Jun. 5 – China’s Ministry of Justice is coming under the spotlight as are the roles of foreign lawyers in China following a case involving PRC-educated and qualified lawyer Stanley Cha, formerly of King & Wood, The Lawyer magazine has reported.
Cha, who practiced Chinese law with both Llinks and King & Wood, served on the board of Sohu.com before it was subsequently listed on Nasdaq. He also spent time in New York taking U.S. bar qualifications, allowing him to be dual qualified. However, Cha took U.S. citizenship in 2001.
China does not permit dual nationalities and restricts the practice of Chinese law to Chinese nationals only. This process is automatic, although there appears to be no administrative procedure for nullifying Chinese citizenship or related Chinese qualifications. Consequently, Cha continued to practice Chinese law after becoming a U.S. citizen, advising a number of companies on their listings. The Chinese Ministry of Justice has now instigated an investigation into the matter under the allegation that Cha, as an American citizen, subsequently became unauthorized to practice in China. It is understood fraud charges could be levied, although doing so would invalidate Cha’s work and place the listings (which are now operational) as invalid. Cha has apparently left King & Wood’s employment.
“The Chinese government has shown through their recent treatment of audit firms that they value the concept of nationality to be a higher priority than professional qualifications – Cha’s case is another example of this,” comments Chris Devonshire-Ellis, founding partner of Dezan Shira & Associates. “Whether or not Cha was aware of his position and abused it is a matter for investigation, however it does highlight the closed nature of China’s professional services industry and the inability for it to permit dual-qualified personnel to operate within it from overseas. The issue of placing nationality above competence in China will bar China from absorbing global practices in both law and audit and will hinder the international development of its domestic industry in these areas, and in its own companies as they seek to expand overseas.”
The practice of Chinese nationals successfully applying for foreign citizenship is something the Chinese government has not appeared to have taken into consideration, with no method of tracking the practice apparently available on the Chinese side. Consequently, it appears likely that many Chinese who have applied for and received citizenship of another country may not have given up their Chinese passports, therefore allowing them a dual status that appears incompatible with China’s nationality laws. In Cha’s case, his professional qualifications – for which he passed Chinese exams for – are automatically cancelled due to his taking U.S. citizenship. Yet with no recording system available in China, it remains unknown how widespread the practice has been. Certainly, the phenomena seems to have extended to the top of the Chinese leadership – disgraced politician Bo Xilai’s wife had changed her nationality to become Singaporean without the Chinese authorities apparently being aware of this.
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