unday April 10 2011

A real issue for HK's leaders-in-waiting

Philip Bowring

With three candidates lining up for the small-circle election to chief executive, a major issue has come up on which all should state their views. So let us hear real views on a real issue from Henry Tang Ying-yen, Leung Chun-ying and Regina Ip Lau Suk-yee, not just catty remarks about their rivals.

Before us is an important test case of their commitment to putting Hong Kong interests above those of Beijing and to take a stand on the principle of 'two systems'. I refer to the question of whether Hong Kong courts have jurisdiction in a commercial case against the Democratic Republic of Congo brought by FG Hemisphere Associates, a defaulted debt fund, which is now before the Court of Final Appeal.

This may seem an arcane legal issue. It is not. It goes to the heart of the most important pillars of Hong Kong's separate status - its legal system and commercial autonomy.

Specifically, Leung and Ip should be leading the cry of outrage against the decision of the government to intervene in this case with the specific aim of undermining the autonomy principle. A senior counsel for the secretary of justice went to court to argue that Congo enjoyed sovereign immunity, and Hong Kong courts had no jurisdiction in the case brought by a fund which had bought the state's commercial debt.

There are complex legal issues here. But the Hong Kong government had absolutely no business involving itself in a case which in no way touched on its administration. The secretary for justice was simply acting as Beijing's lapdog in a matter which should have been left to the disputants to fight out in the court.

The intervention by the government could well blow a major hole in Hong Kong's autonomy in commercial cases and thus threaten its position as a financial centre whose legal system is independent and transparent. Whilst most government commercial dealings are done through companies rather than directly by sovereign states in their own name, there are plenty enough of the latter to make this an issue of concern.

There is an added worry in this case as Congo's joint defendant is China Railway Group, a mainland state entity which is said to hold the claimed US$104 million in Hong Kong after a deal with Congo.

The Hong Kong government has simply been acting as Beijing's mouthpiece in arguing that the principle of 'two systems' cannot override the 'one country' principle. Hong Kong under British rule had followed the judgment of the top British court which ruled that sovereign immunity did not apply in commercial cases which were not acts of state. China, according to letters from the foreign ministry, does not accept the notion of limited immunity.

The Hong Kong government has done its best to undermine its own courts' autonomy by arguing that this issue is a foreign policy one and therefore outside Hong Kong's remit under Articles 13 and 19 of the Basic Law. It has urged that the issue be referred to the National People's Congress Standing Committee, which is empowered to interpret the Basic Law, and would surely rule that Hong Kong has no jurisdiction.

The claimants reasonably argue that this is not a matter of foreign affairs but simply a commercial issue and clearly a Hong Kong one. The government might be considered in breach of its own obligation under Article 109 to provide the legal environment for maintenance of its status as an international financial centre.

It was bad enough that the government went crying to the NPC in 1999 when the Court of Final Appeal ruled against its right of abode interpretation. Then, at least there was an issue which directly concerned the administration. In this case, there is none. So, Ip and Leung, will you show that you have the courage to stand up for Hong Kong's interests when limp-wristed Tang clearly does not?





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