spend money too soon for their expenditures to apply to the minimum capital requirement.
– Is it legal? On a number of of occasions, my firm has been called in to register a WFOE for a US company that has already spent substantial sums scoping out the Chinese market, without knowing that what they propose to do in China is illegal.
2. Contracts
– Who’s your counterparty? Spend a little, save a lot. Be diligent with your Due Diligence.
– Arbitration is the only solution, except when it’s not.
– Can you say litigation carve out?
– Arbitration clauses ain’t easy
– How to get your Christmas lights before Christmas. If you do not put it in your contract, you should pretty much assume it does not exist.
– You want your molds back? You had better make clear in writing that they belong to you.
– Contract language/Arbitration language — If you are going to be in a Chinese court, your contract should probably be in Chinese. If you are going to be arbitrating before CEITAC and you want it to be in English, you need to state this in the contract.
3. Intellectual Property
Register early and often, except patents
NDAs are not DOA
– It’s more than just legal.
4. Joint Ventures
– Why, why, why? The Peoria test.
– Control is always critical yet nearly always illusory. Check out co-blogger Steve Dickinson’s AmCham article and his speech at the recent JP Morgan China Conference on this.
5. Labor Law
– How does tenure for everyone sound?
6. Choosing Your Lawyer
– English and Guanxi. Both are very much overrated.
Lawyer ethics and confidentiality. Be careful.
7. The law is everything and nothing
– Bankruptcy law. Try it.
– Antitrust law. You’ve got to be kidding.
New Company law. Yes, but.
– Labor Law. Who stole my regs?
– Ex post facto. Sure, why not?
– Obsolescence at warp speed.

  • http://www.whataboutclients.com/archives/2008/06/essential_china.html What About Paris?

    Essential China Law

    See “What Lawyers MUST Know About China” by Dan Harris at his China Law Blog. It’s from a talk he gave to the International Law Section of the Alaska Bar Association….

  • 时雨

    Good post.
    Even I am a Chinese, I learn a lot from it.