ABLJ editor – ��߲��

Make your nominations now for Japan Law Firm Awards

ABLJ editor — Mon, 18 Sep 2023 01:35:22 +0000

Asia Business Law Journal is conducting extensive research for the 2023 Japan Law Firm Awards, the results of which will be announced in October 2023.

As part of this process, we are requesting nominations from in-house counsel, corporate executives and legal professionals around the world. Anyone with knowledge or experience of the quality of services provided by law firms in Japan in the past 12 months is welcome to make nominations*.

The nomination form that follows invites you to nominate three law firms in rank order in a number of categories. Please feel free to make nominations in any/all categories with which you are familiar. As you do so, you are encouraged to think about big firms and small firms, old firms and new firms, specialist firms and general practice firms. Please base your nominations on firms�� performances in the past 12 months.

Please? to nominate the law firms that you think deserve to be recognised.

Thank you for your support. We look forward to receiving your nominations.

*Lawyers working at Japanese law firms are not permitted to make nominations here. Japanese law firms have been invited to make submissions in support of their candidacy for Asia Business Law Journal��s awards. If you work for a law firm in Japan and would like to make a submission, please email Miran Lim at mlim@law.asia for more information.

Asia Business Law Journal��s Japan Law Firm Awards will be judged on a number of criteria, including nominations received from in-house counsel and other qualified observers, submissions provided by candidate law firms, reference checks with law firm clients and other research conducted by?Asia Business Law Journal��s editorial team.

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VinFast paves way for Viet listings in US

ABLJ editor — Tue, 29 Aug 2023 08:34:39 +0000

Vietnamese law firm YKVN and international counterpart Latham & Watkins have assisted carmaker VinFast in a merger and Nasdaq listing.

VinFast is a subsidiary of Vietnamese conglomerate Vingroup. Its listing on Nasdaq came in August through a merger with special purpose acquisition company Black Spade.

Following VinFast, Vietnamese internet company VNG filed for an IPO in the US. Vietnam retail company The CrownX, e-commerce platform Tiki and Bamboo Airways have expressed similar plans. However, achieving this is no simple feat.

In 2021, Vietnam-based loyalty and analytics platform Society Pass debuted on the Nasdaq. Hanoi-headquartered construction company Cavico did the same in 2008 but was delisted after three years.

Truong Nhat Quang

��The current regulatory framework [in Vietnam] is not yet fully equipped to facilitate the direct listing of a company incorporated in Vietnam on an offshore exchange,�� Ho Chi Minh City-based YKVN managing partner Truong Nhat Quang told Asia Business Law Journal.

��Several logistical challenges exist, including the need to address issues such as the fungibility of shares held domestically versus those held offshore, as well as the mechanics of distributing dividends to offshore shareholders.��

Truong said a formal agreement between Vietnam��s stock exchange and offshore counterparts such as the Nasdaq was required to enable a dual listing on both stock markets.

��Consequently, local companies seeking to list their Vietnamese businesses have been exploring alternative pathways,�� said Truong. ��One such viable alternative is to list the offshore entity that holds the Vietnamese business, [which was] the approach recently undertaken by VinFast with its Nasdaq listing.��

The reorganisation of VinFast Vietnam to establish VinFast Auto as an offshore holding entity in Singapore was a pioneering initiative. The complex process involved a series of rigorous Vietnamese regulatory procedures and approvals, including offshore investment clearance from the Ministry of Planning and Investment.

��These approvals were essential to enable Vingroup and Vietnam Investment Group, the controlling shareholders of VinFast Vietnam, to establish the offshore listing entity, VinFast Auto, in Singapore, with the capacity to hold 99.9% ownership in VinFast Vietnam,�� said Truong.

After the IPO process, VinFast will be subject to ongoing compliance in the jurisdictions, such as Singapore or the US, where the company is listed. The automaker has imported about 2,100 electric vehicles (EVs) to the US.

Truong led a Ho Chi Minh City-based team comprising partner Nguyen Van Hai and counsel Ho Anh Tuyet. Meanwhile, Latham��s Singapore-based partners Sharon Lau and Stacey Wong, and Tokyo partner Noah Carr, led their company��s team assisted by Singapore-based associates Elisabeth Ong, Sirada Chayabunjonglerd, Esha Goel, Jeffy Katio and Huang Bijun.

The Vietnamese automobile industry is expected to continue its growth trajectory this year, with a projected compound annual growth rate of 25% between 2020 and 2025.

��The industry was traditionally dominated by foreign automakers; however, local brands such as VinFast have been gaining recognisable market share thanks to government support and investment in research and development,�� said Truong.

The Vietnamese government has approved some preferential tax policies including special excise tax exemption and reduction for EVs, as well as a registration fee waiver for three years. Manufacturers of vehicles consuming electricity or renewable energy, vehicles with low fuel consumption, or vehicles with low or no emissions would benefit from a 10% corporate income tax, lower than the standard of 20%, as well as exemptions from land rental fees for 19 years.

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Legal AI��d

ABLJ editor — Wed, 05 Jul 2023 08:15:49 +0000

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Artificial intelligence will inevitably transform legal practice, but it will take time to realise its full potential. Enormous benefits, and dangerous pitfalls, await the tentative legal user. And careful regulation is also required, writes prominent in-house lawyer and legal transformation adviser, Sharyn Ch��ang

In a world where art imitates life, Hollywood movies often envision a future where artificially intelligent computers and robots seamlessly integrate into society, blurring the line between human and machine.

From the sentient HAL 9000 computer in Arthur C Clarke��s 1968 novel 2001: A Space Odyssey to Pixar��s lovable robot animation Wall-E, these cinematic representations reflect our collective fascination with the possibilities of artificial intelligence (AI).

Twenty-first century real-world advancements in AI are already used in consumer and business applications, even those from the relatively new field of generative AI.

Sharyn Ch��ang

OpenAI��s public domain ChatGPT broke records with more than 100 million users in the first two months of its November 2022 release. Industry heavyweights like Amazon, Alibaba, Baidu, Google, Meta, Microsoft and Tencent have their own generative AI products.

We��re witnessing a democratisation of AI in a manner not previously seen �C you don��t need a degree in any subject to use these tools. You just need to type a question.

So, ready or not, generative AI is here. It is impacting our daily lives and will reshape various industries, including the legal profession.

If you need any convincing, just listen to today��s big tech gurus like Google CEO Sundar Pichai, who described AI generally as ��the most profound technology humanity is working on. More profound than fire, electricity or anything that we have done in the past,�� in an interview with The Verge in May. Pichai is not alone.

There are different types of generative AI models, each quite complex to explain. The generative pre-trained transformer (GPT) model is commonly known due to the popularity of ChatGPT.

However, as ChatGPT is a general-use AI tool, this legal industry-focused article instead references Harvey. This is a generative AI platform built on OpenAI��s GPT-4, and is the best example of a multifunctional, generative AI platform designed specifically for lawyers.

Similar legal industry generative AI tools include CoCounsel, LawDroid Copilot and Lexis+AI, and there are other tools with more limited functionality.

Brief history of AI

The foundations of AI can be traced back to the 1940s and mechanical computing pioneers like Alan Turing. Turing is credited with early visions of modern computing, including the hypothetical Turing machine, which could simulate any computer algorithm. In 1950, Turing��s seminal article titled Computing Machinery and Intelligence described how to create intelligent machines and, in particular, how to test their intelligence.

This Turing test is still considered a benchmark for identifying the intelligence of an artificial system: if a human is interacting with another human and a machine, and is unable to distinguish the machine from the human, then the machine is said to be intelligent.

��Artificial intelligence�� was coined as a term in 1956, at the Rockefeller Foundation-funded Dartmouth Summer Research Project on Artificial Intelligence workshop hosted by computer scientists John McCarthy and Marvin Minsky. McCarthy and Minsky, together with computer scientist Nathaniel Rochester (who later designed the first commercial scientific computer, the IBM 701) and mathematician Claude Shannon (who founded information theory) are considered the four founding fathers of AI.

The 1960s saw advancements in machine learning and expert systems, and substantial US and UK government funding for AI research. Outputs like Arthur Samuel��s checkers playing program were among the world��s first successful self-learning programs and a very early demonstration of AI fundamentals.

Expert systems were a prominent area of research for the following 20 years, with the likes of IBM��s Deep Blue chess playing program, which beat world chess champion Gary Kasparov in 1997. However, expert systems are arguably not true AI because they require a formal set of rules, reconstructed in a top-down approach as a series of ��if then�� statements.

The 1980s and 1990s are often referred to as the AI winter, with high expectations by early AI researchers not reflecting the actual capabilities of the AI models being developed. Nevertheless, this period brought significant developments in subfields like neural networks �C important because generative AI models use neural networks and deep learning algorithms to identify patterns and generate new outcomes.

AI research saw a resurgence from the turn of the millennium, driven by advancements in computing power and the availability of vast amounts of data. In 2011, IBM Watson, a computer system capable of answering questions posed in natural language, won popular attention by defeating two human champions on the quiz show, Jeopardy!

IBM��s broader goal for Watson was to create a new generation of deep learning technology that could find answers in unstructured data more effectively than standard search technology. Deep learning, a subset of machine learning focused on artificial neural networks with multiple layers, is also a key technology underpinning generative AI.

AI has boomed since 2011, spurred by breakthroughs in computing power, algorithmic advancement and more systematic access to massive volumes of data. AI applications have flourished across various domains including natural language processing, robotics and autonomous vehicles.

AI continues to evolve rapidly, with ongoing research in explainable AI, ethics and the development of generative AI systems that are more transparent, accurate and accountable. While there is immense potential for further innovation, there are also serious industry concerns about the unexpected acceleration in AI systems development and its direction.

This is best exemplified by comments from computer scientist Geoffrey Hinton. Hinton is widely recognised as the ��godfather of AI��, who quit his long-time AI role at Google to speak freely without his views reflecting on the company.

His apocalyptic warning is that while machines are not yet as intelligent as humans, in perhaps five to 20 years they may become super intelligent, and become a threat to humanity.

His overarching concern is the lack of global and national legal and regulatory guardrails to control the misuse and abuse of AI, especially from bad actors proliferating deep fakes, harmful content, and mis- and disinformation. He believes it��s unrealistic to halt or pause AI innovation, so governments worldwide must take control of how AI can be used.

Generative AI

Generative AI is a subfield of AI where the system or algorithmic model is trained with a human help to produce original content like text, images, videos, audio, voice and software code.

One form of generative AI is a large language model (LLM), a neural network trained on large amounts of the internet and other data. It generates outputs in response to inputs (prompts), based on inferences over the statistical patterns it has learned through training.

ChatGPT and OpenAI��s GPT-4, on which Harvey is built, are popular examples of LLMs. The model can process prompts at a speed, volume and accuracy that outranks average human capability.

Unlike conventional AI systems that primarily classify or predict data (think Google search), generative models learn the patterns and structure of the input training data, then generate new content that has similar characteristics to the training data. However, responses are based on inferences about language patterns rather than what is known to be true or arithmetically correct.

Put another way, LLMs have two central abilities:

Taking a question and working out what patterns need to be matched to answer the question from a vast sea of data; and
Take a vast sea of data and reversing the pattern-matching process to become a pattern creation process.

Both functions are statistical, so there��s a certain chance the engine will not correctly understand any question. There is a separate probability that its response will be fictitious; a hallucination.

Given the scale of data on which the LLM has been trained, and the fine-tuning it receives, it can seem it knows a lot. However, the reality is, it is not truly ��intelligent��. It is only processing patterns to produce coherent and contextually relevant text. There is no thinking or reasoning.

The accuracy and relevance of an output will often depend on the input of the prompt engineering; how the question is asked and contextualised. A prompt might include:

Particular instructions, like asking the LLM to adopt a particular role, or requesting a particular course of action if it does not know the answer;
Context like demonstration examples of answers;
Instructions about the response format; and
An actual question.

Even with well-crafted prompts, answers can be wrong, biased and include completely fictitious information and data, with sometimes harmful or offensive content.

However, the potential benefits of generative AI easily outweigh such shortcomings, which major AI market makers like OpenAI are consciously working to improve.

Who and what is Harvey?

Harvey, the generative AI technology built on OpenAI��s GPT-4, is a multi-tool software-as-a-service AI platform that is specifically designed to assist lawyers in their day-to-day work.

It comes from a start-up company founded by two roommates �C Winston Weinberg, a former securities lawyer and antitrust litigator from O��Melveny & Myers, and Gabriel Pereyra, previously a research scientist at DeepMind, Google Brain (one of Google��s AI groups) and Meta AI.

The story goes that Pereyra showed Weinberg OpenAI��s GPT-3 text-generating system and Weinberg quickly realised its potential to improve legal process workflows.

In late 2022, Harvey emerged, with USD5 million in funding led by OpenAI��s startup fund. In April 2023, Harvey successfully secured USD21 million series A funding led by Sequoia, with participation again from OpenAI together with Conviction, SV Angel and Elad Gil and Mixer Labs.

Typical of generative AI models, Harvey is an LLM that uses natural language processing, machine learning and data analytics to automate and enhance legal work, from research to analysing and producing legal documents like contracts. Sequioa states: ��Legal work is the ultimate text-in, text-out business �C a bull��s-eye for language models.��

In May 2023, only two organisations were licensed to use Harvey: PwC has exclusive access among the Big Four; and Allen & Overy is the first law firm user. More than 15,000 law firms are on the waiting list.

Harvey is similar to ChatGPT but with more functions, specifically for lawyers. Like ChatGPT, users simply type instructions about the task they wish to accomplish and Harvey generates a text-based result. The prompt��s degree of detail is user-defined.

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Indonesia��s Makarim & Taira S names new managing partner

ABLJ editor — Thu, 01 Jun 2023 07:25:13 +0000

Indonesian law firm Makarim & Taira S has appointed its banking and finance lawyer Maria Sagrado as the new managing partner, succeeding litigator Lia Alizia, who has been at the helm since 2017.

Alizia is now a partner at the firm��s corporate commercial and litigation department.

Since joining the firm 22 years ago and becoming a partner in 2013, Sagrado has established an extensive portfolio of prominent clients, earning high credibility in the banking, corporate and fintech sectors.

As a partner, she has exhibited leadership skills with her meticulous and adaptable attitude, creating a favourable working atmosphere for her teams and paving the way for promising young lawyers.

��Makarim & Taira S has been a leading law firm in Indonesia for more than 30 years and we intend to maintain our top-tier position,�� Sagrado told Asia Business Law Journal.

��Our strategies include adapting to change, especially in business technology, to maximise our results and the value we deliver to clients.��

As a banking and finance expert, Sagrado saw innovation become a double-edged sword in the industry in Indonesia. While innovation brings new opportunities and convenience, it also poses challenges to humanity and the way people interact in society.

��The banking and finance industry is experiencing many innovations in terms of products and systems, accompanied by constantly evolving regulations,�� said Sagrado.

��It��s essential for banks and finance companies to keep up with all these innovations.?Embracing breakthroughs and maintaining an open-minded approach will be vital for them to keep up to speed with developments and to compete with non-banks or non-finance companies.��

Apart from that, ensuring compliance with new laws and regulations is also crucial, as Sagrado anticipated banks and finance companies to experience more innovation, leading to the adoption of new products and systems.

��For this, collaborations with various supporting companies, including telcos and payment system providers, will increase the variety of products and systems available in the market,�� she said.

To embrace the new challenges, Sagrado said lawyers need to stay updated with the latest market developments, including new products such as digital assets, digital currencies and bullion. Furthermore, the firm should strive to provide innovative solutions for new business models.

��One of our key strengths is the combination of experience from our senior lawyers and fresh perspectives from our younger lawyers,�� Sagrado added. ��This winning approach helps Makarim & Taira S to adapt and grow stronger in the market.��

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Thailand��s first corporate counsel association invites GC to join

ABLJ editor — Wed, 31 May 2023 03:43:16 +0000

Thailand��s first formal corporate counsel group, the Thai Corporate Counsel Association (THAI-CCA), is taking shape with organisers inviting all in-house lawyers to join ahead of the official launch in June.

Senior general counsel at Thai companies established the THAI-CCA to promote the sharing of knowledge, practical experience, legal innovation, and legal industry trends. It is encouraging all in-house lawyers in Thailand to register with the THAI-CCA to gain full access to its member-only activities.

The THAI-CCA was founded in February and will have its official launch on 22 June at the inaugural GC Powerlist Thailand event, held in partnership with the Legal 500.

Currently, the association does not intend to charge any membership fees for the next few years as it assesses various operating models, member benefits, and sponsorship programmes to determine what is most suitable for Thai corporate counsel. By 2026, the THAI-CCA is expected to be a fully incorporated professional organisation.

During this initial set-up phase, Sahachai ��Jack�� Wibuloutai, general counsel at PwC Thailand and the Mekong Region, and Thitiwat ��Beam�� Wisarath, chief legal compliance and risk officer at digital asset exchange Gulf Binance, will be co-presidents to manage the THAI-CCA.

��While there are many steps required for setting up the THAI-CCA, we plan to organise a few major events this year to bring Thai in-house lawyers together, promote awareness of our association among other legal communities, and keep up with regional and global trends,�� said Wibuloutai.

��Our objective for the immediate future is to bring all general counsel and corporate counsel based in Thailand together. The THAI-CCA will not only be a voice for our in-house legal profession but also an ear to actively listen to our fellow corporate counsel, discuss issues we are facing and solve those issues together.��

Wibuloutai and Wisarath are also supported by other founding members. They are Atipong Chittchang, vice president and head of legal at real estate developer Raimon Land; Ard Sakuntanakalap, former legal manager at PwC Thailand; Chitanong Poomipark, chief legal officer at multinational hospitality company Dusit International; Maprang Sombatthai, legal director at internet company LINE; Natchapon Padungkittimal, first senior vice president – legal at multinational conglomerate B.Grimm; Pajaree Thongvanit, head of legal at CIMB Thai Bank; Pakawat Phitakchutidet, legal compliance lead at Shopee; Pavaratch Visaikul, assistant vice president legal at the Stock Exchange of Thailand; Rugeradh Tungsupakul, head of legal at Lazada Thailand; Sayam Siwarapornskul, chief legal officer of multi-industry conglomerate BTS Group Holdings; Thitipon Mahem, assistant director at Thailand��s Eastern Economic Corridor; Visitsak Arunsuratpakdee, legal director at communications conglomerate True Corporation; and Pathanit Mungkornpanich, director, head of legal at BNP Paribas.

The initial operating plan categorises the THAI-CCA��s missions into three pillars:

The academy, where the association upskills the capabilities of in-house lawyers by organising educational, thought leadership and professional development seminars;
The network, where the association brings all in-house lawyers in Thailand together and connect with broader groups of in-house lawyers in the region; and
The community, where the association promotes professional quality and advances the highest ethical standards governing the practice of law in a corporate setting, shares career opportunities, develops the next generation of in-house lawyers, and builds a collaborative in-house legal community.

��As the role of corporate counsel continues to evolve, the THAI-CCA aspires to be a community of solvers where members work together in innovative ways to solve important problems and challenges facing our businesses and our society,�� said Wibuloutai.

��In collaboration with law firms, knowledge partners and law schools in Thailand, we also plan to organise an annual law conference, seminars, and soft-skill training sessions for in-house lawyers. Some activities will also be extended to law students and recent graduates who wish to pursue a career in the corporate counsel profession.��

The THAI-CCA also received support from leading law firms in Thailand as sponsors and knowledge partners, including Chandler MHM, Herbert Smith Freehills, Kudun & Partners, and Tilleke & Gibbins. Other in-house counsel alliances in the region, such as the Singapore Corporate Counsel Association and the Association of Corporate Counsel, will also help the THAI-CCA to participate in regional and global networks.

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Connect the DOTs

ABLJ editor — Thu, 30 Mar 2023 07:16:56 +0000

All the hype around crypto art raises concerns about fraud and counterfeiting in an unregulated market. NFT experts Joshua Chu and Julian So explain how digital ownership tokens shield the creator and owner from such threats

As virtual assets made a comeback in 2021, one new edition in the spotlight was non-fungible tokens (NFTs). Crypto sceptics commonly argue there is no tangible property associated with NFTs, so they are just hype with no value.

However, with acknowledgment that intangible assets such as intellectual property have been traded for centuries, the real overlooked issue is whether traders are aware of the underlying value of the asset they purchase, namely, ascertaining what they are buying and its value, with due diligence.

Joshua Chu

NFTs are not interchangeable, and unique as a collectible digital or physical item. They can be a single edition or a limited number to ascribe a rarity value.

The most common problem with NFTs early on was storage location, in a centralised or decentralised server. Underlying smart contracts in NFTs are merely computer codes that facilitate the settlement of a sale and purchase transaction, including the payment of fees, but do not convey any legal rights.

Unless the NFT takes the form of a hybrid smart contract, with specific natural-language terms built into the code, it can��t be deemed a legally binding agreement.

Without purchasers and subsequent vendors having a basis of assessing fair value of the underlying asset to their NFTs, value significantly risks fluctuating unpredictably, as its foundation is based completely on emotion.

Digital ownership tokens

Julian So

A digital ownership token (DOT) is created by utilising blockchain and NFT technology tools available on blockchain platforms, with a unique identifier to reflect the digital ownership title to a tangible or an intangible asset.

A DOT embeds legally binding ownership documentation into its metadata and secures such metadata on a blockchain.

The underlying asset of a DOT will usually be accompanied by the following documents:

A sale and purchase agreement acquiring the underlying asset from the owner;
A representation from such owner that it is the legal and beneficial owner of such underlying asset, and has the power to make the sale;
A transfer deed that transfers the underlying asset to the holder of the DOT;
A third-party independent valuation or appraisal report on the underlying asset, where appropriate; and
All associated legal documents.

Therefore, DOTs solve the issue with most NFTs, namely, identifying what the purchaser is in fact buying, assignment of legal rights, and ascertaining the value of the underlying asset.

DOTs will also satisfy requirements by regulators when it comes to virtual assets.

This was echoed by the Monetary Authority of Singapore in 2022, which stated: ��Blockchain, tokenisation and cryptography can be deployed together to enable the fractionalisation of high-value assets and monetisation of previously un-monetised assets. This will in turn help to unlock new economic value, enhance financial inclusion, and enable more seamless and efficient provision of financial services.��

While regulators have expressed concerns over ��blank virtual assets�� (virtual assets with nothing within), they have also shown interest in DOTs.

Some DOTs will include metaverse integration features and augmented reality features. For example, imagine having an antique or painting with a museum curator explaining how it is genuine, its history and historical value, all built into the metadata of the DOT.

The benefits of DOTs will therefore carry forward, both in the virtual and physical realities.

For example, a hybrid DOT, also known as a H-DOT, will include the following legal instruments embedded into its metadata and secured on a reliable blockchain: sale and purchase agreement; evidence or warranty of ownership; transfer of sub-licence detailing holder rights; and image, video, music or other file.

H-DOT owners can confirm ownership and/or licensing rights from the legal documents minted into them. A QR code is usually employed pointing to all related legal documents.

Legal rights

A DOT can resolve the issue of unauthorised copying of NFTs as a legal contract by specifying the intended contracting parties. It contains terms of ownership, licence and rights, and available legal recourses if third parties breach any of them.

Currently, under common law, the foundation of any contract includes the pillars of privity of contract, and offer, acceptance and consideration.

While NFT bootleggers will be able to copy pure codes containing hyperlinks to where a virtual asset is stored, the same cannot be done against a DOT because of the prevailing contract law principle.

For example, the doctrine of privity of contract provides that a person cannot acquire and enforce rights under a contract if not a party, and a person who is not a party cannot be made liable under it. This doctrine is enshrined in The Hong Kong Contracts (Rights of Third Parties) Ordinance (cap 623).

Therefore, an NFT bootlegger cannot simply clone a DOT, as they have no privity to the legal instrument in the DOT. Accordingly, only a legal owner of DOTs can enforce their legal rights.

Conversely, contracts that are embedded into the tokens of DOTs can also address the issue of proper offer, acceptance and consideration.

In the past, intellectual property rights to NFTs were at times only an afterthought, as there was no assignment of these rights at the time of issuing the initial NFT. Problems arise when intellectual property rights are merely ��granted�� retrospectively via centralised terms and conditions; contract conditions of offer, acceptance and consideration for such intellectual property rights are not present.

It should be noted that attempts by many NFT issuers to rectify earlier issues of not assigning rights by amending and issuing a centralised set of terms and conditions betrays the very notion of blockchain, which enshrines decentralisation.

Consideration is also essential where one side gives up something in return for an expected return, and should comprise the following criteria:

Through negotiation where terms are laid out by both parties;
Mutual exchange is accomplished, where both parties gain something; and
The exchange must be of value in some way (it is not the court��s place to determine the value).

As such, it cannot be said there exists proper consideration of a right that is retrospectively assigned to a buyer. Prior attempts by NFT projects to retrospectively assign intellectual property rights to token holders may have ended up ineffective owing to the failure to comply with basic criteria for contract and consideration.

Legally speaking, the only way for proper ratification of various past NFT projects is to simply re-issue tokens with all the proper new contracts embedded. However, this is logistically difficult because many tokens have already been assigned via secondary sales, where the initial issue of a privity contract will return to haunt new NFT holders.

Only the real owner of a DOT will be able to take the necessary legal action, as stipulated in the legal contract, against breach of that owner��s digital ownership rights. DOTs can adequately protect token holder��s rights under Hong Kong laws and common law.

Seamless and paperless

One of the greatest complaints against the legal profession is how environmentally unfriendly it has become. Not only is a paper transaction unsustainable, it also takes time. A typical paper transaction will encounter substantial lag time if going through lawyers preparing relevant transaction documents �C sometimes taking months to complete.

The current state of a secondary market for untokenised assets is akin to stock market trades in the ��90s before the internet, where a broker is called to manually complete a transaction, as opposed to using an automated market maker today. It is highly doubtful that traders would accept a full day��s delay for trade in today��s stock market.

By tokenising assets into DOTs, secondary trade can be transacted digitally, achieving both the commercial goals of quick transaction and sustainability objectives. The DOT to commercial papers is therefore akin to an automated market maker, enabling far greater transaction scale.

The legal framework to enable seamless, instantaneous and paperless property transactions in Hong Kong already exists, found in the Conveyancing and Property Ordinance (cap 219), Land Titles Ordinance (cap 585, not yet in effect), and Electronic Transactions Ordinance (cap 553).

But despite passage back in 2004, the Land Titles Ordinance has stalled owing to competing interests of paper-based conveyancers and technology resistance.

The result, sadly, is that conveyancing transactions still require substantial time to complete, averaging no less than six months, while parties are at the mercy of market uncertainties,? with the slightest shift in markets seeding potential disputes.

The introduction of DOT technology is the last piece of the puzzle that will finally propel conveyancing in Hong Kong to the modern age.

By seamless and paperless transactions, not only will Hong Kong��s economy benefit from increased transaction volume with plentiful completion. Billings can also potentially, one day, become a passive and automatic income stream, freeing lawyers to focus on lawyering again, instead of being bound by billing hours.

Joshua Chu is group chief risk officer at blockchain companies Coinllectibles, Marvion and XBE. Julian So is group CEO at XBE in Hong Kong

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Arbitration aspirations

ABLJ editor — Wed, 28 Dec 2022 04:48:17 +0000

As Hong Kong reopens its borders, Mariel Dimsey, recently appointed secretary-general of the Hong Kong International Arbitration Centre, explains her new role and plans to enhance the city��s reputation as a leading dispute resolution hub.

Mariel Dimsey

Asia Business Law Journal: How do you feel about your new role, what will be your main responsibilities, and what do you want to achieve for the HKIAC?

Mariel Dimsey: In terms of how I feel about the new role, I��m obviously very excited to be doing it. This is very different from private practice in many ways, but I find it a very unique opportunity in that it combines the arbitration worldwith business skills in the sense that I��m running a business at the secretariat. I was very intrigued by the role, and I think there are particular aspects of it that were not present in my private practice career. So I��m very pleased to be honing my skill set in these aspects as well.

In terms of my main responsibilities, I am generally responsible for running the secretariat of the HKIAC, which includes keeping an eye on case management, which is usually done under the very capable support of our case management team. I am also responsible for corporate governance matters, and liaise with the HKIAC Council and standing committees, the number of standing committees that the HKIAC has. I also plan the annual budget.

There is also a large business development [BD] element in what I do and will do, and I��m very pleased now that we are opening up in Hong Kong, that a few trips will be on my agenda very soon. It��s very important to get out there now, after our two-year hiatus.

So it��s a very broad set of responsibilities, which is quite different from private practice in the sense that I��m not working on one particular topic for six hours a day, as I may have been in the past, but engaged in many more diverse tasks throughout my day, so it is very dynamic and interesting.

In terms of what I want to achieve, it��s still early days, and for the time being we have a number of major BD projects, which are keeping us busy. One such project is the International Council for Commercial Arbitration [ICCA] Congress. Edinburgh hosted the congress this year and several members of the HKIAC attended, as Hong Kong is hosting the next ICCA Congress in 2024.

In terms of further projects, as I mentioned, there is some travel on the cards to certain strategic events in which we will also hone our messaging about Hong Kong. There is a lot of information circulating about Hong Kong and China at the moment. From where we stand as an arbitration institution in Hong Kong, we do think that a lot of this messaging can be nuanced and enhanced. Part of the BD endeavour with our upcoming business trips is to reinforce the message about Hong Kong as a safe, reliable place to do arbitration.

In addition to that, we are hoping to revise our rules next year to produce a 2023 edition of the HKIAC administered arbitration rules. We are also looking at a couple of technological initiatives, which I think is a natural consequence of digitalisation, not only generally, but also of the developments in the pandemic. So we have quite a few projects on the cards.

ABLJ: You have a very impressive resume with rich experience in many international arbitration institutions. So what aspects of the HKIAC attracted you the most?

Dimsey: In my career in private practice, I acted as counsel and arbitrator under many different institutional rules. I should start by emphasising that I do not see that this is a contest. I do believe that the existing institutions, particularly in the region, but also those farther afield, can coexist because everyone has a large domestic and regional market that they are servicing, in addition to international work. I do think the way the major regional institutions are set up in Asia allows everyone to operate side by side.

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VM directions bring local flavour to global swap markets

ABLJ editor — Fri, 23 Dec 2022 10:11:56 +0000

Announcing new guidelines over derivative transactions, the Reserve Bank of India (RBI) issued Master Direction �C Reserve Bank of India (Variation Margin) Directions, 2022 (VM directions) on 1 June. While broadly based on the Basel Committee on Banking Supervision-International Organisation of Securities Commissions Framework on margin requirements for non-centrally cleared derivatives (BCBS-IOSCO framework), the VM directions contain unique features adding complexity to swap relationships with Indian counterparties.

Jian Johnson
Partner
Cyril Amarchand Mangaldas

Regime features

Variation margin (VM) is the margin that parties to non-centrally cleared derivative (NCCD) transactions periodically exchange to reduce exposure to each other to zero. VM is required to be exchanged for NCCDs permitted by the RBI, namely forex derivatives (other than physically settled forwards and swaps), interest rate derivatives, and credit derivatives between domestic covered entities (DCEs) and foreign covered entities (FCEs).

VM is calculated daily on aggregate net basis across all qualifying NCCDs under a single netting agreement (generally an International Swaps and Derivatives Association master agreement) and exchanged within three days.?VM exchange is exempted for intra-group NCCDs and those with any branches central or state governments of India, foreign sovereigns, central banks, the Bank for International Settlement and multilateral development banks.

DCEs are Indian regulated financial entities with NCCDs of average aggregate notional amount (AANA) across consolidated groups worth more than INR250 billion, or Indian non-financial entities with AANA of more than INR600 billion. FCEs are foreign financial entities with AANA of more than USD3 billion, or foreign non-financial entities with AANA of more than USD8 billion. VM between DCEs may only be exchanged in specified INR-denominated collateral (onshore collateral), while VM between a DCE and FCE may also additionally be exchanged in specified collateral denominated in any freely convertible currency (offshore collateral).

Substituted compliance is only available for DCEs trading with FCEs, subject to a margin regime assessed by the DCE as comparable to the VM directions. The RBI has not provided a list of comparable margin regimes, but has set out principles �C including netting certainty and BCBS-IOSCO framework-based margin regime �C for regime comparability analysis, placing the onus on each DCE to make its own assessment. DCEs would need to decide on the supporting material backing their comparability assessment, including independent legal opinions.

The analysis

Indian branches of foreign banks are classified as DCEs, while their foreign branches are classified as FCEs. Substituted compliance with their home jurisdictions is not available for such foreign bank DCEs in trading relationships with other DCEs, even if their home jurisdiction has a comparable margin regime. Such dual classification for the same legal entity and VM exchange split between onshore and offshore collateral would require parties to monitor and value two NCCD sets and execute separate credit support annexes (CSAs) for each set. This marks a departure from the ��global single CSA�� model under which VM for all NCCDs from multiple branches under the same netting agreement is exchanged under a single CSA, which is general practice in the cross-border swap market.

In swap relationships with Indian entities and banks with Indian branches, parties now require separate India-specific CSAs, or significantly customised single CSAs, to ensure onshore collateral exchange for trades between DCEs. While such a VM split may be commercially neutral, it adds to documentation and operational complexity, including monitoring minimum threshold amounts for VM exchange across two CSAs and currencies.

While VM exchange has been exempted for trading relationships with a foreign sovereign, the term ��foreign sovereign�� has not been specifically defined. This may lead to uncertainty in assessing VM applicability for sovereign instrumentality entities such as wealth funds, state-owned oil companies, and pension and investment funds. Coverage of non-financial firms in the VM directions may also require Indian subsidiaries of offshore entities having negligible standalone AANA to exchange VM in India due to high consolidated group AANA, even though other constituents of the group contributing the major chunk of the consolidated AANA may not be required to exchange VM, due to their home jurisdictions exempting non-financial firms.

Similarly, non-financial entities in jurisdictions not requiring them to exchange VM would be required to do so when dealing with an Indian bank (including its offshore branch), and not with any other banks, serving as a disincentive for them to deal in NCCDs with Indian banks and their foreign branches.

Jian Johnson is a partner at Cyril Amarchand Mangaldas in Mumbai

Cyril Amarchand Mangaldas
Peninsula Chambers
Peninsula Corporate Park
G. K. Marg, Lower Parel (w) Mumbai 400013, India

Contact details:
Tel: ++91 22 24964455
Email: cam.mumbai@cyrilshroff.com

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Delhi High Court leads way for IP protection, enforcement

ABLJ editor — Fri, 23 Dec 2022 09:59:16 +0000

Earlier this year, Delhi High Court enacted the IP Rights Division Rules, 2022 (IPD rules) to regulate the practice and procedure of the IP Division, which replaced the IP Appellate Board (IPAB).

The IPD rules are noteworthy for reflecting both the court��s expeditious transfer of IPAB cases and establishing procedure for myriad disputes the rules seek to cover.

Shrawan Chopra
Partner
Anand and Anand

Specifically, the rules recognise: traditional knowledge and all associated rights in common law; tortious actions related to privacy and publicity that involve IP issues; and matters pertaining to data exclusivity and data protection, intersecting with IP rights.

It is evident that the IP Division shall adjudicate all aspects of IP and its intersection with various laws, with the wide definition of IP rights subject matter reflecting the court��s expertise to deal with such issues.

The fact that the IP Division shall hear original IP rights lawsuits, appeals from various IP rights registries, and entertain original petitions shows that it seeks to introduce uniformity and consistency in IP rights jurisprudence, as the breadth of decisions shall cover both registrability and enforcement of IP rights.

Case studies

Vibhav Mithal
Managing associate
Anand and Anand

For instance, clarifying when a patent application is abandoned in European Union v Union of India, Delhi High Court observed that to hold a patent applicant had abandoned its application, it was important to examine the facts ascertaining if the applicant truly intended to abandon the patent or not.

In ascertaining this intention, the court could consider negligence by the patent agent, docketing errors, and whether the applicant was able to establish full diligence. If it found no intention to abandon the patent, the court approach ought to be liberal. But failure of the applicant to follow-up inferred intent to abandon the patent.

In this case, the patent application was restored, and the court also noted that only the writ court was empowered to restore an abandoned patent application by exercising its writ jurisdiction. This power did not lie with the controller of patents.

Balancing the interests of IP rights owners while appreciating the nuance of business trade channels and concept of commonality to the trade, in Frankfinn Aviation Services v Tata Sia Airlines, Delhi High Court vacated the injunction and denied interim relief to the plaintiff for its mark ��Fly High�� that sought to restrain the defendant��s mark ��Fly Higher��.

The court held that the term ��Fly High�� is common to the aviation sector, with over 20 active registered companies incorporating the phrases ��Fly High��, ��Highflyer��, or ��Highflyers��. It also held that the term ��fly high�� was widely used in the airline sector and coaching institutes. It therefore ruled that the defendant��s intended use of ��Fly Higher�� was descriptive in nature, and not used as a trademark, which was in fact ��Vistara��.

Modifying its approach to protect IP rights with the evolution of infringement on the internet, Delhi High Court��s Division Bench injuncted a defendant �C not present in India but infringing the plaintiff��s IP rights �C for using the familiar Indian trademark ��Tata�� as part of their cryptocurrency, merchandise, website and domain name.

The court specifically observed that the mere looming presence of a website in a geography, and ability of customers in that geography to access a website, can also qualify as targeting.

In a design infringement action, the court��s Division Bench reversed the order of a learned single judge, thereby granting an injunction in favour of a plaintiff��s design rights to a slipper. The bench clarified that the existence of products with similar designs was not material for ascertaining design piracy. Relevance was whether the design in question was indistinguishable from designs known at the time of the registration.

Bolstering IP law

These illustrative decisions by the IP Division, along with the Division Bench, clearly highlight the myriad disputes and holistic ways that IP rights jurisprudence is being shaped by the court.

Creation of the IP Division and enactment of the IPD rules �C along with the existing framework of the Commercial Courts Act, 2015 and Delhi High Court Rules, 2018 �C bolsters Delhi High Court��s expertise in dealing with IP law issues, highlighting how the judiciary perceives this specialised area of law, and giving it the attention that it richly deserves.

SHRAWAN CHOPRA is a partner and VIBHAV MITHAL is a managing associate at Anand and Anand in New Delhi

Anand and Anand
B-41, Nizamuddin East,
New Delhi 110013, India

Contact details:
Tel: +91 120 405 9300
Email: shrawan@anandandanand.com
vibhav@anandandanand.com

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Time for a rethink?

ABLJ editor — Thu, 22 Dec 2022 02:35:44 +0000

Disruption brought by global uncertainty has pervaded the dynamics of the legal workforce, with lawyers across Asia rethinking their careers. Freny Patel explores the reasons behind this trend

In his alarmist ��great resignation�� speech in early 2022, Singapore Law Society president Adrian Tan lamented high attrition in the Lion City��s legal fraternity, alerting warning signals to the rest of Asia to rectify high attrition or face an exodus of talent.

Surprisingly, the pandemic was not to blame. Rather, the biggest challenge he saw was burnout, over which lawyers had been complaining way before 2020.

��Email and instant messaging mean that young lawyers operate at a far more intense pace, compared to previous generations,�� he warned, highlighting mental well-being as a serious cause for concern.

His apprehension was subsequently, more recently, shared by ��߲�� Chief Justice, Dhananjaya Yashwant Chandrachud, who equated junior lawyers to slave workers. At a Bar Council of India gathering, he said junior lawyers were overworked and underpaid, urging senior members of the bar to pay them decent salaries.

Although not sparking this trend becoming known as the ��great resignation��, the pandemic surely added fuel to the fire, pushing many lawyers to adjust their working routines, roles, practice areas or even entire careers.

In tandem with these developments, say experts, is an urgent need for the region��s law firms to increase pay and improve working conditions if they wish to retain talent. As one lawyer who recently left private practice put it, there is a direct correlation between attrition rates and the empathy of leaders in how they treat their teams.

Many lawyers and legal recruitment agencies Asia Business Law Journal interviewed agree. There are various reasons for people movement in the legal fraternity. Hitting the glass ceiling, wanting a better work-life balance, lack of confidence in meeting billing targets, and wanting a more meaningful role in the corporate world are just some of the reasons why a new generation of lawyers are not necessarily at one firm for the long haul.

Han Ri Bong, a Seoul-based partner at Bae Kim & Lee, says the younger generation of lawyers has a different perspective from the older one, where staying at the one firm for decades until becoming partners was the norm.

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ABLJ editor – ���߲�����

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Arbitration aspirations

Asia Business Law Journal: How do you feel about your new role, what will be your main responsibilities, and what do you want to achieve for the HKIAC?

ABLJ: You have a very impressive resume with rich experience in many international arbitration institutions. So what aspects of the HKIAC attracted you the most?

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VM directions bring local flavour to global swap markets

Regime features

The analysis

Delhi High Court leads way for IP protection, enforcement

Case studies

Bolstering IP law

Time for a rethink?

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ABLJ editor – ��߲��

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