The Asian Wall Street Journal, July 12, 1995

No Confidence in Hong Kong's Highest Court

By Martin C.M. Lee


Today, for the first time in Hong Kong's 150-year history, there will be a vote of no confidence in a sitting colonial governor. If passed in a conventional parliament, such a motion would bring down the government. My party has called the vote because Governor Chris Patten and the British government have done the one thing sure to damage international confidence in the prospects for Hong Kong's post-1997 future: give China control over our legal system.
Since his appointment as the last colonial governor of Hong Kong, Mr. Patten has travelled the world stressing the importance of the rule of law to Hong Kong's future. He was right to do so. Common law and the rule of law are indisputably Britain's greatest legacy to Hong Kong. But last month's Sino-British deal on our Court of Final Appeal (CFA) marked a shabby end to that legacy, and a tacit acknowledgment that from here on out, Beijing -- not London -- is calling the shots.
The Chinese text of the CFA deal says that our highest court shall have "no jurisdiction over acts of state, such as defense and foreign affairs, etcetera." It is this "etcetera" that is so worrying here, as it should be to the people throughout Asia who do business in Hong Kong.
One of Mr. Patten's main selling points for the CFA deal is that Britain has secured China's agreement that there will be "no post-verdict remedial mechanisms," which the governor says was Beijing's initial demand. With the CFA agreement, however, Britain has handed China a more effective and less obvious tool for manipulating our legal system before the verdict, when political authorities -- the Standing Committee of the National People's Congress -- may decide which cases involve "acts of state" and are thus out of judicial bounds.
This is one reason why the Hong Kong Bar Association and both major political parties in Legco have condemned the CFA deal. It is also the reason why various local chambers of commerce should be very worried about their members' chances in court after 1997. After all, the only "certainty" of a common law with Chinese characteristics is that investors can never know whether or not their opponent in court will have the clout in Beijing to have their cases thrown out.
In the past decade, almost 60% of the 529 listed companies on the Hong Kong stock exchange have moved their legal domicile to Bermuda or the Caymans, where access to the Privy Council continues. Now, if the CFA deal is as good for Hong Kong as Britain and the chambers claim, how many will return? Can we expect Jardines, for example, which launched the exodus in 1984 to "have access to the Privy Council," but now praises the CFA deal, to lead a stampede of companies shifting their legal domiciles back to Hong Kong? Probably not. Despite public support for the deal, investors have privately begun to comprehend that the rule of law in Hong Kong after 1997 may not be unlike what prevails in China today -- at a time when the rule of law in China looks worse than ever, with piracy, kidnappings of businessmen (more than 20 in the past three years), and high-profile contract disputes with major international investors such as McDonalds.
The only question is whether the distortions of our legal system will be blatant and spectacular, involving contracts worth millions of dollars, or more subtle, applied only when Beijing needs desired political result. Maybe abuse will be limited to cases of so-called "spies" like Harry Wu, to journalists who "steal state secrets" like imprisoned Hong Kong reporter Xi Yang, or to abducted businessmen like James Peng, who fall prey to cadre corruption.
One thing is certain: Overnight, our independent, transparent and consistent judicial system is due to become something very different. We are left only to wonder how different.
Ironically, though Chinese leaders may not now realize it, the real loser in the CFA agreement could be China itself. On Monday, Xinhua quoted chairman of the China Law Society Zou Yu as saying wanted to promote "the legal system construction in the country." Sadly, he and other reformists in China, such as Qiao Shi, who have expressed concern about the lack of a rule of law will not now have a working example of what an independent legal system is. The CFA agreement has effectively deprived them of a Hong Kong model for establishing their own modern rule of law, so necessary for membership in the World Trade Organization and other international bodies.
Or perhaps what China really wants is to transfer its authoritarian system wholesale to Hong Kong. Certainly without the check of a credible legal system, it now has the ability to do so.
But we in Hong Kong and around the world have two years to explain to China why that would be such a bad idea. We must convince China's leaders that in today's global marketplace, money travels around the world at the speed of light. And as Mexico -- and even China -- have learned the hard way, money which flows in can flow out again just as quickly. If international investors believe our legal system is a lottery, many will simply refuse to play.
Finally, we cannot simply rely on good intentions and self-restraint of Chinese leaders and businessmen not to abuse the power they have been given over our legal system. We must vigorously pursue legal and constitutional reform to shore up and insulate our courts. To make sure China does not inherit the dormant colonial controls wholesale, we must abolish numerous draconian colonial laws dealing with treason, official secrets and sedition. And in case Beijing fails to understand the damage it will do by not keeping its hands off our legal institutions, we must create a Human Rights Commission and make the Legal Aid Department independent of the government. We have barely 700 days left.
In Singapore just four months ago, Mr. Patten said, "To turn a blind eye to the stealthy or brazen chipping away at the architecture of freedom and the rule of law is to connive at their destruction. Great tragedies are invariably the aggregate of a thousand small betrayals." Those and thousands of other fine words about the rule of law can not conceal the fact that in the end Britain's greatest legacy to Hong Kong was betrayed.
For those of us -- legislators, citizens and investors both local and international -- who will remain in Hong Kong after Mr. Patten leaves on June 30, 1997, the real fight to save Hong Kong and our rule of law has just begun.

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