China’s possible intervention in a Hong Kong lawsuit is sparking concerns that Beijing may compromise the high degree of automony promised to Hong Kong and its courts when the territory returned to Chinese rule in 1997.
The dispute stems from conflicting Chinese and Hong Kong practices on sovereign immunity.
In May 2008, a US distressed debt fund that bought about US$102 million in debt carried by the Congo government sued in Hong Kong. The Congo claimed immunity as a foreign state. China, which says it consistently follows the principle of absolute immunity, sided with the Congo — and informed the Hong Kong courts of its position. Hong Kong’s secretary for justice sent lawyers to take part in oral arguments, urging the courts to follow China’s lead.
While a lower court ruled in December 2008 that Hong Kong had no jurisdiction in the case, an appeals court overturned that decision in February, ruling that in line with international law, the territory follows restrictive immunity, which does not cover the business affairs of sovereign nations.
The Congo government appealed to the Court of Final Appeal, and late last month asked it to seek legal guidance from Beijing. If the request is granted, it would be the first time Hong Kong courts have sought a Chinese legal interpretation. The Congo’s request was not widely reported until it came up during a procedural hearing on Monday.
Beijing has a direct political and financial interest in the case. In its lawsuit, the debt fund, FG Hemisphere Associates, has also targeted three Hong Kong incorporated subsidiaries of state-owned China Railway Group that owe the Congo administration about US$221 million for mining rights. FG wants those entry fees to cover the debt that it is owed.
It’s not the first time Hong Kong has invoked immunity for one of Beijing’s African allies. In March last year, the Hong Kong government said Zimbabwean first lady Grace Mugabe enjoyed diplomatic immunity from prosecution on allegations that she attacked a British photographer while visiting the territory.
Hong Kong Human Rights Monitor director Law Yuk-kai (羅沃啟) said the case has compromised Hong Kong’s separate administrative status.
“It’s unacceptable for the secretary for justice to intervene based on sheer sovereign status and ask us to ignore customary international law so China can do a favor for its business partner and benefit itself at the same time,” Law said.
The Department of Justice said in a statement the case “involves important issues of state immunity that attract great public importance” but did not elaborate.
Hong Kong’s Court of Final Appeal is supposed to have the last say in all local cases. In practice, however, Chinese sovereignty has often trumped Hong Kong autonomy.
In 1999, the Hong Kong government asked for a Chinese ruling that forced the Court of Final Appeal to reverse a decision on residency rights that officials said would overwhelm the territory with Chinese immigrants.
The Hong Kong Constitution says its courts must defer to China on matters of foreign affairs. Whether the case qualifies as a “foreign affair” is one of the key issues the Court of Final Appeal will have to address.
Oral arguments will be heard next March.
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