Hong Kong Law Journal 1971 - 2024

This article analyses the tax agreement network of the Hong Kong Special Administrative Region in the backdrop of the changing landscape of international taxation. It aims to assess the consistency of the region’s tax agreement practice and its adequacy to meet future needs of the economy. Owing to its normative roots, the article meticulously reviews all tax agreements concluded over the years to analyse major deviations, dynamics and rationales. This is done in light of the imminent need to maintain the region’s leadership through policy in a bid to remain attractive in the Greater China region and beyond. Due to the premise that taxation is the third pillar of international economic law, the article will also touch upon the region’s international tax law practice. It concludes by proposing that the region must adopt a more sophisticated and proactive international tax policy regime to embrace changes in the international set-up.

This article discusses a particular kind of insider dealing that is undertaken by public officials who have advance notice of regulatory, political or legislative decisions and privileged access to nonpublic corporate information. Notwithstanding this conduct’s conspicuous unfairness to investors and dire implications for the integrity of political governance, seldom do we hear offenders being indicted in principal jurisdictions. Yet invisibility does not equate to nonexistence. In the context of Hong Kong’s stock market, which is driven by Mainland China-based corporations, there is a latent systemic risk engendered by China’s mixed market-planning economy and a peculiar state-corporatist system. Drawing on pertinent laws of the United States, China, the EU, the United Kingdom, Australia, Japan, Canada and Singapore, this article pinpoints several loopholes in the Securities and Futures Ordinance which may impede the law’s applicability and enforceability. I advance a number of recommendations with a view to furnishing a framework which is more amenable to effective oversight. I argue, in particular, that law reform should be spearheaded to endorse a more liberal test for requisite connection and to expand the ambit of inside information across the conventional corporate dimension.

The substantive legitimate expectations doctrine has become a fixed feature in the judicial review landscape of the United Kingdom and Hong Kong. Yet judges in other common law jurisdictions have expressed reservations about the doctrine in view of its potential to intrude into the merits of decision-making and elevate individual interests over legitimate administrative objectives. This article will investigate how the judges in the United Kingdom and Hong Kong have addressed such concerns by highlighting the legal control techniques they have used to restrain the application of the doctrine, as well as the factual circumstances that trigger such restraint. It will argue that while analytical ambiguities exist in the relationship between these factual circumstances and the control techniques they trigger, these ambiguities present further opportunities to shape the doctrine to address the concern of merits review and promote more principled judicial decision-making.

This article argues that Hong Kong should permit third party funding (TPF) for civil litigation because TPF will increase access to justice, promote settlements and enhance Hong Kong’s competitiveness as a preferred dispute resolution centre. TPF’s negative effects can be controlled or limited. Furthermore, Hong Kong’s current policy prohibiting TPF for litigation denies effective access to justice to many companies and individuals and fails the test of proportionality.

The international investment law system presents an inherent tension between the promotion and protection of investors’ economic interests and the freedom of states to regulate on matters of public policy. In particular, there are increasingly topical issues concerning the potential normative conflict between the states’ commitments to protecting human rights and their commitment to protecting investments that are nonetheless creating an adverse social and environmental impact. This article evaluates the ways in which these norms in international law can be harmonised under four categories: (1) state counterclaims against an investor; (2) the reduction of damages awardable to an investor through a theory of contributory fault; (3) the completion of a Human Rights Impact Assessment alongside the negotiation and conclusion of investment agreements; and (4) the greater inclusion of references to sustainable development in treaty-making and investment arbitration. This article argues that the latter three methods bear greater promise and should serve as signposts for arbitral jurisprudence and state practice in the future.

This article examines the meaning of “public function” in the context of determining the amenability of a function performed by a legal person acting in a private capacity to judicial review. It proposes a reformulated and coherent test that streamlines the existing jurisprudence and confirms the need for a substance-over-form approach. It proceeds in three parts. First, by examining the Datafin jurisprudence in English law and existing approaches in Hong Kong law, it will be argued that they are analytically unsatisfactory and in need of streamlining. Second, by examining theories of the public–private divide as a matter of law and recent developments in English law, the article will highlight some doctrinal and practical points that any judicial articulation of the meaning of “public function” should take into account. It will then move on to discuss the elements of the new test and methods of interpreting them.

The South China Sea is a key area in the establishment of the “21st Century Maritime Silk Road”. Its vast area provides unique conditions for the development of marine fisheries in the surrounding states. In recent years, fisheries in the South China Sea have been threatened by illegal, unreported, unregulated (IUU) fishing activities. Simultaneously, there have been fishery conflicts among the neighbouring states. This has led to a significant decline in fishery resources in the South China Sea. This article highlights such fishery activities and their threats to the South China Sea. It also proposes a “South China Sea Fishery Community with a Shared Future” and suggests establishing a regional fishery organisation. The organisation is expected to distinguish the responsibilities and obligations of the surrounding states with regard to the exploration and governance of fishery resources. Such actions might help the states jointly monitor and govern IUU fishing activities in the South China Sea.

Good faith is insufficient in bringing about a multilateral public order. An international community that applies the principle of good faith effectively does not exist. Arguably, rather than a robust juridical mechanism, good faith represents common sense in international law. However, an effective and functioning multilateral public order needs more than that. This becomes all the more palpable in respect of issues such as external sovereign debt, where public international law is inchoate.

While many scholars have stressed the role of guanxi in conducting law and society fieldwork in China, rarely explored is the relationship between guanxi and other factors such as social class, gender, overseas status and politics. Drawing on two decades of the author’s experience, this article demonstrates that when guanxi operates across political, social and cultural dimensions, it forms tensions that subtly affect who, how and what we access. We are constantly tested, and there are various pitfalls. This article not only sheds light on the challenges and opportunities when doing fieldwork in China but also reflects on the limitations of the knowledge created.

In addition to the local people’s courts at different levels, China has gradually established maritime courts specifically to adjudicate maritime claims and disputes. However, although the legal framework regulating the bifurcation of jurisdiction of first-instance civil and commercial cases seems clear and straightforward, conflicts may continue to arise in choosing a maritime court or a local people’s court when deciding a maritime dispute. This article aims to conduct a comprehensive study of Chinese maritime courts and to examine the reasons for jurisdictional conflicts between them and the local people’s courts. It concludes that, despite all the legislative efforts made so far, uncertainties continue to arise concerning the appropriate jurisdiction over maritime disputes and claims. Greater clarity and direction from the relevant authorities are thus needed for a better and more efficient system for deciding the jurisdiction of maritime cases in China.

The art market in China has grown exponentially in the past 20 years. However, the circulation of cultural objects in the art market has long been secondary to heritage protection. As a result, there are few rules directly dealing with the regulation of the art market, and they are far from satisfactory to clean up abuses of the art market and protect consumers’ rights. As the Chinese government has put forth its proposal to encourage the circulation of cultural objects, it is necessary to establish an orderly and healthy business environment in the art market. This article is the first to present a holistic account of the regulation of the art market in China. It aims to gauge if China is on the right track in terms of regulation to allow the art market to thrive and also to explore the possibility for further improvement at the legislative level.

Information disclosure is perceived as a cure for information asymmetry. Mandatory information disclosure is expected to reduce information asymmetry and protect consumers from misrepresentation or misunderstanding. However, empirical studies have shown that the effect of mandatory disclosure could be compromised due to consumers’ inattentiveness to disclosed information. This article explores the readership of retail investors and the comprehension of the mandatory disclosure information in standard form contracts when the investors purchase bank-issued wealth management products in China. Drawing on a survey of 479 respondents, this article finds that Chinese retail investors generally did not read disclosures in standard form contracts when engaging in banking wealth management services. The survey results reinforce the arguments that an important reason is that standard form contracts are generally not designed in a reader-friendly manner. Other reasons include Chinese retail investors’ misperception of the performance of products and the fairness of terms. The results also find that even where retail investors read their contracts, the liabilities are misconstrued by them. Based on the survey findings, this article concludes that the current information disclosure regime needs improvement and suggests ways to better reduce information asymmetry. Finally, this article calls for more empirical studies on the human cognitive factors that may influence retail investors’ readership and comprehension of mandatory disclosure information in China’s banking sector.

Chinese state-craft has empowered a potential reformation of the existing global international economic and legal architectures. This article evaluates the potential new monetary order through the lens of the U.S.–China hegemonic rivalry instead of a more conventional authoritarian versus free world paradigm. China aims to create a renminbi-centric zone encouraging the use of renminbi as a reserve currency and a unit of settlement for trade. Chinese initiatives may serve both as a framework and an incentive to raise the demand for renminbi. Significantly, despite intense U.S. pressure, numerous U.S. allies are incentivised to align with China’s objectives and integrate financially with Chinese financial institutions in the longer term. Moreover, the plan to introduce a central bank digital renminbi could potentially serve to promote renminbi internationalisation. China’s prospects of becoming a hegemon and the de-­dollarisation of the global financial order would herald a transformatory shift in the overall geopolitical order.

On 9 January 2021, the Ministry of Commerce of the People’s Republic of China issued its first order of the year to resist “unjustified extra-territorial application of foreign laws and other measures”; this law contains a set of blocking rules effective as of the date of the promulgation. With uncharacteristic speed and limited public discussion, this law has become a milestone in Beijing’s intention to counteract judicial and administrative acts taken by foreign countries that have had a significant impact on the Chinese state and businesses. This article, by looking at the application of foreign extraterritorial laws and measures in China and beyond as well as at related countermeasures, establishes that the real effects of the blocking rules may not be promising for China due to both legal and non-legal reasons. In the analysis, this article inquires whether the blocking rules are effective and legitimate and, subsequently, whether they could lead international law down the right path towards a fair international order. Understanding the blocking rules as unilateral countermeasures that will likely become a tool in the lawfare between the United States and China and will have a negative impact on the development of international law, the author proposes an alternative approach to solve problems related to issues of unfair extraterritoriality.

Qing judicial decisions in criminal cases were highly formalised and tightly structured compositions put together in accordance with a number of rules directed at the identification, on the one hand, of the facts constituting the offence and, on the other, of the article or substatute in the code prescribing the punishment for that offence. From a study of the decisions of the Board of Punishments in homicide cases arising from intentional killing (gusha) or killing in a fight (dousha), we can discern both the ways in which the Board structured the facts constituting the offence and how it applied the law to those facts. Section 1 of this article studies the following important features of a judgment’s structure: classification of the facts according to whether they constituted all the facts of the case (qingjie) or just the facts relevant to the particular circumstances of the parties (qingxing); the use of the terms wei (“only”) and jiu (“in the end”) to highlight exceptional or decisive considerations to be taken into account; and the use of the term qingli (“reasonableness”) to express the test for assessing the accuracy of the evidence. Section 2 of the article studies the selection of the correct law for the sentencing of the offence. Where there was no “clear text” in the code, the court was empowered to select a law by analogy which might be imposed with or without a variation in punishment. Such analogical application of the law was not a manifestation of an uncontrolled discretion on the part of the court but proceeded from a legislative directive to find and apply the true intention of the code.