JEREMY MATHEWS: LAST week's editorial in the Sunday Morning Post set out the case for the Government introducing the Court of Final Appeal (CFA) Bill into the Legislative Council as soon as possible, and called on members to support it. We have made clear many times we would like to introduce the bill into the Legislative Council with Chinese support, and we see no reason why this should not be possible. The two sides agreed in 1991 the CFA should be established before 1997. This was to ensure a smooth transition in the judiciary, for the benefit of the Special Administrative Region (SAR) and its inhabitants. The Chinese side, including the Director of the Hong Kong and Macau Affairs Office, Lu Ping, on his recent visit to the United States, has repeatedly said it wishes to see the CFA set up before 1997 on the basis of the 1991 agreement. We welcome these assurances. The CFA Bill has been drafted fully in accordance with that agreement and does not raise any new issues of principle. It was disappointing, therefore, that at the expert talks on March 24, the Chinese side indicated it still had some concerns about the bill, but declined to tell us what those were. We are, of course, ready at any time to discuss with the Chinese side any concerns it may have, and to give them any additional explanations or information that they want. But almost 11 months have passed since we gave them the draft Bill in May last year. There is now only a limited time available for further discussion. We need to set up the court by July 1996 at the latest. Cases can take up to a year to be heard by the Judicial Committee of the Privy Council. We also want to give the court time before 1997 to establish a body of jurisprudence and overcome teething problems. But a great deal needs to be done once the CFA Bill has been enacted. The judiciary will need to fit out premises, appoint judges and staff, draw up rules of procedure and enshrine them in subsidiary legislation. All of this will take at least 12 months. So it is vital we enact the bill before this session of the Legislative Council ends in July. If we do not manage to do this, we will have to introduce the Bill all over again in the new Legco session in October. This would mean a delay of at least six months and probably longer. Time is very tight. We would like to have introduced the Bill by February at the latest. However, we have tried to give the Chinese side as much time as possible to look at the Bill itself and the purely technical amendments we gave them in January. To buy time, we decided to compress the legislative timetable. But we cannot compress it much further. If the Chinese side do not tell us very soon that they are content with the Bill, we will have to face the difficult decision of whether to fulfil our responsibility to do our best to implement the 1991 agreement, or whether to wait until the two sides can reach agreement, in the knowledge that we will then in all probability not be able to set the CFA up before 1997. Whenever the CFA Bill is introduced into the Legislative Council, members will be faced with a stark choice: whether to pass the Bill, and set the CFA up on the basis of the 1991 agreement, or whether to reject it, and ensure that Hong Kong will have no CFA until the SAR Government sets it up sometime after 1997, on a timescale and on a basis about which there can be no certainty. The Government has no doubt it is in the best interests of the people of Hong Kong to implement the 1991 agreement and set up the CFA as soon as possible before 1997. We also realise some legislators and members of the legal profession have doubts about whether the Bill is consistent with the Joint Declaration and the Basic Law. However, we believe it is consistent, a view supported by a number of authoritative independent opinions. It is quite frankly inconceivable the 1991 agreement would have been made if either government had thought it inconsistent with the Joint Declaration and the Basic Law. The CFA is a crucial symbol and an embodiment of the rule of law. Uncertainty over when and on what basis it will be established is already having a damaging effect on confidence in Hong Kong. Commercial contracts are being drawn up with clauses aimed at avoiding resort to Hong Kong courts in the event of any dispute. It is clearly harmful to Hong Kong's reputation as a commercial, financial and services centre if investors are showing a lack of confidence in its judicial system. So the CFA must be set up as soon as possible. Some legislators argue we cannot guarantee that even a CFA set up in accordance with the 1991 agreement will survive 1997. That is true. Only the Chinese Government can give that guarantee. But both the Joint Declaration and the Basic Law provide for continuity in the judiciary. And the CFA Bill is wholly in accordance with the 1991 agreement - an agreement whose purpose was to make possible the establishment of the CFA before 1997 so it could continue after the handover. But even if there was no guarantee of continuity in 1997, that would be no reason for the Goverment not to do what is clearly right, and clearly in the best interests of Hong Kong, and set up the CFA in accordance with the 1991 agreement. That is exactly what we are trying to do. And we hope that the Chinese side will confirm very soon that it is content for us to do that. MARTIN LEE: THE argument over the make-up of the Court of Final Appeal (CFA) may at first seem like lawyerly hair-splitting: why should it matter so much whether the Sino-British agreement allowed for one, two or more foreign judges for our highest post-1997 court? Recent posturing by Britain, and threats by China to scrap Hong Kong's highest court, have obscured the original intent of the court itself. This was to reassure international investors that the Hong Kong Special Administrative Region would keep our existing rule of law and not have rule by Communist Party cadres. I have good reason to know. In May 1983, I had just finished my term as chairman of the Hong Kong Bar Association and negotiations on the Joint Declaration were getting underway. I sought out Mr Li Ju-sheng, then a vice-director of the Hong Kong Branch of Xinhua (New China News Agency) and a key player on the Joint Declaration negotiating team, to discuss the CFA. I asked him where it would be after 1997 and he asked me where it was then located - indicating he had not thought of this point at all. When I told him the CFA was at the Privy Council in London, he said: 'I hope you are not suggesting that after 1997 the CFA should remain in London? It must be in Beijing.' When I asked where the judges would come from, he said: 'Fly them up from Hong Kong, of course. We have a totally different legal system, and our judges cannot deal with the cases in Hong Kong.' What about barristers and solicitors? He said: 'Fly them up from Hong Kong too because our lawyers can't cope with your cases.' What about our many books, authorities and case law? He said: 'Of course you must bring them with you from Hong Kong.' I told him it was certainly China's prerogative to set up the CFA in Beijing, but that if it wanted to help Hong Kong, could the court not be established here? After some thought, he said: 'Okay, I don't see why not.' Mr Li at first said the court would be composed by judges from Hong Kong, but I pointed out that, while Hong Kong judges were free from corruption, there was a difference in ability in comparison with the Law Lords who heard Privy Council appeals in London. I asked him to look at the matter from the point of view of an overseas investor who had invested heavily in Hong Kong. This investor now felt secure about his investment because if anything went wrong, he could make his case in our fair and impartial legal system, and be confident in the Privy Council judges who would not be influenced by any government. But after 1997, when Hong Kong was part of China, what would these overseas investors think, particularly bearing in mind the rule of law in China? Mr Li asked me what I would suggest. I said that in the Privy Council, there were five Law Lords hearing appeals, and I suggested the CFA also have five judges. Since only eight to 10 cases from Hong Kong went to the Privy Council on average per year it would not be necessary for the CFA to sit for more than two months a year. I suggested three of the five judges be invited from other common law jurisdictions, to come to Hong Kong and sit with two Hong Kong judges. I told him my hypothetical overseas investor would feel secure with his investment because the majority of the CFA judges would be seen to be independent of the Hong Kong Government and China. The further advantage would be that the common law system in Hong Kong would develop with the other common law jurisdictions. Mr Li thought for a long minute and said: 'An excellent idea, Mr Lee, but will the British agree?' On the following day, I made the same proposal to the then Attorney-General, Mr Michael Thomas, QC. He was delighted with the idea but asked whether the Chinese would agree. I assured him just to press on. When the Joint Declaration was announced on September 26, 1984, I was pleased my proposals had been incorporated. The declaration stated that the CFA would be established in Hong Kong and that the Court could invite judges from overseas common law jurisdictions. I envisioned that with top international legal minds on our court, Hong Kong judges surely would keep their independence - and just as important - the perception of independence. Today, the concerns of the international investor should be even more paramount. Indeed, Hong Kong's rule of law has become more crucial, as rampant corruption, broken contracts, copyright chaos, scandals and businessmen held hostage over commercial disputes, have undermined China's economic boom and threatened Hong Kong's own future stability. How ironic, then, that the Hong Kong and British Governments propose to buttress the rule of law in Hong Kong by breaking it, arguing that it is vital to have the CFA - no matter how bad - in place before 1997. If the CFA is to be the cornerstone of our legal system, it is totally unacceptable that it be set up in breach of the law. When Britain wilfully violates the Joint Declaration and the Basic Law, it is not only the worst possible precedent for the future, but it also makes it impossible to engender local and international confidence in a legal system built, not on law, but on sand. Martin Lee Chu-ming, QC, is an elected Legislative Councillor.