* New rule to further internationalisation of HK legal market – Secretary of Justice
* Shenzhen’s special service zone Qianhai to pioneer international arbitration for commercial disputes
* HKIAC to set up rep office in Shenzhen’s Qianhai

QINGDAO, Oct 19: Hong Kong is poised to pass a new law allowing Hong Kong solicitors to adopt limited liability partnership (LLP) model to facilitate further collaboration with their local and foreign peers, according to Hong Kong Secretary for Justice Wong Yan-lung.

Wong revealed the new move when he spoke at the ninth China Lawyer Forum held in China’s seaside city Qingdao, Shandong, where more than 900 mainland lawyers attended the biennial conference hosted by China’s national legal professional body All China Lawyers Association on Tuesday.

“Hong Kong will soon pass a new law allowing (local) solicitors to operate under the ‘limited liability partnership model’, which (we) believe will encourage further cooperation between multinational law firms and Hong Kong lawyers. It will help propel internationalization of Hong Kong legal services,” Wong said.

The Legal Practitioners (Amendment) Bill was introduced in 2010 and it will be reviewed by the draft committee at the Hong Kong legislature in November. Once it goes through the necessary legislative vetting process and approved by the lawmakers, it is expected to be effective by mid-2012, said Junius Ho, president of The Law Society of Hong Kong.

Both the legal community and the secretary of justice have pinned high hopes on the November session. “It will be a golden window of opportunity to cement passage of this bill before the end of the remaining term of the current legislature,” said Ho, noting that Hong Kong will soon elect its new chief executive and legislature.

“We expect quite a sizeable of Hong Kong law firms—we are talking in the range of more than 10 percent of Hong Kong’s 770 firms— are likely to make the switch once LLP model is allowed,” added Ho.

Adopting the LLP structure helps install “firewalls” among partners within a firm and can prevent liability from “spilling over” to all partners and expose them to “unlimited liabilities,” Ho explained. “Once LLP is adopted, it will encourage merger among Hong Kong’s small and medium-sized law firms, and also facilitates building of partnerships between Hong Kong firms with foreign firms that already are using the LLP model.”

Across the border, LLP adoption is already written into law in China a few years ago—but local PRC firms are yet to make the change because details of implementation and other issues still need to be fine-tuned.  “In a way, China is already ahead of us,” Ho said.

HK to extend arbitration services in Shenzhen’s Qianhai

Wong’s pledge to make headways with LLP adoption also comes close on the heels of Hong Kong’s enactment of a new Arbitration Ordinance in June, which bolsters the city as a user-friendly UNCITRAL Model Law jurisdiction where arbitral awards made in Hong Kong are enforceable in more than 140 jurisdictions through the New York Convention and mutual agreement between the mainland and Hong Kong.

As a leading international arbitration centre competing with Singapore, London, Stockholm and Beijing, Hong Kong will soon extend its arbitration and mediation services across Lo Wo.

In August, China’s State Council designated Shenzhen’s Qianhai, a stretch of land in Nanshan district, as the "Shenzhen-Hong Kong modern service industries co-operation zone" under the nation’s 12th Five-Year grand plan for development. It aims to turn the 15 square-kilometres of reclaimed land into a “Manhattan of the Pearl River Delta” by pioneering high-end services in finances and modern logistics, information services and science and technology.

Anticipating a keen demand in resolving cross-border commercial disputes in the region, Hong Kong is encouraged to extend its arbitration service in Qianhai, said Ho.

Details of the arbitration mechanism are still under discussion. But Hong Kong and mainland regulators are exploring different models, including reviewing the international and common laws applicable to arbitration in international financial centres such as Dubai, Ho said.

Ever since Hong Kong inked the trade pact Closer Economic Partnership Arrangement (CEPA) with the motherland in 2004, Hong Kong law firms have set up 70 representative bodies in 15 cities across China, and six Hong Kong firms have sealed alliances with mainland law offices to provide cross-border services.

Wong is upbeat about furthering collaboration between legal communities in Hong Kong and China. He said Qianhai authorities will set up a new ruling body specifically for commercial cases and handling commercial disputes under the new Qianhai co-operation enacted on July 6. Qianhai authorities are also looking into legal reform to better facilitate innovative industries, attraction of foreign investment and allow the local government to play a bigger role as a service provider.

In addition, China’s vice-premier Li Keqiang mentioned on Aug. 17 during his Hong Kong visit that the supplement VIII to CEPA would be signed later this year to facilitate joint operation of Hong Kong and mainland law firms. ALB