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.