An obscure money dispute between Congo, a US-based investment fund and a mainland state-owned company that starts its hearing in the Court of Final Appeal today may redefine not only the immunity rights of governments but the extent of the central government's influence on Hong Kong courts.
Lawyers and legislators are watching keenly for repercussions on Hong Kong's constitution and its commercial attractiveness.
'The stage has been set for a constitutional storm,' said Sienho Yee, Changjiang Xuezhe Professor and Chief Expert at the Wuhan University Institute of International Law.
Such high stakes almost overshadow US$104 million owed to New York-based FG Hemisphere Associates (now known as FG Capital Management Ltd) by the Democratic Republic of Congo as part of debts first incurred more than 20 years ago.
FG is a so-called vulture fund that, according to the March issue of Hong Kong Lawyer, 'specialises in purchasing distressed sovereign debt at a discount price, with a view to enforcement by litigation wherever the state has assets or is owed money by a third party'. It is seeking repayment on Hong Kong soil, as the assets claimed are in the city.
The question is whether foreign countries are immune from prosecution in Hong Kong courts in their business dealings - an issue that the Basic Law does not explicitly address. If nations' commercial transactions are not immune, legal experts fear big money could flee Hong Kong if it became a favourable place to chase debts. If they are fully immune, companies may fear entering into contracts with state-backed businesses, knowing that if things go wrong they have no legal recourse.