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Percy Lo-Kit Chan
22 July, 2010  
HK's politico judicial juggling act

Conflicts lawyers salivating … Hong Kong court told to butt out of case involving claims of sovereign immunity … US hedge fund wants it’s money back … Arbitral award over debts owed by state enterprises … Percy Lo-kit Chan files this report


imageThe Hong Kong Court of Final Appeal is our highest court.

It is headed by the new CJ Geoffrey Ma and manned by a number of local judges, and NPJs (non-permanent judges).

The latter are drawn from the serried ranks of retired Brits and colonials.

Smiler Gleeson has just received a guernsey, while McHugh NPJ handles any judgment to do with betting slips and horse racing (see his Honour’s classic judgment which examined every aspect of common law hearsay: Oei Hengky Wiryo v HKSAR).

So all is, in theory, hunky dory with respect to judicial independence.

However, sitting above the CFA is one other body which is non-judicial – the National People’s Congress of the People’s Republic of China.

The supreme Constitution of Hong Kong as a separate autonomous region is the Basic Law and in certain circumstances, the NPC is empowered to interpret it.

You can see the wisdom in this.

Until 2047 no PRC writ will operate in HKSAR. This gives the Hong Kong a tremendous invisible advantage as a place to do business.

The legal system is predictable, efficient, and incorruptible.

An ICAC (on which your own in NSW is modeled) roams the countryside like a “Star Chamber” keeping the conduct of all public officers above board.

The troops of the People’s Liberation Army moved quickly to take over the old British naval headquarters in Tamar, but are never seen at all in the streets.

How unlike the old days when Scottish squaddies from the Black Watch, or some other miscreant group of Highlanders (or Lowlanders from the Highland Light Infantry) brawled drunkenly, enlivening a Sunday stroll for the tourists at Stanley Beach.

However, a new and perplexing issue has arisen which will have conflicts lawyers salivating.

A US-based hedge fund has imprudently advanced funds to Chinese state-owned enterprises operating in Darkest Africa – in fact in the Heart of Darkness, the former Belgian Congo.

The fund obtained arbitral awards over debts owed by PRC entities carrying on work in the Congo – the PRC was building infrastructure (railways etc.) in return for mineral resources.

The debt was originally owed by the Democratic Republic of Congo and then “transferred” to the PRC entities. Certain assets may be attachable in Hong Kong itself, but the PRC entities appear to be invoking the Congo’s sovereign immunity as a defence to their own position.

Can the arbitral award be registered in HK?

In the Court of First Instance, Reyes J (one of the leading up and coming jurists in the HKSAR) upheld the claim of immunity.

The Court of Appeal overturned this ruling, on the basis that the common law applied and that there was no relevant central government legislation on the topic.

Of course, if the ability to register the award is upheld, this will enhance the attractiveness of Hong Kong as an international business centre.

On the other hand, the central government clearly has much at stake in a geo-political sense in Central Africa, as it does in many other parts of the globe, where it seeks to obtain access to raw materials to further the PRC’s economic growth.

Australians, who are enjoying the best terms of trade for a generation because of the demand from China for minerals, know this only too well.

The HKSAR autonomy does not extend to matters of foreign affairs or defence – once again, this is a fair shake since Hongkongers (Triads apart) are a notoriously law-abiding and non-violent people.

In the same way that Western Australia could not go it alone (despite its attempt in 1933), so Hong Kong is happily nationalistic is terms of defence, sport, and foreign affairs.

The Secretary for Justice has urged the Court of Final Appeal to refrain from deciding the case on the ground that it raises issues of sovereign immunity beyond the remit of the HK courts.

What will happen? Those who aspire to write for the International and Comparative Law Quarterly will be holding their breath. Watch this space.

* * *

While on the topic of Chinese nationalistic temperament, there has been great disquiet lately over the apparent defacing of a famous Guangzhou monument.

The statue of a victorious general against the northern hordes has had removed from the plinth his immortal rallying cry, “Go F… Your Mother”.

This is all part of a wider fear that the central government is attempting to make Mandarin (a bastard tongue that is an admixture of Mongolian and northern Chinese) the main language in Canton and to replace the pure Cantonese dialect.

Mandarin is promoted as the language at schools in Canton and protesters in Guangzhou have organized Cantonese recitations in public places, which have attracted many thousands of supporters.

Percy Lo-Kit Chan reporting