It is said that Hong Kong is the most successful BOT (Build Operate Transfer) project in history. Many things have changed since it became a Special Administrative Region of the People’s Republic of China at midnight on 1 July 1997, but much remains the same. Property and share prices continue to fluctuate, more than 6.9 million people rub shoulders in an area of about 1,100sq km (of which, it is said, 90 per cent is not built on) and the bars of Wanchai remain open from dusk until dawn.
The airport has moved from Kai Tak in the city centre to a modern airport linked to the city by an excellent train service, depriving passengers on the right-hand side of the plane of the experience of seeing into people’s living rooms during the final descent.
The Hong Kong economy has seen similar changes to the UK over the years. Mass manufacturing has moved away, mainly to China, to be replaced by service industries such as banking and insurance. Recent dotcom mania has been tempered like everywhere else, but Hong Kong remains a vibrant economic city in the heart of Asia.
Hong Kong’s economic success was aided by a common law legal system akin to the UK’s. Investors could look to a solid and predictable legal framework with functioning courts. Since the handover, Hong Kong law has derived its constitution from the Basic Law. The Basic Law takes precedence over all other laws in Hong Kong and all executive, judicial, legislative and economic systems must comply with it. The Basic Law provides that all laws previously in force in Hong Kong, including English common law, rules of equity, ordinances, subordinate legislation and customary law, will remain in force, and guarantees the freedoms that residents of Hong Kong enjoyed prior to the handover for 50 years after the handover.
The Hong Kong Special Administrative Region (HKSAR) courts have some jurisdiction to interpret the Basic Law. But the extent of this jurisdiction is unclear. In the law it is provided that the National People’s Congress of China will authorise the courts of the HKSAR to interpret the Basic Law on its own. Yet it remains uncertain as to when the need to refer to the NPC for interpretation would arise. Last year, following a decision of the Court of Final Appeal in Hong Kong granting rights of abode, the Standing Committee of the Ninth National People’s Congress, upon the request of the Hong Kong Chief Executive, issued a different interpretation of the Basic Law to that of the Hong Kong courts and directed the judges to amend their judgments accordingly. This led to a great deal of controversy about how the “one country, two systems” principle was applied in practice.
Hong Kong follows the English system of solicitors and barristers, with a similar demarcation of roles. Foreign lawyers may practise in Hong Kong and can qualify as solicitors if they pass a transfer examination. Most of the large UK and US firms are represented – the UK-based firms tending for historical reasons (no transfer examination was required before the handover nor was a work permit needed) to practise locally as Hong Kong solicitors. Applications may be made for UK barristers to appear before the Hong Kong courts in cases where the local bar may not have the relevant experience.
Property work, the mainstay of many firms, was hit dramatically by the Asian financial crisis and has not fully recovered (property prices in Hong Kong have halved and at the same time conveyancing scale fees have been abolished). Firms who relied on the work have had to look for alternative sources of income to keep their place in the market.
Commercial and banking work has steadily recovered from the crisis, and many firms have been busy for much of the start of this year with internet and e-commerce related work.
Nicholas Grandage is a foreign lawyer at Denton Wilde Sapte’s Hong Kong Office.