Foreign lawyers get shaky foothold in communist Vietnam
Foreign lawyers get shaky foothold in communist Vietnam
HANOI (Reuter): Vietnam opened a door to foreign lawyers this week, granting a batch of firms branch office status, but kept a much bigger door firmly shut by barring them from advising clients on local law.
Fourteen firms from Britain, Singapore, Hong Kong, Australia, the United States and France won licenses to open the country's first foreign law company branches, upgrading from representative office status. About a dozen others are expected to follow soon.
On paper, the move is a great boost for companies which -- as simple representative offices -- were not supposed to conduct business and make profits in the communist country.
"It's going to be a lot easier," Fraser White of Clifford Chance said yesterday. "The situation before licenses was that we were not allowed to carry on any activity or give advice."
However, not all foreign lawyers were so upbeat about the changes, which stem from a decree passed last July.
Until now, lawyers in representative offices have sidestepped restrictions on doing business by billing their clients offshore. But as branch offices, they will now have to bring their accounts onshore and pay corporate taxes.
Under the new rules branch companies are allowed to provide consultancy services on international and foreign law.
But they are forbidden from giving advice on Vietnamese law, which includes explaining or interpreting and drafting contracts with an element of Vietnamese law.
Drafting contracts for clients setting up joint venture contracts -- big business in Vietnam's now burgeoning and increasingly open economy -- would be ruled out.
If they need to advise international clients they will have to work through Vietnamese firms, few of which have lawyers experienced in Western ways of working or drafting in English.
"They are trying to protect Vietnam's own law firms by keeping core business for them and at the same time get tax income from foreigners," said one disenchanted lawyer, who declined to be named.
Diplomats said the new regulations typified Hanoi's ambiguous stance on foreign business since it embarked on capitalist-style reforms and an open door policy in the late 1980s.
"The Vietnamese have a great suspicion of foreign entities and they have a history of looking very closely at foreign involvement and wanting some control," one said.
Vietnam is not alone in banning foreign firms from dealing with local law: it happens in Singapore, where foreign firms flourish by advising clients on business law around Asia.
"It works there because there's enough international business going on...to make it worthwhile and because the caliber of (Singaporean) lawyers is high enough to advise international clients" said one lawyer.
According to Milton Lawson, an international lawyer at Sinclair Roche and Temperley, it remains to be seen how the new laws will be interpreted.
Foreign law firms will probably still be able to work behind the scenes, drafting opinions on contracts and loan transactions which would then be signed off by Vietnamese law firms, he said.
Clifford Chance's White said that foreign law companies can play an important role, as local lawyers' advisers rather than their puppets, and make a lot of money along the way.