Research in Foreign Law

Chenglin LiuLL.M (China); LL.M (Sweden); LL.M, MS, JSD (U.S.)

Cliu@central.uh.uh Foreign and International Law Librarian

O’Quinn Law Library

Foreign Law Search• Common Law v. Civil Law--Personal observations:

– Law School: Case book v. Hornbooks– Law Classes: Socratic (1hr) v. Lecture (3hr)– Tuition: high v. low– Exams: Memorizing v. Analyzing – Law making: Judges v. Scholars– Law making: Case by case v. Laying out all contingencies – Judicial Review: Norm v. Exception– Jurisprudence: highly practical v. highly theoretical – Judge selection: lawyer-judges v. student (scholar)-judges – Judgment: Lengthy (with dissent) v. short (W/O dissent)– Attorneys: Active role v. Passive role

Foreign Law Research

Not as easy as finding domestic law

Useful SourcesThomas H. Reynolds & Arturo A. Flores, Foreign Law-

Current Sources of Codes and Legislation in Jurisprudence of the World (K38 .R49 1989, Reference Collection)

Online Research GuideMuligan and Liu’s Foreign Primary Law on the Web LLRX.com Resource Center - Comparative and Foreign Law Foreign and International Law Sources on the Internet: Annotated

LexisNexis (Legal (excluding U.S.) )Reference Librarians

On-line and Print Resources

• Lexis-Global– Not international

• Westlaw

• Government Website

• Online Catalogue

• Interlibrary loan

Class 2:State Structure

Basic Facts about China• Population

– China 1.4 billion– U.S. 200 million as of this week 10/17/06– EU 450 million

• Size: Which country is bigger, China or the U.S.? – CIA http://www.cia.gov/cia/publications/factbook/geos/ch.html U.S. is

bigger!– China.org http://www.china.org.cn/e-changshi/index.htm China is bigger!

• Nationalities: minorities 56; majority 1 (Han)• Provincial governments

– 4 large cities: Beijing, Shanghai, Tianjin, Chongqing– 23 provinces– 5 autonomous regions – 2 special administrative regions (SAR): Hong Kong and Macau – Taiwan

• Neighboring States

Foreign Direct Investment in China

From the US-China Business Council

• China's foreign direct investment (FDI) inflows surpassed those of the United States in 2002, making China the world's leading destination for foreign funds; China should continue to attract significant levels of FDI in 2003 from existing and new investors alike. The 2002 annual increases in both contracted and utilized FDI, of 20 percent and 12 percent, respectively, were particularly striking in light of the fact that overall world FDI flows declined in 2002 for the second consecutive year. (Global FDI fell 50 percent in 2001 and an estimated 25 percent in 2002).

US-China Trade Statistics and China's World Trade Statistics

http://www.uschina.org/statistics/tradetable.html

Trade in Goods (Imports, Exports and Trade Balance) with China

http://www.census.gov/foreign-trade/balance/c5700.html

China and TWO

• China applied to join GATT in 1986.

• December 2001, became WTO member.

Foreign Investment in China

• Equity Joint Venture (EJV)

• Contractual Joint Venture (CJV)

• Wholly Foreign-Owned Enterprises

• Holding Companies

EJV

• Governing Law– The Law on EJV– Regulations for the Implementation of the Law

on EJV– Rules, notices from the State Council and

ministries – Local rules

EJV

• The Chinese Government protects EJV’s investment.

• No national expropriation (if it happens, EJVs will be compensated. )

• EJVs must follow the laws and regulations of China.

• EJVs should take the form of a LLC.

Setting up an EJV

• Approval and license

• Foreign share must be over 25%.

• Foreign parties should bring in high tech.

• EJVs have the site use rights

• Contributions– Foreign side: high tech, cash, – Chinese side: site, workers

EJV board of directors and general manager

• The highest authority of a JV is its board of directors. Term: 4 yrs.

• BD should consist of no less than 3 members. 7, 9, … in odd numbers

• Should meet at least once a year. • Unanimous votes required for

– Amendment of the articles of association– Termination or dissolution of the JV– Increase or decrease of registered capital– Merger or division of the JV

• The General Manager runs the JV and reports to the board.

• Do you recall the relationship between “NPC” and “State Council?”

Net Profit Distribution

• In proportion of shares invested

• After tax, the foreign party is allowed to remit the profit abroad.

Materials and Products

• Not restriction for acquiring materials, but domestic market preferred.

• Products are encouraged to be marketed in the international market, but are allowed to be marketed in domestic market.

Dispute Solution EJV reg. Art. 97-100

• Consultation or mediation

• Arbitration

• Court

JV: Basic Issues

• Total investment and approval– $ 30 million

• Contribution– Debt– Equity (cash, know-how, IP, site, facility etc.)

Discharging Debts and Liability

• Reasons for resolving local partner’s debt– Could become JV’s debt– Creditors might create trouble for the JV

• Solutions– Urge the local partner to pay off the debt– The MNE pays it off, but the amount should

be counted in the contribution.

Size of the Total Investment

• Scale• Ratio: 49/51; 30/70; 10/90 in favor of the MNE• Approval purpose

– Under $ 30 million, local – Above $ 30 million, Beijing

• Tricks – Increase capital immediately after approved by the

local authority– Divide a large project into several $30 million projects– Defense– Risk

Competition

• Agreement on non-competition – May be difficult to enforce– May be difficult to interpret– For good cooperation

• Solutions– Absorb the local partner– Separate location– Purchase local brand names, trademarks

Management Structures

• Appointments of board members are in proportion to the ration of the contribution.

• Chairman of the board is the JV’s legal representative.

• Symbolic status • The MNE can concede this position to the

local partner. • But, MNE should control the appointment

of the GENERAL MANAGER of the JV.

Practical Issues

• Employees– The MNE should refuse to take all of the local

partner’s employees. – Good faith efforts to hire former employees. – Probation – Arrears should be paid by the local partner. – Or, one-time payment. (if the MNE pays off, it

should be counted in the contribution.)

Other issues

• Selection of site

• Land use– Check if the conversion fees have been paid.– If not, the MNE should urge the local partner

to pay off. Or the MNE pays it off, but the amount should be counted as part of contribution.

• Utilities