Hong Kong Law Journal 1971 - 2024

Whether a court order under appeal is interlocutory or final can be of immense legal and practical significance. In particular, the Hong Kong Court of Final Appeal has recently held that any decision made by a two-member panel of the Court of Appeal on appeal from an order which transpires to be a final one is a nullity so that the Court of Final Appeal has no jurisdiction to hear any further appeal on merits. This article examines three recent decisions of the Court of Final Appeal and concludes that notwithstanding these judicial pronouncements of the highest authority in Hong Kong, the waters are probably now muddier rather than clearer. There is therefore a need to formulate plain and workable statutory rules to deal with the problem.

The Lee Ming Tee case, stretching from 1998 to 2004, is the longest and most expensive criminal prosecution in the Hong Kong Special Administrative Region thus far. This article examines the strategies employed by the defence to try to delay and abort the prosecution. The strategies are many of the same ones documented by Kenneth Mann in his study of American white collar crime attorneys. The effectiveness or potency of strategies, such as information control, information access and deflecting attention, depends on the underlying rule of law values and institutions of the society where the prosecution occurs. While some may criticize the outcomes and many detours taken in this case, they nevertheless serve to underline the robustness of Hong Kong’s independent judiciary, due process safeguards, and system of jury trials post-1997.

Adam Smith’s invisible hand requires a level playing field in which symmetry exists between consumers seeking to maximise utility and businesses seeking to maximise profits. However, it is often observed that the modern consumer may find himself in situations where his bargaining power vis-à-vis the supplier is “unequal”. In this paper, attention is focused on the asymmetries between consumers and businesses that put consumers at a disadvantage. These are market power asymmetry, information asymmetry and access to justice asymmetry. The analysis of the effects of such asymmetries provides a framework and yardstick for the examination of consumer protection policies and mechanisms, whether they may involve legislative initiatives, consumer education, law enforcement, or civil justice reform, and will help rationalise the debate on why consumers need protection and what mechanisms should be adopted for consumer protection.

While political relations between China and Taiwan have gone from bad to worse in recent years, the growing importance of economic relations between both sides of the Taiwan Strait has compelled governments on both sides to amend relevant laws and regulations so that courts may recognise and enforce arbitral awards rendered by each other's arbitral organisations. This historic trend started in 1992, when Taiwan's Legislative Yuan passed a statute authorising courts to recognise and enforce civil judgments and arbitral awards rendered in mainland China. China's Supreme People's Court reciprocated in 1998 by issuing regulations permitting recognition and enforcement of arbitral awards rendered by arbitration bodies in Taiwan. Significantly, courts on both sides have recently begun enforcing each other's arbitral awards. This amounts to a major breakthrough in cross-Taiwan Strait relations that as of yet has gone widely unnoticed. However, more experience must be accumulated on both sides before the emerging system of cross-Taiwan Strait arbitral award recognition and enforcement can be declared a success.

This article analyses challenges to judicial independence in the lead-up to the 2005 interpretation of the Basic Law by the National People’s Congress Standing Committee. It argues that because the Chief Executive is accountable to the Hong Kong Special Administrative Region as well as to the Central People’s Government, (enhanced by a legitimate expectation of universal suffrage for the future election of the Chief Executive), the interpretation potentially concerned a matter of “regional autonomy”, which was therefore within the jurisdiction of the Hong Kong courts. The criticisms made by the Hong Kong Special Administrative Region Government of judicial review and of a lack of experience with constitutional law suggests that legitimate avenues of public challenge to inappropriate government action are not respected, which in the current absence of democratic alternatives is a cause for concern with respect to the rule of law, the separation of powers and the future development of Basic Law jurisprudence.

On 24 August 2005, Justice Hartmann handed down a landmark judgment in Leung v Secretary for Justice, the first “gay rights” case to come before the Hong Kong courts. In a judicial review application, the High Court declared that four provisions in the Crimes Ordinance relating to sexual activities between men were unconstitutional and therefore invalid, on the basis that they arbitrarily interfered with the private lives of gay men, and discriminated against them on the ground of their sexual orientation. The Government has appealed the decision regarding section 118C (only), which prohibits “buggery” between men where one party is under the age of 21. This article calls for the Court of Appeal to uphold Justice Hartmann’s ruling, arguing that it should comfortably withstand the Government’s grounds of appeal, and highlighting further potential precedents and arguments in support. It also responds to an article in Volume 35, Part 3 of this journal, in which Robert Danay argued that the offence of buggery should have been analysed on privacy grounds alone, and that the use of the equality analysis had resulted in the judicial promotion of a negative, “hypersexualised homosexual stereotype”. This article contends that upholding the dual aspects of the judgment is important for continuing Hong Kong’s progressive jurisprudence in the fields of equality and human rights, and also has positive significance for Hong Kong’s gay community, by both respecting the privacy and affirming the equality of gay men in Hong Kong society.

In this article, the author reviews China’s law of commercial arbitration, in light of recent amendments to international arbitration rules, designed in part to improve and ensure neutrality and independence. Despite these amendments, there remain significant pitfalls, arising in part from deficiencies in the court system, to which a claimant must turn in the event of non-compliance with an award. The article concludes with some proposals to address these deficiencies.

The legal systems of Australia, Hong Kong and Singapore have all evolved from a common genesis within the British Empire, but their corporate taxation systems have developed in quite contrasting directions. This article examines two specific areas in which the three polities have historically diverged - in the manner by which each determines its jurisdiction to impose tax, and also how each treats corporate profit distributions flowing to both domestic and foreign shareholders. In particular, the article considers two recent tax reforms in Singapore, designed, in the author's view, to place Singapore on a more competitive footing with Hong Kong in attracting multinational holding company activity, and inward foreign investment. Although fundamental jurisdictional differences will still remain between the three jurisdictions, in the treatment of corporate profit distributions a greater degree of uniformity has been achieved.

Regulatory interest in financial derivatives centres on how unforeseen shocks might affect their value. Current concerns arise from prolific growth in the use of derivatives by financial institutions for credit risk transfer, the scale of which some national authorities find disquieting. However, attention in Hong Kong applies to a wholly different setting, springing from its prominent market in listed covered warrants. The regulatory regime for these instruments is fractured, porous, and conflicts with precepts of international practice to which the territory nonetheless subscribes. Primary oversight is entrusted to the Stock Exchange of Hong Kong, a body neither equipped nor inclined to perform the function authoritatively. Slender, variable disclosure requirements do little to inform participants as to the balance of risk and reward inherent in these products, and since most warrant buyers are non-professional individuals, a pronounced market correction would create a significant moral hazard for Hong Kong's government.

This article explores the practical and conceptual affinities between the doctrine of strict compliance of presentation documents and a rejecting bank's obligation to give a proper rejection notice in letters of credit transactions. When a beneficiary or negotiating bank presents documents to draw down on a letter of credit, payment may be denied if the documents do not strictly comply with the terms of the credit, an allegation that is often liable to challenge in litigation. If the court finds the documents to be discrepant, the problem that naturally takes centre stage is determining the validity of the bank's communication of its decision to reject the presentation. In recent years a huge volume of letters of credit cases has been contested on these problems. In this article, the author evaluates the emerging trends, and argues that the principle of strict documentary compliance is the quid pro quo for the stringent criterion for a valid rejection notice; both compel strict conformity from the parties.

This paper advances the argument that institutional investors, in particular mutual funds, can play a vital role in enhancing corporate governance in emerging economies. Accordingly, regulatory frameworks should be structured in a manner that encourages the growth of the mutual fund industry and enables it to play a proactive role in corporate governance. The paper highlights key regulatory issues that must be addressed while devising suitable regulation for mutual funds, and evaluates the regulation of mutual funds in Pakistan in the light of the propositions laid out in order to demonstrate the application of this approach.

The current problems of China's taxation system reveal a major flaw in its Constitution and reflect a false understanding about taxation maxims. This article points out, through analysing three major problems with respect to its income taxes, that one of the main reasons that many businesses and common citizens throughout the country are reluctant to pay taxes is that they enjoy few rights as taxpayers. According to modern constitutional theory and tax law theory, taxpayers' rights not only concern people's private property rights but relate, also, to their civil and political rights. Few Chinese constitutional scholars pay sufficient attention to the fact that limiting government is a pre-requisite to foster growth in constitutionalism. This article discusses the linkage between taxpayers' rights and constitutionalism and suggests some reforms aimed at fostering the growth of limited government in China.

The fiduciary doctrine holds that a fiduciary must avoid a conflict of duty and personal interest and must not derive any profit from his fiduciary position. Liability for breach attracts the more extensive remedies of equity's armoury, including the gain-stripping remedy of an account of profits. With respect to a fiduciary's liability to account, although Hong Kong courts recognise that a causal connection between a breach and its ensuing gain is required, there have so far been scant judicial remarks on this front. This article argues that issues of causation and remoteness in the award of an account of profits for a breach of fiduciary duty can be determined by a two-stage inquiry. First, this article examines the possible approaches to establishing factual causation and suggests that a probabilistic approach to causation may be a better way forward. The answer to the second inquiry depends on the nature and purposes of the equitable principles involved.

Legal Professional Privilege (“LPP”) is deeply rooted in the common law and has even been described as a right of a constitutional nature. In the recent decision of the Three Rivers case (2005), Lord Scott described LPP as an “absolute right”, subject only to the well established crime / fraud exception. In another decision, Taylor CJ opined that once LPP is established, it is not subject to any further balancing exercise. In contrast, the Canadian Supreme Court refused to adopt the same approach and decided to subject LPP to the same proportionality exercise as any fundamental constitutional right. This article explores the scope of LPP and argues that the Canadian approach should be preferred. While the Canadian approach seems to have been endorsed by the Court of Final Appeal in a recent disciplinary appeal, this article criticises the Court of Final Appeal for having swung the pendulum too far by adopting a relatively loose standard to allow LPP to be abrogated. Finally, this article explores how the Court should approach an application for a warrant to conduct covert surveillance under the newly adopted Interception of Communication and Surveillance Ordinance 2005 when such covert surveillance may interfere with LPP.

Economic and finance theories - for example, the efficient markets hypothesis (EMH), financial economics and behavioural finance - enrich our understanding of securities regulation and assist in regulatory design. This article, however, argues that the theories are largely irrelevant to the long-standing core aims of securities regulation - the prevention of fraud and investor protection via disclosure of material information. So, for example, behavioural finance tells us that irrational investors may make bad investment decisions for a variety of reasons. This insight tells us nothing lawyers do not know already or intuitively. The thesis of this article is that the United Kingdom - and by extension the former British enclaves in the Southern hemisphere such as Hong Kong, Malaysia, Singapore, Australia and New Zealand which all adopted United Kingdom law - had developed a powerful and “classic legal genealogy” or rationale for securities regulation long before EMH - or indeed, any other finance theory - became main-stream. It is this “reclaimed” genealogy that should inform governmental regulation of securities markets in those countries.

In previous articles in this series, the authors have identified and discussed the challenges posed by self-representation both for litigants and for other stakeholders in the civil justice system; highlighted gaps in knowledge about litigants in person and charted a course for further empirical research; reported upon findings of a survey of solicitors conducted to elicit their views on the issues raised by self-representation, and considered specific issues relating to the recovery of costs. The purpose of this fourth article is to report upon findings generated by a survey of the barristers' profession in Hong Kong, which was designed to gather information about the issues raised by self-representation from the perspective of barristers acting and appearing in court for represented parties.

Shortly after the ninth anniversary of Hong Kong's reunification, mainland China and the HKSAR signed an agreement on mutual recognition and enforcement of judgments in civil and commercial matters. This article first reflects upon the background of the long consultation process, having regard to the theoretical and practical difficulties arising within the unprecedented framework of “one country, two systems”. The article proceeds to examine the major provisions of the agreement and critically analyses the agreement in the light of the recent comparable arrangement between the Mainland and the Macau SAR. Although the Mainland / HKSAR agreement represents a breakthrough in cross-border judicial cooperation, the authors argue that because of its very limited scope the agreement will likely be of quite limited use in the future. The notable differences between the two legal regions may also give rise to a number of uncertainties when it comes to the practical implementation of the agreement.

While political relations between China and Taiwan have gone from bad to worse in recent years, the growing importance of economic relations between both sides of the Taiwan Strait has compelled governments on both sides to amend relevant laws and regulations so that courts may recognise and enforce arbitral awards rendered by each other's arbitral organisations. This historic trend started in 1992, when Taiwan's Legislative Yuan passed a statute authorising courts to recognise and enforce civil judgments and arbitral awards rendered in mainland China. China's Supreme People's Court reciprocated in 1998 by issuing regulations permitting recognition and enforcement of arbitral awards rendered by arbitration bodies in Taiwan. Significantly, courts on both sides have recently begun enforcing each other's arbitral awards. This amounts to a major breakthrough in cross-Taiwan Strait relations that as of yet has gone widely unnoticed. However, more experience must be accumulated on both sides before the emerging system of cross-Taiwan Strait arbitral award recognition and enforcement can be declared a success.

The Interim Provisions on Administration of Clinical Application of Human Organ Transplant Technology were promulgated by the Ministry of Health in March 2006 as China's first piece of national legislation in the field of organ transplants. This article firstly reviews the legislative background of the new provisions as well as the previous local legislation, and then describes and analyses the main rules of the new legislation. These rules are categorised into three groups: the licensing and supervising mechanisms, the in-hospital procedural rules and reporting systems, and the rules of organ donation and informed consent. Despite these rules, the new legislation has some significant deficiencies that tend to weaken its importance. This article concludes with a general evaluation of the new legislation.

On 1 January 2006 the amended Company Law of the People's Republic of China came into effect. The Law contains many provisions on limited liability companies which are substantially different from their Hong Kong counterparts. They include: setting company policies by shareholders, inspection of board decisions by shareholders, disregarding majority shareholders' views in shareholders' meetings, directors elected by staff, passing resolutions without a majority vote in supervisory boards and overriding shareholders' wills by articles of association. This paper was prepared after having reviewed 50 recently published works on the new Law. They were obtained from leading book stores in Beijing, Shanghai, Guangzhou and Shenzhen. It will be seen that all these works fail to address the operational mechanisms of the above special features. This paper aims at discussing these unexplored issues and making suggestions where appropriate.