Absolute state immunity does not serve honest commerce in HK

PUBLISHED : Friday, 16 September, 2011, 12:00am
UPDATED : Friday, 16 September, 2011, 12:00am


Beijing has concluded that Hong Kong must follow the mainland's law on state immunity and that absolute state immunity now applies in the SAR.

On September 14, 2005, China signed (but has not yet ratified) the UN Convention on Jurisdictional Immunities of States and Their Property, Article 10 of which provides for restrictive state immunity, not absolute state immunity, where a state engages in a commercial transaction with a foreign natural or juridical person. Twelve countries have so far ratified, approved or acceded to the convention. When 30 countries have done so, the convention will come into force. If and when China ratifies it, Hong Kong will presumably revert to restrictive state immunity.

Since Beijing has signed the UN convention on restrictive state immunity, one might have reasonably expected that this doctrine was accepted by China. Perhaps the National People's Congress can explain the apparent contradiction in its latest assertion of absolute state immunity.

If the essence of the recent interpretation by the NPC is that Hong Kong follow the mainland's position regarding immunity, and if China accepts restrictive state immunity, then Hong Kong can follow suit and it would be business as usual.

Article 10.3 of the convention provides that where a state enterprise or other independent legal entity established by a state is involved in a proceeding which relates to a commercial transaction in which that entity is engaged, the immunity from jurisdiction enjoyed by that state shall not be affected. A distinction is drawn between 'the state' on one hand and 'state enterprises' on the other. China accepts this distinction. Yet, paradoxically, Beijing does not distinguish between the conduct of 'foreign affairs' by the SAR and commercial transactions engaged in by the SAR.

Absolute state immunity suited China historically, but it would be appropriate in view of the modernisation of the country and its key role in international trade to move towards restrictive state immunity and provide reciprocity with its trading and treaty partners.

Absolute state immunity does not serve justice or honest commerce in Hong Kong. It introduces limitations on Hong Kong's jurisdiction. The rationale of harnessing Hong Kong to China does not justify the introduction of absolute state immunity to the SAR.

Allan Woodley, Sydney, Australia