May 2007 e-BULLETIN Page MEMBER NEWS • Pacific Rim Advisory Council Welcomes New Member Baker Botts LLP 2 • Asahi Law Offices to Merge with Nishimura & Partners 3 • Davis Wright Tremaine Partner Addition to Seattle’s Corporate Finance Practice Group 3 • Fraser Milner Casgrain Appoints New Managing Partner for Calgary Office 4 • Hogan & Hartson Expands Growing Berlin Office With Leading Tax Partner 4 • Morgan Lewis & Bockius - Former Chief Counsel of KLA Tencor and SunGard Joins Morgan Lewis 5 • NautaDutilh Strengthens Energy & Utilities Practice with Former E.ON Manager 5 • Tilleke & Gibbins International Ltd Appoints New Board Member 6 • WilmerHale Growing New York Office with Addition of Corporate & Securities Partner 6 DEALS MAKING NEWS • Carey y Cia Acts for JP Morgan Chase Bank in US$192 Million Zero Coupon Bond 7 • Clayton Utz Advises Bank of Queensland on Credit Card Deal With Citibank 7 • Gide Loyrette Nouel Warsaw Advised Enterprise Investors on the Takeover of Komfort Market 8 • Hogan & Hartson Advises Norilsk Nickel Group on US$4.8 Billion Bid for LionOre Mining International Ltd; Clayton Utz to Advise on Australian Local Matters 8 • NautaDutilh Advising ABN AMRO on Merger Negotiations with Barclays 9 • Tozzini Freire Teixeira e Silva; Hoet Pelaez Castillo & Duque Advise Buyer in McDonald’s Corporation Sale of All Its Fast-Food Outlets in Latin America and the Caribbean 9 • WilmerHale Advising Kronos in US$1.8 Billion Acquisition by Hellman & Freidman 10 COUNTRY ROUNDUPS • AUSTRALIA – Clayton Utz – 2007-8 Budget Announced - Budgeting for a Simpler Personal Property Securities Regime? 11 • CHINA – King & Wood - Computer Software Protection in China 13 • HONG KONG – Lovells – Contentious Risk Monitor : Report on Recent Developments Impacting Risks For Businesses Operating in Asia 19 • INDIA – Mulla & Mulla & Craigie Blunt & Caroe –Remittance Scheme Liberalised – Increased to USD$100K 23 • MOROCCO – Gide Loyrette Nouel – Three Financing Alternatives to Be Announced 24 • NEW ZEALAND – Simpson Grierson – Spam Act In Force As of September 2007 – Is Your Business Ready? 28 • TAIWAN – Lee and Li – Proposed Amendments to Fair Trade Act 31 • UNITED STATES • Hogan & Hartson – Privacy Update – FCC to Address Data Storage Issues 32 • Davis Wright Tremaine - IRS Guidance Clarifies That Tax-Exempt Hospitals May Share Health Information Technology With Physicians 33 • Luce Forward Hamilton & Scripps – Construction Law Update - A Mechanic's Lien on a Hybrid Private/Public Work of Improvement? When Can a Lien Be Recorded When Told There's No More Money? Recent California Decisions Provide Guidance 35 PRAC EVENTS (Members Only) • Seoul Conference • October 20-24, 2007-• Member details available on line Tools to Use • PRAC Contacts Matrix & Email Listing –Update (member version only) • Directory 2007 Member Firms now available at PRAC web site • Expert System – IP & Licensing Capabilities Survey available at PRAC web site Private Libraries (members only) PRAC e-Bulletin is published monthly Visit us on line at www.prac.org

PACIFIC RIM ADVISORY COUNCIL WELCOMES NEW MEMBER BAKER BOTTS LLP

Following unanimous approval of the PRAC Board of Directors, we are pleased to announce that the law firm BAKER BOTTS LLP has joined the Pacific Rim Advisory Council (PRAC) effective May 1, 2007. Headquartered in Houston, Texas, Baker Botts has been making history for over 150 years. Today, with over 750 lawyers working with clients on a wide range of practices in 11 cities around the globe, Baker Botts continues to be at the forefront of the legal community. In addition to many world-wide industry recognitions, Baker Botts is renowned for the quality of its upstream oil and gas work, and its continuing involvement in cutting-edge LNG deals. We are both pleased and honored to have a Firm of their distinction as a member of PRAC. The PRAC Primary Contact information for Baker Botts LLP is noted below. Baker Botts LLP One Shell Plaza 910 Louisiana Street Houston, Texas 77002-4995 United States of America Phone: +1 713 229 1234 Fax: +1 713 229 1522 Web Site: www.bakerbotts.com Primary Contact: Blake H. Winburne Direct Line: 713.229.1532 Fax: 713.229.2832 blake.winburne@bakerbotts.com

Baker Botts will be represented at our 42nd International Conference to be held in Seoul, Korea from October 20-24. In the meantime, please join me in welcoming Baker Botts to the PRAC family.

S. Sivanesan Chairman, Pacific Rim Advisory Council

The Pacific Rim Advisory Council (PRAC) is a unique strategic alliance within the global legal community providing for the exchange of professional information among its 32 top tier independent member law firms handling substantial business dealings in the Pacific Rim region.

With over 12,000 lawyers practicing in key business centers around the world, these prominent member firms provide independent legal representation and local market knowledge. Whether you are an institutional client or an emerging business our member firms are leaders in their fields and understand your business needs and the complexities of your industry.

Since 1984 PRAC member firms have provided their respective clients with the resources of our organization and their individual unparalleled expertise on the legal and business issues facing not only Asia but the broader Pacific Rim region.

Whether you seek to retain a market-leading law firm or to join one, visit our web site at www.prac.org to read more and you will see why our members' commitment to their clients, their depth of experience, global reach, and unparalleled industry focus distinguish them from other law firms.

ASAHI LAW OFFICES TO MERGE WITH NISHIMURA & PARTNERS

Effective as of July 1, 2007, the international division (kokusai bumon) and the domestic division (kokunai bumon) of Asahi Law Offices (formerly Asahi Koma Law Offices) will become two independent law firms. The international division will merge with Nishimura & Partners to establish a new firm, Nishimura & Asahi; while the domestic division will continue to operate as Asahi Law Offices at their current office location, in Marunouchi MY Plaza (Chiyoda-ku, Tokyo). The two divisions of Asahi Law Offices will continue to cooperate together in order to provide outstanding legal services. For additional information regarding Nishimura & Asahi, please visit http://www.alo.jp/english/kokusai/index.html

DAVIS WRIGHT TREMAINE SEATTLE PARTNER ADDITION TO STRENGTHEN CORPORATE FINANCE PRACTICE GROUP

FOR IMMEDIATE RELEASE May 8, 2007

Joe M. Wallin Joins Davis Wright Tremaine’s Corporate Finance Practice

SEATTLE, WA, MAY 8, 2007 – Joe M. Wallin has joined Davis Wright Tremaine's (DWT) Seattle office as a partner. Wallin joins DWT's well-known corporate finance practice group, where he plans to continue providing general counsel services to public and private companies on a wide variety of matters, including mergers and acquisitions and financing transactions.

Wallin brings to DWT over ten years of advising clients on a myriad of corporate finance, mergers and acquisitions, and tax matters. Prior to to DWT he was a partner at DLA Piper US LLP, where he provided general counsel services to companies from start-up to post-public, represented both companies and investors in venture financings, represented both public and private buyers and sellers in mergers and acquisition transactions, provided tax planning and equity compensation advice to individuals and companies, and provided counsel to public companies on compliance with respect to federal and state securities laws and corporate governance matters. Prior to DLA Piper, Wallin was an associate at Riddell Williams, P.S., where he provided general tax and business advice. Wallin was also an adjunct professor for three years at Seattle University School of Law, where he taught a course on taxation.

Wallin received his law degree from Seattle University in 1994, his LLM in taxation from New York University in 1996, and a BA in economics from the University of Washington in 1990. He is licensed to practice law in Washington state.

About Davis Wright Tremaine Davis Wright Tremaine LLP is a national law firm with Northwest roots. A business and litigation law firm with more than 480 attorneys, DWT has offices in Seattle and Bellevue (Wash.), Portland (Ore.), Anchorage (Alaska), Los Angeles, San Francisco, New York, Washington, D.C., and Shanghai, China. For more information, visit www.dwt.com.

FRASER MILNER CASGRAIN APPOINTS NEW MANAGING PARTNER FOR CALGARY OFFICE

May 1 2007 – Calgary Fraser Milner Casgrain LLP, one of Canada’s leading law firms, is pleased to announce the appointment of Matt Lindsay on May 1, 2007 as Managing Partner of our Calgary office. Matt succeeds Quincy Smith, Q.C. who, after six years as Managing Partner, will continue with the firm as Senior Counsel in the Insolvency and Workout Group. As a member of the firm for the past 18 years, Matt has established a proven track record of success and is well-recognized as a leading litigation practitioner in Western Canada in the areas of construction, oil and gas, technology, corporate governance, and the tracing and recovery of proceeds of fraud. FMC’s clients will benefit from Matt’s leadership, understanding of their needs and knowledge of the Calgary legal environment. For additional information visit www.fmc-law.com

HOGAN & HARTSON EXPANDS GROWING BERLIN OFFICE WITH LEADING TAX PARTNER

BERLIN, May 1, 2007 – Hogan & Hartson LLP announced today that Dr. Jens-Uwe Hinder will strengthen the firm’s Berlin office. Dr. Hinder joins Hogan & Hartson from Hammonds, where he has practiced as a partner and the head of the tax practice since 2002. An experienced international transactions partner, Hinder will play an important role in the further expansion of Hogan & Hartson’s national and international tax practice in Germany. Dr. Hinder advises national and international businesses and has extensive experience in the structuring of real estate transactions. Additionally, he focuses on international tax planning, advising on tax matters related to M&A transactions, tax structuring of funds, and settlement (transfer) prices. “We are delighted that Dr. Hinder is joining our Berlin office,” said Dr. Gernod Meinel, managing partner of the firm’s Berlin and Munich offices. “Due to the constant increase of our advisory activities related to international transactions, we are experiencing an increased demand for integrated tax advice. After strengthening our tax practice in Munich with the addition of Sebastian Kost as well as expanding our private equity practice with Dr. Uwe Steininger, we have now gained a highly qualified partner that is the ideal addition to our transactional team in Germany.” “By moving to Hogan & Hartson, I have the opportunity to further develop the tax practice of a global law firm and to expand it on an international level. In addition to this attractive challenge, I have been inspired by the professional competence of the Hogan & Hartson team as well as the friendly atmosphere at this firm,” commented Dr. Hinder. Dr. Hinder, who is both an attorney and a tax consultant, studied at the universities of Bonn and Freiburg and received his doctorate degree at the University of Münster. His legal career started 1991 at Brandi, Dröge, Pilz & Heuer in Detmold, Germany. After completing his Master of Laws degree at the University of San Diego and the second state exam in law 1995, Dr. Hinder worked at KPMG, followed by joining the law firm of Schmidt Hampel-Dorrmann Schmidt in 1999 and joining Hammonds in 2002. Notes to Editors

1. Hogan & Hartson is an international law firm founded and headquartered in Washington, D.C. in 1904 with more than 1,000 lawyers in 22 offices worldwide.

2. In Europe, Hogan & Hartson has offices in Berlin, Brussels, Geneva, London, Moscow, Munich, Paris, and Warsaw. The firm is recommended in over 40 categories in UK and European Legal 500.

3. Hogan & Hartson has been present in Berlin since 2001. To meet the increasing demand by clients and the market, the firm opened its Munich office in 2004.

4. For more information about the firm, visit www.hhlaw.com

MORGAN LEWIS & BOCKIUS – FORMER CHIEF COUNSEL OF KLA- TENCOR AND SUNGARD JOINS FIRM

PHILADELPHIA, April 2, 2007: Morgan Lewis is pleased to announce that Lawrence A. Gross has joined the firm as a partner in the firm's Business and Finance Practice. Originally scheduled to join Morgan Lewis in September 2006, Mr. Gross first accepted a short-term assignment with firm client KLA-Tencor Corporation of San Jose, California, the world's leading supplier of process control and yield management solutions for the semiconductor and related microelectronics industries. As KLA-Tencor's interim general counsel, Mr. Gross was responsible for assisting the company with the investigation of its historical stock option practices, shareholder litigation, and related matters and for managing its worldwide legal function. Mr. Gross has successfully completed this interim assignment.

Previously, Mr. Gross was the longtime chief counsel of SunGard Data Systems, a global leader in software and processing solutions for financial services, higher education, and the public sector, as well as the pioneer and leading provider of disaster recovery and other information availability services. Mr. Gross was SunGard's general counsel from shortly after its public offering in 1986 until the start of 2005, when he assumed the roles of chief legal officer and chief administrative officer. During his 20 year tenure at SunGard, the company grew from $50 million to $4 billion in revenue as he created, developed, and managed the legal, governance, and compliance functions for the company's worldwide operations. An NYSE-listed company for most of its history, SunGard was acquired in August 2005 by a consortium of seven leading private equity firms in a landmark $11.4 billion leveraged buyout transaction.

"Larry Gross did an excellent job assisting KLA-Tencor through a difficult period. Before that, he was a key member of the senior management team that led SunGard to extraordinary success." said Fran Milone, Chair of Morgan Lewis. "We look forward to having Larry's legal and business acumen, leadership, and organizational skills available to assist our clients, especially in M&A, technology transactions, and corporate governance."

Mr. Gross is a 1979 magna cum laude graduate of the University of Michigan Law School. He also received a Masters degree in philosophy from the University of Michigan in 1978. As an undergraduate, he specialized in logic, earning an A.B. degree with highest honors in philosophy and a second major in mathematics from the University of Michigan in 1973. During graduate school, Mr. Gross taught a variety of courses at the University of Michigan and also supplemented his income (and gained an invaluable perspective into the human psyche) as a taxi driver.

About Morgan, Lewis & Bockius LLP Morgan Lewis is a global law firm with more than 1,300 lawyers in 22 offices located in Beijing, Boston, Brussels, Chicago, Dallas, Frankfurt, Harrisburg, Houston, Irvine, London, Los Angeles, Miami, Minneapolis, New York, Palo Alto, Paris, Philadelphia, Pittsburgh, Princeton, San Francisco, Tokyo, and Washington, D.C. For more information about Morgan Lewis, please visit www.morganlewis.com.

NAUTADUTILH STRENGTHENS ENERGY & UTILITIES PRACTICE WITH FORMER E.ON MANAGER

Amsterdam, 2 May 2007 – This month, Mr. Sjoerd Pistorius has joined NautaDutilh to strengthen the Energy & Utilities sector team. In the Netherlands and Belgium, this sector team has played a major role in transforming the energy sector and is regarded as a leading advisor in the field. As a manager at E.ON, Sjoerd Pistorius was responsible for the Legal Affairs department from 2005. Before that, he was the legal counsel of E.ON Benelux for four years, where he focused primarily on contracts and the strategy of acquisition programmes. After studying law at the University of Tilburg, he worked a few years for PriceWaterhouseCooper. In 2005, he was a member of the management board of the Dutch Association for Energy Law. Chairman of the Executive Board Marc Blom says: “We would like to wish Sjoerd a warm welcome. With his knowledge and experience of the energy sector, he will be a valuable addition to our existing team.” For additional information visit www.nautadutilh.com

TILLEKE & GIBBINS INTERNATIONAL LTD APPOINTS NEW BOARD MEMBER

The Board of Directors of Tilleke & Gibbins International Ltd. (“T&G”) and the shareholders of T&G are pleased to announce the appointment of Mr. SANTHAPAT PERIERA to the Board of Directors of T&G, as of April 26, 2007. Mr. Periera has been with Tilleke & Gibbins since 1990. He is currently a Partner of the Commercial Department but has previously served the firm in his capacity as Group Director of the Commercial Department and Head of the Banking and Finance Group. Mr. Periera’s contributions to the firm extend beyond that of providing superior legal services to clients. Being part of the Periera family, Mr. Periera has always been an integral part of T&G’s growth and development and has always served T&G with his heart and with the best interests of the firm in mind. For more details on Tilleke & Gibbins visit us at www.tillekeandgibbins.com WILMERHALE GROWING NEW YORK OFFICE WITH ADDITION OF CORPORATE & SECURITIES PARTNER

May 2, 2007 WilmerHale is pleased to announce that Brian B. Margolis has joined the firm as a partner in its Corporate Department. With a broad background in corporate and securities law—focusing on public offerings, private placements, mergers and acquisitions, corporate governance issues and general corporate counseling—Mr. Margolis is a valuable addition to the firm’s New York practice, supporting its plans for significant growth. “We are very pleased that Brian has joined the firm. He brings to us deep experience and keen insight into corporate deal-making and counseling,” said Steven D. Singer, who is heading up the firm's New York corporate practice and is also the co-chair of the firm’s Life Sciences Group. Mr. Margolis joins WilmerHale from Proskauer Rose. His practice focuses on the representation of both domestic and foreign issuers and underwriters in public offerings of equity securities. He has acted either as issuers’ counsel or as underwriters’ counsel for more than 40 public offerings, which have raised in the aggregate in excess of $3 billion. Mr. Margolis has extensive experience representing companies and venture capital funds in connection with equity investments in private companies. In addition, Mr. Margolis has represented numerous companies in mergers and acquisitions. Mr. Margolis has represented a wide variety of companies—from start-up to established publicly-traded companies—in the e-commerce, information technology, life sciences, media, software, telecommunications and wireless industries. This, along with his experience representing Israeli companies accessing the US public and private capital markets, further solidifies WilmerHale’s ability to serve its broad corporate client base of companies based in the US, Europe and Israel. WilmerHale’s Corporate Department is widely known for its representation of technology and life sciences companies in the US and Europe. The firm has handled more IPOs from 1996-2006 for eastern US companies than any other law firm in the US. In the past five years, WilmerHale has served as issuers’ counsel or underwriters’ counsel in more than 250 public offerings and Rule 144A placements raising over $100 billion, including as issuer’s counsel in deals such as CIT Group’s $4.6 billion IPO, the fourth largest in history, and the IPO of Wolfson Microelectronics. Also during the past five years, WilmerHale’s Corporate Department acted as company counsel in more than 750 venture financings raising over $10 billion and advised on more than 800 M&A deals valued in excess of $400 billion. “The network of talented lawyers and comprehensive practice areas that comprise WilmerHale are truly world class,” said Mr. Margolis. “I am excited to be a part of the firm’s culture and its dedication to providing the highest quality legal services to its clients.” Mr. Margolis was formerly with Brobeck, Phleger & Harrison LLP and Weil, Gotshal & Manges LLP. He holds a JD degree from Harvard Law School, an MBA degree from Harvard Business School, and a BA degree, summa cum laude, from Columbia College. For additional information visit www.wilmerhale.com

DEAL MAKING NEWS – CAREY Y CIA - Acts for JP Morgan Chase Bank in US $192 Million Zero Coupon Bond – First in Chile to be Issued by Private Entity

Carey y Cia. acted as counsel for the Chilean branch of Jpmorgan Chase Bank in the first zero coupon bond ever issued in Chile by a private entity, which was registered in the Securities Registry of the Chilean Superintendecy of Banking under Nr. 13/2007 on April 10, 2007 and fully placed in the local market on 8 May, 2007 at a rate of 6.48%.

The Carey team was lead by partner Diego Peralta and associates Gonzalo Aguirre and Nicolas Cabello. For additional information visit www.carey.cl

DEAL MAKING NEWS – CLAYTON UTZ – Advised Bank of Queensland on Credit Card Deal with Citibank

Brisbane, 9 May 2007: Clayton Utz has advised Bank of Queensland on the transfer of its credit card business to Citibank and the establishment of an ongoing strategic arrangement for Citibank to provide Bank of Queensland branded cards to its customers.

The arrangement between Bank of Queensland and Citibank provides Bank of Queensland with product, back office and marketing support to ensure its card portfolio grows in line with the rest of the Bank's rapid expansion.

Bank of Queensland is Australia's fastest growing bank with a strong and growing branch and business banking network. Citibank is the largest worldwide credit card issuer.

Clayton Utz' lead partner on the deal, Tim Reid, said that in structuring the arrangements, it was important that Bank of Queensland customers' experience was enhanced and that service levels were clearly established at the outset and continuously improved throughout the term.

"The arrangements focus carefully on ensuring a seamless transition for current customers and ensuring that service levels remain consistent with, and support, Bank of Queensland's high customer service standards to achieve seamless service delivery," he said.

The existing credit card portfolio, valued at approximately $260 million, will transfer to Citibank. Credit cards will be provided by Citibank through a "white label" distribution arrangement and will be branded Bank of Queensland. Customers will be supported by the Bank's extensive network of retail branches across Australia and an onshore call centre to be operated by Citibank. Confirmation of the sale and the strategic arrangements follows on from Citibank's selection after a tender process in late 2006.

The transfer of the portfolio involved careful consideration of Credit Code compliance issues, with Clayton Utz banking and finance partner Randal Dennings and senior associate Wei-Loong Chen advising on these matters. The Clayton Utz deal team also included corporate partner Anna Sharpe and senior associate Clayton Barrett as well as tax partner David Cominos.

For additional information visit us at www.claytonutz.com

DEAL MAKING NEWS – GIDE LOYRETTE NOUEL Warsaw – Advised Enterprise Investors on the Takeover of Komfort Market

18 April 2007 The Banking and Finance department of Gide Loyrette Nouel Warsaw advised Enterprise Investors, one of the leading private equity funds in Central and Eastern Europe, on the takeover of Komfort Market Sp. z o.o., the largest retail chain for floor materials and carpeting in Poland. This €66 million acquisition was linked to a bank loan of €32 million. The team that advised Enterprise Investors was managed by Paweł Grześkowiak, partner, head of the Banking and Finance department of Gide’s Warsaw office, in collaboration with Agnieszka Kowalska, Marta Karmińska and Tomasz Hatylak for tax aspects. For additional information visit us at www.gide.com

DEAL MAKING NEWS – HOGAN & HARTSON Advises Norilsk Nickel Group on US $4.8 Billion Bid for LionOre Mining International Ltd; Clayton Utz to Advise on Australian Local Matters

LONDON, May 3, 2007 – Hogan & Hartson announced that it is advising Norilsk Nickel Group in connection with its unsolicited all-cash offer of C$5.3 billion (approximately US$4.8 billion) to acquire LionOre Mining International Ltd. The offer was announced on Thursday, May 3, 2007. Under the terms of the offer, Norilsk Nickel is offering to purchase all of the issued and outstanding common shares of LionOre at a price of C$21.50 in cash for each LionOre common share. The Norilsk offer represents a premium of approximately 16.2% over the existing C$18.50 all-cash offer of Swiss-based Xstrata plc to acquire LionOre. Norilsk Nickel is the largest mining and metals company in the Russian Federation and is the world’s largest producer of palladium and nickel and one of the world’s largest producers of platinum and copper. Norilsk Nickel’s shares are listed in Russia on both the Russian Trading System Stock Exchange and the Moscow Interbank Currency Exchange. Norilsk’s ADRs are traded over the counter in the United States, on the International Order Book section on the London Stock Exchange; and on Freiverkehr, Berlin-Bremen Stock Exchange. Hogan & Hartson has advised Norilsk Nickel for the past eight years on a broad range of transactional, regulatory, and litigation matters including, most recently, the approximately US$500 million purchase of the nickel business of OM Group, Inc., which was completed on March 1, 2007. LionOre is an international nickel and gold producer with mining operations in Australia, Botswana, and South Africa with its shares listed on the Toronto, London, Australian, and Botswana stock exchanges. The Hogan & Hartson team is being led by partner Todd D. Schafer and involves multidisciplinary lawyers from across the firm. Notes to Editors

1. Hogan & Hartson LLP is a ‘Top 30’ global law firm founded and headquartered in Washington, D.C. in 1904 with more than 1,000 lawyers in 22 offices throughout Asia, Europe, Latin America, and the United States. In Europe, the firm has eight offices: Berlin, Brussels, Geneva, London, Moscow, Munich, Paris, and Warsaw.

2. The London office of Hogan & Hartson focuses on the structuring, establishment, financing, acquisition, and maintenance of UK, pan-European, and other multinational business operations. Advice is given on a full range of corporate, finance, commercial, securities, capital markets, regulatory, privacy, employment, insurance, property, tax, litigation, and competition matters.

3. The Moscow office of Hogan & Hartson has built a strong market reputation for highly complex corporate and commercial work, including mergers and acquisitions, corporate finance, capital markets, banking, private equity, real estate, tax, intellectual property, international litigation, and arbitration.

4. Hogan & Hartson occupies a preeminent position in the area of mergers and acquisitions, with more than 100 experienced lawyers worldwide.

5. For additional information about Hogan & Hartson, visit www.hhlaw.com

DEAL MAKING NEWS – NAUTA DUTLH Advising ABN AMRO on Merger Negotiations with Barclays

NautaDutilh is advising ABN AMRO in its merger negotiations with the British bank Barclays. The team consists of, among others, Hein Hooghoudt, Geert Raaijmakers, Leo Groothuis, Paul Olden, Larissa Silverentand, Lieke van der Velden, Frits Oldenburg and Kleis Broekhuizen. ABN AMRO is the eighth biggest bank in Europe and the thirteenth in the world with more than 4,500 branches in 53 countries. Barclays is one of the biggest British banks and is active in Europe, the United States, Africa and Asia For additional information visit www.nautadutilh.com DEAL MAKING NEWS – TOZZINI FREIRE TEIXEIRA E SILVA and HOET PELAEZ CASTILLO & DUQUE Advise Buyer in McDonald’s Corporation Sale of All Its Fast-Food Outlets in Latin America and the Caribbean

PRAC member firms TOZZINI FREIRE TEIXEIRA e SILVA (Brazil) and HOET PELAEZ CASTILLO & DUQUE (Venezuela) are acting for the Buyer in sale by McDonald's Corporation of all its fast-food outlets in Latin America and the Caribbean. The world's best-known hamburger chain agreed to sell 1,600 restaurants to Woods Staton for US$700 million on 20 April. Staton oversaw the rapid expansion of the golden arches brand in Argentina.

Staton, who now heads RestCo Iberoamericana, was president of McDonald's Argentina and has spent more than 20 years with the company. Staton, who outbid other interested parties such as UBS Pactual and GP Investments, will assume ownership of nearly 1,100 McDonald's-owned restaurants and become the franchiser for 500 restaurants operated by other licensees. Staton is backed by investors that include US group Capital International, Brazilian investment bank Gavea Investimentos, and DLJ South American Partners, a private-equity fund half-owned by Credit Suisse. Acting for Buyer in Brazil - Tozzini Partner Affonso Aurino Barros da Cunha. Acting for Buyer in Venezuela – HPCD Partners Fernando Pelaez-Pier and Jorge Acedo and associate Germán Briceño Colmenares. For additional information visit : Tozzini Freire Teixeira e Silva at www.tozzini.com.br Hoet Pelaez Castillo & Duque at www.hpcd.com

DEAL MAKING NEWS – WILMERHALE Advising Kronos in US $1.8 Billion Acquisition by Hellman & Freidman

March 27, 2007

WilmerHale is advising Kronos® Incorporated (Nasdaq: KRON), a leading provider of human capital management solutions, in its recently announced plans to be acquired by Hellman & Friedman Capital Partners VI, L.P. for approximately $1.8 billion. On March 23, 2007, Kronos announced that it had signed a definitive agreement to be acquired by the private equity firm Hellman & Friedman Capital Partners VI, L.P. and its related funds in a transaction valued at approximately $1.8 billion. Under the terms of the agreement, Kronos shareholders will receive $55.00 in cash for each share of Kronos common stock, representing a 34.4% premium over Kronos’ closing share price from 20 trading days ago. The WilmerHale team advising Kronos on the transaction includes John Burgess, Jay Bothwick, Michael LaCascia, Tod Reichert, Laurie Harrison and Elizabeth Akehurst-Moore from the Corporate Department; Linda Sherman and Julie Hogan from the Tax Department; and William Kolasky and Janet Ridge from the Antitrust and Competition Department.

For additional information visit www.wilmerhale.com

AUSTRALIA – CLAYTON UTZ – 2007-8 BUDGET ANNOUNCED – BUDGETING FOR A SIMPLER PERSONAL PROPERTY SECURITIES REGIME?

May 09, 2007

As part of the 2007-8 Budget handed down by the Federal Treasurer last night, the Government has allocated $113.3 million over five years to harmonise Australian personal property securities law and establish an online national register for personal property securities. That amount includes $27 million in capital funding for office fit-outs and IT infrastructure to establish the register. This follows on from the in-principle agreement reached at the April 2007 COAG meeting for the establishment of a national system for the registration of personal property securities, administered by the Commonwealth.

In light of the Budget allocation of funding and the in-principle agreement of COAG, it now seems almost inevitable that the proposed reforms of the personal property securities laws will be introduced in Australia in the short term. Barring election interruptions it is likely that legislation to implement the reforms will be introduced to Federal Parliament by the end of the year. Present indications are that the reforms will be in place by 2009, though there will need to be a long transitional phase as banks and financial institutions migrate the registration of their security interests from existing security registers, such as that maintained by ASIC, to the new regime. Early indications suggest that the transitional phase could be as long as 2 years.

As those of you who have followed the reform process will be aware, the intention of the reforms is to establish one national register to replace the plethora of registration systems that currently operate at the State and Territory level throughout Australia. The reforms will not affect the registration system for land or interests in land. There may also be some very limited specific asset class registers that are continued (such as for ships). The reforms are closely modelled on the New Zealand regime which was introduced in 2002. This reflects an intention to facilitate the stated goal of the Government to achieve closer economic relations between the 2 countries.

To date, the Attorney General has issued three discussion papers on the reforms. The first discussion paper outlines the registration proposal and considers issues related to the use of the register, the second expands on the issues of extinguishment, priorities, conflict of laws, enforcement and insolvency and the third discussion paper (which was released only last week) deals with how the reforms would provide for the taking of security over "possessory security interests", that is, investment property (being shares, interests in listed managed investment schemes and the like), negotiable instruments, accounts receivable, bank accounts and securitisation.

The final date for public submissions on the first discussion paper has now passed. Generally, submissions from industry and legal bodies on that first discussion paper were very supportive of the Government's proposal, reflecting a desire in the banking and financial services industry to streamline the process for taking security over personal property. Submissions are due on the second discussion paper in late May and on the third discussion paper in late June. Although there is general industry support for a "one stop" registration regime for security interests, the more detailed issues that are raised in the second and third discussion papers, some of which are touched on below, mean that support for those discussion papers is likely to be less enthusiastic.

Summary of the Proposed PPS Reforms

Although one of the outcomes of the adoption of the reforms will be the introduction of a global registration regime for security interests granted by individuals or companies (other than over real property), the reforms propose fundamental changes to many aspects of securities law in Australia. Those changes include:

• a "conceptual shift" in the interests covered by the term "security". A registrable security interest will extend to any transaction which is intended to secure debt, regardless of whether title to the secured property vests in the debtor or the secured creditor. This means, amongst other things, that leases with a term of more than 1 year, retention of title arrangements evidenced in supply contracts (so called "Romalpa clauses") and commercial consignment arrangements will all need to be registered if the relevant lessor, supplier or consignor wishes to retain an interest in the leased, supplied or consigned goods;

• the introduction of a new, and more complex, priority regime. Although there will be a new registration system, covering a broader range of security interests, registration will not determine priority in all cases. Priority may, for example, be determined by the nature of the security interest held and whether the security holder has possession or control of the secured property;

• the introduction of new rules relating to:

(a) security rights over "accessions", that is items of personal property that are affixed to or installed in other items of personal property (for example, a car engine installed in a car body);

(b) security rights over "commingled goods", which refer to goods which are the subject of Romalpa clauses; and

(c) enforcement of security interests. It is clear that the reforms could not ignore enforcement, given that the concept of security interest is to be expanded by the reforms;

• the removal of the distinction between fixed and floating charges. Instead of taking a floating charge, security will be taken over "circulating assets", which security providers will have an ongoing right to use in the ordinary course of their business. It appears likely that this change is one of name only and whether the introduction of this new concept will resolve any of the difficulties arising from the existing law on floating charges remains to be seen.

For additional information on this reform, please visit us at www.claytonutz.com

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Computer Software Protection in China

By Song Haiyan* and Xu Yuezhu**

The rapid development of the information industry and the popular application of networks has made computer software (“software”) a core part of the network information era. Since software is so important, protecting it is essential. Currently, the international prevailing practice in software protection is to place protection standards within the purview of copyright laws. Patent and trade secret regulations are also used to protect software. The exact definition of software can fluctuate nation to nation, as each nation adjusts the definition provided by the World Intellectual Property Organization (“WIPO”)1 to address their respective situations. In China, Article II of the Order of the State Council of the People’s Republic of China defines “computer software” as “computer programs and the relevant documentation thereof.”2 I. Copyright Protection for Computer Software Copyright protection is the most widely used legal protection model for software internationally. As a type of “works”, copyright law offers a broad scope of protection to software. Because copyright law standards to qualify as works are not high, only formal innovation is needed. Therefore, almost all software falls within the purview of copyright protection. Based on the “automatic copyright” system, software can conveniently and efficiently be copyright protected immediately after its development without further application and approval. As copyright protection is the most prevailing protection system for intellectual property, most nations which have set up copyright protection systems are members of Berne Convention and Universal Copyright Convention. Therefore, international protection for software can be more easily gained under a copyright protection system, and there is no need to introduce new multilateral treaties to protect software.

1 According to WIPO Model provisions on the protection of computer software, Geneva 1978, “computer software” refers to: computer program, program description and program user instruction. Computer program” means “... a set of instructions, expressed in words, codes, schemes or in any other form, which is capable, when incorporated in a machine readable medium of causing a machine having information-processing capabilities to indicate, perform or achieve a particular function, task or result.” “Program description” means a complete procedural presentation in verbal, schematic or other form, in sufficient detail to determine a set of instructions, constituting a corresponding computer program; ”User instruction” means any auxiliary materials, other than a computer program or a program description, created for aiding the understanding or application of a computer program. 2 Regulations on the Protection of Computer Software Article 3 definitions for the following terms used in these Regulations are: 1) Computer program: refers to the coded instructional sequences -- or those symbolic instructional sequences or numeric language sequences which can be automatically converted into coded instructional sequences -- which are for the purpose of obtaining a certain result and which are operated on information processing equipment such as computers. The source code program of a piece of computer software and its object code program should be regarded as one work. 2) Documentation: refers to written materials and diagrams which are used to describe the contents, organization, design, functions and specifications, development circumstances, testing results and method of use of the program, for example: program design explanations, flow charts, user manuals, etc.

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Copyright Law of the People’s Republic of China explicitly covers software.2 In 1991, China promulgated the regulations specific to software protection—Regulations on the Protection of Computer Software (“Regulations”). According to the Regulations, software that is independently developed and that is in a material form, such as magnetic media or CD, will enjoy copyright protection. II. Patent Protection of Computer Software Software protection is within the purview of the Patent Law of China. Inventions composed of software programs are significantly different from traditional “works” because it consists of a large amount of creative work. Therefore, the software developer’s ideas are the most valuable and are most in need of protection. If technicians obtained the developer’s design ideas, they can easily design a program-- via reverse engineering, reverse coding, or reverse assembly—that shares the same or similar function. However technical ideas can not be protected by traditional copyright law. Under copyright law, only the expressive forms of works are within the purview of protection; ideas and “function” are excluded from the purview. For the programs depicting technical ideas, especially those inventions involving computer programs, patent law protection usually adopts the functional characteristics to limit their scope of protection. Patent protection is characterized by its exclusive and monopolized rights. Once patent rights are granted to computer software, any similar inventions, even those developed independently by others, falling into the scope of patent protection will constitute an infringement. However, there are also some deficiencies in patent protection of software. Strict examination is needed for the approval of patent application. While the economic life span of most software is less than three years, it may take up to one year to receive a patent approval. When strictly following the examination procedure, the life of software is almost due when the patent application is finally approved. In addition, patent law requires the applicant to fully disclose the content of the invention, placing the invention at risk of theft. It is not difficult to develop a new program with the same function once the developer knows the ideas and structure of the software. Article 25, Item 2 of the Patent Law of the People’s Republic of China excludes “rules and methods for mental activities” from patent protection rules3 under the theory that they do not belong to “inventions” as defined by the Patent Law. Article 25 was once an obstacle for patent applications for computer software. But with the recognition of the patent protection for software in the United States and some other countries, almost all countries now

2 Article 3 For the purposes of this Law, the term "works" includes works of literature, art, natural science, social science, engineering technology and the like which are expressed in the following forms: … (8) computer software; 3 Patent Law of the People’s Republic of China For any of the following, no patent right shall be granted: (2) rules and methods for mental activities;

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recognize it, too. In China, the Guidelines to Patent Examination (“Guidelines”), promulgated by the State Intellectual Property Office (“SIPO”), stipulate general principles and specific instances for software protection. However, the Guidelines offer no patent protection for common computer programs. But if the computer software described in the invention application constitutes a technical program, then it does fall within the purview of patent protection.4 III. Trade Secret Protection of Computer Software Before copyright protection for computer software existed, most countries protected computer software as trade secrets. Trade secrets, which provide their owners economic benefits, are not within the public domain. Technical and business information characteristics of trade secrets coincide with characteristics of software to some extent. Enforceable through software confidentiality requirements, the trade secret protection model has unique advantages over copyright and patent protection models. Trade secret protection has no time limitation and has a broader scope of protection. The trade secret protection model protects both the expressive forms and the ideas of software. At the same time, requirements for trade secret protection are less strict than those for patent application, but more strict than those for copyright protection. These characteristics are suitable for computer software protection to a certain extent. The trade secret protection model has many defects, also. Once the relevant technical information is disclosed or divulged to the public, there are no conditions for trade secret protection for the target objects. A series of complementary measures must be taken in trade secret protection for software. For example, respective measures like technical and related personnel management and software management should be taken to ensure the confidentiality of the software. Confidentiality agreements and business competition prohibition agreements should be signed between the enterprise and its employees. Confidentiality scope should be stipulated clearly in the agreement. Since software is easily-copied, special attention should be paid to ensure the validity of evidence preservation. As the party who raises the tort suit bears the burden of proof, evidence collection procedures must be regulated to ensure the legitimacy and validity of the procedure.

4 Guidelines for Patent Examination of China(2006) Chapter 9 Some Provisions on the Examination of the Patent Application Relating to Computer programs 1. Introduction Computer programs per se said in this chapter mean a coded instruction sequence which can be executed by a device capable of information processing, e.g., a computer, so that certain results can be obtained, or a symbolized instruction sequence, or a symbolized statement sequence, which can be transformed automatically into a coded instruction sequence. Computer programs per se include source programs and object programs. The invention relating to computer programs said in this chapter refers to solutions for solving the problems of the invention which are wholly or partly based on the process of computer programs and control or process external or internal objects of a computer by the computer executing the programs according to the above said process. The said control or process of external objects includes control of certain external operating process or external operating device, and process or exchange of external data, etc.; the said control or process of internal objects includes improvement of internal performance of computer systems, management of internal resources of computer systems, and improvement of data transmission, etc. Solutions relating to computer programs do not necessarily include changes to computer hardware.

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Therefore, to make up for the insufficiency in trade secrets protection, most software manufacturers adopt the method of signing a licensing agreement with the distributors and end-users, using the confidential provisions in the agreement to ensure “confidentiality” of trade secrets. Common methods for the acceptance of the agreement are as follows: 1. Via Shrinkwrap Contract. The contract will come into force once the user opens the shrinkwrap. 2. Via mail-back agreement. This method requires that users sign the attached agreement and mail it back to the distributor after purchasing the software. 3. Via Clickwrap Contract. Users must accept a series of provisions before the end of installation. But it must be noted that the legal effect of the agreement, accepted by the end-user through one of these formats, still requires further consideration. For example, though prohibition of reverse engineering is always provided in the clickwrap contract, it is commonly agreed that redeveloping software through reverse engineering is legitimate. In addition, to make it more compatible with other software in a software development project, reverse engineering is sometimes unavoidable. Article 12 of the Interpretation of the Supreme People’s Court on the relative Issues Concerning the Application of Law in the Trial of Civil Disputes over Unfair Competition, which became effective on February 1, 2007, provides that acquiring trade secrets through reverse engineering is not identified as an infringement of trade secrets. Meanwhile, Article 175 of the Regulations on Protection of Computer Software of China also recognizes that reverse engineering is legitimate for the purpose of learning and studying. Therefore, combined with the consideration of the stipulations of the laws of China when software developers draft the end-user agreement, more detailed, powerful and practical provisions should be included in the agreement; otherwise, the legal effect of relevant provisions will be greatly reduced. IV. Technology Anti-circumvention Protection of Computer Software To avoid the theft of core technology, many enterprises have taken technological measures to prevent reverse engineering. However, certain professional technicians can still circumvent the technical measures. Therefore, it is necessary to prevent circumventing activities to protect software copyright holders. Interim Regulations on Administration of software Products,6 China's first anti-circumvention provisions in the form of ministry regulations, was promulgated by the Ministry of Electronics Industry in 1998. The amended Copyright Law of 2001 also introduces anti-circumvention rules.7 In 2002 the State Council promulgated the Regulations on

5 Regulations on Protection of Computer Software Article 17 Those that use the software by installing, demonstrating, transmitting or storing it for the purpose of learning and studying the design ideas and theories contained in the software may do so without the approval of the software copyright owner and without paying remuneration to the owner. 6 Interim Regulations on Administration of software Products, Article Eighteen: Production of pirated software, software for deciphering secret and software with the main function of removing technology-protection measures are prohibited. 7 Article 47 Those who commit any of the following acts of infringement shall bear the civil liability for such remedies as ceasing the infringements, eliminating the effects of the act, making a public apology or paying compensation for damages, depending on the circumstances; where he damages public interests at the same time, the copyright administration department may order him to cease the act of tort, may confiscate his illegal gains, confiscate and destroy the reproductions of infringement, and impose a fine on him; if the case is serious, the

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the Protection of Computer Software which include the same anti-circumvention rules8; On June 1, 2006, Regulation on the Protection of the Right to Network Dissemination of Information was promulgated by the State Council, in which anti-circumvention measures were stipulated.9 The anti-circumvention provisions greatly expanded the protection scope, which extends from encryption software to all the technical protection measures of copyright holders and adjacent right holders of video and audio products. These anti-circumvent principles can help copyright holders protect their rights and combat piracy under the digital environment. However, there is still much to be improved in anti-circumvention law for the following reasons:

1. Anti-circumvention rules are too simple and vague. 2. The new rules make no distinction between different technical measures and provide for a blanket

prohibition, while not all technology circumvention activities should be prohibited. In many cases circumvention activities serve important legitimate interests, such as, research and academic activities. Hence, most countries and regions allow reverse engineering under certain conditions.

3. No provisions are made to stipulate the protection scope, and this will easily cause the abuse of technical measures. Jiangmin's “logic lock" incident is a typical example.10

copyright administration department may also confiscate the materials, instruments and equipment, etc. mainly used to make the reproductions of infringement; where his act has constituted a crime, he shall be investigated for criminal liabilities in accordance with the law: (6) without the permission from the copyright owner or obligee related to the copyright, intentionally avoiding or destroying the technical measures taken by the obligee on his works, sound recordings or video recordings, etc. to protect the copyright or the rights related to the copyright, except where otherwise provided in laws or administrative regulations; 8 Regulations on the Protection of Computer Software, Article 24 Except as otherwise prescribed by the Copyright Law of the People’s Republic of China, these Regulations or other laws and administrative regulations, anyone who has committed any of the following infringing acts without the approval of the software copyright owner shall, according to the circumstances, bear the civil responsibilities of stopping the infringement, eliminating the effects, making apologies, compensating for losses, etc; for anyone who damages the public interests at the same time, the administrative department of copyright shall order the offender to stop the infringing acts, confiscate the illegal gains, confiscate and destroy the infringing copies, and may impose a fine on him at the same time; if the circumstances are serious, the administrative department of copyright may also confiscate the materials, tools, equipment, etc. that are mainly used in the making of the infringing copies; if there is any violation of criminal laws, the criminal responsibilities shall be investigated according to the provisions of the Criminal Law on the crime of infringing upon copyright law and the crime of selling infringing copies… 9 Regulation on the Protection of the Right to Network Dissemination of Information, Article 4 In order to protect the right to network dissemination of information, an owner may adopt technical measures. No organization or individual may purposely avoid or break the technical measures, purposely manufacture, import or provide to the general public any device or component that is mainly applied to avoiding or breaking the technical measures, or purposely provide such technical services to any other person for the purpose of avoiding or breaking the technical measures, unless it is otherwise provided for by any law or regulation that the relevant technical measures may be avoided. 10 In 1997, Jiangmin anti-virus Software Company suffered great loss because of software piracy, but they could not get effective legal protection. Therefore, “logic lock”, a type of protection program security was installed on the software. When the decoded software was run by the pirate, the "logic lock" would be automatically activated, and frequent computer locks would occur. Users suffered great damage from “logic lock” attacks. Jiangmin Company fell into the embarrassing situation of a worldwide condemnation. Eventually, due to the importation of hazardous data that endangered users’ computer system, Jiangmin was subject to an administrative fine.

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To provide for public interests, copyright law should list the restrictions and exceptions of technical measures that precondition when legitimate technical measures can be protected. In this regard, with the consideration of reasonable use principle of the existing copyright system, restraints and exceptions of technical measures should be stipulated after referring to similar laws, like the United States’ Digital Millennium Copyright Act (“DMCA”).11 In short, each protection model has its advantages and disadvantages, and a choice should be made after comprehensive consideration. Since the patent protection model has strong exclusive and protective powers, computer software that can meet application requirements for the Guidelines for Patent Examination of China and that have longer economic life spans should be ascribed under patent protection. For those that do not satisfy the patent application requirements, copyright and trade secret protection should be applied. If trade secret protection is used, confidentiality of the computer software should be confirmed before any action is taken. A discrete consideration of consequences should be made before adopting technical measures.

(This article was originally written in Chinese. The English version is a translation.) *Song Haiyan is a partner in King & Wood’s Shanghai office. **Xu Yuezhu is an associate assistant in the IP Litigation Group, King & Wood’s Shanghai office.

11Article 120 of DCMA stipulates the exceptions and exemptions of the technical protection measures, including the reasonable use exceptions: (1) A nonprofit library, archives, or educational institution; (2) Law enforcement, intelligence, and other government activities; (3) reverse engineering; and (4) encryption research. If these activities are conducted to advance the state of knowledge in the field of encryption technology or to assist in the development of encryption products, under certain circumstances, encryption of the technical measures can be carried out.

CONTENTIOUS RISK MONITOR MAY 2007

This is the first bulletin of Lovells' "Contentious Risk Monitor". In it, we report on developments which

could have an impact on the risks for businesses operating in the Asia region and Hong Kong in

particular. If you wish to discuss any of the topics raised in the bulletin, please contact Allan Leung,

Mark Lin or Abdulali Jiwaji on +852 2219 0888.

CONTENTS

1. Reciprocal enforcement of judgments between Mainland China and Hong Kong

2. Litigation funding and champerty

3. Obtaining injunctive relief - service contracts

4. Bilateral Investment Treaties and International Arbitration

1. Reciprocal enforcement of judgments between Mainland China and Hong Kong

Recent developments should make it easier to enforce certain judgments as between the

Mainland and Hong Kong.

The Mainland Judgments (Reciprocal Enforcement) Bill purports to give effect to the

Agreement entered into between the Supreme People's Court and the HKSAR in 2006. The

Bill makes provision for enforcement in Hong Kong of certain Mainland judgments and for

facilitating the enforcement in the Mainland of certain judgments given in Hong Kong. The Bill

applies only to final judgments made by a designated court in Mainland China or Hong Kong

requiring the payment of money in a civil or commercial case pursuant to an exclusive choice

of court agreement in a commercial contract. In parallel with this, steps are being taken to

implement the Agreement in the Mainland.

To be enforceable in Hong Kong, a Mainland judgment must be registered with the Court of

First Instance. It will then, for the purpose of execution, have the same force and effect as a

judgment given by the Court of First Instance of Hong Kong. The time limit for registration of

Mainland judgments is one year if one of the parties is a natural person and six months in

other cases. Enforcement of a Mainland judgment can be refused on specified grounds,

including where the Court of First Instance is satisfied that the judgment was obtained by

fraud, or where enforcement of the judgment is contrary to public policy.

To be enforceable in the Mainland, a Hong Kong judgment must be from the Court of Final

Appeal, High Court or District Court. The Hong Kong courts may, on application by the

judgment creditor and payment of the specified fee, issue a certified copy of the judgment to

facilitate enforcement in the Mainland.

Arbitral awards rendered in Hong Kong and by designated Mainland arbitration commissions

are already mutually enforceable. Once the Agreement has been implemented parties will

have more freedom to choose between arbitration and litigation in either Hong Kong or the

Mainland, although it remains the case that a Hong Kong / Mainland arbitral award is more

enforceable around the world than a Hong Kong / Mainland Court judgment. Insofar as

disputes with Mainland Chinese parties are concerned, any significant swing between the two

will depend on the ease of enforcing judgments in practice, but overall the changes should

bolster the role of Hong Kong as a key centre for all methods of dispute resolution.

abc

- 2 -

Once the Agreement is in force, it will be possible to enforce Hong Kong judgments in the

Mainland without the need for (re)litigating the substantive merits in Mainland China.

Judgment creditors should be free to enforce judgments that meet the relevant requirements

against assets located in either Mainland China or Hong Kong. Judgment debtors, on the

other hand, will find it less easy to shield their assets from cross-border judgments where a

Mainland or Hong Kong court is chosen to have exclusive jurisdiction.

The Bill is expected to be passed by LEGCO before the end of this year.

Back to top >>

2. Litigation funding and champerty

In a recent case (Siegfried Adalbert Unruh v Hans-Joerg Seeberger), the Court of Final

Appeal had to consider the question of whether an agreement was champertous and therefore

void - this has implications for litigation funding which is when a third party funds a claim in

return for a share of the proceeds.

The plaintiff had entered into a Memorandum of Agreement ("MoA") with the defendant setting

out the terms on which the plaintiff would sell his shares in a company known as ESCT to the

defendants. The MoA provided that the plaintiff was to assist ESCT in connection with an

arbitration that was ongoing at the time of the share sale and that the plaintiff was to be paid a

'Special Bonus' if the monetary compensation received by ESCT in respect of the arbitration

exceeded US$10million.

The plaintiff contended he was entitled to the Special Bonus and he brought proceedings to

recover it. The defendant argued that the MoA was a champertous agreement and therefore

void and unenforceable.

The Court of Final Appeal held that on the facts the plaintiff had a genuine commercial interest

in the outcome of the arbitration as the means by which the value of the shares that he had

sold to the defendants was to be realised. This participation in the arbitration did not pose a

risk to the integrity of the arbitral process. The Court remarked that "the continued retention by

Hong Kong of criminal and tortious liability for maintenance and champerty may not be

justified and this question merits serious legislative attention".

The issue of champertous agreements is particularly relevant in the context of litigation

funding. There is a risk that a funding arrangement may be held to be void and unenforceable

on maintenance or champerty grounds, leaving a funder potentially out of pocket and exposed

to criminal and other liability. The approach of the English courts is to look at whether the

funder might inflame the damages, suppress evidence, suborn witnesses or otherwise

undermine the ends of justice. The courts will generally have regard to the extent to which the

funder, rather than the plaintiff, is controlling the proceedings and the legal team and there will

be concerns if the funder's success fee is disproportionate to the funding offered. Overall the

courts appear to be more accepting these days of litigation funding agreements, unless they

are an abuse of process. However, caution is required.

Back to top >>

3. Obtaining injunctive relief - service contracts

In Worth Achieve Associates Ltd v Huang Sheng Yi, the Court of First Instance was asked to

grant an interlocutory injunction to enforce a contractual obligation, and this is a good

reminder of the considerations when one is dealing with a contract for services.

The Defendant, an actress, contracted with the Plaintiff as her manager and agent to manage

exclusively all the affairs relating to her activities in performing arts for an initial period of 3

- 3 -

years. The contractual period could potentially be extended until 2011. The Plaintiff alleged

that the Defendant had committed breaches of the Contract including by taking up work

without the Plaintiff's approval. The Defendant also went on to sign a new contract with

another company.

The Plaintiff sought an interlocutory injunction against the Defendant to restrain her from

acting in breach of the Contract until the full trial. In this type of application, a plaintiff has to

show that damages will not be an adequate remedy if the injunction is not granted. The

Plaintiff argued that if the Defendant observed the Contract, the Plaintiff could groom her to

great success and that the income that the Plaintiff would be able to generate in this way was

difficult to assess.

The Court's view was that nothing short of specific performance of the Contract could have

addressed the Plaintiff’s concern. However, the events leading up to the litigation and the

exchange of allegations and cross-allegations were highly damaging to the trust and

confidence between the parties. The Court was convinced that the parties had reached the

point of no return in terms of the continuation of a close relationship, and that the Plaintiff had

no prospect of getting a permanent injunction by way of remedy at trial.

An interlocutory injunction was refused, and the Plaintiff was left to pursue the claim at a full

trial. This highlights the difficulty with obtaining any form of injunctive relief in relation to a

contract for services.

Back to top >>

4. Bilateral Investment Treaties and International Arbitration

Many countries have now entered into Investment Promotion and Protection Treaties. Most

common are Bilateral Investment Treaties (“BITs”). These essentially provide rights of fair

treatment which investors can enforce directly against the authorities of the state in which they

have invested (the “Host State”). Key elements of BITs include provisions for equal and non-

discriminatory treatment of investors and their investments, prompt compensation for

expropriation, transfer of capital and return and access to independent settlement of disputes

with the Host State.

The protection afforded under BITs is normally broader than that available under customary

international law. The World Bank's specialist division, the International Centre for Settlement

of Investment Disputes (ICSID), administers neutral international arbitration to resolve

investor-state disputes which may be provided for under the various BITs. Recently, ICSID

registered the first arbitration request from a Chinese investor, which was brought under a BIT

entered into between China and Peru.

The Chinese owner of a fish flour company in Peru is claiming US$20 million in compensation

from the Republic of Peru for the government’s alleged breaches of the China-Peru BIT.

There was initially a dispute between the company and the government of Peru over the

amount of taxes which the company has to pay. While the amount was being disputed, the

government seized the company’s bank accounts. The company was not compensated, and

accordingly the owner’s claim is that this amounted to an expropriation and a breach of the

China-Peru BIT by the government. A mandatory consultation period was commenced late

last year, and the claim was registered at the ICSID in February this year.

Until now, there have not been many known investor-state arbitrations arising as a result of

China BITs. This is because older China BITs tended to have limited dispute resolution

provisions that did not offer foreign investors a wide latitude to take the Host State to

international arbitration. Newer China BITs have been coming into place which provide for

broader dispute resolution mechanisms. Traditionally, BITs allowed arbitration only in limited

cases, for example, expropriation. The recent trend, however, seems to be allowing

arbitration for other provisions as well.

- 4 -

From recent developments, it appears that China is becoming increasingly open to negotiating

more investor-friendly dispute resolution mechanisms in its Investment Promotion and

Protection Treaties. It is therefore likely that there may be an increase in parties resorting to

international arbitration to settle their disputes in China and elsewhere. Accordingly, investors

should make sure they are aware of the valuable rights which they may have under the

various BITs and other international treaties in place.

Back to top >>

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Any information in this e-mail is provided as a general guide only. It should not be relied upon as a substitute for specific legal advice. If you

would like any further information on any of the matters raised in this e-mail, please contact your usual contact at Lovells.

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This newsletter is a commercial communication from Lovells - 23/F, Cheung Kong Center, 2 Queen's Road Central, Hong Kong.

© Lovells 2007.

All Rights Reserved.

INDIA – MULLA & MULLA & CRAIGIE BLUNT & CAROE – Remittance Scheme Liberalised – Increased to USD$100K

The Reserve Bank of India (“RBI”), with a view to simplify procedures and providing enhanced flexibility in respect of foreign exchange transactions, had liberalized the remittance scheme by enhancing the then existent remittance limit of USD 25,000. Accordingly, on 20th December 2006, the remittance scheme was liberalized, pursuant to which an individual resident in India was permitted to remit up to USD 50,000 per financial year for any current or capital account transaction or combination of both. The cap of USD 50,000 would include remittances made by resident individuals by way of gifts and donations. In accordance with the Annual Policy Statement for the year 2007-08, the RBI has on 8th May 2007, announced further liberalization of the remittance scheme in respect of resident individuals whereby the existing remittance limit of USD 50,000 per financial year has now been enhanced to USD 100,000 per financial year (April – March). Such remittances are allowed only in relation to permissible current or capital account transactions or a combination of both. Transactions not permissible under the prevalent foreign exchange law and regulations in India and remittances for margins or margin calls to overseas exchanges/overseas counter parties are not permitted under the liberalized remittance scheme. Further, banks would not be allowed to extend credit facilities to resident individuals for facilitating remittance under the liberalized remittance scheme. Investment by resident individuals in overseas companies earlier included under the rationalized remittance scheme and the 10% reciprocal shareholding requirement in listed Indian companies by such overseas companies which has been dispensed with by the RBI would remain unchanged. Shardul Thacker, Partner Mulla & Mulla & Craigie Blunt & Caroe Mulla House, 51, M. G. Road Fort, Mumbai 400 001, India. Tel.: +91 (22) 2204 4960 / 6634 5496 Fax: +91 (22) 2204 0246 / 6634 5497 Email: shardul.thacker@mullaandmulla.com

The Br iefA p r i l 2 0 0 7 - N° 4

North Africa

AlgiersTel. +213 (0)21 23 94 94gln.algiers@gide.com

BeijingTel. +86 10 65 97 45 11gln.beijing@gide.com

BelgradeTel. +381 11 30 24 900gln.belgrade@gide.com

BrusselsTel. +32 2 231 11 40gln.brussels@gide.com

BucharestTel. +40 21 223 03 10gln.bucharest@gide.com

BudapestTel. +36 1 411 74 00gln.budapest@gide.com

CasablancaTel. +212 (0)22 27 46 28gln.casablanca@gide.com

HanoiTel. +84 4 946 05 05gln.hanoi@gide.com

Ho Chi Minh CityTel. +84 8 823 85 99gln.hcmc@gide.com

Hong KongTel. +852 2536 9110gln.hongkong@gide.com

IstanbulTel. +90 212 325 35 81gln.istanbul@gide.com

KyivTel. +380 44 206 0980gln.kyiv@gide.com

LondonTel. +44 (0)20 7826 9700gln.london@gide.com

MoscowTel. +7 495 258 31 00gln.moscow@gide.com

New YorkTel. +1 212 403 6700gln.newyork@gide.com

ParisTel. +33 (0)1 40 75 60 00info@gide.com

PragueTel. +420 222 871 111gln.prague@gide.com

RiyadhTel. +966 1 476 60 39gln.riyadh@gide.com

ShanghaiTel. +86 21 53 06 88 99gln.shanghai@gide.com

TunisTel. +216 71 891 993gln.tunis@gide.com

WarsawTel. +48 22 344 00 00gln.warsaw@gide.com

Morocco: three financing alternatives tobe marketed shortly

On 23 March 2007, after repeated refusals to allow Islamic banks to establishbranches in Morocco, the Governor of Bank Al-Maghrib (Moroccan CentralBank), Adellatif Jouahri, announced plans to issue a recommendation onalternative forms of financing in the near future for them to be marketed by creditinstitutions.

Although still in the draft stage, the recommendation is due to be approved bythe Governor of Bank Al-Maghrib, pursuant to Article 19 of the new BankingAct1, in consultation with Moroccan Banks Professional Group and afterfavorable opinion issued by the Banking and Finance Committee.

The recommendation is targeted at credit institutions. Its purpose is to define alegal framework for the alternative forms of financing to be offered to the public.The three alternative financial services will be: Ijara, Mourabaha and Moucharaka.

Motivation for the recommendation

The recommendation is a response to strong demand from a section of Moroccansociety wishing to obey Shari'ah rules2 law that prohibit "riba" (interest or usury)in all financial transactions and dictate that entitlement to income implies liabilityto share losses.

1 Act No. 34-03 relative to credit institutions and promulgated by dahir dated 14 February 2006.2 Shari'ah rules (i.e Islamic law) mean all the rules derived from Coran, Mohamed traditions and

Muslim experts' opinions.

It will also contribute to greater banking service penetration in the Moroccan economy by incorporating non-interest loans and other forms of financing into the official financial system. These services were onlypreviously offered by fundamen-talist movements with the risk that they might contribute to moneylaundering and other criminal or terrorist activities.

Institutions entitled to offer financing alternatives

Banks (credit institutions licensed to carry on all forms of banking transactions) will be at liberty to offer all ofthese alternative forms of financing. Finance companies (credit institutions licensed only to carry on certaintypes of banking transactions) will only be able to offer customers the forms of financing approved undertheir individual licences.

Outline of the three new financial products

The three new authorised forms of financing are loan and not deposit based. Ijara and Mourabaha will assistcustomers in real estate transactions. Moucharaka is aimed at business.

Ijara

Ijara is a contract whereby a bank leases specific, identified, tangible real or personal property (intangiblepersonal property and natural resource exploitation rights are expressly excluded) owned by the bank to acustomer for a use authorised by law.

The product may be considered as a type of quasi debt instrument.

Ijara can be structured in two ways:

– Ijara Tachghilia: a simple lease;

– Ijara Wa Iqtina: a lease combined with a firm lessee undertaking to purchase the asset at the end of anagreed period. This second option resembles a credit lease agreement.

The property owner (the bank) retains full liability for all risks associated with the property.

An Ijara contract must contain the precise terms and conditions governing the bank/customer relationshipand the rights and duties of each party. It must also contain certain key clauses, particularly: the transactionnature; the rent amount; the rent payment terms and instalment dates; the term of the lease; maintenanceexpenses and upkeep costs ("administrative costs"3); the insurance costs to be borne by the lessee; theconditions for termination or renewal.

Mourabaha (contract of sale with a compensation)

Mourabaha may be classed as debt instruments.

It is a purchase and resale agreement. The bank purchases real or personal property from a supplier for itscustomer. The resale price is based on cost plus an agreed compensation4 which the bank is not afterwardsentitled to revise upwards. The customer will pay for the asset in one or more instalments over a period notexceeding forty eight months. The contract resembles a deferred payment sale.

Mourabaha is a tripartite agreement: the parties are the customer, the bank and the seller.

This type of contract may not be used to acquire assets not yet in existence.

3 Administrative costs differ from the interest as they correspond to effective costs related to the asset and borne by the credit institutionwhereas the interest is the consideration paid for use of borrowed funds.

4 The compensation differs from an interest as it relates to the asset itself whereas the interest relates solely to the cost of money.

2

3

A Mourabaha contract must contain the precise terms and conditions governing the bank/customerrelationship and the rights and duties of each party. It must also contain certain key clauses, particularly: adefinition of the purchase price; the costs and taxes incurred by the bank in purchasing the Mourabaha assetand the costs to be borne by the customer; the bank's compensation; the payment terms; the security providedby the customer and the amount of the down payment made by the customer, if there is one.

Moucharaka (active partnership or joint venture)

Moucharaka resembles private equity financing. It is a contract to acquire an equity stake (only in "joint stockcompanies") so that the credit institution and the customer both contribute to the financing of a project.

Under the contract, the capital owner and entrepreneur both contribute to the company's capital and take part inproject management. They will share profits according to pre-defined ratios. They will be liable for lossesaccording to their initial capital contribution. Accordingly, Moucharaka provides for the sharing of profits and losses.

Moucharaka can be structured in two ways:

– Moucharaka Tabita (fixed): the credit institution and its customer remain corporate partners until the expiryof their agreement;

– Moucharaka Moutanakissa (decreasing): the credit institution withdraws progressively from the company'scapital according to the terms of the contract.

A Moucharaka contract must contain the precise terms and conditions governing the bank/customerrelationship and the rights and duties of each party. It must also contain certain key clauses, particularly: thetransaction nature and purpose; the amount of capital and percentage owned by each party; the duration ofthe arrangement; the security offered to the credit institution by a customer managing the company alone toinsulate against losses due to its negligence or other such acts or omissions; the terms for dissolution of theMoucharaka and for the division of the assets; how and on what time-scale credit institution will withdrawprogressively from the company's capital in the case of a Moucharaka Moutanakissa; changes in the company'sarticles of association so that they comply with the Moucharaka contract.

One essential feature of this type of contract as provided for in the draft recommendation taken by theGovernor of Bank Al-Maghrib is that it must not contain any provision attempting to guarantee the equitystake of either of the parties without reference to the company's results.

Conclusion

Although many criticisms have been made of the financing alternatives described above, there is livelycompetition between Moroccan banks and credit institutions to capture a share of the market. This businesscould prove very profitable because customers will undoubtedly be charged more for these services that classicforms of financing.

For now, the names given to these financing alternatives in the draft recommendation are only suggestions.Each credit institution will choose its own names that it will promote in marketing campaigns to be organisedin the future. These names should, under no circumstances, contain any religious references or connotations.

Finally, it is intended that these alternative financial products should be provided in Morocco according toagreed standard form contracts drafted according to the rules of "The Accounting and Auditing Organisationfor Islamic Financial Institutions", based in Bahrain. This institution is responsible for defining standards forIslamic financial products and institutions that conform to the precepts of Shari'ah rules.

_________________

Gide Loyrette NouelAssociat ion d’Avocatsà la Cour de Par is

26, cours Albert 1er

75008 Paris - France

Tel +33 (0)1 40 75 60 00

Fax +33 (0)1 43 59 37 79

E-mail : info@gide.com

www.gide.com

If you would prefer to receive future issues of th is Br ief by email , p lease not i fyIwona Czarnecka: czarnecka@gide.com

You may also consult th is Br ief , and our other newsletters , in the News/Publ icat ions sect ion of our website .

ContactsFor Alger iaFrançois KrotoffE-mail : krotoff@gide.com

For MoroccoChristophe EckE-mail : eck@gide.com

For Tunis iaKamel Ben SalahE-mail : bensalah@gide.com

The Brief "North Africa" (the "Newsletter") is a periodic electronic publication edited by Gide Loyrette Nouel (the "Firm") distributed free of charge to a limited number of recipients with adirect or indirect relationship with the Firm. The Newsletter is reserved for the private usage of its recipient and is not intended to provide general or exhaustive information. It should not betaken or construed as legal advice. The recipient alone is responsible for any use made of the information provided in the Newsletter and the Firm cannot be held liable to

the recipient for any direct or indirect loss or injury resulting from the use of such information.In accordance with the French Data Protection Act, No. 78-17, as amended, you are entitled to access any personal information concerning you, processed by our Communication Department,

and request that it be amended or deleted, by emailing us at (privacy@gide.com).

AK071300166.doc

Spam Act Set To Come Into Force In September - Is Your Business Ready?

The Unsolicited Electronic Messages Act 2007 (Spam Act) comes into force on 5 September this year. The Spam Act regulates the sending of commercial electronic messages and represents New Zealand's contribution to a global movement towards preventing spam. The Government believes that this legislation will reduce: • impediments to the uptake and effective use of information and communications

technologies; and • the cost to businesses and the wider community that arises from spam. The Spam Act imposes various requirements on senders of electronic messages that are likely to have a significant impact on many organisations (particularly organisations engaged in direct marketing). This begs the question: is your business ready?

What Kinds Of Electronic Messages Are Captured? The Spam Act applies to "commercial electronic messages". "Electronic messages" are defined broadly as messages sent using a telecommunications service to an electronic address. This definition captures: • information in any form or combination of forms (including text, data, sound and images);

and • information sent to any address used in connection with an email account, an instant

messaging account, a telephone account, or similar account. Voice calls (using a standard telephone service or VOIP) and facsimiles are expressly excluded and are therefore not subject to the requirements of the Spam Act. An "electronic message" will be deemed to be a "commercial electronic message" when it: • markets or promotes goods, services, land, an interest in land or a business opportunity;

or • assists or enables a person to obtain dishonestly a financial advantage or gain from

another person; or • provides a link, or directs a recipient, to a message that does one of the above things. There are however exceptions to this in certain circumstances (for example, if the message provides a quote or estimate for the supply of goods or services, where that quote or estimate was requested by the recipient).

What Prohibitions/Requirements Does The Spam Act Introduce? In summary, the Spam Act:

AK071300166.doc Page 2

• prohibits the sending of commercial electronic messages with a New Zealand link (whether

in the form of email, text message or instant message), unless the receiver has consented to receiving the message;

• requires any commercial electronic messages sent to include a functional unsubscribe facility (being a facility that allows the recipient to notify the sender that no further commercial electronic messages should be sent to that electronic address). This facility must allow the recipient to respond to the sender using the same method of communication that was used to send the initial message (eg unsubscribing by replying to the email received) and must not impose any cost on the recipient when used;

• requires any commercial electronic messages sent to include information which enables the recipient to accurately identify the person who authorised the sending of the message and to readily contact that person; and

• prohibits the use of address-harvesting software or a harvested-address list in connection with, or with the intention of, sending unsolicited commercial electronic messages in contravention of the Spam Act. Address-harvesting software is software that is capable of searching the internet for electronic addresses and collecting, compiling, capturing, or otherwise harvesting those electronic addresses (ie address-harvesting software is used to create a harvested-address list).

Penalties For A Breach Of The Spam Act The Spam Act sets up a civil penalty regime where a Government enforcement department or an individual "victim" may take action against another person in respect of a breach of the Spam Act. The enforcement department may do one of the following in respect of a breach: • issue a formal warning to the perpetrator;

• issue a contravention notice to the perpetrator specifying a penalty to be paid (as a fine);

• accept an enforceable undertaking from the perpetrator and, if that undertaking is subsequently breached, seek an order from the High Court in respect of that breach;

• seek a performance injunction or restraining injunction from the High Court; and

• make an application to the High Court for a pecuniary penalty and/or for compensation or damages on behalf of another person (penalties of up to $200,000 for an individual and $500,000 for an organisation may be ordered).

The Spam Act also makes provision for the enforcement department to apply to the District Court for a search warrant (which may include authorisation to seize property) where it is suspected that there has been, or will be, a breach of the Spam Act. An individual that claims to be the victim of another person's breach of the Spam Act may summarily seek an injunction from the High Court and/or make an application to the High Court for compensation or damages.

Practical Considerations To Ensure Compliance The main issue for business organisations to deal with prior to the Spam Act coming into force is that of obtaining the consent of email recipients to receiving commercial electronic messages. The Spam Act states that "consent" can be: • express; or

AK071300166.doc Page 3

• inferred from the conduct and the business and other relationships of the persons concerned; or

• deemed where:

(i) the recipient's electronic address has been published by a person in a business or official capacity; and

(ii) the publication of the address is not accompanied by a "no spam" statement

(similar to a "no circulars" statement on a letter box); and

(iii) the message sent to that address is relevant to the recipient's business, role, functions or duties.

In practice, this means that businesses will need to check their marketing lists to ensure that each intended recipient has provided "consent" in one of the forms referred to above. Records of documents evidencing "consent" should also be kept. For organisations heavily involved in direct marketing, this may mean that certain employees will need to be allocated the responsibility of maintaining the marketing lists, which will include removing persons from that list when they notify they wish to no longer receive messages. Organisations will also need to configure all outgoing commercial electronic messages so that they: • contain a functional unsubscribe facility; and • clearly disclose the organisation's identity and provide contact details for the organisation. As far as marketing alternatives are concerned, businesses may now wish to reconsider using faxes or telemarketing to communicate with potential customers (as these forms of communication are not caught by the Spam Act). Whether the Spam Act will actually have any real impact on the levels of spam received in New Zealand remains to be seen, as the majority of spam originates from overseas. The Government does recognise this shortcoming, however it believes that the Spam Act will enable New Zealand to enter into international agreements concerning international enforcement of anti-spam legislation, sharing of information between national enforcement agencies, and the pursuit of cross-border complaints concerning spam. In any event, if New Zealand businesses have not already set in place procedures to ensure compliance with the Spam Act, the time to do so is now. A well planned compliance strategy is critical to reducing disruptions to business processes when the Spam Act comes into force in September.

Key Contacts Simon Vannini Ph +64 9 977 5186 simon.vannini@simpsongrierson.com Matt Smith Ph +64 9 977 5016 matt.smith@simpsongrierson.com Note: The information provided in this article is intended to provide general information only. This information is not intended to constitute expert or professional advice and should not be relied upon as such. Specialist legal advice should always be sought for your particular circumstances.

May 2007 © Simpson Grierson

TAIWAN - PROPOSED AMENDMENTS TO FAIR TRADE ACT

Yvonne Hsieh - Lee and Li

The Fair Trade Commission has proposed cer-tain amendments to the Fair Trade Act with the following key features:

•In line with government restructuring, the name of the competent authority for the Act will be changed to the "National Fair Trade Commission" (NFTC).

•The types of actions constituting "restraint of competition" and "unfair competition" will be expanded. For the former, in addition to monopolies, business combinations and con-certed actions, they will also include resale price agreements and other actions likely to restrain competition. For the latter, actions of unfair competition will be reduced to cover only counterfeiting of symbols or famous for-eign trademarks, false or misleading state-ments or representations, denigration of commercial reputation, and other deceptive or obviously unfair conducts.

•The threshold for monopoly will be raised, so that an enterprise with a total sales turnover of less than NT$2 billion will not be considered a monopolist.

•An enterprise that establishes a 100%-owned subsidiary will be expressly exempted from the obligation to file a combination notifica-tion.

•The regulation of concerted actions will be adjusted, with the introduction of a new catch-all provision for the granting of excep-tional permissions, and the adoption of a "le-niency" policy whereby an enterprise partici-pating in a concerted action may be subject to reduced administrative penalties or exempted from penalties if on its own initiative, it in-forms the NFTC of the unlawful concerted action before the NFTC has become aware of it or before it has begun to conduct investiga-tions; or if during an investigation the enter-prise assists in the investigation and provides specific evidence, so that the NFTC is able to successfully complete its investigation.

•Actions to restrict resale pricing will in prin-ciple be unlawful per se.

•The provisions regulating infringement of trade secrets is to be removed from the Act, and will be entirely governed by the Trade Secrets Act.

•The sections that duplicate the provisions of the Commodity Labeling Act will be deleted.

•The scope of restrictions on access to case files will be revised.

•The criminal penalties relating to counterfeit-ing of famous foreign trademarks not regis-tered in Taiwan will be abolished.

•There will be greater differentiation between penalties, with different administrative penal-ties defined for different types of violation of the Act, and the maximum levels of fines will be greatly increased, up to a maximum of NT$1 billion.

•A party that does not accept an NFTC decision should proceed directly to administrative liti-gation.

In addition, in conjunction with the separate legislative process to enact the Multilevel Sales Control Act, the sections of the FTA relevant to multilevel sales are deleted from the draft. The draft amendments to the FTA and the draft Mul-tilevel Sales Control Act have both been sub-mitted to the Executive Yuan for approval, after which they will be sent to the Legislative Yuan for consideration.

/ Lee and Li - Taiwan

May 7, 2007

PRIVACY UPDATE

FCC to Address Data Storage Issues

We have learned that the Federal Communications Commission (FCC) is in the process of

developing additional rules that will affect how customer data can be stored by certain providers of

communications services in the United States. It is not yet clear whether the rules would restrict the

manner in which data held by these service providers can be stored and maintained abroad, restrict

the manner in which data can be accessed by foreign entities, or both. It also is not yet clear

whether the rules would apply only to telecommunications carriers, or whether they would apply

more broadly.

The action would follow the FCC’s most recent revisions to its “Customer Proprietary Network

Information” rules, which set requirements for the treatment of customer data by providers of

telecommunications services in the United States. Those revisions, which followed in the wake of

the Hewlett-Packard pretexting scandal, changed the FCC’s approach to protecting customer data

and made it more difficult for third parties to secure access to certain data absent express customer

consent. The FCC’s expected action on data storage will, to our knowledge, be the first instance in

which the FCC is addressing this issue.

We are continuing to follow this development. In the meantime, please contact the Hogan &

Hartson attorney with whom you work or the attorneys listed below if you have any questions or

would like additional information.

About the Privacy Update Hogan & Hartson frequently publishes the Privacy Update to track privacy developments at the FTC, FCC, and U.S. Congress. YARON DORI ydori@hhlaw.com 202.637.5458 Washington, D.C.

MARK W. BRENNAN mwbrennan@hhlaw.com 202.637.6409 Washington, D.C.

This Update is for informational purposes only and is not intended as a basis for decisions in specific situations. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship.

Copyright © 2007 Hogan & Hartson LLP. All rights reserved. Hogan & Hartson LLP is a District of Columbia limited liability partnership with offices across the United States and around the world. Some of the offices outside of the United States are operated through affiliated partnerships, all of which are referred to herein collectively as Hogan & Hartson or the firm.

Hogan & Hartson LLP

Health Law Advisory Bulletin

IRS Guidance Clarifies That Tax-Exempt Hospitals May Share Health Information Technology With Physicians1

By Susan S. Mathis and LaVerne Woods [May 2007]

The Internal Revenue Service (IRS) issued guidance on May 11, 2007 that should allow tax-exempt hospitals to proceed with plans to share certain health information technology (HIT) with physicians. Widespread adoption of electronic health record (EHR) technology has become a national policy priority in recent years, and many nonprofit hospitals qualified under Section 501(c)(3) of the Internal Revenue Code wish to provide a financial incentive to allow physicians to acquire HIT and connect to the hospitals’ EHR systems. Until recently, however, both federal health law regulations and rules for tax-exempt organizations presented hurdles. The U.S. Department of Health and Human Services (HHS) removed the health law hurdles when it published anti-kickback safe harbors and Stark regulatory exceptions, effective October 2006, allowing permitted organizations to share the cost of certain HIT and related services with referral sources. A full description of the final HHS regulations is set forth in our August 2006 advisory bulletin.

After the HHS regulations became effective, federal income tax questions remained for the tax-exempt hospitals, including whether the proposed transfers could give rise to private benefit, inurement and intermediate sanctions issues, as described in our February 2007 advisory bulletin. The recent IRS guidance, in the form of an internal memorandum issued by the Exempt Organizations Director, largely removes the federal income tax obstacles to clear the way for HIT subsidy arrangements between tax-exempt hospitals and their medical staff physicians.

The IRS guidance states that the IRS will not treat the benefits that a tax-exempt hospital, qualified under Section 501(c)(3), provides to its medical staff physicians as impermissible private benefit or inurement as long as the benefits fall within the range of HIT and related services permissible under the HHS regulations. In addition, the hospital’s arrangement to provide HIT and related services to physicians at a discount must meet certain criteria:

● The HIT subsidy arrangement must require both the hospital and the participating physicians to comply with the HHS regulations on a continuing basis.

● The arrangement must provide that, to the extent permitted by law, the hospital may access all of the electronic medical records that the physician creates using the HIT and related services subsidized by the hospital.

● The hospital must ensure that the HIT and related services are available to all of its medical staff physicians.

● The hospital must provide the same level of subsidy to all of its medical staff physicians, or otherwise vary the level of subsidy by applying criteria related to meeting the healthcare needs of the community.

Remaining Issue: Taxable Income to the Physician-Recipient?

The IRS guidance does not address the issue of whether the hospital's subsidy to the physicians, under conditions consistent with the HHS regulations, will constitute taxable income to the physician-recipient. It is unclear when or if the IRS will issue further guidance addressing this issue. If the value provided by the hospital constitutes taxable income to the physician, it could impede the dissemination of EHR technology, despite the resolution of other health and tax law issues.

http://www.dwt.com/practc/healthcr/bulletins/05-07_IRSGuidance(print).htm (1 of 2)5/15/2007 5:35:39 PM

Footnote

1 This advisory was not intended or written to be used, and it cannot be used, for the purpose of avoiding penalties that may be imposed under federal tax law. Under these rules, a taxpayer may rely on professional advice to avoid federal tax penalties only if that advice is reflected in a comprehensive tax opinion that conforms to stringent requirements under federal law.

For more information, please contact:

Susan S. Mathis Seattle, Washington (206) 628-7764 susanmathis@dwt.com

LaVerne Woods Seattle, Washington (206) 628-7792 lavernewoods@dwt.com

This advisory is a publication of the Health Law and Tax-Exempt Organizations Groups of Davis Wright Tremaine LLP. Our purpose in publishing this advisory is to inform our clients and friends of recent legal developments. It is not intended, nor should it be used, as a substitute for specific legal advice as legal counsel may only be given in response to inquiries regarding particular situations. Attorney Advertising. Prior results do not guarantee a similar outcome. Thank you.

Copyright 2007, Davis Wright Tremaine LLP.

June 6, 2006 www.luce.com

A Mechanic's Lien on a Hybrid Private/Public Work of Improvement? When Can a Lien Be Recorded When Told There's No More Money?

Recent California Decisions Provide Guidance.

Roger C. Haerr Partner rhaerr@luce.com Phone: 619.699.2564 Fax: 619.645.5329

In North Bay Construction, Inc. v. City of Petaluma (2006) 143 Cal.App.4th 552, a contractor sought to enforce a mechanic’s lien for grading work performed on City land. The contractor performed the work under a contract with a developer to whom the City had leased the property to build a sports complex. The court dismissed the action to foreclose the mechanic’s lien against the City land, even if the work was not a public work, because the Legislature had not authorized enforcement of mechanic’s liens against public property.

The North Bay decision is hardly new law when viewed in the light of attempting to enforce a lien against public property alone. (See Cal. Civ. Code, § 3109.) However, in today’s world of increasingly complex hybrid private/public construction projects, the court left unanswered the question of whether a mechanic’s lien might attach to a private work of improvement constructed on public land. (See Progress Glass Co. v. American Ins. Co. (1980) 100 Cal.App.3d 720.) For example, a lien might be used to foreclose the leasehold interest of a private work of improvement independent of the land. (See English v. Olympic Auditorium, Inc. (1933) 217 Cal. 631; Western Electric Co. v. Colley (1926) 79 Cal.App. 770.) Because the question was not before it, the North Bay decision leaves open the issue of whether a mechanic’s lien might attach to a private improvement constructed on a public property leasehold.

In another recent decision, Howard S. Wright Construction Co. v. BBIC Investors, LLC (2006) 136 Cal.App.4th 228, the court addressed the proper timing of recording a lien. Howard involved a contract for construction of a business facility. After work commenced, the owner experienced financial problems and informed the contractor that it could not pay any more money. The contractor responded with a letter confirming an anticipatory breach of contract and promptly left the site. The contractor filed a mechanic’s lien the following day, and later, some insignificant closeout work was performed. The trial court found the lien was prematurely recorded, and therefore void, because contract work was performed after the lien was recorded.

The court of appeal reversed the trial court, finding the work was complete for purposes of recording a lien when all work under the contract had been performed, excused, or otherwise discharged. In this case, performance on the contract was discharged when the owner informed the contractor that it would not pay for any more work. An anticipatory breach occurs where one party to a contract repudiates its obligations before they become due. If significant, the anticipatory breach discharges the other party’s obligations under the contract. Because of the anticipatory breach by the owner, the contractor was discharged from performing further work on the contract. Accordingly, the court of appeal found the lien was timely recorded and not premature.

Caution should be exercised not to read too much into the Howard decision, because owner’s often inform their contractors that no further money will be forthcoming. Whether such conduct rises to the level of a material breach may be a question of fact that turns on how far along the project is toward completion. (See Integrated, Inc. v. Alec Fergusson Electrical Contractors (1967) 250 Cal.App.2d 287.) However, the decision provides guidance on the timing of recording a mechanic’s lien in such cases.

Roger C. Haerr leads the Construction Law Practice Group and is an Equity Partner at Luce Forward. You may contact Mr. Haerr at rhaerr@luce.com or 619.699.2564.

Luce Forward's mission is to provide quality, efficient solutions to our clients' legal needs and to enable our clients to achieve their goals and objectives.

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