The Basic Law is supposed to be a shield for Hong Kong, one which gives it autonomy in all things except foreign affairs and provides for its own courts to interpret that law. But Beijing and its local 'united front' chauvinists are doing their best to undermine it in various ways. The decision last week of the National People's Congress to enforce Beijing's concept of sovereign immunity on the city will have a lasting impact on Hong Kong's role in international commerce - its main reason for existence.
The decision was expected once the Court of Final Appeal, by a narrow vote, elected to refer to the NPC the matter of sovereignty immunity in a commercial claim against the Democratic Republic of Congo.
Perhaps fittingly, the decision came the same week as it was learned that one of China's largest state-owned enterprises, Cosco, was reneging on bulk carrier charter contracts with a Greek ship owner which led to the arrest of some Cosco ships in foreign ports. It was not as though Cosco, an arm of the Ministry of Communications, was unable to pay; it has access to any amount of funds from the state or from state banks. It was refusing to pay simply because it was losing money on charters signed in 2008. It may have a triple-A credit rating but what is that worth if it thinks that being big and Chinese and state-owned means it can tear up contracts?
In the light of the NPC decision, it is clear that no one is going to be bothering to arrest a Cosco ship in Hong Kong. Better wait until it docks in somewhere like Singapore, or Hamburg, or Cape Town. And if Cosco is assumed to be immune then, presumably, state-owned shipping lines from other countries can make similar claims.
Some lawyers anxious to ingratiate themselves with Beijing have praised the decision - made unanimously by the 157 members of the NPC Standing Committee - as clarifying the situation. In fact it does little of the sort. In the Congo case, the state itself was the defendant though the case was commercial. A Chinese state company stood to lose as well, as it actually possessed some of the assets claimed by the creditor.
What remains up in the air is the key issue: does the interpretation apply to commercial entities, trading as companies, which happen to be majority-owned by a government ministry? Or was the Congo case an unusual and exceptional case because there was no corporate intermediary?