THE question of how Hong Kong and China co-operate on the matter of mutual legal assistance after the handover of sovereignty to the mainland next year is one that deserves urgent attention, especially in relation to its impact on commercial contracts between the two parties.
Evidence is growing to suggest there is foot dragging on both sides of the border on this complicated legal issue as the two sides concentrate their efforts on resolving broader political questions. At the same time, leading figures in the legal and business fraternities voice concern about the impact a failure to satisfactorily conclude a basis for sound legal relations with China will have on Hong Kong's future as an international commercial centre.
The potential to expand the economic integration with China already achieved and which provides the foundation for so much confidence in Hong Kong's future prosperity, will be heavily influenced by the ability of the two sides to establish a sound legal footing for conducting business.
The integrity of Hong Kong's commercial legal system, in particular the strength of the available expertise and its efficiency, has long been held an attraction for international companies seeking to set up a base in the region. However, this advantage is being challenged as uncertainty grows about how legal co-operation with China will be achieved in the coming years.
At present, multilateral treaties entered into by Britain and extended to Hong Kong can be applied in China and these enable mutual legal assistance to take place between Hong Kong and China. The practical effect of these treaties such as the key 1958 New York Convention on Recognition and Enforcement of Foreign Arbital Awards is that awards made in Hong Kong are enforceable in China.
When Hong Kong becomes part of China, mutual legal assistance in civil questions will no longer be governed by such international agreements. Without these or a suitable substitute in place there is no mechanism by which judgments and arbitration awards obtained in Hong Kong can be enforced on the mainland or vice-versa.
Daniel Fung, the solicitor general, focused attention on these looming problems when addressing an American Chamber of Commerce conference last week. He has regularly voiced his concerns about the issue but the tone of this speech was stronger, reflecting an aggravated concern with the apparent lack of action from both sides.
