Capital set-up in law at town hall (6)
I believe the answer is:
ottawa
'capital' is the definition.
(capital of Canada)
'set-up in law at town hall' is the wordplay.
'set up' says the letters should be written backwards (in a down clue, letters go up).
'in' indicates the answer is hidden within the clue.
'awatto' can be found hidden inside 'law at town hall'.
'awatto' written backwards gives 'OTTAWA'.
(Other definitions for ottawa that I've seen before include "capital city" , "Canadian capital" , "Canadian city" , "Canada's capital" , "Foreign capital" .)