With the rapid growth of the economy, Chinese has become the world's second largest energy producer and consumer countries, however, in Chinese showed great demand for energy and energy industry to develop at the same time, China energy legislation has failed to keep pace with the development of energy industry China steps. Why Chinese has not been published "energy law"? Supervision system of Sino US energy differences? Lawyers can provide legal services in the field of energy what kind?
    
    Get the degree of doctor of law in America, and in America had experience in practicing lawyer Zhang Libin accepted an exclusive interview with the value Chinese reporters, compared American situation, tells us the legal services in the field of energy China.

►Compared with foreign countries, see China lawyer industry
    "America formulation system of law and case law is very developed; Chinese law on the whole is not specific enough, nor on the many problems of interpretation case, so China law itself exists great uncertainty."

　　The value Chinese: you are the doctor of law degree in American obtained, and with practice experience is very rich, as a lawyer in America and Chinese, gives you the feeling what is different?

Zhang Libin.After graduating from law school, I in the first half of the work of a famous America LLP New York office, after being sent back to Beijing office. Because of the different legal systems between China and the United States, so in the two countries engaged in lawyer work also have differences. I just came back from USA was in 1998, when China firms are still in the early stages of development, service mode and service quality and international firms still have a big gap. I feel the difference in the two countries engaged in lawyer work is the most prominent: USA lawyers to provide legal advice in American, legal conclusion is determined, it may be because the America formulation system of law and case law is very developed. Chinese law on the whole is not specific enough, nor on the many problems of interpretation case, so China law itself exists great uncertainty, often need to apply and the legislature, law enforcement departments for long time communication; in addition, in Chinese, and legal practice rules many things are often out of touch. Based on this situation, lawyers in the customer to explain the law, we need to explain the reality of practice, at the same time, allows customers to fully understand the risks to decide how to do. It is differences in this environment, resulting in all aspects of American and Chinese lawyers work will have certain difference.

　　Value: China had done "China lawyer magazine Crossroads" topic, how do you look at this point?

Zhang Libin.Nowadays, the lawyer industry is sure to go to a relatively awkward stage.

In the field of litigation, China lawyers are limited in many. Because of China judicial system to protect law does not work, the lawyer is taken into account, in criminal cases the defence sometimes risk one's head, therefore also more do not talk to go up to provide the legal rights vindicated for the party. A case about Chongqing, regardless of how the case the right and wrong, restrictions on lawyers to cause the case objectively make Chinese lawyer practicing environment further deterioration, which further influence the construction of rule of law in Chinese.

In the economic field, any legislation is to run the needs of people, it is not empty legal documents or legal provisions, so he naturally played an important role on the essential legal system operation. But in a unique phenomenon China is, a lot of problems does not rely on the law to solve, but by the government or the special relationship to fix or solution, which makes the lawyer's value is reduced, and even the emergence of "being" marginalized.

In the foreign economic field, Chinese lawyer service to foreign customers China projects or to provide legal service for overseas investment projects China enterprises. Because foreign customers in the China investment generally on the law and contract value, and Chinese enterprises in the overseas investment must act in accordance with the rules of international law, so foreign customers and Chinese customers to foreign economic field lawyers work more recognized and valued. So, in the economic field, a lawyer working environment is relatively good.

　　The value Chinese: lawyer industry existence these questions, do you think should be reformed to what?

Zhang Libin.To solve the China lawyer industry problems and future development not only depends on the Chinese lawyer system reform; reform the system of lawyer is subject to the law of the people China social awareness, legal education system reform, legislative and administrative and judicial system, laws and regulations formulation technology to improve, and ultimately depends on the Chinese the reform of the political system. On the current situation, in order to solve the above problems will be a long process. To make Chinese economic reform, the realization of the rule of law economy, we need Chinese society from top to bottom in respect for the law, and the law to regulate their own behavior, make it become a recognized rules. Otherwise, no matter how many laws enacted by the legislature, are just paper law. This situation should not be China socialist legal system characteristics.

►USA energy law energy method reference for Chinese
  "To USA as the representative of the energy regulatory system (which is based on market supervision system) is China energy industry supervision system in the future direction."

　　Value your China: mainly engaged in legal services for energy projects in a law firm, has presided over the translation of "American energy law", America energy method for Chinese "energy law" formulation is what meaning?

Zhang Libin.China and American on land system is not the same. Chinese basically public ownership of land, the land China all resources are owned by the state; and America implementation of private ownership of land, who owns the land, who have attached to the land resources. Therefore, the property rights of resources, there is a fundamental difference between the two countries. However, due to the inherent nature of the energy industry and the economic law, China and the United States are facing the same problem in the regulation of energy, the energy monopoly, energy prices. American has experienced one hundred or two hundred years of legislative and regulatory experience for reference so as to avoid Chinese, Chinese walked many detours. For oil, America is the world's largest consumer, China is the world's second largest consumer. American facing energy security issues, China face may be more energy security problem. In a sense, to USA as the representative of the energy regulatory system (which is based on market supervision system) is China energy industry supervision system in the future direction.

　　The value Chinese: Excuse me why the regulation of energy? Please introduce the differences between China and the United States Energy Regulatory system.

Zhang Libin.China and the United States are at different stages of economic development, national ideology also has the very big difference, but there are many similarities in the field of energy. It also makes America energy law can be established to the reference energy legislation for the Chinese.

China and the United States with energy consumption. The country needs a huge and stable energy supply to support the development of Chinese economy, ensure GDP rose steadily; and America as the number one economy in the world, also need adequate and stable energy supply, to maintain its economic operation. The scarcity of energy is very easy to cause the energy of natural monopoly industry, so the government regulation is necessary. However, the need to pay attention to is, government regulation doesn't mean "administrative intervention" for the energy industry, also provide an excuse not to state monopoly of natural resources. Government regulation of what I say is the premise of based on market economy, by means of Finance and price regulation, regulation through the legal form. For this problem, understanding Chinese government officials may exist deviation.

Market economy is not perfect, without supervision will be a chaos. In the oil resources in Texas Prefecture American early in development, "rules" of the common law is applicable to the petroleum industry division of property, which leads to the resources have been plundered, disordered mining, resulting in serious waste of resources. Chinese energy industry also once appeared "put random" situation. American to prevent monopoly and adopt an open, fair competition, a collection of folk capital, a great deal of sophisticated technology, effectively solve the monopoly problem in petroleum and natural gas industries represented in the energy sector. Can say, America is successful in monopoly and regulation of energy industry on processing. America after years of development has been in the energy industry is a relatively mature supervision system. Our country can learn from American experience in it, of course not to copy. At present, our country is composed of three major state-owned oil monopoly in the oil and gas industry, and government regulation is not in place or not enough, not the tube, pipe the pipe. Our country should consider the proper release of oil and natural gas upstream industry, for oil and gas exploration and development blocks through competitive bidding way to allow private enterprises and other state-owned enterprises to enter, to break the monopoly situation now, market competition pattern, the government also through price regulation and taxation of natural resources and industry bottlenecks caused by natural monopoly heavier regulation, for the state-owned enterprises and private enterprises supervision should make no exception.

　　The value China: introduced the private investment of 36 and the relevant rules this year, allow private capital into the energy industry, but in fact we are very worried that this is just a short file, you believe in laws and policies also need to decide which adjusted to ensure the real implementation?

Zhang Libin.I am the validity of related policies or skeptical. Because the policy itself failed to break the monopoly in the true sense, resources or in the hands of a few large state-owned enterprises. Only on the premise of state-owned enterprises voluntary, private enterprises can get some opportunities for cooperation, the initiative is still in the state owned enterprises. If you want to fundamentally change the status quo, China can break the monopoly of resources, through competitive bidding and other forms, the formation of an effective mechanism of fair competition.

Shanxi coal to events, in order to reduce accidents, reduce pollution in it for the purpose of private coal mining enterprises, forced "acquisition". When the private entrepreneur market investment is not a fair market price compensation in accordance with the takeover, behavior becomes a looting of private enterprises, this will make the public lose confidence in the Chinese law. Private enterprise investors worried about such things from happening again, have to find investment opportunities abroad. This Chinese capital outflow of the trend and the Chinese government to make Chinese economy from government investment oriented economy to counter the folk capital investment led model of economic policy. A country can not be long-term government investment to stimulate the economy, must have the participation of private capital investment; but if the national law does not follow to go up, the economic development is not a large number of private capital participation and support, the economic development is not sustainable, its economic transformation objectives can not be achieved.

　　The value Chinese: Energy Law China has not issued, what do you think is the main reason?

Zhang Libin.As to the healthy development of the energy industry and energy China civil lawyer, I hope that the "energy law" introduced the mood is very urgent. "Energy law" has not issued instructions from all walks of life, the basis for our country "energy law" of some important policy issues have not reached a consensus. Chinese should take the government's regulatory system to a market-oriented has not been the government, enterprises and the public identity. Various government departments for their own power to consider the mutual conflict, some state-owned energy enterprises for their own interests, but also actively opposed to break the monopoly, against the market access and fair competition, thus becoming negative force hampering the energy sector reform. So, Chinese "energy law" can not be quickly issued. For the world's largest consumer of energy for many years even a department of energy law are not, incredible.

In addition, previously announced to the public to solicit the views of the "energy law" draft is more like a policy announcement file, the lack of operability and execution, is not a law. Very little energy law drafting who know the law. Energy law, should not only declared energy policy, should also have specific laws and regulations, including the implementation of the mechanism and the responsibility, the right is violated to obtain the legal relief, the mandatory norms is violated by the government. Therefore, Chinese "energy law" in the legislative techniques should also improve.

　　The value Chinese: energy management contract (EPC) in Chinese is at an early stage of commercial development, in your opinion, the government should from what respect to cultivate EPC market, in order to better allow enterprises to avoid risk and financing risk?

Zhang Libin.In China, energy service becomes the contract energy management, English namely energy performance contracting, referred to as EPC. This industry is developed in recent years in China, compared with the developed countries is late. I feel in relation to the development of this industry has several problems is the key.

First of all, China should improve the relevant laws, so that the high pollution, high energy consumption industries to bear more of the cost and responsibility, which is the externalization of cost internalization. If the sewage enterprises or enterprises with high energy consumption is not really bear the cost and responsibility, they have no commercial incentive for energy contract management service enterprises, they will continue to be high pollution, high energy consumption and way of operation. If there is no demand for energy services in the industry chain, energy management services enterprises are lack of business opportunities. This is a China EPC industry development is one of the most important problems.

Second, should establish standard measuring energy saving effectively. This problem is not solved, between the Energy Service Companies and its customers can easily lead to disputes. This is detrimental to the transaction security. The system construction is very important. Now the international already some related standards, Chinese can get them to digest reference. China existing standard is still not complete.

Third, the government should provide financial and policy support to the Energy Service Companies. The policy banks should provide financing support, the government should give a certain subsidies. The industry in its early stage of development should get some policy support, because it is young industry.

Fourth, through market means to promote state-owned commercial banks and policy banks actively involved in this industry, play a more general role in financing. Don't expect completely based on ethical standards to support the industry of commercial banks, commercial banks must consider financing business risk and credit reasonable profit. Commercial banks in deciding whether to provide financing support, to see whether item company have sufficient assets and future stable cash flow, as a repayment guarantee. This can make the commercial bank and trust to energy service companies to provide financing support. In addition, completely rely on the moral, rely on policy responses of commercial bank financing is not expect its long-term.

►Legal services in the energy field and overseas mergers and acquisitions
  "Overseas M & A has many kinds of risk, not only is the legal risk, and political risk, cultural risk and business risk, acquisitions and many unimaginable details, all need to Chinese business caution."

　　The value Chinese: so the Ze law firm in this major can provide what services to enterprises?

Zhang lawyers:My world Ze law firm has an energy and environmental legal service team, we have Chinese best experienced energy lawyer, participated in many domestic and foreign large oil, natural gas, energy, infrastructure, financing and other aspects of the project. The team agent in addition to traditional energy projects, but also provide legal service in the new energy and energy services industry. Specifically, we can provide legal services include contract drafting and negotiation of a contract, to the customer. If there are disputes, we can also provide the relevant dispute resolution of legal services. We also can provide advice to the relevant government departments, introduces the successful experiences of foreign energy industry, especially foreign conventions concerning energy services industry and experience. I have been invited China natural gas industry policy and legislative proposals to participate in the drafting and demonstration.

　　Value: Chinese in commercial operation of this level, you think emission trading and carbon emissions trading is related to differences in how?

Zhang lawyers:China now in some places are trying to emissions trading, I don't know much about the trading patterns, therefore is not good to talk about it with the international carbon emissions trading mode and what is the relationship and difference. Carbon emissions trading is to trade on carbon emissions right to use market mechanism, the carbon emission reduction total control to achieve environmental goals, but also makes the most efficient use of emission reductions in the economy. Carbon emission trading has been implemented in American, in Europe has developed quite mature. At present, most transactions in the project is the clean development mechanism (Clean Development Mechanism, referred to as CDM) project. Some hydropower or CBM project Chinese can be designed as CDM projects, in accordance with the procedure of some institutions to foreign certification, and certification after the sale in the international carbon emission trading market, so as to change the project finance model.

　　Value: Chinese in overseas M & A, the enterprise should pay attention to what issues associated with the law?

Zhang Libin.Chinese enterprises overseas mergers and acquisitions, is a topic of hot debate. The state-owned enterprises and private enterprises are itch for a try, a lot of enterprises have already succeeded in "going out". Many other lawyers I and world Ze law firm are involved in many overseas merger and acquisition. I have led a team of lawyers in Xinjiang Guanghui energy company in Kazakhstan to purchase zaysan block and financing projects as well as representative in the two oil blocks the acquisition of Brazil Peregrino oilfield. The amount of investment of these projects, and so far have been successful.

Overseas mergers and acquisitions throughout Chinese enterprise case, legal issues China enterprises should pay attention to the following:

First of all, China enterprises should avoid blind merger, the first to do the feasibility study. You must do the due diligence investigation (legal due diligence) research as well as all aspects of technology, management, market etc.. Secondly, Chinese enterprise once the acquisition target, should help the design of the transaction structure by professional lawyers, accountants and investment banks experienced professionals. The design of trading structure to avoid or reduce the legal risk, political risk, commercial risk.

In the preliminary investigation and contact with each other, generally need to be signed a letter of intent with each other, if the other party to sell the shares or assets of the target enterprises adopt bidding mode, Chinese enterprises need to other quotations, quotations in the commerce clause also need to provide the opposing counsel purchase agreement for review and as part of a bid to each other. No matter when the letter of intent or quotation, China enterprises should be cautious, a lawyer to review, legal and other traps, the use of legal provisions to protect themselves. For example, in a letter of intent or quotation, should be pre condition is provided with a plurality of delivery for the acquisition of obligations, these conditions include: due diligence to China enterprises satisfaction, finally signed a formal agreement and the quotation or signed a letter of intent to the formal contract between local, national political, legal and market had no substantial adverse effects (material adverse effect). If these three conditions are not met will be detrimental to the transaction, while China enterprises can exit at any time according to the above terms. Otherwise, Chinese enterprises may lawsuits.

In general, the energy acquisition projects are often large transactions, this huge exchange involving commercial risk, legal risk, regulatory risk and political risk is usually very large. If you do not do the due diligence of our enterprise, if in the future economic responsibility and the political responsibility, it is not an enterprise or individual can afford. Hire experienced specialized law firms and accounting firms to do due diligence can be very good to avoid or reduce these risks. Legal due diligence should include many aspects, such as the legitimacy and effectiveness of the target enterprise property, assets true, there is no major litigation, there is no higher risk of contract, whether the assets license and so on, are to be included in the scope of investigation.

Also, I would like to say that the purchase agreement negotiations. Overseas acquisitions to the goal enterprise acquisitions generally sign a share purchase agreement (SPA). Most equity energy of mergers and acquisitions international purchase agreement is usually used as the applicable law of Anglo American law. The terms of the contract is very complicated, there are few Chinese lawyer can understand this kind of contract and contract modification and negotiation. Now only those who served in the Chinese lawyers have received strict training in international law firms lawyer could do this business. China enterprise if cannot find Chinese lawyers, can only be hired international law firm.

In the negotiation of SPA, Chinese entrepreneurs are not very familiar with several important terms but needs to grasp is: representation and warranties (Representations and Warranties). This clause requires the seller to the buyer by legal due diligence and financial due diligence to do a full guarantee on the sale of the assets or equity based on. If there is a misrepresentation or fraud case, then the contract is invalid, China enterprises can also sue each other, ask for relief of law. But if the seller in the terms and the disclosure letter revealed some problems and China enterprises still buy, is not to the China enterprise after disclosures grounds, the rescission or ask for compensation or that other rights.

Another provision "is the pre condition of delivery" (Conditions Precedent to Closing, referred to as CP). This provision is also necessary for the protection of the acquirer's terms. This is like the love from the engagement to marry, have a long way to go. After the engagement if not up to a certain condition, is not married. Signing is like before marriage, engagement, engagement, and delivery is married, to perform certain procedures and rituals, and then live together. The pre conditions of delivery usually includes access to relevant government approvals, including antitrust review or national security review. If you go to the American investment, but also through the national security review of USA (CFIUS review). If the CP cannot meet and can not be abandoned, the transaction finally will not complete the delivery.

Default on the responsibility and relief, in order to avoid the seller because of changes in market prices does not fulfill the contract, China enterprise may require "breakup fee" in the SPA clause. "Break fee" with the nature of the liquidated damages, is a punishment given to the other party. If the other party fails to perform the contract after, will need to pay a huge breakup fee. Set the amount of breakup fee is appropriate? Should be enough to make the other side to pay the high cost of default can effectively suppress the default.

In general, overseas mergers and acquisitions has many risks, not only is the legal risk, and political risk, cultural risk and business risk. A good lawyer should be through the design of the transaction structure and the terms of the contract to help China enterprises effectively reduce or avoid these risks. Acquisitions and many unimaginable details, all need to Chinese business caution.

　　Reporter: "Li Chunyu"
　　2010-11-20