Hong Kong Law Journal 1971 - 2023

A decade after the introduction of buyer’s stamp duty (BSD) on purchases of residential property in Hong Kong, im-portant questions on its application and, in particular, on the scope of the exemption for Hong Kong permanent resi-dent individuals acting on their own behalf remain unanswered. No systematic guidance on what, in the context of that exemption, acting otherwise than on one’s own behalf means is available at this time. This is problematic from the perspectives of both the duty-payer and the practitioner, as it gives rise to considerable uncertainty, especially in cases where the purchase of residential property is funded by persons other than the purchaser. Whereas it is clear that a trustee of an express trust acquiring property to hold on trust does not do so on his own behalf, the Collector of Stamp Revenue (the Collector) appears to be of the opinion that the trustee of a trust implied by law, likewise, does not act on his own behalf and is therefore ineligible for the exemption. That interpretation is, however, in effect un-workable as the constitution of an implied trust is a matter for the courts — and not for the revenue — to ascertain, and a duty-payer, in applying for exemption from BSD, may only give evidence of his own state of mind.

In Fong Chak Kwan v Ascentic Ltd, the Court of Final Appeal (CFA) gave a broad construction to the tort gateway for service out as contained in O 11 r 1(1)(f) of the Rules of the High Court, holding that “damage” therein encompasses both direct damage and indirect/consequential damage. This note argues that the decision is not without its flaws, with assertions that claims need not necessarily have a “real connection” with Hong Kong to pass through the O 11 jurisdictional gateways being particularly problematic. Nevertheless, when read in the round, Fong Chak Kwan is to be welcomed for according the tort gateway its proper scope without imposing undue strain on the forum conven-iens doctrine. The future for the law governing service out thus looks bright.

On 28 June 2023, the Hong Kong Court of Final Appeal (CFA) will hear an appeal of the Court of Appeal’s decision in Sham Tsz Kit v Secretary for Justice, a case challenging the exclusion of same-sex couples from marriage and the lack of other forms of relationship recognition with equivalent rights and responsibilities. This article considers the courts’ rejection of these constitutional claims thus far and argues that their conception of the relevant constitutional, legal and historical contexts is overly narrow. In particular, the failure to invoke the constitutional values of equality and dignity departs from CFA precedent and the well-established “purposive and contextual” approach to the interpreta-tion of constitutional rights.

Article 37 of Hong Kong’s Basic Law (BL 37) enshrines the freedom to marry, stating: “The freedom of marriage of Hong Kong residents and their right to raise a family freely shall be protected by law.” In the pending case of Sham Tsz Kit v Secretary for Justice, the Hong Kong Court of Final Appeal will determine whether BL 37 encompasses a right to same-sex marriage. The Court of First Instance and the Court of Appeal rejected the idea that BL 37 encompasses same-sex marriage, and they relied on comparative law to support their conclusions. This essay explains that the lower courts erred in citing cases from the European Court of Human Rights (ECtHR) and United Nations Human Rights Committee (HRC) as persuasive authority. The lower courts also erred in completely ignoring the In-ter-American Court of Human Rights (IACtHR) even though the IACtHR’s advisory opinion on same-sex marriage is especially germane. With Sham Tsz Kit now pending before it, the Court of Final Appeal has an opportunity to correct course by drawing insights and inspiration from the IACtHR instead of the ECtHR and HRC. The IACtHR’s jurispru-dence supports construing BL 37 to encompass same-sex marriage.

In the past two years, the sweeping offence of seditious publication that was enacted almost a hundred years ago in the colonial times, and which has fallen into disuse for almost half a century, was brought back to life in Hong Kong. While an archaic offence does not by itself mean that it is a bad law, it does call for intense judicial scrutiny, especially when personal liberty is at stake, when history bears witness on how this offence has been influenced by the prevail-ing political climate and has been used to stifle and suppress political dissent, and when a similar offence has been ei-ther repealed or narrowed down in modern times in many parts of the common law world. Sadly, such intense judicial scrutiny is absent in Hong Kong. HKSAR v Lai Man Ling, popularly known as The Village of the Sheep Case, is one of the latest conviction for this offence. It is argued that the case was wrongly decided for two reasons: (1) the court has failed to require an intention to upset social and political order by bringing down the government or crippling its effec-tive functioning in convicting the defendants and (2) the vaguely framed offence of seditious publication fails the con-stitutional tests of legality and proportionality.

When individual rights and public interests rub together, the law accommodates both rather than determines the winner of a clash. Communities are formed for mutual support and protection. But a collectivity inevitably reduces the personal autonomy of the individuals forming it. We pay that price for the benefits of living in organised society. The law must ensure that the price is not too high. That requires an appropriate balance between individual rights and public interests. It involves a broad philosophy and careful attention to the details of particular instances. Some-times public interests necessitate measures which bear very heavily upon personal liberty. Such measures are to be resorted to with the greatest moderation and only upon the most cogent necessity. Historically, this was said in re-gard to naval impressment. Today, it is to be applied to things such as quarantines in pandemics. Press gangs are of the past. Conscientious objection to military service is of the present. In it, individual rights and public interests must each have their due. The same is true of things such as the debate on euthanasia, marrying in a gender-reassigned capacity, the criminal law’s objectives, the withholding of part of a suspended police officer’s pay and the obligation on the part of demonstrators and ordinary highway users to respect and accommodate each other’s rights. Competi-tion law concerns itself with individual rights in the ultimate interests of the consuming public. In defamation law, the individual’s right to reputation and the public’s right to know are both duly protected. Freedom extends to commer-cial speech. Public interest voices matter at trade negotiations. Contracts can be invalidated on public policy grounds. A duty of care in negligence will not be imposed contrary to public interests. Sitting between a society’s morality and its economics, law straddles individual rights and public interests. This affects socio-economic rights. Courts have a duty to maintain a balance between individuals and society. Always crucial are reasonableness, sense of proportion, civic responsibility and commitment to fundamental rights and freedoms.

In this lecture, presented at the University of Hong Kong, the speaker, the former Chief Justice of the Hong Kong Court of Final Appeal (2010–2021), traces the development of criminal law over the centuries, intertwining it with his own experiences as a senior judge in Hong Kong’s common law system.

Johannes Chan’s extensive body of scholarship and commentary has brought Hong Kong’s constitutional journey, and conveyed its significance, to a global audience. Several key themes emerge from Chan’s work. He evaluates Hong Kong judicial decisions and actions by the central and local governments in terms of their conformity to both applicable positive law and transcendent principles, such as the rule of law, liberal conceptions of rights, constitu-tionalism and common law norms — all the while recognising that neither measure alone offers an adequate analysis and critique. His writings recognise and explore the especially pervasive intertwining of law and politics in Hong Kong. He offers wise advice to key institutional participants, grounded in careful assessments of their actions and op-tions, and appealing pragmatically to their self-interest. His appraisals have become more pessimistic, reflecting de-velopments in Hong Kong, but he has remained resiliently committed to the virtues and values that have consistently motivated, and resonated in, his writings. Chan’s extraordinary contributions extend beyond his writings to his roles as practising lawyer, law dean, and public intellectual.

Although Johannes Chan is rarely, if ever, thought of as a legal theorist, this article argues that there is in fact a ma-jestic theoretical edifice of the rule of law that stands humbly behind his rich legal scholarship, which spans almost four decades. Drawing primarily on his voluminous writings from the period after the establishment of the Hong Kong Special Administrative Region in 1997, this article systematically reconstructs Chan’s substantive theory of the rule of law. This theory stands on the three pillars of legality, judicial independence and the integrity of the common law system, and is built on the groundwork principles of legal publicity, consistency, stability, certainty, equality and the protection of human rights and liberties. These principles, as this article argues, are all ultimately rooted in a fundamental respect for human dignity. One may not agree with Chan’s views in whole or in part, but it can hardly be denied that his remarkable corpus of work relating to the rule of law will provoke deep discussions among law students, legal practitioners and jurists in Hong Kong and beyond in the decades to come.

Drawing on declassified archival documents including records of the Foreign and Commonwealth Office of the British Government, this article traces how the distinct and unprecedented feature of the entrenchment of the Hong Kong Bill of Rights Ordinance (Cap 383) (BORO) was introduced, against the bigger backdrop of deteriorating Sino-British relations after the Tiananmen incident of 4 June 1989, and the active role played by the very few legal scholars who specialised in human rights law in Hong Kong, particularly Johannes Chan, in the process. This article will also sum-marise how such an important entrenchment design facilitated the development of “entrenchment” jurisprudence by the colonial judiciary in its decisions on the BORO in the 1990s, and how such jurisprudence survived the handover and provided the foundation for further development of human rights jurisprudence by the courts of the Hong Kong Special Administrative Region after 1997.

This article seeks to demonstrate the value of comparative human rights law in the development of the fundamental rights jurisprudence in Hong Kong, including in the adoption and development of the proportionality analysis (PA), in the interpretation of art 10 of the Hong Kong Bill of Rights and in examining rights restrictions under the PA. In doing so, this article hopes to highlight the important contributions of Professor Johannes Chan, S.C. (Hon.) to the law as the first and only Honorary Senior Counsel in Hong Kong.

Johannes Chan is renowned for espousing and defending a legalist view of the judicial role. This article seeks to con-trast his legalist theory of judicial behaviour with the strategic school. Using five iconic case studies from the Court of Final Appeal, the article explains why as a descriptive claim, the legalist school does not reflect actual judicial prac-tice, especially for the disputes that matter. It further argues why, as a normative claim, this legalist account may not be the wisest option for judges who seek to defend the rule of law and their institutional autonomy in Hong Kong. In closing, the article discusses how Chan’s thoughts have evolved, with Chan now seemingly accepting that the strate-gic school, as both descriptive and normative accounts of judicial behaviour in Hong Kong, is at least plausible, espe-cially in light of the city’s turn towards authoritarianism. If we read Chan correctly, it would appear that he has over time become, in substance, more sanguine about strategic judicial decision-making than he admits.

Hong Kong’s Competition Commission first introduced its leniency programme in 2015, which allows cartel members to blow the whistle in exchange for immunity from antitrust fines. In late 2020, the Competition Tribunal handed down a judgment in Competition Commission v Quantr Ltd and Cheung Man Ki, which set a milestone in the devel-opment of HK’s leniency policy because it was the first case in HK resulting from a successful leniency application. Since then, there have been more instances in which the Commission relied on its leniency programme to combat cartels. The identity of these leniency recipients has been unknown to the public, as the Commission has intentionally hidden such information. Such a practice has diverged from practices implemented in most overseas jurisdictions and has had significant implications for the city’s competition regime. Through a comparative approach, this article ex-amines whether HK should disclose the identities of successful leniency applicants.

This article investigates the arguments for and against legal transplants and addresses the phenomenon of “cross-fertilisation” between law and culture. It is argued that before making a decision as to whether to borrow for-eign legal rules or legal models, legislatures, policymakers and regulators must take into account the local context of the society that is subject to legal transplant. This approach would allow for laws to reflect the fabric of the society. Without it, legal rules would fail to draw respect, legitimacy and compliance.

Through a comprehensive study of known investor-state arbitration cases related to sanctions, this article intends to analyze the impact of economic sanctions on investor-state arbitration and whether investor-state arbitration is ap-propriate as a tool to regulate unilateral sanctions. Known sanctions-related arbitration practices have shown that economic sanctions have a substantial impact on the issues of jurisdiction and admissibility, merit, and enforcement of awards. A key insight is that in the absence of international legislation on the legality of economic sanctions, in-vestment arbitration practices may help to clarify the legal boundaries of economic sanctions. Investors may chal-lenge the host State’s unilateral sanctions through investor-state arbitration in accordance with the investment pro-tection obligations of bilateral investment treaties. On the other hand, States may rely on national security exceptions under bilateral investment treaties or customary international law, such as force majeure, necessity or counter-measures, to defend their sanction measures. The legitimacy of sanction measures needs to be judged in practice on a case-by-case basis.

The National Security Law (NSL), directly imposed by Beijing, poses a variety of challenges for Hong Kong courts. Chief among them is interpreting the NSL’s provisions, which are broadly worded and contain unfamiliar legal con-cepts. This article addresses this issue by examining the approaches adopted by the Hong Kong courts in interpreting the NSL. It also explores how the courts have interpreted the sedition legislation, which falls under the local Crimes Ordinance and has been recognised as part of the overall national security legal framework. This article argues that, when interpreting the NSL, the Court of First Instance initially adopted the proactive legality principle, thereby alter-ing the statutory wording to produce an interpretation that maximises rights compatibility. It then shows that the Court of Final Appeal (CFA) developed a balanced approach to the interpretation of the NSL, emphasising both the statutory language and the protection of fundamental rights. This article further argues that the trial courts have failed to heed the CFA’s direction when interpreting the NSL and sedition legislation by adopting rigidly literal inter-pretations that pay insufficient regard to rights protection. This article concludes that in future national security cas-es, Hong Kong courts should recover the CFA’s balanced approach through rigorous use of remedial interpretation and International Covenant on Civil and Political Rights jurisprudence.

This article provides a preliminary analysis of the Hong Kong National Security Law (NSL) Interpretation by the Na-tional People’s Congress Standing Committee in December 2022. Reviewing the context in which the Interpretation was sought by the Hong Kong Chief Executive and given by the Beijing legislature, the article examines critically the redefined power of the Hong Kong National Security Committee (NSC), the application of the executive certificate procedure in national security cases and the NSC’s intervention in the case of judicial non-compliance with the execu-tive certification requirement. The article argues that, on a proper reading, the Interpretation did not, and was probably not meant to, grant such powers to the NSC that would usurp the judicial power of the court and powers allocated to other bodies under the Basic Law, the NSL and other Hong Kong laws.

The state-run Social Credit System (SCS), China’s mega-project to improve governance capabilities and legal compli-ance, depends on accurate data to achieve its purposes, but national-level regulation promoting it is slim. This study examines the overall regulatory framework dealing with the accuracy of personal information used in the public SCS, considering special sectoral and provincial regulations and national legislation such as the Personal Information Pro-tection Law and the Regulation on Open Government Information. It frames the SCS as a data-processing mechanism and discusses data input and use, as well as the overall legal framework it operates in. Subsequently, it assesses the legal content of existing regulations with regard to ensuring data accuracy, focusing on accuracy obligations, notifi-cation requirements, prior review procedures, information accessibility, posterior objection procedures and the dis-semination of changes throughout the system. The study finds that special legislation is inconsistent and that national legislation is often too vague to deal with the complicated and diverse processes of the SCS. Further legislation will be needed to standardise procedures.

This article examines the governance model and the political economic considerations in the criminalisation trend of cryptocurrencies in China since 2017. Cryptocurrencies are completely banned for threats to the central bank and commercial bank-dominated sovereign monetary system and their policy tasks (such as capital control); for financial stability, market integrity and illegal fundraising concerns and for regulatory cost and capability of identifying and supervising different kinds of cryptocurrencies and their operators. The downside of such a criminalisation decision is arguably sacrificing market efficiency and autonomy. Based on the idea that the essence of money is credit, this arti-cle then explores the limits of private money operation in China, namely the entry conditions and operational rules on banking and payment institutions. A policy suggestion is that private entities with technological strengths for risk control and infrastructure design should be encouraged to provide banking and payment services. The regulatory rules of commercial banks are applicable to private banks, with bespoke rules applied to non-bank payment institu-tions. Regulation and supervision of data protection, operational security and digital infrastructure design shall be the focus of legal design in the future.

The global tendency towards financial integration means that securities transactions are often transnational. In Chi-na, such transactions are covered by the Securities Law; with the enactment in March 2020 of the additional art 2, para 4, China took the first step towards the extraterritorial application of this law. This article discusses the theoret-ical basis for extraterritorial jurisdiction and examines the problems posed by the new article. It addresses the limita-tion of the ambiguous “effect test”, the way in which the article is formulated, and the construction of the whole process from establishing the jurisdiction to law application. In development for over 40 years, the relatively mature and comprehensive extraterritorial jurisdiction system of the United States is used as a reference. This study proposes implementing a clearer effect test revolving around the ideas of “certainty”, “directness” and “reasonable predicta-bility”; it also suggests relevant amendments to other related laws.