Current Regulatory Barriers Against Foreign Lawyers Practicing In Malaysia

Transcription

1 Current Regulatory Barriers Against Foreign Lawyers Practicing In Malaysia To practice law in Malaysia, one has to be a qualified person. To be a qualified person, one must be called to the Bar by fulfilling the following conditions: - 1. must be a citizen or a permanent resident of Malaysia; 2. must have a recognised law degree; 3. must pass the Bahasa Malaysia Qualifying Examination; 4. must serve the pupilage period of 9 months in Malaysia. 1 Messrs Mah Weng Kwai & Associates

2 Access Of Foreign Lawyers Into Malaysia Current Position: - 1. Foreign lawyers access into Malaysia is currently limited to the Federal Territory of Labuan. 2. Foreign lawyers can only provide legal services in foreign law to offshore corporations incorporated in Labuan. 3. Foreign lawyers may not provide legal services to Malaysians or Malaysian corporations while practicing in Labuan or advise any parties on matters relating to Malaysian Law. 2 Messrs Mah Weng Kwai & Associates

3 1. There are 2 ways where foreign lawyers may practice in Malaysia besides the Federal Territory of Labuan:- i. By Court Order under S. 18 of the Legal Profession Act; ii. By a Special Certificate for admission by the Attorney- General under S. 28A of the Legal Profession Act. 2. Local law firms intending to engage foreign lawyers must show that they have been unsuccessful in retaining local lawyers with similar qualifications. 3. A foreign lawyer must have at least 7 years experience in practice and must have knowledge in the areas of law not available in Malaysia. 3 Messrs Mah Weng Kwai & Associates

4 Reasons For Entering The Malaysian Legal Market i. Cost It will be cost effective to establish a commercial presence in Malaysia due to lower wages and low currency exchange rate. ii. Geographical Location Malaysia s location in South East Asia is a good platform to enter the markets in China, India and the Middle East. iii. Common Law System Malaysia s legal system shares many similarities with the legal systems in many Commonwealth jurisdictions, e.g. India, Singapore, Australia and New Zealand. iv. Language English is widely used in Malaysia v. Foreign Direct Investment (FDI) Malaysia remains one of the major recipients of FDI in the region. 4 Messrs Mah Weng Kwai & Associates

5 Main Participants In Trade In Services Developing And Transition Economies Exporter Value Share Importer Value Share (US$ Billion) (US$ Billion) 1. Hong Kong, China % 1. China % 2. China % 2. Republic of Korea % 3. Republic of Korea % 3. Hong Kong, China % 4. Singapore % 4. Chinese Taipei % 5. Chinese Taipei % 5. Singapore % 6. Turkey % 6. India % 7. India % 7. UAE % 8. Malaysia % 8. Russian Federation % 9. Mexico % 9. Malaysia % 10. Thailand % 10. Thailand % Source: WTO Messrs Mah Weng Kwai & Associates

6 Opportunities For Foreign Lawyers In The Malaysian Legal Market 1. Opportunity to enter into the wider ASEAN legal market, especially when free flow of legal services among ASEAN countries are scheduled to take place by year 2015 under the ASEAN Framework Agreement on Services (AFAS) 2. Opportunity to develop and provide International Islamic Banking business in Malaysia and expand into the Middle East market. 3. Opportunity to provide legal services in areas such as Intellectual Property Law, Competition Law, E-Commerce Law and other high end legal services where there is a demand for them in Malaysia and the ASEAN region. 6 Messrs Mah Weng Kwai & Associates

7 Opportunities For Foreign Lawyers In The Malaysian Legal Market 4. Opportunity to recruit the best legal minds in Malaysia and to contribute in shaping the Malaysian legal landscape. 5. Opportunity to provide services to various Multi-National Companies in Malaysia by virtue of being an active trading nation. 7 Messrs Mah Weng Kwai & Associates

8 Risks For Foreign Lawyers Entering The Malaysian Legal Market 1. Foreign lawyers may not be allowed automatic entry into the Malaysian market and would be subject to approval by relevant authorities. 2. Foreign lawyers may not enjoy full access into the Malaysian legal market as certain areas of practice may be closed to them. 3. Foreign lawyers may be required to form alliances with local legal firms in order to practice in Malaysia and may have problems with the local working culture. 4. Foreign lawyers may have to deal with Malaysian laws and regulations which they may object to when practicing in Malaysia (e.g. Internal Security Act 1960, Anti Money Laundering Act 2001,...etc). 8 Messrs Mah Weng Kwai & Associates

9 Liberalising the Malaysian Legal Market Malaysia is currently negotiating and/or has entered into several agreements in an effort to liberalise the Malaysian service market: a. General Agreement on Trade in Services (GATS). b. ASEAN Framework on Services (AFAS) c. Bilateral and Regional Agreements 9 Messrs Mah Weng Kwai & Associates

10 Requests Received For Access Into The Malaysian Legal Market The following countries have made requests under GATS for unrestricted access into the Malaysian Legal Market: 1. Australia 2. Republic of Korea 3. Japan 4. EEC 5. Poland 10 Messrs Mah Weng Kwai & Associates

11 Local Concerns Regarding Liberalisation 1. Erosion of professionalism and ethics among lawyers due to fierce competition; 2. Brain drain of the best local talents from local firms to international firms; 3. Inability to compete with foreign firms for highend work; 4. Encroachment by foreign lawyers into traditional areas of practice; 11 Messrs Mah Weng Kwai & Associates

12 Local Concerns Regarding Liberalisation 5. Loss of revenue due to competition of foreign firms; 6. Introduction of a culture of litigation by foreign firms to the local culture; 7. Inability to penetrate foreign markets in return due to lack of brand recognition internationally. 12 Messrs Mah Weng Kwai & Associates

13 The Bar Council s (BC) Consensus Regarding Liberalisation Results from a survey carried out by the BC among Malaysian Lawyers regarding liberalisation: % agreed foreign lawyers should form partnerships with local lawyers; 2. 29% agreed that foreign lawyers should practice freely in Malaysia; 3. 16% agreed that foreign lawyers should be allowed to practice in all areas of law in Malaysia; 4. 50% agreed that admission of foreign lawyers is inevitable; % agreed that co-operation between foreign and local lawyers would produce a win-win situation; 6. 66% agreed that the BC should take the lead in the liberalisation process; 13 Messrs Mah Weng Kwai & Associates

14 The Bar Council s (BC) Consensus Regarding Liberalisation The consensus among Malaysian lawyers is that the admission of foreign lawyers is inevitable. However it should be controlled, structured and subject to conditions by the BC. 14 Messrs Mah Weng Kwai & Associates

15 Proposed Measures To Open Malaysia s Legal Market The BC has proposed the following to regulate the entry of foreign lawyers: - i. Amending the Legal Profession Act 1976 by adding Part IVA to the Act. ii. Introducing the Legal Profession (Joint Law Ventures And Registration Of Foreign Lawyers) Rules. 15 Messrs Mah Weng Kwai & Associates

16 Permitted Practice Areas (PPAs) Foreign lawyers would be allowed to practice in the following areas in Malaysia:- a. Legal work in international capital markets and asset securitisation. b. Foreign law. c. Any other categories of work to be prescribed by the BC 16 Messrs Mah Weng Kwai & Associates

17 The Joint Law Venture A foreign firm can only practice in Malaysia by entering into a Joint Law Venture (JLV). A JLV will be constituted:- i. by a partnership between a foreign law firm and a Malaysian law firm, or, by any other arrangements prescribed by the BC; and ii. by registration with the BC. iii. BC must approve the proposed JLV and has the power to revoke or vary the terms of the JLV after the approval has been given. 17 Messrs Mah Weng Kwai & Associates

18 Requirements For Entry of Foreign Firms i. The foreign law firm and the local law firm must have the relevant legal expertise in the PPAs; ii. The foreign law firm must have at least 1 foreign lawyer with 7 years of relevant legal experience in the PPAs and be resident in Malaysia; iii. The number of foreign lawyers shall not at any time be more than 30% and the Malaysian firm shall have 70% equity and voting rights in the JLV. 18 Messrs Mah Weng Kwai & Associates

19 Requirements For Entry of Foreign Firms iv.the foreign law firm and Malaysian law firm shall have a written agreement to participate and manage the JLV. v. The JLV to maintain a Professional Indemnity Insurance policy. vi.both firms to submit a satisfactory business plan for the JLV to the BC. 19 Messrs Mah Weng Kwai & Associates

20 Requirements Of Entry of Foreign Lawyers i. A foreign lawyer would only be permitted to practice as a partner or an employee of an approved JLV; ii. Has attained the age of 21 years and is of good character; iii. Is a qualified person and was conferred a degree in law by a university acceptable to the BC; iv. Not subject to any criminal, civil or disciplinary proceedings in any legal jurisdiction; 20 Messrs Mah Weng Kwai & Associates

21 Requirements Of Entry of Foreign Lawyers v. At least 7 years of relevant legal experience in the PPAs. vi. Attend courses prescribed by the BC; vii.satisfy the Selection Committee that there is no Malaysian lawyer proficient in the PPAs, that it would contribute to the development of the PPAs in Malaysia and it would be in the best interests of the Legal Profession; 21 Messrs Mah Weng Kwai & Associates

22 The Selection Committee 1. The Selection Committee shall consider every foreign lawyer s application for employment under the JLV. 2. The Selection Committee will have the following members:- i. The Chairman of the Bar Council or his representative; ii. 2 representatives from the Attorney-General s Chambers; iii. 1 representative from the Ministry of International Trade and Industry; and iv. Up to 5 BC members with 15 years standing. 3. The Selection Committee shall deliberate and make a recommendation to the BC, which could approve or reject the recommendation. 22 Messrs Mah Weng Kwai & Associates

23 Foreign Law Firms and Lawyers will also be subject to: - 1. The prevailing local laws regulating the Malaysian Legal Profession (subject to modifications when necessary); 2. An investigation by the Malaysian Advocates & Solicitors Disciplinary Board in the event of a complaint and if found guilty, the Disciplinary Board shall refer the matter to the BC for punishment. 3. Any Rulings or Orders issued from time to time by the BC; 4. Disclosure of information regarding the JLV as required by the BC. 23 Messrs Mah Weng Kwai & Associates

24 Comments Received In Response to The Proposed Measures 1. The condition to form a JLV is too rigid as it involves a setting up of a partnership between a foreign and local law firm and not between individual partners of the law firms. Instead, the JLV should be a separate entity comprising of partners from the local law firm and foreign law firm. 2. The PPAs is too narrow and vague. The list should encompass all complex banking and corporate work and should define which work is permissible and which is not. 3. The requirement of 7 years relevant experience in order to practice would make it difficult for a foreign lawyer to find an experienced foreign assistant to accompany him. An exemption should be given for 1 foreign assistant accompanying the foreign lawyer. 24 Messrs Mah Weng Kwai & Associates

25 Comments Received Regarding The Proposed Measures 4. A foreign lawyer in the JLV should not be required to be an expert in all the fields stated in the PPAs and being an expert in 1 field should be sufficient. 5. Certain class of foreign lawyers should be allowed to be exempted from attending courses required by the BC. 6. The requirement of 7 years experience is too long and should be reduced to 4 years. 25 Messrs Mah Weng Kwai & Associates

26 Thank You Messrs Mah Weng Kwai & Associates