Hong Kong Law Journal 1971 - 2024

This article compares the balanced-budget rule in art.107 of the Hong Kong Basic Law with its counterpart in art.135 of the Spanish Constitution. It reveals that, as an instrument of fiscal governance, the Spanish provision is superior to the Hong Kong provision because the text combines an appropriate level of macroeconomic flexibility with an absolute commitment to fiscal sustainability in each of its three legal applications: a balanced-budget rule, an expenditure rule, and a debt rule. However, it also reveals that fiscal control in Hong Kong is superior to fiscal control in Spain: Hong Kong has a budget surplus while Spain has a budget deficit. On the basis of the political economy of Spain and Hong Kong, the article argues that constitutional law does indeed have a function as an instrument of fiscal governance but that function is subject to the effect of fiscal culture – the politics and economics – in the jurisdiction.

Lengthy law and policy reform initiatives and consultation exercises preceded the UK's move to place the duties of directors on a statutory footing. This initiative has recently been subjected to detailed analysis by reform agencies in both Hong Kong and Singapore. This culminated in the adoption of the considered position to await the outcome of the UK's experience in terms of whether the key objectives of achieving accessibility, predictability and simplicity via a statutory restatement of directors' duties were achievable. This article examines whether the perceived benefits of the restatement found in Part 10 of the [UK] Companies Act 2006, s.170(4) of which expressly preserves the pre-existing case law as an interpretive tool for the courts, maintains the necessary flexibility for the law to continue confronting and resolving the multifarious circumstances arising where a director resigns his office prior to embarking on an enterprise which might place him in breach of the no-conflict duty.

The liberalisation of the cross-border rendering of IT services is crucial for business but the present legal regime of the General Agreement on Trade in Services does not meet the commercial needs since the applicable classifications of IT services are quite outdated. Therefore, this article assesses how to use different methodologies for services' classifications. A so-called "cluster" approach could help negotiators and law enforcement authorities to reasonably group IT services. Particularly, a differentiation between data transmission (technical infrastructure/network) and delivered content seems to be more resistant to technological changes since functional aspects become the centre of the classification in the digital environment.

The Hong Kong title registration system remains frozen in a legislative twilight zone eight years after the Land Titles Ordinance was enacted. The provisions of the rectification and indemnity schemes attracted much legal debate, which became obstacles to commencing the system. These schemes provide critical statutory safeguards in title registration, and are crucial for public confidence in the new system. This article examines the policies for enhancing the effectiveness of the two schemes in improving the security of title, and considers how insurance principles could guide the development of the debate. Whilst the system, in its currently proposed form, could provide adequate security of title from a risk analysis perspective, it enhances land registration in a way that scarcely justifies the costs of reform. Nonetheless, title registration and conveyancing in Hong Kong could benefit significantly in the foreseeable future if the government legislatively improves (even if only marginally) the system to reduce transactional risks.

This paper argues that the Central Counterparty (CCP) clearing system will be able to provide an effective platform in dealing with counterparty risk and insolvency risk in OTC derivative transactions. First, this paper assesses how authorised institutions can enter an OTC derivative contract in Hong Kong (HK). Second, it illustrates the issues in the context of the ISDA Master Agreement in the global financial crisis and why a new regulatory method is required. Third, the paper explains the principal functions of the designated clearing and settlement system. The paper concludes that the proposed CCP clearing system aimed at minimising the counterparty risk, and which arose from insolvency, shows a shift in regulatory policy (welfare policy) in OTC derivatives to the regulatory policy (systemic stability) of finality orders in a clearing system. In theoretical terms, it is important to understand the shift of policy in which derivative contracts are regulated in HK. In practical terms, the understanding of regulatory policies guides the understanding of the relationship between the derivative regulation and economic stability alignment with the governmental objective.

At present Hong Kong lives in a Jurassic Park tax world and there is virtually no political or business momentum or will to change it.… Whether GST or another form of more broadly-based tax will form part of Hong Kong's future tax landscape remains a highly contentious issue.… Thus, contrary to current public opinion, this stasis and opposition to GST in particular and seemingly to tax reform in general is "not the end, it is not even the beginning of the end, it is just the end of the beginning".1 On the face of it, the New Zealand GST would seem to be the tax policymaker's dream: reliable and unexciting.… Yet, New Zealand has the highest reliance on GST/VAT revenues as a percentage of total taxation of any OECD country. The New Zealand GST also taxes the "untouchables" – food, children's clothing, books and medicine, for example.2 The Government of the Hong Kong Special Administrative Region (HKSAR) proposed a goods and services tax (GST) in 2006. Following extensive opposition the proposal was dropped and an opportunity to reform the HKSAR tax system was lost. In comparison New Zealand (NZ) introduced in 1986 what remains the purest GST internationally, following a period of extensive consultation and coordinated publicity. This paper, through its comparative analysis, seeks to offer lessons for the HKSAR from the NZ experience, should the HKSAR decide to pursue once again a GST at some future time.

This paper examines the constitutionality of Hong Kong's administrative regime regulating access to government-held information. It has four parts. The first part examines the notion that freedom of expression incorporates a positive right of access to information. The second part justifies why Hong Kong should treat a positive right of access to information as part of the free expression right. Having established the positive right to information forms part of the free expression right, the third part examines whether Hong Kong's present administrative code on accessing official information infringes the constitutional right to free expression. The fourth and final part discusses the way forward for Hong Kong to develop an open, transparent and effective access to information legal framework.

Although the Civil Justice Reform brought about many changes to the Hong Kong courts, multi-party claims are still governed by rules whose origins are over a hundred years old. In 2006, the Hong Kong Law Reform Commission (LRC) undertook the task of considering whether a scheme for multi-party litigation should be adopted in Hong Kong and, if so, to make whatever recommendations were needed to bring this into being. The LRC eventually proposed the creation of a "class action regime". This proposal has met with a mixed response from the legal profession, industry groups and the wider public. Its fate may soon be decided by a cross-sector working group chaired by the Solicitor General.

China has embarked on the establishment of a national electronic health records (EHRs) system since 2009. The ongoing transition from the traditional paper based medical records to a centralised EHRs system is expected to bring about significant improvement in safety, quality, integration and efficiency of the health care system. Meanwhile, these advantages are a threat because they increase the risks of unauthorised access, disclosures and unwelcome secondary uses of patient health information. The potential benefits of an EHRs system can be realised only if patient privacy protection is guaranteed. This article explores how the Chinese law should provide necessary patient privacy protection in the age of EHRs. The discussion is framed by using the OECD's Guidelines on the Protection of Privacy and Transborder Flows of Personal Data, and focuses on five key legal issues of patient privacy protection regarding EHRs, including information collection, information disclosure, sharing and use, rights of the subject patients, data quality and security and enforcement of patient privacy standards. This article provides specific suggestions for the Chinese law to address each legal issue and calls for establishing a comprehensive legal framework to protect patient privacy in China in the age of EHRs.

The PRC Supreme People's Court has recently issued its third piece of judicial interpretation on the PRC Contract Law in order to clarify ambiguities surrounding the sales contract. Among others, the new judicial interpretation tries to explicitly impose a pre-contractual liability, which is a confusingly unsettled but dynamically developing area, not only in China but also abroad. This article is an attempt to understand the connections between the PRC Contract Law and the latest judicial interpretation on pre-contractual liability in a logical fashion by outlining a three-stage good faith framework. However, tensions and confusions as illustrated in cases of some advanced economies show that there is a need to revolutionise this area and in that regard, this article advocates for a new, and more interventionalist approach in determining the liability that could potentially flow from conduct that occurs at the pre-contractual stage

There has been a global trend towards judicialisation in recent decades. Within this trend, Chinese courts are playing a more salient role in the governance structure than ever before, yet judicialisation in China is not without limits. These boundaries are especially evident in strategies employed by Chinese judges in group action cases. Two specific judicial strategies are examined below: (1) the demanding of separate trials over representative proceedings, and (2) the rejecting of cases. Chinese judges are reluctant to allow representative proceedings in group action cases due to concerns over the gathering of parties as well as performance evaluation. Furthermore, judges are indisposed to accept group action cases due to the polycentric issues involved and the complaint-letter-and-visit system. This paper provides an analysis of class/group action lawsuit mechanisms utilised by various countries in both civil and common law legal traditions. The analysis concludes that the preference of the Chinese judiciary for restraint strategies over representative proceedings in group action cases corresponds to the limits placed on such proceedings in those countries. Thereafter, two types of group action cases are explored in particular – ie, layoff and homeowner cases – and recommendations are offered. Finally, this paper suggests that incomplete reforms serve as the underlying cause of limited judicialisation in China.

The Arrangement on Mutual Recognition and Enforcement of Judgments in Civil and Commercial Matters between Mainland China and Macau has entered into force since 1 April 2006. While it is compared favourably with the counterpart between Mainland China and Hong Kong, it has some inherent problems regarding jurisdiction, parallel proceedings, public policy and burden of proof. Six years' experiences demonstrate that generally this Arrangement could and will continue to be implemented successfully in practice by the Mainland courts. It, however, has largely not been applied by the Macau side although judgments from the Mainland could still be recognised and enforced according to the traditional Macau approaches. Looking forward and to make improvements for the Arrangement, jurisdiction issues shall be directly regulated, parallel proceedings shall be dealt with at the jurisdictional stage, the Mainland courts shall be required to recognise and enforce gambling debts judgments from Macau and a general clause favouring recognition can be inserted into the Arrangement.

A legal system can only be as good as the legal professionals, including lawyers, who make it work. Experience teaches that some lawyers will fail to meet ethical and professional standards. Such lawyers bring the legal system into disrepute. The Ministry of Justice has a role in disciplining lawyers, and the website of the Beijing Bureau of the Ministry of Justice provides a series of records of disciplinary proceedings. The purpose of this article is to examine the records.

The Court of Final Appeal in KEWS v NCHC had to decide whether an award of ancillary relief may be shaped so as to “judiciously encourage” third parties to use their resources to financially support the party “paying” the ancillary relief. The Court decided that it can take third party resources into account if the previous extent and likely continuation of access to those resources can be satisfactorily determined. Moreover, the Court held this was a reiteration of past practice under the statutory discretion conferred by s 7(1)(a) of the Matrimonial Proceedings and Property Ordinance and not the development of a discrete principle of judicious encouragement. Nonetheless, a review of past precedents demonstrates that, whilst the Court acted within the scope of its statutory discretion, an order so heavily reliant on third party assets deriving neither from a trust nor from a family company is not commonplace. As a consequence of the Court’s decision, intending spouses may in future place greater reliance on marital property agreements in an attempt to exclude third party resources from the court’s consideration.

In Christie Manson & Woods Ltd v Chritrs (Group) Ltd and Stichting BDO v Banco De Oro Unibank Inc, two very recent Court of First Instance cases, the Court dealt with several issues relating to the protection of well-known trade marks. In particular, the Court examined the dissimilar goods or services requirement, the unfair advantage doctrine and the detriment to distinctiveness element. Extensive reference was made to a number of leading European Court of Justice’s authorities. However, the European approaches have been arguably misapplied. Moreover, these European authorities have sparked considerable controversy in Europe, and it is submitted that the Hong Kong courts must carefully scrutinise the European decisions before applying them.

Private property ordinarily triggers notions of individual rights, not social obligations. The core image of property rights, in the minds of most people, is that the owner has a right to exclude others and owes no further obligation to them. That image is highly misleading. Property owners owe far more responsibilities to others, both owners and non-owners, than the conventional imagery of property rights suggests. Property rights are inherently relational, and because of this characteristic, owners necessarily owe obligations to others. But the responsibility, or obligation, dimension of private ownership has been sorely under-theorised. Inherent in the concept of ownership is an implicit norm that might be called the social-obligation norm. This norm captures the various obligations that owners owe to others, specifically, to certain members of the various communities to which they belong. The moral foundation of this norm is human flourishing. As a moral and legal value human flourishing differs importantly from welfare as that term is commonly used today by economists and legal analysts. The article will explain the differences and how the obligations of ownership develop from human flourishing. It will then illustrate the theory with an example, access to private beaches.

Mainstream international law scholarship has come to understand the right to self-determination as being composed of two distinct dimensions: a right to “internal self-determination” (the freedom of peoples to choose a democratic government within the State) and “external self-determination” (the freedom to decide the “external” character of the State). This dichotomy, however, does not always help us appreciate the complexities, fluidity and indeterminacy, associated with the principle of self-determination. The point may not necessarily be to reject this dichotomy. Rather, the critical challenge is to appreciate its limitations and move beyond the “internal”/“external” distinction so that it does not limit the myriad ways in which self-determination, its history, its meaning and politics can be understood, articulated and demanded by peoples under complex and volatile circumstances.

The Court of Final Appeal in its landmark decision in W v Registrar of Marriages upheld a post-operative transsexual person’s constitutional right to marry. All the judges agreed that legislative reform on gender recognition would be desirable. This paper examines, with reference to the approach in the United Kingdom (the Gender Recognition Act 2004) and other recent developments overseas, two legal ramifications of gender recognition for the law of marriage: first, who qualifies as a “woman” or a “man” for marriage, and second, whether gender recognition should be available to a married person.

In a case expected to go to trial shortly, an ex-employee has claimed that her employment contract with her former employer contained an implied “anti-avoidance” term. This term purports to require that the employer not engage in tactics calculated to evade the operation of an express term of the contract that confers a benefit upon the employee. This article examines the implied anti-avoidance term contended for in this case and concludes that there is a sound basis for implying it by law. It also concludes that the term may already be encompassed within the existing implied term of mutual trust and confidence. This calls, however, for the courts to confirm that the limitation imposed on that implied term in England, which prevents it from operating in the realm of dismissal, is not applicable to Hong Kong. The article concludes by suggesting that an alternative, and perhaps better, route to the anti-avoidance principle may lie simply in the ordinary principles of construction of the express contractual terms without the need for any implied term.

First Laser was a dispute that was litigated both in the PRC and Hong Kong, the outcome being different depending on whether PRC or Hong Kong laws applied. The issue of the law applicable to the dispute was consequently critical, and is the focus of this article. The article is written from the common law perspective, and reviews principally the judgment of the Court of Final Appeal as written by Lord Collins of Mapesbury NPJ. The equivalent PRC conflict rule and its application by the Supreme People’s Court are considered to demonstrate that they differ fundamentally from the common law rule and approach, and to question whether the Court of Final Appeal was indeed bound to decide the same way as the Supreme People’s Court.

Tax reform is inherently a political issue, no more so when proposals give rise to widespread opposition from the general populace and the government is facing upcoming elections. The experience of tax reform in New Zealand, compared to that of the Hong Kong Special Administrative Region (HKSAR), in many respects could not be more contrasting over the last fifteen to twenty years. New Zealand has operated with a distinctive process for developing, implementing and reviewing tax policy, namely the Generic Tax Policy Process (GTPP), which has survived largely unscathed over the almost twenty years of its existence. The GTPP facilitated the most recent comprehensive review of the NZ tax system in 2009–2010 under the auspices of the Tax Working Group. In contrast, the HKSAR’s most recent attempt at major tax reform, “highlighted” by the proposal to introduce a Goods and Services Tax (GST) between 2002–2007, led to a significant back down on the HKSAR Government’s GST proposal, and a reluctance to pursue any form of significant tax reform in the HKSAR. This article suggests that the tax policy environment in NZ, with adaptation, could be of considerable benefit to the HKSAR, whether or not it contemplates significant future tax reform.

The TiSA negotiations will face a dilemma between two conflicting positions: on the one hand, whether TiSA can promise to yield gains through new business opportunities will depend on the political will of RGFs members to deal with the need for introducing creative modalities to the negotiations. On the other hand, TiSA must mirror the format of GATS so as to facilitate future multilateralisation into the current GATS architecture. The future success of TiSA depends on whether there will be sufficient mutual gains to be achieved by cooperating within the services trade. This means that the “main partners” and “main markets” must be included, and that the gains are distributed relatively symmetrically. In any event, the professed “multilateralization” will not happen as long as the condition for critical mass is not fulfilled. In that case, any other options to incorporate the TiSA into the WTO would require either a qualified majority vote, or a consensus from the broader WTO membership, which it is unlikely to be achieved. It remains to be seen how the struggle of RGFs to find a common landing zone will be resolved.

The Second Amendment to PRC Civil Procedure Law was adopted on 31 August 2012 and came into force on 1 January 2013. Although many changes have been made, the “dual track” structure separately addressing domestic and international civil proceedings has been maintained. The undeniable link between the rules for domestic and international civil proceedings in China dictates that the changes made for domestic proceedings will also bring about considerable effects for international proceedings. A systematic examination of the changes that may have impact on the different areas in international civil litigation, namely international jurisdiction, service of documents and taking of evidence, demonstrates that many advanced achievements in the field have been embraced and a more transparent and streamlined legal regime has been established. The amendment is surely a big step forward in terms of international civil litigation.

Concession is now an important public policy for municipal utilities in China. Yet, a decade after its implementation, the application of embedded competitive mechanisms is much more limited than had been expected. Taking the water supply industry as an example, this article analyses the reasons from the perspectives of economics and practice for this limitation. To illustrate, the author focuses specifically on current water concession models in China, and finds that the underlying political system and characteristics of market structure restrict competition. In view of the restricted competition, the author argues that the major rules for current concession award should be sole sourcing and transparency rather than competitive bidding. The discussion is extended to the distinction between state-owned enterprises and proper concessions.

On 6 January 2013, the Supreme People’s Court promulgated Interpretation (I) on the Private International Law Act". The Interpretation (I) attempts to provide concrete explanations of the abstract articles mainly in Chapter One of the Act and to create new provisions to close the legal loopholes. In this respect, the adoption of the Interpretation (I) can be regarded as a large step towards building a modern private international law system. Nonetheless, some articles of the Interpretation (I) invite debate and even criticism. Indeed, the danger of certain articles, such as Art 6 (party autonomy), Art 10 (mandatory rules) and Art 17 (proof of foreign law), is so grave that the underlying purpose of the Act would be defeated. For this reason, the development made by the Interpretation (I) may be compared to two steps forward, one step back.

It is no use giving citizens rights if they cannot, when necessary, have access to the courts to enforce those rights

Like many other constitutions, the PRC Constitution enumerates a list of fundamental rights that citizens can enjoy. The 2004 Constitutional Amendment adds the phrase “The state respects and preserves human rights” to Art 33 and marks a new page in rights protection in China. However, the violation of citizens’ constitutional rights and freedoms by the PRC government and its officials and the unavailability of judicial remedies to curb this phenomenon have long been criticised inside China as well as outside. As a result, the realisation and guarantee of rights and freedom is far from satisfactory. Firstly, focusing on the implementation of constitutional rights clauses, this article analyses why the current constitutional legal framework discourages direct application of the Constitution by/in the courts. Secondly, it examines the attempts made by the PRC courts in the recent past, and discusses their significance in the protection of such rights. Thirdly, it further argues that although there can be no foreseeable substantial institutional breakthroughs in the current context of law and politics, the courts as positive enforcer of the Constitution can still play a limited but important and irreplaceable role in realising constitutional rights. To achieve it, a “dual-track approach” that involves both the NPCSC and the courts is promoted.

Most wrongful convictions that have been discovered in China have involved the use of illegally obtained evidence. Such evidence was first excluded from criminal trials in 2010 as China responded to some notorious wrongful convictions. The new remedy did not prevent wrongful convictions caused by the use of tainted evidence. In 2012, China’s top legislature attempted to remedy the shortcomings by revising the current Criminal Procedural Law. This paper will examine how China’s current evidentiary procedures operate in practice and will explain why they fail to uphold the presumption of innocence. It will be suggested that the prime reason for these failures is institutional rather than cultural or attitudinal. In other words, judges in China are not in an institutional position where they can enforce the presumption of innocence and exclude improperly obtained evidence even if they desired to do so. Institutional reforms are required to prevent the use of such evidence and resulting miscarriages of justice including strengthening the ability of defence counsel to seek the exclusionary remedy. What is required is the transformation of China’s criminal justice institutions, so that the presumption of guilt is replaced by the presumption of innocence. Additionally, all evidence derived from coerced statements must be excluded from criminal trials.

This article reviews the history of privacy law and focuses on the current state of personal data privacy law in Hong Kong, recent reforms and emerging privacy issues in the digital era. It suggests that personal data privacy law is not a static concept, but one that changes with sociological and technological developments, such as the Internet. It provides an outline of the Personal Data (Privacy) Ordinance with reference to each of the Data Protection Principles. In particular, it addresses technological developments (cookies, cloud computing, and location based services), topical issues (trolling and cyber bullying; identity theft and cyber crime) and high profile cases (the Octopus Rewards case), and gives recommendations for further reforms (class actions; specialised law enforcement; international cooperation; “Do Not Call” registers). It concludes that the Hong Kong Government must continue to follow international best practice and be more vigilant in developing the law in light of technological developments.

Regulatory schemes that mandate historical preservation for private property are increasingly common. This article employs the attempt to preserve Ho Tung Gardens as a case study to examine problems in the design of compensation measures for such schemes. The compensation provision of Antiquities and Monuments Ordinance (Cap 53) is ambiguously worded, and this article argues that this Ordinance provides compensation only for the additional costs associated with the maintenance of historical buildings and does not compensate owners for property value depreciation. However, this article also argues from an incentive perspective that adequate compensation should be provided to property owners for such depreciation to ensure that the government and the public duly account for the true costs of heritage conservation. In addition, adequate compensation eliminates the perverse incentives for owners to preemptively demolish historical buildings in order to avoid the regulatory regime. This article draws on similar legislative experiences in the UK to propose guidelines for reforming the compensation provision.

In the nineteenth century case of Taylor v Blacklow, Gaselee J stated that “the first duty of an attorney is to keep the secrets of his client”. That duty of confidentiality has been reiterated by the courts in numerous cases throughout the common law world in the years since Taylor v Blacklow was decided. Yet, how does the duty arise? Is it dependent upon a formal retainer? Is it owed to those who have not even retained a solicitor’s services? If so, how and when? Is there any substantive difference between paying clients and so-called quasi clients for the purposes of confidentiality? The Court of Appeal considered these issues in Allan v Ng Co (a firm). The implications of its conclusions are far from encouraging.

Environmental migration has historically received less attention than migration resulting from other factors like war, persecution or economic considerations. Although there is now greater recognition of environmental migration globally, many governments still lack the knowledge and capacity to manage it. Hence, it is important to strengthen national institutional frameworks. Previous research suggests that the concept of sustainable development could drive better understanding of international environmental migration law. However, there has been little study of the relevance of sustainable development to national institutional frameworks; a gap which this paper seeks to address. It is argued here that national institutional frameworks may be strengthened through five principles of sustainable development: (a) integration, (b) international cooperation, (c) precautionary approach, (d) public participation, (e) gender equity and (f) good governance. The paper therefore contributes to knowledge on the progressive development of institutional capacity for addressing environmental migration at the national level.

Appellate and first instance judgments dealing with CITIC Pacific’s privilege claim cover five important aspects of legal professional privilege. This article addresses each of these aspects in turn, paying particular attention to the concept of partial waiver and exclusion of prosecution evidence of a defendant’s admittedly privileged communications. The object is threefold: exposition and clarification of the relevant law, illustration of the potential effect of a commitment to the fundamental substantive human right of privilege on the development and application of privilege and putting certain questions about the manner, substance and implications of the “partial” or “limited” waivers adopted in the Court of Appeal on the agenda.

Changes in the ways we work and communicate increasingly challenge the ability of organisations to evaluate performance and control conduct. Monitoring personnel in some form or fashion, which increasingly means the monitoring of communications, as well as conduct occurring outside of the traditional workplace, is necessary. However, the scope and methods can present difficult questions due to a variety of considerations, which sometimes conflict. Developing a monitoring plan that balances the various considerations has never been more difficult. In this paper, these issues are evaluated under the legal landscape in Hong Kong. Regulatory codes, guidance and investigation reports, as well as administrative appeal decisions, court cases, and commentary bearing on these issues, are compiled and assessed. The author in turn attempts to charm out a useful construct, to be used as a tool for decision-making in connection with the development of a workplace monitoring plan compliant with the Personal Data (Privacy) Ordinance.

This paper aims to illustrate how the continuing reform initiatives concerning the sponsor regulatory regime in Hong Kong were precipitated by the need to tackle cross-border enforcement problems relating to Mainland Chinese companies. Despite the reunification in 1997, Hong Kong and Mainland China remain two separate jurisdictions under the “One Country, Two Systems” constitutional design and full reciprocity of law enforcement assistance between both sides has yet to be achieved. Consequently, Hong Kong regulators face a considerable challenge in finding ways to regulate Chinese issuers operating their businesses primarily outside the territory. In attempting to solve the problem of initial public offerings’ disclosure, Hong Kong regulators have turned their attention to sponsors who can perform a significant gatekeeper function in ensuring that the issuers’ prospectuses are complete and accurate. The sponsor reform thus provides a useful case study for elucidating the impact that Chinese listings have exerted upon the regulation of Hong Kong’s listing market.

The Macau Special Administrative Region of the People’s Republic of China is a locality characterised by many “special” features. From a legal perspective, Macau is based on the “one country, two systems principle” enshrined in the Constitution of the PRC, which gives it ample room for the governance of both its domestic or local and its international or global affairs. Such a scheme of “glocal” governance is exemplified at the international level in the fact that Macau has been a founding member of the World Trade Organization whereas domestically it is, for instance, reflected in the regulation of the issue of food safety, which has led to the adoption of a new Food Safety Law in April 2013. The new law thus provides a good opportunity to cast some light on the complex and cross-sectional character of the issue of the regulation of food safety and, most of all, to emphasise the need for the combined local and global considerations within the so-called “trade linkage debate” against the backdrop of an emerging global food industry.

During 2000–2012, 12 cases on the recognition or enforcement of foreign arbitral awards (FAAs) in the Supreme People’s Court (SPC) of China involved public policy issues. Only one FAA was refused enforcement because the FAA violated China’s judicial sovereignty. In reviewing FAAs, the SPC positively defined the public policy doctrine as a violation of China’s fundamental legal system or an infringement of China’s fundamental socio-public interests. The SPC has excluded some situations from being parts of China’s public policy, such as violations of mandatory rules for foreign exchange control and for restrictions on commodity futures exchange transactions, incorrect interpretation of Chinese laws and procedural grounds in Art V(1) of the New York Convention. In defining public policy, Chinese courts may further consider the following items to be parts of China’s public policy: fundamental principles of law, especially those relevant to principles in China’s Constitution; corruption or bribery in arbitration and the res judicata principle; mandatory rules that constitute parts of China’s fundamental legal system or that protect fundamental national interests and international obligations to other States or international organisations, such as mutual respect of sovereignty and security.

Variable interest entity (VIE) is widely adopted both by foreign investors to enter into certain sectors of the Chinese market and by Chinese companies to access offshore capital markets. The uncertainty as to its legality has generated endless speculation, and a recent PRC Supreme Court decision on a similar contractual arrangement has stirred another round of debate. This paper examines China’s VIEs in the broader context of foreign investment in China, focusing on both horizontal and vertical risk factors surrounding such an investment structure. It is argued that the current limbo status of VIEs exemplifies the fundamental institutional challenges faced by China’s development model, ie how to improve the current rule-of-law system and build a genuine-level playing field for private enterprises and foreign investors in China. The prospects of VIEs very much depend upon how China responds to these institutional challenges.