2015 Spring

Hong Kong Student Law Gazette Spring 2015 · Issue 6

Feature Interview with Mr Denis Chang, S.C.

Articles Opportunities and Challenges of Shanghai–Hong Kong Stock Connect: a Transformation Filling the Sky with Drones Net Neutrality in Hong Kong A New Affront to Women’s Rights in Myanmar

1

LETTER FROM THE EDITOR

Where will your legal career take you?

If you s ee yours elf working at the very top of the p rof essi on on head l i ne d eal s w i t h m ar ket leading clients, consider a career at Clifford C hance.

Dur ing a training contract with us y ou will be adv i si ng t he b est cl i ent s, exp osed t o t h e most innovative transactions and working with a d ynami c, d i ver se and amb i t i ous t eam s panning the globe. W ith our first-class law yer d evel op ment p rogr ammes, t he b readth and depth of our expertise and our worldw i d e reach, w e can off er you t he b est opportunity to begin your inter national legal career.

F or more information and to apply, visit our websi t e www. c l i ff o rd c h a n c e . c o m

HKSLG 路 SPRING 2015 路 ISSUE 6

TABLE OF CONTENTS

1

HONG KONG Opportunities and Challenges of Shanghai–Hong Kong Stock Connect: a Transformation 4 BMO Reform: Calming the Storm of Owners’ Disputes Relating to Large-Scale Maintenance Projects?

6 Introduction of State Security Law to Hong Kong — Are the Grounds and Rationales Sound?

8 Filling the Sky with Drones 9 Re Asia Television Ltd: the Tactics of an Unfair Prejudice Petition 10 The Common Law Defence of Innocent Dissemination in Hong Kong: Why Solina Chau Was Wrongly Decided 12 Ultra Vires Theory: the Most Appropriate Constitutional Justification for Judicial Review in Hong Kong? 14 Net Neutrality in Hong Kong 16 Competition Ordinance: the Implication for Hotels and Online Travel Companies 18 Freedom of Speech vs Right of Privacy: It’s Time for Hong Kong to Make a Choice 20

CHINA Clarifying the Muddle of Chinese Foreign Investment Law 21 China’s RTL Reform: Real or Cosmetic? 22

FEATURE Interview with Mr Denis Chang S.C. 24

INTERNATIONAL Can There Be Too Much Freedom of Expression in the Media?

32 Bolivia Sends Its Children to Work 33 Ebola and Charterparty Considerations 34 A New Affront to Women’s Rights in Myanmar 36 The Real Debate in R (Carlile) v Home Secretary:

the Distributon of Power Between the Executive and the Judiciary 38 Outdated Policy for Police Immunity 40 Civil Forfeiture and Its Draconian Measures 42

HKSLG · SPRING 2015 · ISSUE 6

2

LETTER FROM THE EDITOR

W

ith its third year of publication, the Gazette’s journey has been nothing short of an amazing ride. From interviewing leading judges and practitioners to gradually building the Gazette’s reputation in the legal industry, the past Editorial Boards have embarked on an exciting quest for “legal scholarship with integrity”, in which I am very proud of playing a role as the incumbent editor-in-chief.

It was fitting, therefore, for the Gazette to approach in this issue the Chairman of the Hong Kong Law Journal, who also happens to be one of the most recognisable figures in Hong Kong. We had the honour and pleasure of meeting Mr Denis Chang S.C., head of Denis Chang’s Chambers, who welcomed us warmly and shared with us his exciting stories and intellectual views. We would like to thank Mr Chang for his time, as well as his enthusiasm and diligence in ensuring the quality of our feature article.

On that note, the journey of this year’s Editorial Board has come to an end. As usual, we wish to give our gratitude to those who have supported the Gazette since its inception. First and foremost, we would like to thank Clifford Chance LLP for their continuous support in sponsoring our printed copies, as well as our online platform at hongkongstudentlawgazette.com. We would also like to thank the readers and writers of the Gazette, as the Gazette has been established with their supports in mind.

Last, but certainly not the least, I would like to give my special thanks to my fellow editors. I owe the success of the Gazette during my tenure to them, and I am proud to have worked alongside a team that I could trust in upholding the reputation of the Gazette.

As the esteemed Mr Denis Chang S.C. have once said, Hong Kong is a place where “the common law is put in the most uncommon setting”. Given Hong Kong’s exciting legal developments, I am confident that the journey of the Gazette - as Hong Kong’s leading student-run law publication - is far from over.

James Ng Editor-in-Chief

HKSLG · SPRING 2015 · ISSUE 6

EDITORIAL BOARD

3

Editorial Board

James Ng

Keith Cheung

Alan Lee

Cynthia Or

Natalie Lau

Quentin Wong

Layout Team

Lemon Lin

Cynthia Or

Additional Thanks (in alphabetical order)

Clifford Chance LLP CUHK Faculty of Law

Ms Amy Barrow Ms Jeannie Kow

Mr Denis Chang, S.C. Ms Jay Wong HKSLG 路 SPRING 2015 路 ISSUE 6

4

HONG KONG

Opportunities and Challenges of Shanghai–Hong Kong Stock Connect: a Transformation

I

n 1998, only a year after the handover of Hong Kong, Edgar Cheng, the then chairman of the Council of the Stock Exchange of Hong Kong (SEHK), claimed that Hong Kong’s success as a financial centre will be inextricably tied to being not only the Mainland’s investment conduit of the world, but as the international financial hub for China. In the years that followed, the statement was brought into realisation. Indeed, there has been closer financial integration between the Mainland and Hong Kong: free trade agreements between Hong Kong and China had been signed, State Owned Enterprises (SOEs) are continually listed on the SEHK, and Hong Kong had become the first RMB offshore HKSLG · SPRING 2015 · ISSUE 6

David Wen

trading centre. Recently, the opening of the Shanghai–Hong Kong Stock Connect (the Connect) can be seen as a further development of Hong Kong as a financial hub for China.

lar, the current legal regime for investor redress will be brought into focus.

However, since its launch in November 2014, it has appeared that the Connect has not been operating with full efficacy. According to a survey by the Hong Kong Investment Funds Association, international investors were hesitant to invest in a scheme fraught with pending legal and technical issues.

This article will trace the development of the Connect, outline its objectives and highlight the difficulties that both investors and regulatory bodies face. In particu-

In early 2014, the Connect was first announced by Premier Li Keqiang at the opening of the Boao Forum. The proposed Connect would set another milestone in the internationalisation of the RMB, a process in which China had been actively engaged in for the past decades. Its scope would surpass the previous Qualified Foreign Institutional Investor (QFII) Scheme which excluded many investors because of its strict requirements.

Under the QFII Scheme, only a

Conceiving the Connect: goals and objectives

HONG KONG small number of selected institutional investors from certain countries could be granted licenses to purchase approved RMB denominated investment products, with the amount of investment limited by a quota allocated to each QFII individually. By the end of 2013, there were only 251 QFII investors, mostly from major international financial institutions. Furthermore, the regulations under the scheme were stringent: investors are not allowed to withdraw their assets freely as a ‘lock up period’ was prescribed for all funds. This was to prevent ‘hot money’ from causing market instability.

For individuals or smaller institutions ineligible for the QFII scheme, the Connect marked a further step in market liberalisation there are neither limits to the number of foreign investors nor quotas allocated to participants. Despite an aggregate quota of RMB 300 billion for Northbound trading to control the influx of ‘hot money’, Hong Kong and foreign investors are allowed to trade through the Connect. Furthermore, there is no ‘lock up period’ and investors can sell their purchase at any time provided that clearing rules are followed.

In contrast to the QFII, the SEHK claimed that the Connect would be ‘the first feasible, controllable and expandable channel for crossboundary RMB flow’. For Hong Kong, the Connect would benefit the city’s financial institutions by encouraging offshore RMB trading. It would thus increase liquidity in the local stock markets, further strengthening Hong Kong’s status as an offshore RMB and international financial centre. Finally, as investors can trade shares on the other market, the Connect would be a very attractive preposition for individual and institutional investors.

Pending issues Such an ambitious undertaking is not without its challenges. After the launch of the Connect, there was a disappointing response from the market: only RMB 27 billion or 4.9% of the aggregate quota was used during the first trading week.

Commentators believed such phenomenon resulted from a lack of readiness of the investors and was only temporary. However, some also pointed out that despite early technical setbacks, such as differences in trading time and clearing systems, there are outstanding legal issues to be resolved. In particular, the regulatory framework of the Connect remains untested to the satisfaction of investors.

Investor protection for Hong Kong and international traders is perhaps the greatest concern. For investors, all Shanghai Stock Exchange (SSE) shares acquired through the Northbound link are deposited in the omnibus account held by the Hong Kong Securities and Clearing Corporation (HKSCC) under a securities depository known as ChinaClear. The securities laws of Hong Kong and China both recognise the notion of nominee owner and beneficial owner. Hence, investors in Hong Kong have a proprietary interest in the SSE shares they purchased and it is kept with the nominee owner, the HKSCC. However, many investors cast doubt upon whether, in the event of malpractice by a firm listed in the Mainland with no assets or management representation in Hong Kong, their interests would be protected. It is also unclear, in such a situation, if the HKSCC would bring legal proceedings in China or proceed an action against the firm in Hong Kong courts.

Furthermore, in the event that a Mainland listed company defaults, local Hong Kong regulations do

5

not provide clear legal options for investors. Under the revised Central Clearing and Settlement (CCAS) rules, the HKSCC has no obligation to bring legal proceedings to enforce any rights on behalf of investors in China or elsewhere.

This may seem disappointing to investors who favour legal protection. However, Hong Kong law offers a potential avenue of legal recourse for aggrieved investors.

Under the Securities and Futures Ordinance (Cap 571), it is possible that the HKSCC, as the nominee owners of the SSE shares, may owe a statutory duty towards investors.

Therefore, it is in theory obligated to bring proceedings in China on behalf of investors. However, as there is no case law in the area, any future legal proceedings will be navigating uncharted waters. This offers little comfort to potential investors for the Connect.

Conclusion Nevertheless, there are definite risks and challenges posed by integrating stock markets governed by different rules and regulations.

These issues, however, did not halt the Connect from coming into operation. The economic benefits to both Hong Kong and China from mutual stock market access is too great to ignore. Nevertheless, there are still uncertainty ahead for stakeholders. Yet, in the early stages of the Connect, the regulatory bodies had shown a willingness to cooperate in order to resolve technical issues. The continued success of the Connect will depend on further collaboration among these bodies in order to foster investor confidence. Therefore, a future framework, supported by a strong legal foundation, for enforcing investor rights would be indispensable for the Connect.

HKSLG · SPRING 2015 · ISSUE 6

6

HONG KONG

BMO Reform: Calming the Storm of Owners’ Disputes Relating to Large-Scale Maintenance Projects?

I

n recent years, a wave of disputes relating to large-scale maintenance projects of residential buildings have spread across Hong Kong. Individual owners allege that their management committees (MCs) are abusing the decision-making mechanism of incorporated owners to approve multi-million maintenance contracts that legally bind all owners.

The consultation period for reviewing the Building Management Ordinance (Cap 344) (BMO) ended on 2 February 2015.

Will reform end allegations that MCs dominate owners’ meetings?

Owners often challenge the representativeness of the resolution passed at the owners’ meeting that approves large-scale maintenance projects of the buildings. Under the current BMO requirement, MCs can pass such resolution merely by securing the votes of as little as 5% of the owners. Accordingly, the Government proposes to raise the threshold: either to increase the quorum of the owners’ meeting passing such resolutions from 10% to 20%; or to increase the passing ratio of such resolution from 50% to 75%. The Hong Kong Institute of Housing and the Chartered Institute of Housing support setting the quorum at 15% and 20% respectively. They regard it as more feasible than requiring special majority vote for passing a resoluHKSLG · SPRING 2015 · ISSUE 6

tion, which is difficult to fulfil in practice and may lead to fruitless discussions.

A higher quorum theoretically encourages wider participation and raises a resolution’s representativeness, but such formalistic reform can hardly satisfy uncompromising individual owners. In July 2013, nearly 30% of the flat owners of Garden Vista attended the owners’ meeting that approved a HKD 260 million maintenance contract. Although the owners present were well above the proposed quorum, dispute still erupted after the exorbitant bill arrived. Owners reluctant to pay disagreed with the extent of renovation and challenged the decision made in that owners’ meeting.

To offer additional protection for these owners, political parties have suggested setting a cooling-off period after the resolution passes.

During the 14-day period, uninformed owners shall be notified of the voting result and undecided owners can reconsider the legal and financial impact of the resolution. If there is any objection, the decision-making process may be restarted. However, there are other problems with challenging the finality of a resolution. Reopening discussion incurs further administrative cost and time. The contract price will naturally increase as construction costs increase over time.

Where the building urgently needs

Cathy Mui

maintenance or is facing a statutory order, prolonged delay may even lead to safety issues and criminal liability. Unless appropriate limitations can be incorporated to remedy these problems, setting a cooling-off period may not serve the overall interest of the owners.

Will reform end allegations that MCs manipulate voting results?

Owners have alleged that MCs control the voting result by manipulating proxy arrangements. Although owners who cannot attend the owner’s meeting may appoint a proxy according to the BMO, their voice may be stifled because the MCs are alleged to have ‘lost’ their proxy instruments or refused to accept valid proxy instruments.

In response, the Government has tightened the standard of proxy collection and verification arrangements. For example, the MC must display the list of owners’

HONG KONG instruments lodged 24 hours before the owners’ meeting. It also needs to mark on each proxy instrument the reasons for invalidation.

These measures may stop one type of manipulation, but fail to cover others. Before Ting Ping Estate’s owner’s meeting last October, owners suspected that fellow owners were ‘buying’ proxy instruments from elderly owners by offering them cash and meals. Among the proxy instruments received, some were further suspected of having forged signatures.

In fact, such malpractices fall outside the scope of the BMO or other statutory regulations. The trading of proxy instruments is neither regulated by the Elections (Corrupt and Illegal Conduct) Ordinance (Cap 554) nor the Prevention of Bribery Ordinance (Cap 201).

While forgery is a criminal offence under the Crimes Ordinance (Cap 200), offenders are seldom charged due to several difficulties.

Firstly, the signatures in question often belong to owners who lease their flats or reside overseas so that verification with their authenticity is problematic. Secondly, the high burden of proof must be discharged by sufficient evidence even where the dishonest signatory can be identified. As a result, simultaneous reforms of relevant

criminal statutes may be necessary to effectively deter manipulation of the proxy arrangements.

Will reform end allegations that MCs obstruct owners’ intervention?

Flat owners of Grandway Garden sued their MC after it deliberately failed to convene an owner-requested meeting, so to avoid enquiry on their building’s maintenance project and block the proposed resolution to dissolve the MC (周春燕 另一百四十五人 對 富嘉花園業 主立案法團 [2014] HKLT 105).

Under the BMO, the MC’s Chairman is supposed to convene an owner’s meeting upon the request of over 5% of the owners. However, the Chairman in this case intentionally resigned and the vacancy was left unfilled for ten months, such that no one was responsible for convening the owner-requested meeting. The magistrate eventually ordered the dissolution of the existing MC and appointed an administrator to convene an owners’ meeting. In response to this case, the Government’s proposal is to oblige the Vice-Chairman or the MC Members to convene the meeting while the Chairman’s seat is vacant. Where they fail to do so, the owners requesting the meeting may nominate themselves to convene it.

7

This proposal attains a better balance of power between MCs and individual owners in the decisionmaking process. By stopping MCs from obstructing owner-requested meetings, distressed owners can intervene in a timely manner regarding their buildings’ affairs.

This enhanced mechanism may also remedy the limitations of the other aforementioned government proposals. First, individual owners dissatisfied with the resolution passed in an owners’ meeting with quorum may still challenge the outcome in an owner-requested meeting. A cooling-off period will not be necessary to allow this additional redress. Secondly, aggrieved owners of the MC’s manipulation of proxy arrangement may dissolve their MC in an owner-requested meeting. They need not commence litigation to bring justice.

Legislators have proposed importing criminal sanction into the BMO to further deter malpractice

by MCs, but this may bring unfavourable side effects. MC members act on a voluntary basis, usually possessing little legal knowledge and building management experience. Attaching criminal liability to their acts may discourage owners from assuming managerial role over their residence.

Concluding remarks The consultation paper on the BMO review reveals that some of the government proposals are merely formalistic with limited practical function. On the other hand, the proposed mechanism of owner-requested meeting is more promising and constructive.

It would resolve owners’ disputes without resorting to litigation, and enhance the representativeness in decisions concerning largescale maintenance projects.

HKSLG · SPRING 2015 · ISSUE 6

8

HONG KONG

Introduction of State Security Law to Hong Kong — Are the Grounds and Rationales Sound?

Owen Tsoi

concrete statement to include the phrase ‘on its own’ than that in Annex I. Therefore, such legislation shall follow the practice adopted in other statutes, judging from the language and the legislative intent.

Legal compliance with the Basic Law The scope for introducing national legislations into Hong Kong’s legal system is extremely limited, and the relevant procedure for doing so are set out in Arts. 18 and 14 of the Basic Law.

Legitimacy of a substitute for Art. 23 Legislation

I

n recent years, the Hong Kong Government had been unwilling to introduce a state security law into local legislation as required by Art. 23 of the Basic Law. As a remedy, Ng Chau-pei, a National People’s Congress deputy, had suggested a wholesale implementation of the State Security Law of the People’s Republic of China (the State Security Law), which was promulgated by the Standing Committee of the National People’s Congress (NPCSC) in 1993. He views both potential legislative regimes as essentially the same, and urged the pan-democrats to implement the lesser of the two evils.

On the surface, the two implementation methods would afford the State the same protections. The problem, however, arises on procedural HKSLG · SPRING 2015 · ISSUE 6

grounds. Art. 23 of the Basic Law states that the Hong Kong Government should on its own enact such laws, although the Article is silent on whether legislation through other means are permissible. However, the legislative intent of the Basic Law needs to be taken into account in construing the true meaning of Art. 23. Throughout the Basic Law, the drafters have given the Government a wide discretion to legislate Basic Law provisions. For instance, Art. 108 allows the Government, through legislation, ‘to practice an independent tax system’. In turn, the Inland Revenue Ordinance (Cap 112) is enacted for such purposes. Similarly, Annex I of the Basic Law provided that the electoral rules of the Chief Executive shall be enacted by HKSAR. Pursuant to such requirement, the Chief Executive Election Ordinance (Cap 569) was enacted in 2001. Art. 23 has a even more

Art. 18 states that the NPCSC may introduce national laws in Hong Kong by adding such laws to Annex III of the Basic Law. However, the Central Government can only introduce laws through the Annex III mechanism that are traditionally outside of Hong Kong’s autonomy – defence and foreign affairs. Of relevance here is how defence is defined. As such, Art. 14 of the Basic Law needs to be considered.

Art. 14 separates public order from defence by distinguishing the actor of such duties. It states that ‘the Central People’s Government shall be responsible for the defence of the Hong Kong Special Administrative Region. The Government of the Hong Kong Special Administrative Region shall be responsible for the maintenance of public order in the Region.’ Moreover, it explicitly states that ‘military forces stationed by the Central People’s Government in the Hong Kong Special Administrative Region for defence

HONG KONG shall not interfere in the local affairs of the Region.’ It is apparent that defence ought to be understood in the context of a foreign invasion.

Thus, ‘defence’ would form a poor legal basis for the introduction of the State Security Law through the Annex III mechanism.

Hypothetically, if the Central Government were adamant in transplanting the State Security Law in to Hong Kong through the Annex III method, the NPCSC would have considerable difficulties. Art. 18(2) states that ‘the laws listed [within Annex III] shall be applied locally by way of promulgation or legislation by the Region’. Here, the Legislative Council and the Executive has a wide discretion to introduce a national law at its own leisure. Thus, a simple ‘transplant’ will contravene the framework already in place in the Basic Law. The State Security Law also infringes on key aspects of human rights regimes in force locally. For instance, Art. 19 of the State Security Law states that citizens shall keep any State secrets confidential.

Although Art. 16 of Bill of Rights Ordinance (Cap 383) protects freedom of expression with permissible grounds of limitation, Art. 19 of the State Security Law is too loosely defined as a ground of limitation and it would fail the precision required in Leung Kwok Hung & Others v HKSAR [2005] 3 HKLRD 164. Furthermore, Art. 29 of the State Security Law authorises relevant authorities to search related places of the suspects. According to Art. 111 of the Criminal Procedure Law of the People’s Republic of China, criminal procedural law, such as the requirement for search warrants, need not be strictly followed in emergency. Accordingly, the government may always argue that a threat to state security is an emergency which justifies to waive

the requirement of a warrant. This would contravene Art. 29 of the Basic Law, which prohibits ‘arbitrary or unlawful search of, or intrusion into, a resident’s home’. Therefore, the State Security Law, if implanted as a local legislation, will be incompatible with the Basic Law, the Bill of Rights Ordinance and a considerable body of human rights case law.

Compliance with the common law of Hong Kong ‘One Country, Two Systems’ has been the basic framework for Hong Kong’s legal system. It preserves the practice of common law within a country with a civil law tradition.

Introducing legislation from a civil law jurisdiction to Hong Kong will undoubtedly disturb the established practices of our legal system. The common law is based upon the principles of precedent, whereas the civil law relies on legislations that are more formalised, precise, and concrete in a sense that allows little room for the use of precedents. If the State Security Law under a civil law system were to be transplanted into the Hong Kong common law, the courts will have considerable difficulty in interpreting and creating precedents from a legislation made from a civil law legislature.

Furthermore, steeped in the traditions of socialism, the State Security Law would conflict with a common law system with Western principles. For example, Art. 1 of the State Security Law explicitly states the legislation’s purpose is to protect the socialist system in force in the Mainland. This diverges to a great extent from the HK jurisdiction, where one of the general purposes of Hong Kong legislations is to uphold territorial integrity and immunity from socialist system as stated in Paragraph 2 of the pream-

9

ble of the Basic Law, which reads ‘upholding national unity and territorial integrity, maintaining the prosperity and stability of Hong Kong… under the principle of “one country, two systems”, the socialist system and policies will not be practised in Hong Kong…’. Art. 2 of the State Security Law allows cooperation between branches of the government to safeguard state security. This is against the very essence of rule of law in Hong Kong – checks and balances exist between all branches of government in order to prevent any branch from usurping power.

As such, significant changes need to be made to a transplanted State Security Law in order for it to be compatible with our legal system.

This will paradoxically defeat the purpose of a direct ‘transplant’.

Conclusion Finally, a direct transplant of the State Security Law could be effected by an interpretation of the Basic Law from the NPCSC. In Lau Kong Yung and Others v Director of Immigration [1999] 3 HKLRD 778, the courts recognised the NPCSC having the jurisdiction to issue binding interpretation of the Basic Law. However, it is unlikely that the NPCSC will implement the State Security Law through an interpretation. Following the right of adode cases, the NPCSC is already reluctant to interfere with the independence of Hong Kong’s judiciary and issue an interpretation.

Nevertheless, having thoroughly explored the political avenues, as well as the legal ramifications, it is legally unsuitable for the State Security Law to be transplanted directly into Hong Kong.

HKSLG · SPRING 2015 · ISSUE 6

10

HONG KONG

Filling the Sky with Drones George Lau

P

resident Barack Obama probably received an unexpected security alert report on 26 January 2015, when a small drone powered by four rotator blades crashed onto the ground of the White House.

The device was operated by a drunken government worker, who blamed the drone for not functioning properly.

Drones have long crossed over from military use and are now commonly seen in homes. They can be used for leisure pursuits, commercial aerial photography, search, and rescue. However, the proliferation of drones has led to numerous accidents. In March 2014, a US Airways jet and a drone nearly collided in Florida. Later in July, an Airbus A320 pilot reported a near miss with a drone when approaching London Heathrow Airport runway.

the Director-General of Civil Aviation regardless of the drone’s size and weight.

These legislations are inadequate to regulate the use of drones, as they do not address issues such as maximum flying altitude, safety distance, and nuisance caused by aerial photography. Besides, many drones on the market weigh far less than seven kilograms, falling outside of the scope of the regulations.

HKSLG · SPRING 2015 · ISSUE 6

However, many drone operators are flouting the law due to the lack of enforcement, which requires a considerable amount of manpower and resources. Even if the police apprehend an illegally flown drone, it is difficult to locate the drone operator.

Future development

Shortcomings in current laws In Hong Kong, drones are classified as a kind of aircraft governed by relevant civil aviation legislations. Under Arts. 3, 7, and 100 of the Air Navigation (Hong Kong) Order 1995 (Cap 448C), any person flying a drone which weighs more than seven kilograms (without fuel) must apply for a Certificate of Registration and a Certificate of Airworthiness from the Civil Aviation Department (CAD) or other relevant aviation authorities. In addition, under Reg. 22 of the Air Transport (Licensing of Air Services) Regulations (Cap 448A), if a drone is used commercially, one must apply for a permit from

flight altitude for drones weighing more than seven kilograms. Furthermore, under Art. 167, a drone fitted with a camera or surveillance device must not be operated over or within 150 metres of any congested area and organised open-air assembly of more than 1,000 persons, or within 50 meters of any person, vessel, vehicle, or structure.

Looking at foreign exemplary legislations, the UK Air Navigation Order 2009 provides a more comprehensive legal framework. Art. 166 states that the person in charge of a drone must be reasonably satisfied that the flight is safe and that he or she can maintain unaided visual contact with the drone. It also limits the airspace and maximum

To tackle these issues, there have been demands to introduce geofencing programmes in drones to prevent them from entering certain airspace. This technology will compel the drone to land if it enters prohibited areas. Another useful measure is compulsory licensing, such that each drone will be assigned a serial number, and purchasers are required to register their personal information with the retailer along-side the serial number. This will aid in tracking the operator if a drone is found to be violating the law.

Whether these methods will succeed depends largely on the advancement of technology and the cooperation of manufacturers and retailers. Largely one thing is certain though: we will definitely see more drones in the sky.

HONG KONG

11

Re Asia Television Ltd: the Tactics of an Unfair Prejudice Petition Candice Lau

A

sia Television Limited (ATV) has made headlines lately for its failure to pay its staff on time and its questionable prospect of licence renewal. The troubled broadcaster was put under an even more precarious situation by the recent court decision in Re Asia Television Ltd [2015] 1 HKLRD 607.

Case background: unfair prejudice Antenna Investment (Antenna), one of ATV’s shareholders, claimed that its interests had been unfairly prejudiced. The Court held that through a deceptive scheme with his allies, investor Wong Ching obtained de facto control of the company, thus acting in breach of ATV’s licensing agreements and circumventing the Broadcasting Ordinance (Cap 562). According to She Wai Hung v Juliano Lim & Ors HCMP 6472/2001, ‘unfairly prejudicial acts’ refer to conduct causing the applicant shareholder to suffer from diminishing shareholding value. To justify the decision in the case at hand, Harris J explicitly pointed out that the mismanagement of ATV by Wong’s aligned parties directly contributed to the risk of non-renewal of ATV’s licence, which would jeopardize Antenna’s economic interest.

remedy were noted in this High Court decision. First, the Court will assess as at the date of the hearing and examine the overall situation. It should frame a relief to prevent the continuation of the unfairly prejudicial state of affairs.

Second, where the unfair prejudice has been remedied at the time of hearing, the Court may conclude that no relief is required.

Although a buy-out order is commonly sought under an unfair prejudice petition, such a relief should be carefully calculated according to the shareholder’s business objectives. As suggested by Harris J, Antenna may request a court order compelling Wong’s aligned companies to buy Antenna’s shares at a value determined on the basis that the unfair prejudice had not occurred. In Re London School of Electronics Ltd [1986] Ch 211, the prima facie starting point of share valuation could be the date of the buy-out order. Yet Harris J’s obiter illustrated that the starting point is subject to the overriding principle of fairness, and the Court will exercise its discretion by looking into facts of the case (Re Sparkle Consultants [2002] 4 HKC 107).

Did Antenna make a risky decision?

Despite the Court’s readiness to consider granting Antenna a buyout remedy, Antenna’s decision not to apply for buy-out in the first place has reflected its intention to maintain shareholding in ATV. Instead, Antenna sought a ‘novel order’, as described by Harris J, that Panfair Holdings, the fourth respondent, has to sell 10.75% of its ATV shares to an independent third party. This will in effect remove the control by Wong Benkoon, ATV’s majority shareholder, through whom Wong Ching has been exercising de facto control over the company. Nevertheless, it may not be rational for an investor to purchase only a small percentage of this cash-strapped company’s shares. In order to attract investors who wish to gain substantive control of ATV, it is now critical to have Wong Ben-koon compromise to forgo more of his shares. Otherwise, the court order may be of no avail to Antenna since it cannot prevent a likely wind up because of the lack of substantial change in management.

Seeking a buy-out order?

If an unfair prejudice petition is successful, the court can ‘make any order that it thinks fit’ under s. 725 of the Companies Ordinance (Cap 622). Two useful points regarding the assessment of an appropriate HKSLG · SPRING 2015 · ISSUE 6

12

HONG KONG

The Common Law Defence of Innocent Dissemination in Hong Kong: Why Solina Chau Was Wrongly Decided

T

he balance between freedom of speech and respect for others is, as evidenced by the incident of the controversial satire magazine Charlie Hebdo, a delicate one. As the media tread the fine line between uncovering scandals and spreading smears, courts often face difficult dilemmas. For instance, should a distributor who decides to sell a magazine notwithstanding its defamatory nature be held liable to the defamed person? Is it any different if one honestly and reasonably, albeit falsely, believed that the magazine was telling the truth?

The defence of innocent dissemination An individual’s reputation is jealously guarded by the common law under the twin torts of libel and slander, which concern written and spoken defamation respectively. Since letters often run more viral than speech, all ‘publishers’ of a libel used to be strictly liable for it—including distributors such as bookstores and street vendors.

However, not all defamatory statements are libellous. Defences are available, for instance, if the statement is truthful, is a ‘fair comment’, or is privileged for public interest.

Still, such strict liability proved to be unduly harsh upon distributors.

In response, the common law developed an additional defence of ‘innocent dissemination’ (the Defence). To succeed, a distributor must show that he was unaware of HKSLG · SPRING 2015 · ISSUE 6

the libel (the knowledge limb) and that his ignorance was not caused by negligence (the negligence limb). In that case, the dissemination would be ‘innocent’. Over time, however, a discrepancy has developed to cloud a key component of the Defence.

Distinguishing libel from defamatory materials The word ‘libel’ has both an everyday and a legal meaning: it could loosely mean anything defamatory of another, or it could specifically refer to defamatory materials to which no defence is available. Unfortunately, this fine yet decisive distinction went unnoticed until Goldsmith v Sperrings Ltd [1977] 1 WLR 478, where Lord Denning MR first argued that, for a distributor to be liable, not only must he know of the defamatory materials, he must also know of the libel, meaning that he would have no defence. Lord Denning’s view was rejected by the majority who favoured the lower ‘defamatory material’ standard. The majority view was further entrenched as such standard was incorporated in

Icarus Chan

the statutory defence of innocent dissemination in both England and Australia since the 1990s.

The position in Hong Kong: Solina Chau In Hong Kong, where the Defence exists at common law only, the fine distinction was brought to light by the recent case of Chau Hoi Shuen Solina Holly v SEEC Media Group Ltd [2014] 3 HKLRD 77. There, the Defendant had no knowledge of the libel contained in the magazines they distributed and sought to justify that ignorance by arguing that, even if they could discover the defamatory materials by reasonable care, they could not have known it was a defenceless libel. The Court of Appeal dismissed that contention and held the Defendant liable based on the ‘defamatory materials’ standard. However, in principle, this point of law was wrongly decided.

Injustice and freedom of speech To start with, the ‘defamatory material’ standard carries injustice by wronging distributors innocently

HONG KONG believing in the veracity of the materials. For example, if the headlines of multiple respectable newspapers all read ‘CY Leung implicated in graft probe’, a clearly defamatory statement, most street vendors would naturally think it is breaking news rather than unwarranted rumour. Moreover, even if some distributors could and did investigate the statement with due diligence, they may still be held liable if their conclusion turns out to be wrong. In practice, major publishers often assure newsagents with legal advice that although their magazines’ content may be defamatory in the everyday meaning of the word, it is truthful in substance. Following Solina Chau, such assurance will be worthless because knowledge of mere ‘defamatory material’ suffices for establishing liability.

More importantly, such injustice challenges the freedom of speech.

Lord Denning MR commented in Goldsmith that ‘the freedom of the press depends on the channels of distribution being kept open’.

Most attention-courting cover stories, be it innocent or otherwise, appear defamatory to varying degrees. If distributing such publications will attract liability, the reality is that most vendors will refrain from distributing them, thereby exacting an impermissible toll on press freedom.

The Law Commission of England and Wales in a 2002 consultation paper pointed out this difficult choice faced by secondary publishers subsequent to the adoption of the statutory ‘defamatory material’ standard. It concluded that ‘[t]here is a possible conflict between such pressure to remove material, even if true, and the emphasis placed upon freedom of expression’.

Achieving the right balance Despite the potential injustice and restraints on press freedom, individual reputation is indeed better protected under the current position. After all, it is a balancing exercise between the rights of litigants. In Solina Chau, the Court of Appeal admitted that the ‘defamatory material’ standard ‘may not be perfect’ but maintained that ‘it is certainly a workable test’ and ‘the solution is really for the distributor to take indemnities’.

Although it may be true that the real impact on street vendors is minimal since only big-names would be sued, these suggestions were still overly optimistic. Instead of focusing on whether small distributors would be sued or insured, the major concern should be whether distributors will be deterred to take the risk to disseminate which are possibly defamatory articles.

Pursuant to Solina Chau, even the most unmeritorious claimant could gag distributors simply by threatening them that ‘defamatory material’ is present without even challenging its veracity.

Such concerns disappear if distributors can avail themselves of the defence of innocent dissemination on a strictly interpreted ‘libel’ standard. This is consistent

13

with the spirit of other statutory regimes, such as securities law: a director is not liable for a false prospectus statement if he had reasonable ground to believe, and did believe that the statement was true. In fact, the ‘libel’ standard is supported by the Law Council of Australia, which opined in a 2011 submission that ‘[s]uch an approach would…strike the right balance between freedom of expression and the protection of reputation,’ given the drawbacks of adopting the ‘defamatory material’ standard under Australia’s statutory defence.

In Solina Chau, Cheung JA questioned the feasibility of the ‘libel’ standard: how much legal knowledge should a distributor be expected to possess in order to decide whether he would have a legal defence against distributing the prima facie defamatory materials?

However, this critique is flawed because the distributor need not have any legal knowledge. For example, he need not know the niceties behind a defence of truth, as long as he believed in the truthfulness of the defamatory material, which is a question of fact. In the same vein, a mistake of law but not fact will certainly not avail a distributor.

Not only can the alternative approach of the ‘libel standard’ protect distributors against excessive self-censorship, it also protects individuals from actual defamation.

In order to be found liable, claimants would need to find evidence to show that the distributor knew of the defamatory statements and that the lack of knowledge was not due to negligence. This would ultimately allow only the truly meritorious cases to be heard by the courts. It is this balance in the law that would suitably accommodate such competing interests.

HKSLG · SPRING 2015 · ISSUE 6

14

HONG KONG

Ultra Vires Theory: the Most Appropriate Constitutional Justification for Judicial Review in Hong Kong?

W

hen justifying judicial review in administrative law, there are two mainstream theories: ultra vires theory and common law theory. In Ping Shek and Karel Weiss v The Mother Superioress of the Daughters of the Canossian Institute (Hong Kong) [1949] HKCU 6, Hong Kong followed the UK position and adopted ultra vires theory to justify judicial review. After the hand-over, ultra vires theory has remained as Hong Kong’s justification for judicial review (Shiu Wing Steel Limited v Director of Environmental Protection [2006] 4 HKC 111). However, given the currently intense relationship between the Hong Kong government and its citizens, it is meaningful to reexamine the applicability of ultra vires theory.

The general grounds for upholding ultra vires theory Ultra vires theory requires that decision-makers, on whom legislations have conferred legal powers, must not exceed these powers. In determining whether decision-makers have exceeded their powers, courts will examine the legislative intent of the relevant provisions to ascertain the scope of powers conferred upon the executive by the legislature.

The most significant ground for upholding ultra vires theory is the principle of separation of powers enshrined in the Basic Law. From the perspective of judicial deference, courts do not have the topical expertise to perform the legisHKSLG · SPRING 2015 · ISSUE 6

lative role as common law theory would suggest. Besides, while the courts are appointed and therefore lack democratic credentials, the Legislative Council does have some, if not full, electoral mandate for its policies and legislative agenda. Therefore, instead of assuming the role of the legislature or executive, the courts’ role is limited to interpreting the law and reviewing the administrative decision in accordance with the applicable legislative intention.

Challenges against ultra vires theory Prof. Paul Craig criticises ultra vires theory because the insistent references to legislative intention mean nothing in practice, since legislations are usually drafted with vague and broad terms which do not reflect any specific legislative intent. Courts are left with little guidance to interpret the intended scope of power to be conferred to the executive branch. Instead, judges need to use their discretions in applying, or even creating, legal principles to control the exercise of governmental power on a case-by-case basis. In other words, there is no unified doctrinal basis for courts in adjudicating the exercise of administrative powers.

Problems for ultra vires theory can also arise when courts deal with ouster clauses and non-statutory powers. Although ouster clauses are drafted to preclude judicial review, courts have followed An-

Henry You

isminic Ltd. v Foreign Compensation Commission [1969] 2 AC 147 and held that such clauses can only protect decision-makers where they have not exceeded their jurisdictions. Such practice evidences a split between the theoretical requirement of ultra vires theory and the established case law: since courts are required to draw support from the legislative intent when conducting judicial reviews, they should refrain from acting in contravention of the ouster clause. This is an apparent paradox because courts have been acting in contravention of ultra vires theory regarding ouster clauses, but their power to review ouster clause-related decisions is precisely derived from ultra vires theory.

Moreover, the executive enjoys non-statutory powers which are not conferred by the legislature.

Strictly speaking, judicial review of these powers cannot be justified by ultra vires theory because there is no applicable legislative provision to confine the scope of such non-statutory powers. However, in practice, courts have confidently supervised not only the use of statutory power, but also the exercise of prerogative or de facto power. In R v Panel on Takeovers and Mergers, ex parte Datafin plc [1987] QB 815, the court explicitly stated that a power would be subject to judicial review as long as the power was of a public function. Thus, it seems that judicial review has moved away from ultra vires theory.

HONG KONG The modified ultra vires theory: a strong response A modified version of ultra vires theory is proposed by Prof. Christopher Forsyth and Prof. Mark Elliot in response to criticisms against the traditional formulation. Instead of ascertaining the specific legislative intent in each case, courts will interpret laws with the assumption that they are passed by the legislature in accordance with the rule of law and liberal democratic values in society. In a sense, the modified ultra vires theory is a combination of both common law theory and orthodox ultra vires theory.

This modified theory can effectively defend itself against criticisms concerning the orthodox ultra vires theory. By subjecting legislative intent to the rule of law, there is no need for a unified doctrinal basis for courts’ adjudicating the exercise of public powers. Courts have the jurisdiction to review decisions by measuring them against the standard required by the rule of law. It is precisely the vague and broad terms of legislations that now provide space for courts to exert their discretions. In terms of the problem of ouster clauses, courts can confidently apply the Anisminic principle under the modified theory, since the rule of law requires

that decision-makers should not exceed their jurisdictions regardless of any protection from ouster clauses. Likewise, Datafin is compatible with the modified ultra vires theory. Courts should review non-statutory powers with the same degree of scrutiny as reviewing statutory powers to make sure any exercise of powers are in conformity with rule of law.

A unique context in Hong Kong Unlike the UK, Hong Kong’s lack of legislative supremacy facilitates the application of the modified ultra vires theory. According to Prof. Craig, as long as parliamentary sovereignty is maintained, the modified ultra vires theory fails in its logical foundation because of the unavoidable conflict between courts’ discretions and their adherence to Parliament’s intent. It is different in Hong Kong because there is no excessive pressure from a supreme legislature. The idea of general legislative intent under the modified theory gives courts more freedom and flexibility to read between the lines of statutes alongside concepts such as rationality, and fairness. This in turn would unlock the doors for the courts to develop the scope of judicial review as they see fit under the Basic Law. Given the peculiarities of

15

Hong Kong’s political framework, it is attractive to argue that judicial review should serve to fill the lacuna of political accountability.

However, there needs to be limits on the judiciary since its main task is dealing with legal issues rather than political issues. Other than effectively checking against decisionmakers, it is equally important that judicial standards do not become a fetter on progressive administrative decision-making. In this sense, a delicate balance between retaining judicial discretion and efficient public administration is better made by the modified ultra vires theory.

Conclusion Generally, the justification for judicial review defines the scope, influences the mechanisms and establishes the legitimate basis of judicial review. Without a fully democratic government or legislature in Hong Kong, to what extent courts exercise their discretions in judicial review is highly relevant to safeguarding individuals’ rights. In this sense, re-examining ultra vires theory in Hong Kong is meaningful. It is fair to say that the modified ultra vires theory is perhaps the most appropriate justification given the current political context in Hong Kong.

HKSLG · SPRING 2015 · ISSUE 6

16

HONG KONG

Net Neutrality in Hong Kong Siegfried Sin

Tiffany Yau

W

ith exponential growth in Internet demand and an increasing variety of online services and content, Internet Service Providers (ISP) have become motivated to impose restrictions within their networks. Such restrictions include intentionally slowing down Internet service or limiting a heavy user’s upload and download rates during file-sharing. While these restrictions are sometimes well-intended to minimise bandwidth congestion and ensure the fair use of resources for all customers, they are often in place to sway users from other Internet-related services and products in order to boost profits. For example, an ISP could block Voice over Internet Protocol (VoIP) services such as Skype or Google Hangouts in order to protect the ISP’s very own landline or mobile carrier businesses. Such discriminatory practices have led to debates about the need to regulate the ISPs in order to ensure Net Neutrality.

What is Net Neutrality?

Net Neutrality is the principle that ISPs should not be allowed to control what is going on in its network by imposing restrictions or discriminatory policies — all data transmitted should be treated equally without throttling of any particular types or sources of data. Many have regarded Net Neutrality as a safeguard of one’s fundamental rights and freedoms, particularly the freedom of speech.

HKSLG · SPRING 2015 · ISSUE 6

The international trend: the US, Europe, and Chile As the world’s first country to implement Net Neutrality legislation in 2010, Chile is hailed as the pioneer in this field. ISPs operating in Chile are prohibited from blocking, interfering, or restricting customers’ access to any content or services on the Internet. The legislation is the result of a strong civil society with a clear desire to create a fairer and a more transparent ISP market.

Similarly, the European Commission passed a major package of telecoms law reform in 2014, which properly defines and protects Net Neutrality. It prohibits ISPs from charging more or slowing down Internet traffic for end-users and providers of data-intensive services. It also sets out clear principles to be adopted for Internet traffic

management, such as non-discrimination, proportionality, and transparency.

Although the United States has been trailing behind in Net Neutrality legislation due to fierce rejection from major telecommunications companies such as AT&T and Comcast, significant developments are currently underway as initiated by the Federal Communications Commission (FCC). In February 2015, the FCC reclassified Internet services as telecommunications services under Title II of the Communications Act of 1934, so that FCC can exert more stringent ‘public utility-style’ regulation over the ISPs. Tom Wheeler, the FCC’s Chairman, announced that the ‘enforceable, bright-line rules will ban paid prioritisation, and the blocking and throttling of lawful content and services.’

HONG KONG The situation in Hong Kong The situation in Hong Kong is unique because of its highly competitive Internet industry. Unlike other countries where the market is dominated by two to three ISPs, Hong Kong features seven major providers. The network’s average highest speed is 65.4 Mbps, which is the fastest in the world. In addition to landline-based service, Hong Kong has one of the most extensive networks of wireless and mobile data carriers in the world, with five mobile data network operators and a penetration rate of 165%, serving 11.85 million users.

Despite the competitiveness of Hong Kong’s Internet service market, access to Internet has become a daily necessity such that ISPs are in the position to take advantage of the situation by imposing anti-Net Neutrality policies in the terms and conditions of their service agreements. A high-profile example occurred in August 2004, where Hong Kong Broadband Network (HKBN)’s VoIP service was blocked for 16 hours upon its public launch on PCCW’s network. The thenregulator, Office of the Communications Authority (OFTA), issued a direction in favour of HKBN, mandating PCCW to maintain the interconnection. Subsequently, when PCCW refused Wharf T&T’s VoIP services on its network in 2007, similar directions by OFTA were affirmed by the courts. However, since regulatory oversight or court decisions are effective only in responding to specific complaints of Net Neutrality violation, discriminatory service terms and conditions imposed by the ISPs still remain in place. For example, Clause 5 of the PCCW’s Special Conditions of Navigator Broadband Service for Consumer Customers expressly states that ‘unless a Voice Over Internal Protocol (“VOIP”) service

provider is permitted by us to use our Broadband Service to deliver its VOIP service, such VOIP service may not be accessible for your use or its quality may be adversely affected even if it is accessible.’ These terms endanger customers’ rights to freely access Internet services since they can be invoked at the ISP’s discretion and in accordance with their commercial interests.

Inadequacy of the existing regulatory regime None of the current regulatory frameworks seem to provide endusers with adequate Net Neutrality protections. Although ISPs are required to comply with the Telecommunications Ordinance (Cap 106) as well as the terms and conditions set out in its carrier licence, regulating all Internet traffic is a difficult task due to the jurisdictional limitations of the Communications Authority, the current regulator succeeding OFTA. While ISPs are required under their licenses to ensure ‘non-discriminatory treatment’ within the region and provide ‘anyto-any connectivity’ among all access providers, the relevant licence terms are unclear on whether these requirements should also extend to content providers or whether overseas connectivity are included. As a result, customers of one access service are often barred from accessing television platforms connected to other rivalling access services. The Trade Description Ordinance (Cap 362) also offers little consumer protection. It is only available where an ISP provides misleading or deceitful information regarding anti-Neutrality in their practices and that the end-user considered such representations material in choosing the service.

Net Neutrality often concerns an ISP’s discriminatory practices against content-providers or end-

17

users. However, the Telecommunications Ordinance only contains provisions that prevent a dominant ISP from abusing its market power against its competitors. Neither is there sufficient guidance offered by the Competition Ordinance (Cap 619), which only regulates monopolistic behaviours within individual industries. Thus, abuse or discrimination by ISPs falls beyond the ambit of both Ordinances because they only guard against behaviours committed against ISP competitors within the industry, but offers little protection to end-users or contentproviders.

Legislation: the solution to all?

In its 2009 report on Net Neutrality, the OFTA suggested that Net Neutrality legislation is not needed due to Hong Kong’s competitive market for ISPs. If any ISP adopts anti-neutrality policies, it will risk losing clients who may opt for another less restrictive ISP. Although such a decrease in clientele may be prevented if the ISPs join effort in implementing anti-Neutrality policies collectively, such a concerted practice would contravene the Competition Ordinance since it functions to restrict competition that deprives customers of choices.

However, given the likely trend of increasing monopolisation of Hong Kong’s ISP market as evidenced

by PCCW’s recent acquisition of CSL New World Mobility, antiNeutrality practices may become a more pertinent issue. Therefore, the Communications Authority should monitor the situation closely and come up with timely regulatory responses. In doing so, it should also bear in mind the risks of overintervention, as it would discourage ISPs’ infrastructural investments and infringe Hong Kong’s highly valued market freedom.

HKSLG · SPRING 2015 · ISSUE 6

18

HONG KONG

Competition Ordinance: the Implication for Hotels and Online Travel Companies

T

he Competition Ordinance (Cap 619) (the Ordinance) is anticipated to apply to all industries in Hong Kong in the latter part of 2015. The purpose of this Ordinance is to allow a ‘level playing field’ for all businesses in Hong Kong, whilst maintaining Hong Kong’s reputation for high economic efficiency and free flow of trade.

The Ordinance would have a significant impact on the hospitality industry, particularly on the relationship between hotels and online travel companies (OTCs). Between 2007 and 2012, hotels have increased their online distribution of rooms by 269%. This demonstrates that hotels rely heavily on these channels for distribution.

Based on anti-competitive investigation and litigation in Europe, current agreement and/or practices between hotels and OTCs may infringe sections of the Ordinance when it comes into effect.

Reflecting on these situations from Europe, hotels and OTCs should be careful of two provisions: resale price maintenance and most favored nation provision.

Resale price maintenance (RPM) provision A RPM provision is a term in the contract where a business will set the price which customers or suppliers will sell the item at. The previous practice in the hospitality industry was that hotels had a term HKSLG · SPRING 2015 · ISSUE 6

that sets minimum or maximum price in which the OTCs can offer the rooms on their sites. These provisions allowed hotels to ensure that prices reflect the correct brand image and attract the correct customer segments.

In the UK, the Office of Fair Trade previously conducted an investigation against Intercontinental Hotel Group (IHG) and several OTCs. It alleged that IHG’s restriction on OTC’s discounting ability was anti-competitive. Even though it did not set an exact price, IHG limited the OTC’s discounting ability. This may lead to different OTCs (e.g.

Expedia, Agoda) having similar prices, harming competitiveness.

The Office of Fair Trade also suggested these provisions increased the barriers to entry. By having limited discounting abilities, it will be very hard for new OTCs to win market share from current suppliers. This inflexibility will not only make it difficult but also deter new entrants from entering the market, as return on investment will likely be very limited.

There is currently no local case law in this regard to determine whether the Competition Commission (the Commission) will apply similar reasoning. However, recent guidelines published by the Commission stated that any arrangement that impedes competition or restricts another business’ pricing freedom will likely contra-

Kevin Mak

vene the First Conduct Rule under the Ordinance. Therefore, it seems likely the Commission will follow the footsteps of the Office of Fair Trade in the UK. Most favored nation (MFN) provision A MFN provision is where a supplier has agreed to always provide the distributor(s) the equivalent or the most favorable price and/or conditions compared to any party.

The provision can apply to more than one distributor. For example, in the hospitality industry, a hotel can agree with multiple travel agencies to provide them with the best price, suggesting that any of the agencies with the MFN provision will get equivalent price and/ or conditions.

As a result of MFN provisions, hotels are able to achieve rate parity - the ability to set the same price for all distribution channels. This is beneficial for multiple reasons.

Firstly, it allows a hotel to effectively measure the partnership success of its distributors. Secondly, for consumers, rate parity helps to reduce confusion and allows fairness in prices when they are booking the same product simultaneously regardless of the booking method. Finally, rate parity will reduce price wars with OTCs. As a result, consumers will opt to book directly with the establishment, thus reducing commission costs for the hotels.

HONG KONG Agreements containing MFN provisions had been challenged within a European competition framework. In the German case of JustBook Mobile v Hotel Reservation Service, Robert Ragge Gmbh [2013] 9 Beschlussabteilung B966/10, it was alleged that Hotel Reservation Service contravened the Treaty on the Functioning of the European Union by applying the MFN provision to hotels. This means that Hotel Reservation Service will always acquire equal or the most favourable prices and/or conditions from hotels. The plaintiff in the case was JustBook Mobile, a startup company developing a hotel booking system based on an opaque selling model; this is where the customer will not know the identity of the hotel until the price is fully paid, usually offered with a huge discount.

JustBook Mobile claimed that Hotel Reservation Service, in applying their MFN provision, limited competition in the market place by increasing the barriers to entry, as new entrants will almost never be able to survive the price competition. They also claim that Hotel Reservation Service could easily increase their prices without having to worry about the competition stealing their customers. Furthermore, it was alleged that such

19

provisions would not allow any ‘exclusive deals’ to third parties. Due to these factors, JustBook Mobile was successful in claiming that the MFN provision contravenes competition legislation.

However, with the new Ordinance coming into effect, it may attract new entrants. Established distribution companies will need to find other methods, apart from pricing, to stay competitive.

Similarly, in the UK, the Office of Fair Trade has made claims that MFN provisions may lead to restrictions in discounting abilities of OTCs. They declared such provisions in the agreement should cease to have effect.

Furthermore, in the past, hotels and OTCs restricted each other’s pricing ability through RPM and MFN provisions. These binding agreements were seen to be anticompetitive. What is important in the future is for the hotels and OTCs to ensure pricing flexibility in order to adhere to the Ordinance.

It is likely that Hong Kong will follow a similar approach for these provisions as it violates the principles of the Ordinance by reducing competition through increasing barriers to entry.

Conclusion Therefore, from investigations and cases in EU and UK, there are significant implications for the local hospitality industry once the Ordinance comes into effect.

By not allowing limitations to pricing, the Ordinance decreases the barriers to entry for distribution channels. Previously, with contractual terms such as MFN provisions, it was almost impossible for start-ups to compete on a pricebasis with established companies.

For hotels, losing the ability to restrict the pricing freedom of OTCs will make it increasingly difficult to ensure that the price of their rooms sold on third-party distribution channels are to the correct market segmentation. They could possibly minimise the impact by providing distribution channels with a nonbinding recommended resale price.

As such, it is important that Hong Kong OTCs and hotels review their agreements. In order to comply with the Ordinance, OTCs and hotels should ensure that their contracts do not contain provisions that would create an artificial barrier to new entrants and/or reduce flexibility in pricing.

HKSLG · SPRING 2015 · ISSUE 6

20

HONG KONG

Freedom of Speech vs Right of Privacy: It’s Time for Hong Kong to Make a Choice

I

n August 2014, business tycoon Albert Yeung was granted permission to raise a libel lawsuit against Google. Mr Yeung’s complaint was that when his name was entered into Google search, the autocomplete and related search functions returned the term ‘triad’ or the names of notorious triad gangs, thus damaging his reputation. The Court of First Instance was asked to rule on whether Mr Yeung could serve a writ out of the jurisdiction against Google. In order for his application to succeed, the Court would have to decide in the affirmative that he had a good arguable case in relation to his claim, that there was a serious question to be tried, and that Hong Kong was clearly and distinctly the appropriate forum for the trial of the dispute.

The core of the preliminary hearing focused on ascertaining the existence of a good arguable case, specifically whether search engines were the publisher of the results of their autocomplete and related search functions. Google’s main defence was that it was not a publisher HKSLG · SPRING 2015 · ISSUE 6

because it had no control in the algorithms that generated search results and autocomplete functions.

In ruling that Google was a publisher of information, Ng J followed the English case of Byrne v Deane [1937] 1 KB 818, where it was held that the owner of a golf club was a publisher by omission (strict publication rule) by not removing a libelous item from the club’s bulletin board. Ultimately, the Court held that Google was a publisher under the strict publication rule by providing a platform for the dissemination of the defamatory postings, regardless of whether or not they knew such postings contained defamatory material.

The Court also considered Trkulja v Google Inc LLC& Anor (No.5) [2012] VSC 533, a Victorian Supreme Court case involving similar facts. In this case, the Court held that search engines were a publisher for the purpose of defamation law, but might raise the common law defence of innocent dissemination until it received notification of the defamatory material.

Michael Leung

Interestingly, approximately two weeks after Ng J’s decision, the Supreme Court of New South Wales came to an opposite conclusion of the Hong Kong court and departed from Trkulja in the process. In Bleyer v Google Inc [2014] NSWSC 897, the court followed the principle of passive dissemination, a defence where a person is absolved of liability when he has no knowledge of the defamatory materials as set out by English jurisprudence, and held that search engines were not publishers.

In October 2014, Ng J granted leave for Google to appeal the decision to the Court of Appeal, setting the Hong Kong courts to essentially make a choice between the freedom of speech and the right of privacy. For people who champion the freedom of speech, the decision in Bleyer is applauded for its pragmatism because any penalties imposed upon Google would not remove the underlying defamatory material. Bleyer also prevents the opening of a floodgate of timely and costly litigation against passive Internet facilitators where in most cases, the plaintiffs have suffered insignificant harm. Meanwhile, Trkulja safeguards the privacy of individuals, which is particularly important in the Internet age where misinformation can spread quickly and easily. Confronted with diverging case authorities in other jurisdictions, it will be interesting to observe how the Hong Kong courts would decide on this issue.

CHINA

21

Clarifying the Muddle of Chinese Foreign Investment Law Suzy Su

C

hina’s regulatory regime on foreign investment has always been known for its complexity, case-by-case approach, and draconian approval procedures. However, changes seem to be on the way.

On 19 January 2015, China’s Ministry of Commerce (MOFCOM) released a draft Foreign Investment Law (the Draft) aimed at consolidating and simplifying the existing regulatory regime. This article will set out two of the major changes proposed by the Draft and compare them against the existing foreign investment regime.

Reformed approval and reporting systems Currently, all foreign investments need approval. By proposing to grant some foreign investors ‘national treatment’, the Draft seeks to replace the current approval system and unify the corporate legal requirements for both foreign and domestic investments. Under the proposed new approval regime, foreign investment would not need to obtain prior approval except for two situations: where the size of investment exceeds a certain value, or where the investment is classified as a prohibited projects or restricted projects under the ‘negative list’. In other words, foreign investment not required to seek prior approvals will be treated like domestic investment, being subject only to registration obligations under China’s Company Law and other applicable industry-specific regimes.

Moreover, the Draft creates a comprehensive reporting system. This new regime requires foreign investors and foreign invested enterprises (FIEs) to make reports to the MOFCOM within 30 days after having first undertaken a foreign investment transaction and after any major change regarding that investment has taken place. Moreover, annual filings and quarterly filings are mandatory for foreign investors and large FIEs respectively. Such detailed reporting requirements and disclosure obligations are responses to the Chinese leadership’s recent concerns over information security.

Regulating Variable Interest Entities (VIE) VIE structures are commonly adopted by foreign firms as an attempt to circumvent the Chinese foreign investment restrictions.

Under a VIE structure, foreign investors would form a wholly foreign-owned vehicle and enter into contractual arrangements with a domestic company that have the required licenses to operate in industries that restrict foreign investment. This allows the foreign investors to assume de facto control over, but without legally owning the business in a restricted industry. This structure is viable because it operates in the grey area of the

law. The existing regulatory regime on foreign investment only considers the company’s place of incorporation or the nationality of its direct shareholders. Therefore, contractual arrangements that allow foreign investors to maintain de facto control over a domestic entity are not considered prohibited.

The Draft, however, seeks to capture the VIE issue by expanding the definition of foreign investment to include ‘arrangements that affect control of a domestic enterprise through contracts, trusts and other means’. The Draft goes further to define that ‘control’ exists in four situations: (a) an equity ownership of at least 50%; (b) having the power to nominate at least half of the directors; (c) the holding of voting rights sufficient to exercise major influence over shareholders’ or directors’ decisions; or (d) decisive influence over business operations. By including VIEs as a type of FIE – and therefore subjecting VIEs to the new approval regime mentioned above – the new regime aims to clarify the legal status of VIE structures and allow foreign investors to participate in a restricted industry via a minority, noncontrol-based interest in a VIE. While the Draft may be amended as it undergoes further legislative processes, the reforms it proposes will ultimately improve the Chinese regulatory regime on foreign investment. Undoubtedly, if the Draft is enacted in its current form, it can bring profound benefits and conveniences to foreign investors.

HKSLG · SPRING 2015 · ISSUE 6

22

CHINA

China’s Re-education Through Labour Reform: Real or Cosmetic?

Iris Chong

I

n January 2014, Zhang Yueling, a petitioner hoping to bring her grievances to the higher authorities in Beijing, was detained in an ‘irregular petitioning education and reprimand center’ in Henan.

She was seriously beaten to the extent of vomiting blood and losing consciousness. Another petitioner, Sheng Qiaozhen, was sent to an illegal and ad hoc ‘black jail’ for one month in February 2014. The guards tied her arm to a radiator, which scalded her and left a huge scar. Zhang and Sheng were just some of the many petitioners who were intercepted and detained illegally. These incidents reveal that illegal detention is still prevalent in China despite the abolition of reeducation through labour (RTL) in December 2013. While the abolition was commendable, it has little practical impact on the treatment of petitioners in China.

RTL and its abolition RTL was an extrajudicial detention and punishment mechanism imposed by the public security organs on individuals deemed to have committed minor offences.

It allowed the Chinese authorities to deprive individuals of their liberties for extended periods of time without access to courts or legal representation. It was estimated that up to 160,000 individuals were detained for up to four years without trial by the end of 2013 when RTL was abolished.

RTL was abolished for several reaHKSLG · SPRING 2015 · ISSUE 6

sons. The legal basis for RTL under Chinese law was questionable to start with. Under Art. 8 of the 2000 Legislative Law, restriction of a citizen’s freedom can only be effected through laws passed by the National People’s Congress or its Standing Committee (NPCSC). However, RTL was founded upon the State Council’s decisions, which were not regarded as ‘laws’ under the Chinese legal system.

The RTL system also contravened Art. 37 of the Constitution of the People’s Republic of China, under which unlawful detention is prohibited and any arrest must be approved by the procuratorate or the court. Similarly, RLT violated Art. 9 of the International Covenant on Civil and Political Rights (ICCPR), which prohibited arbitrary detention. Although China has yet to ratify the ICCPR, it is obliged to refrain from acts that would defeat the object and purpose of the treaty. Given the public outcry at home and pressure from the international community, the NPCSC eventually passed a decision in 2013 to abolish RTL. Is the RTL reform real or cosmetic?

In a white paper titled ‘Progress in China’s Human Rights in 2013’ (the Paper), the Chinese government asserted that abolishing RTL was one of its measures to protect the citizen’s natural rights, particularly the right to liberty. The Paper further explained that RTL could be abolished because its function

had been ‘replaced’ by other laws such as the Law on Penalties for Administration of Public Security and the Law on Narcotics Control, in addition to other amendments of the Chinese Criminal Law. The Paper gave the impression that detentions in the post-RTL era would comply with the relevant laws and ensure the citizen’s right to liberty. However, studies have revealed that due to the lack of further reforms, the abolition of RTL alone was insufficient to safeguard the citizen’s fundamental rights.

CHINA

Merely a different signboard Reports indicate that black jails, both formalised or temporary, are becoming more prevalent in place of RTL. Temporary black jails are usually set up inside hotels, guesthouses, residential buildings, psychiatric hospitals, storage facilities, farms, or factories. Formalised black jails, on the other hand, have signboards indicating they are ‘legal education centers,’ ‘reprimand and education centers’, or ‘relief centers.’ Human rights lawyer Chen Jiangang noted that black jails or legal education centers are similar to RTL except for a different signboard replaced by the government.

He remarked, ‘the abolition of the RTL would not change the human rights situation in China. Wherever one goes, there is still no human right.’

23

The remnants of RTL are still found in the black jails, as revealed by the Chinese Human Rights Defenders (CHRD) in its recent report titled ‘We Can Beat You to Death With Impunity: Secret Detention & Abuse of Women in China’s Black Jails’. It details the abuses suffered by female petitioners and activists.

It is not uncommon for these activists to be abducted from their own homes or on their way to Beijing in their pursuit of justice. Within these black jails, these women are subject to severe physical and sexual assaults, including deprivation of food, sunlight and contact with family. The CHRD estimated that about 449 facilities were openly labeled as ‘legal education,’ suggesting that the appalling abuse of petitioners under the RTL system continues to linger even with its official abolition.

cause after contracting tuberculosis and liver disease, medical care was not given until the last moments.

Extended pre-trial detention periods

Finally, human rights groups explained that local authorities’ heavy reliance on black jails and criminal detentions is largely a response to the Communist Party’s emphasis on ‘maintaining stability’: if petitioners flock to Beijing to demand justice, it would be viewed as a threat to political stability. A closely related explanation is the authorities’ wish to avoid poor performance evaluations, which are linked to the number of petitions filed in Beijing against their area.

Art. 9(3) of the ICCPR provides that any arrested or detained person shall be entitled to trial within a reasonable time. Although it does not define what a reasonable period of pre-trial detention is, the current practice in China is clearly too lengthy. Under Chinese law, public security organs can only impose, upon suspects, a maximum of 15 days for administrative detention and/or 37 days for criminal detention. In practice, however, there is no regulatory oversight to prevent extended criminal detention. Cao Shunli, a Chinese lawyer and human rights activist, was an example. Intending to deliver a report to the United Nations regarding torture and arbitrary detention of Chinese activists, Cao was stopped by the police when boarding her flight and was placed in criminal detention. Her detention lasted for six months after which she died be-

The law also provides that any arrested person can be detained for seven months or indefinitely during the course of police investigation. A person can be further detained for another six and a half months pending prosecution. In other words, before any real trial could take place, a person could be detained for at least 14 months. Wu Guijin, a worker who participated at a strike, was detained for eight months before his first hearing at the First Level People’s Court. Given these loopholes in the law as evidenced by case examples, the abolition of RTL has failed to ensure a detainee’s right to speedy trial.

Underlying issues unaddressed

Due to broader issues such as the lack of judicial independence, the vagueness of the law, and the lack of punishment against abuse of petitioners, black jails and violation of detainees’ right to liberty are likely to continue. Therefore, unless China is ready to truly recognize the rights and liberties of its citizens and address the underlying issues that perpetuate the ills of RTL, any similar reforms would be more cosmetic than real.

HKSLG · SPRING 2015 · ISSUE 6

24

FEATURE

Interview with Mr Denis Chang, S.C. Natalie Lau

Achievements of Denis Chang, S.C.

M

r Denis Chang, S.C. is Head of Chambers at Denis Chang’s Chambers.

•

Admitted as a Barrister in England and Wales in 1968 (Lincoln’s Inn) and Hong Kong in 1970.

•

Former Chairman of the Hong Kong Bar Association (1985-87)

•

Appointed as a member of the Executive Council of Hong Kong (1992-97)

•

Appointed as Queen’s Counsel in 1981 and Senior Counsel in 1997.

•

Took part in drafting the Basic Law as a Member of the Executive Committee of the Consultative Committee of the Basic Law.

•

Lead Counsel in various high profile cases. Represented right-ofabode claimants in Ng Ka Ling & Others v Director of Immigration (1999) 2 HKCFAR 4, and also for the Foundation in Chinachem Charitable Foundation Ltd. v Chan Chun Chuen & Another [2010] HKEC 156

•

Appeared in the landmark property case Jumbo King Ltd v Faithful Properties Ltd (1999) 2 HKCFAR 279

•

Chairman of the Hong Kong Law Journal.

We are wondering what you love to do when you are not busily engaged in your professional work as Senior Counsel. What’s your favourite pastime?

Babysitting my little grandson, if I’m allowed to do so! I’ve probably learned more about philosophy and human psychology – and the real politics of “soft power” – from being with the 5-year old than from just reading dense books on those subjects! And I do love to read a lot and occasionally write.

HKSLG · SPRING 2015 · ISSUE 6

Other things I cherish include talking and sharing with students like yourselves, and with other wonderful people including especially those in social enterprise and faith groups that I regularly meet up with.

A couple of recreational activities which I still love but perhaps should never have attempted are downhill ski-ing, and singing. I used to ski practically every year without ever really getting beyond the intermediate slopes; and did

Quentin Wong

vocal training, visiting the Academy for Performing Arts as often as twice a week but, alas, I soon realised that I was no born tenor, and you can safely assume that I can’t really sing. I greatly admire those who can and am passionate about music. I sort of play the yangqin and it will be quite some time before I’d dare to share with others the dulcet sounds of this lovely instrument aptly called “a hammered dulcimer” in English…

The court battle over Nina Wang’s will in Re Estate of Nina Kung [2010] HKEC 156 has been dubbed by the media as “the battle of the century”.

There, you seem to have taken a considerable amount of time to learn about aspects of forgery relevant to the case. As someone who has shown interests in many disciplines seemingly unrelated to law, what is your opinion on the significance of acquiring specialist knowledge in order to understand the particulars of a case?

Well, I’d have to be thoroughly briefed in all that I need to know about the science of document examination and the art of handwriting comparison, and a bit about “fung shui” and other things! – even though Lam J, as he then was, reminded everybody in court at the start that “this court is a court of law, not a court of fung shui”.

FEATURE The beauty about legal practice is that you’re given so many opportunities to learn about things which are, as you say, “seemingly unconnected with law”. You’re expected to become an “instant expert”, at least enough to deal with the expert evidence. And you are paid for doing so. This is even better than subsidised education!

Law is getting increasingly interdisciplinary. Indeed law is life although life is of course much more than law. And it’s amazing how fast one can learn when properly motivated to do so, but also how much one can quickly forget, and should perhaps even learn to forget, when the case is all over. The beauty is that you can go on learning until your brain cells die or something equivalent or worse happens.

I suppose that’s one reason why some people never want to retire although, as Mr Justice Ribeiro PJ reminded us recently in an interview published in your journal, you’re only as good as your last case. So, Senile Counsel, beware!

“Indeed, law is life; although life is of course much more than law.”

What has been your most challenging case, or cases, where both the points of fact or law and the subject matter were intellectually stimulating?

It’s difficult to say really. Some cases that come to you are “challenging” but are such dead ducks that no amount of “stimulation”

25

is going to put life into them! But fortunately you do get “good” and forensically stimulating cases. I suppose “the battle of the century” case ranks pretty high in my list. It has almost everything in it, including court room drama. Mind you, the challenge lay not so much in the need to have a thorough grasp of the legal principles engaged as in the sheer bulk and complexity of the factual and expert evidence and in applying the law to the facts.

By the way, there were three wills involved, one a home-made Chinese will indisputably signed by Nina, another a purported will, in less than perfect English, that was eventually found to be a forgery and a third, also in English and executed by Nina, which an attesting witness swore looked like the second-mentioned will but gave the named beneficiary “only” some $10 million. It was this document that was alleged to be a “fung shui” will. The old proverb “Where there is a will, there is a way” thus took on new meaning!

HKSLG · SPRING 2015 · ISSUE 6

26

FEATURE

The human interest generated was enormous; the issues of mixed law and fact were wide-ranging and included not only forgery but, as alternative pleas, “lack of testamentary capacity” and “want of knowledge and approval” which required medical and expert evidence in such disciplines as psychiatry, neuro-psychology and oncology.

Without teamwork and the industry of every member of the legal team, the battle could not have been fought and won. I think Lam J’s Judgment, upheld on appeal, deserves study. Those who are forensically inclined should find it fascinating.

I think I’d also put near or at the very top of my list the landmark right-of-abode case of Ng Ka Ling v Director of Immigration (1999) 2 HKCFAR 4, the first case on the Basic Law to be decided by the Court of Final Appeal (CFA).

Together with Chan Kam Nga v

HKSLG · SPRING 2015 · ISSUE 6

Director of Immigration (1999) 2 HKCFAR 82 decided at the same time, it led to the first interpretation of the Basic Law by the Standing Committee of the NPC (NPCSC) on 26 June 1999. This effectively “reversed” the CFA’s interpretation, thus depriving the relevant declaratory reliefs granted by the CFA of any general precedential effect but without affecting the CFA’s “final adjudication” as between the parties concerned.

“Final Adjudication vs. Supreme Interpretation” – a mystery of faith in “One Country, Two Systems”!

But questions then arose as to who were “the parties concerned” (or affected) who could take the benefit of the CFA’s judgment. There was, and there still is, no “class action” in Hong Kong and this was not a representative action as such (as distinguished from so-called “test cases”). However the litigation history (including claims made in

verified applications for legal aid) showed that it was not simply those who were joined as parties (like my clients) who were intended to benefit or to be bound by the result.

Subsequent litigation ensued over the scope and precise consequences of the NPCSC’s interpretation in relation to claimants who arrived in Hong Kong from the Mainland at different times: see Lau Kong Yung & Ors (1999) 2 HKCFAR 300, CFA; and Ng Siu Tung & Ors (2002) 5 HKCFAR 1, CFA where over 5,000 claimants were joined as parties and 19 named as representative plaintiffs.

Also high in my list are property and title-related cases such as Jumbo King Ltd v Faithful Properties Ltd (1999) 2 HKCFAR 279, cited more frequently for what Lord Hoffmann said regarding principles of construction of documents than for anything else. The passage that begins with “The construction

FEATURE of a document is not a game with words” has now become famous in common law jurisdictions.

I must say, however, that the case presents far less of a challenge than, say, Leung Tsang Hung & Another v The Incorporated Owners of Kwok Wing House (2007) 10 HKCFAR 480. There, a hawker plying her trade in a fixed pitch stall at street level was struck and killed by a piece of concrete that had broken off from an enclosed extended balcony (an old unauthorized structure) of an upper-floor flat. The case concerned not the liability of the flat owner (who consented to judgment) but that of the Incorporated Owners, in public nuisance for an act of omission.

Ironically, it was precisely because such liability in public nuisance was not strict or absolute that certain policy objections (for making bodies incorporated under the

Building Management Ordinance (Cap 344) liable in public nuisance for acts of omission) were overcome. Once the incorporated body, for such purposes, was held by the court to be analogous to that of flat owners and occupiers rather than to that of public authorities, the way was open for the court to give judgment in favour of the hawker (which it did upon finding that the Incorporated Owners had knowledge or presumed knowledge of the nuisance hazard, practical control and means of removing it). Mr Justice Ribeiro delivered a monumental judgment, which was described by Lord Woolf NPJ as “a masterly examination of the law and facts”, thus contributing to the jurisprudence of common law jurisdictions.

Since 1997, Hong Kong has been developing its own jurisprudence with reference to other common law jurisdictions. While certain

27

trends or developments of the law are endorsed by Hong Kong, others have been met with skepticism (such as the attempt to abolish the jury system). Do you think there is a need to reform any particular area of law in Hong Kong?

Yes, of course! And not just in one area. A legal system that has no need of reform is likely to be one that is already dead. But in Hong Kong it is also necessary to preserve the essentials of the common law system without “locking Hong Kong into a reliquary”. You mention the jury system (which has been abolished in places like Singapore) but is protected by the Basic Law here. Well, back in 1983-85 the Government did attempt to abolish juries in the trial of complex commercial crime cases but was met with strong opposition, led by the Bar Association. I happened to be Chairman then. To the credit of the Government, the bill was shelfed.

That was before the Basic Law was promulgated. Hong Kong, as we all know, is the crucible of a huge experiment, where the common law is put in the most uncommon setting of a PRC-mandated Basic Law. There are bound to be tensions at the heart of and at the interface between the two systems in one country. It is only with the necessary political will, imagination and constitutional self-restraint that we can ever hope to work towards a resolution of such tensions...

But, looking at law reform more broadly, I’d just say this. Whilst I do not necessarily agree with all recommendations of the Law Reform Commission, if the Government would only give some priority to consider the Commission’s Reports (including, incidentally, the Report on “class actions”) we’d have a better chance of seeing a more energetic agenda for law reform.

HKSLG · SPRING 2015 · ISSUE 6

28

FEATURE

At a more specific level, I’d like to see better implementation of the International Covenant on Economic, Social and Cultural Rights (ICESCR). This Covenant is often wrongly dismissed as merely ”aspirational” as if it had no legal effect.

That is a misunderstanding of what “progressive realisation” means. Yes, there are resource implications but unless ICESCR is taken more seriously we are likely to end up distorting our concept of human rights by ignoring their social or communal and other relevant dimensions, and the vulnerable and those most in need will continue to be systematically neglected if not also exploited.

“Human beings are, by nature, deeply relational.

That’s part of the truth of the human condition, the ‘human’ in ‘human rights’.”

We understand that you believe human rights should be understood in relational terms: that there is the “human” in ‘human rights’ as well as the “rights” component. Could you indicate how this idea applies to human rights issues in Hong Kong today?

HKSLG · SPRING 2015 · ISSUE 6

Let me explain briefly what I mean.

I think of human rights as entitlements or claims which everyone possesses simply in virtue of their shared humanity. They are an expression of normative values based on basic human needs or goods and rooted in equal intrinsic worth and dignity of everyone. Human beings are, by nature, deeply relational.

That’s part of the truth of the human condition, the “human” in “human rights”.

As for the “rights” side of the equation, let me just take, as an example, Art. 23(1) of the International Covenant on Civil and Political Rights (ICCPR) which is reflected in Art. 19(1) of the Hong Kong Bill of Rights. This says: ‘The family is the natural and fundamental group unit of society and is entitled to protection by society and the state’. And the article which comes next deals with the child’s right to protection.

Taken together, you will see why although the ICCPR is commonly described as conferring “individual” rights, the rights and duties I’ve mentioned have familial and communal dimensions based on a web of relationships. Don’t forget also what Art. 29(1) of the Universal Declaration of Human Rights says: “Everyone has duties to the community in which alone the free and full development of his personality is possible”.

All this, I think, has enormous implications across a whole range of issues, including those relating to social provision in various sectors such as housing, health and education and the setting of priorities in policy and law making that often results in “differential treatment” between people or groups of people which may or may not amount to unfair “discrimination” depending on whether it has to be or can be “justified” in terms of rationality, proportionality etc. in light of principles of justice and equality.

“What is the object or purpose of human rights? Is it primarily ‘personal autonomy’ or is it something else, such as human flourishing (‘eudaimonia ’)?”

I think we need to ask fundamental questions such as what is the relationship between positive law and human rights? What is the object or purpose of human rights? Is it primarily “personal autonomy” or is it something else, such as human flourishing (eudaimonia)?

Let’s take, as example, the issue of commercial surrogacy which is banned in Hong Kong and many other countries. Should a woman be free to “‘rent” her womb? Those who answer “yes” often pray in aid the argument that a woman should be free to do what she wants with her body. However those who say “no” would argue that this would, among other things, lead to commodification of children and exploitation of vulnerable women especially in poor countries (such as Nepal) and that it is in any event something deeply against human dignity and the welfare of children.

In my view, taking a relational view of human rights will reinforce the case for saying “no” not just to commercial surrogacy but to other forms of surrogacy also banned by many countries.

FEATURE A relational view of human rights, while upholding the centrality of the human person, will have proper regard to human relationality and vulnerability. Somewhat like Joseph Raz and others I believe that integral human flourishing is the ultimate or proper object of human rights and duties. It includes freedom and the responsibility that comes with it. Civil liberties are a crucially important part but by no means the whole of human rights.

I’d like to sound a caveat. I know that Singapore is developing what its advocates call “relational constitutionalism”. It would not be fair for me to compare it with the sort of “harmony rights” which have been advocated by some officials in Mainland China. The point I wish to make, however, is this. It is so very tempting for those in authority to use the preservation of a harmonious society as a reason or excuse to suppress even legitimate political dissent and other freedoms. Peace and harmony in society are indeed very important goals but there can be no sustainable peace or true harmony without justice. If human rights are treated no differently from any state-conferred right then the power of rights can always be subordinated to the rights of power and the Rule of Law changed into little more than Rule by Law at best, and arbitrary and abuse of power at worst.

At this year’s Opening of the Legal Year, different views were raised regarding the impact of the recent social events on the Rule of Law and Hong Kong’s progress on democracy. How do you view the Rule of Law as it stands today in Hong Kong?

is not simply the use of law by the state as an instrument of power; it includes, among other things, control of the exercise of power by the state itself.

Right now in Hong Kong we are at the cross-roads of history (and not for the first time!) after the end of “Occupy Central” and with no end of the electoral reform controversy in sight. I can still honestly say that, as things stand, the authority of the courts has remained largely intact and judicial independence is still an outstanding hallmark of Hong Kong. That is an important aspect of the Rule of Law although there are other aspects of which Hong Kong can still be proud – such as the independence of the Bar and a relatively free press!

On the other hand, we cannot take anything for granted. I feel strongly that in today’s Hong Kong, unless the causes of division in society including “the democratic deficit” are adequately addressed, and unless disenfranchised and young people are given hope so that they are not driven to desperation by a sense of helplessness, the chances of keeping the Rule of Law alive or strengthening it in all its aspects are likely to suffer.

29

So are you saying that in light of the recent Umbrella Movement and the proposed electoral reform, which feature different interpretations of universal suffrage by the Chinese government and many people in Hong Kong, the doctrine of ‘One Country, Two Systems’ is now facing a new set of challenges?

Yes, although some challenges we face are by no means entirely new.

They are structural, such as those inherent in the very concept of “One Country, Two Systems”, or arising from subsequent interpretations. Indeed it was through the use of its free-standing power of interpretation that the top-down and then bottom-up 5-Step Process of Constitutional Development was laid down by the NPCSC. I dare say that nobody knew, back at the time of the drafting of the Basic Law, that was how the Basic Law should be interpreted. The late Lu Ping, for one, certainly said nothing of the kind.

But, quite clearly, even with the 5-Step Process a less restrictive framework for electoral reform could still have been laid down. It was not, leading to what many describe as “Hobson’s Choice”: Take

“The Rule of Law is not simply the use of law by the state as an instrument of power; it includes, among other things, control of the exercise of power by the state itself.”

Well, as I’ve just indicated, the “Rule of Law” is not just the rule of legality without regard to what is right and just. The Rule of Law HKSLG · SPRING 2015 · ISSUE 6

30

FEATURE

it or leave it. I won’t rehearse the arguments over the question: “To pocket or not to pocket?” I’d look instead beyond the vote, to the urgent problems that need to be addressed after the vote. There can be no re-building of trust without continuing dialogue accompanied by responsible action. And I still believe that there can be no satisfactory solution unless there is the political will to address, among other things, the democratic deficit.

Thank you very much. Could we now turn to a different topic that concerns the structure of professional practice? With the introduction of the Solicitor-Advocate role, it seems that the distinction between barristers and solicitors is becoming increasingly blurred.

Do you think Hong Kong should take the step to fuse the two branches of the legal profession?

No. I believe that the maintenance of a strong independent Bar is in the public interest. The Bar has a unique role to play, including making available a pool of barristers (all self-employed) to be instructed by any of the solicitors’ firms whether big or small to do advisory and/ or court work. The smaller firms which do not have any solicitoradvocate or sufficient manpower of their own, can still have the services of any number of specialist or generalist Counsel they choose to brief. And many judges, particularly of the higher courts, are drawn from the ranks of barristers.

I don’t think it is an accident that the Legal Functional Constituency has (so far at least !) returned a barrister to Legco, one who supports universal suffrage and abolition of all functional constituencies, including his or her own! What I’ve just said of course in no way devalues the role of solicitors. There are, after all, rights and privileges which only solicitors but not barHKSLG · SPRING 2015 · ISSUE 6

risters have, whatever their seniority, and services which only solicitors and not barristers can or are allowed to provide.

The President of the Law Society sought to campaign for conferring the title of Senior Counsel to solicitors or solicitor-advocates during the opening of the legal year. How does the Bar view that?

I don’t read him as suggesting that they should all be called by the same title “S.C.”. I can’t speak for the Bar Association but have not, as yet, heard of any strong reactions either way to the idea that the more senior solicitor-advocates should be given some recognition and/or distinguished in some way from the less experienced ones.

Speaking personally I think the important thing is to ensure that the public is not confused and that the continued and separate existence of an independent Bar be not indirectly or progressively undermined.

A main concern of joining the Bar is the barrier to entry, particularly the staggering start-up costs. What do you think should

be done to help those who wish to join the Bar? The Bar is a very competitive place.

The Bar Association has a Fund for New Barristers and also offers coveted and prestigious Bar Scholarships and has a number of other funds which are described in the Bar Association’s website. We need to do more to encourage young people of character and quality, including “the best and the brightest”, to pursue a career at the Bar. Individual sets of chambers have their own system of sharing expenses and ways of assisting new entrants but I agree with those who think that it is not enough simply to provide “devilling” work to junior barristers or for pupil-masters to allow pupils who have completed their pupillage to “squat” in their rooms rent-free pending admission to membership. Setting up a system of providing interest-free bridging loans to meet rental and other expenses is an idea worth pursuing for those sets of chambers which have not yet adopted it. “Door tenancies” policies vary among

“We must explore fresh ways of helping new entrants if we wish to foster the healthy growth of the Bar in accordance with its best traditions.”

FEATURE the different sets of chambers and need to be handled with care. We must explore fresh ways of helping new entrants if we wish to foster the healthy growth of the Bar in accordance with its best traditions.

Many of our readers are law students. Do you have any advice for them that would guide them in deciding whether to join the Bar or become a solicitor, and also generally in pursuit of their chosen career?

My general advice is that you should, of course first “know yourself ” and all the options available and not be afraid to seek information and advice from sources that you can trust. I see the practice of law as a vocation, a very noble one, requiring commitment to high ethical and professional standards, not to speak of sheer hard work, including pro bono work! If you have a strong sense of being called to be a barrister rather than a solicitor, keep a cool head but unless you see some cogent reasons against your heart’s legitimate desires go with your heart. I’m not saying that the same advice does not hold should you find that it is the other branch of the profession that you feel strongly attracted to. Nor am I suggesting that you should ever, whether in the choice of career or in the practice of law, allow emotions to get the better of you by ignoring either reason or conscience. No. What I am suggesting is that the heart sometimes knows reasons of which the head does not: the route from heart to head often seems shorter and quicker than that from head to heart!

In your interview by the Hong Kong Bar Council titled ‘Decades of Nostalgia from the “Uncertificated Counsel”’ in 2000, you mentioned that you were ‘cautiously optimistic’ about the future of the Bar, and that you

31

“Those who habitually fight shy of asking any really basic questions may still be good legal technicians but are unlikely to become great lawyers.” felt uncomfortable when ‘people say there is no future for the law in Hong Kong’. It has been 15 years since then – are you still optimistic?

Yes, I’m still cautiously optimistic!

I find pessimism dull. By keeping my hopes generally higher than my expectations I avoid being constantly disappointed! You are young and the future belongs to you. If after joining the Bar or a solicitors’ firm you find that perhaps you should switch to the other branch of the profession or do something else such as becoming an in-house lawyer with a business corporation or public authority, it is not the end of the world. The sky is still the limit!

As the Chairman of the Hong Kong Law Journal, perhaps you could provide us with some insights on how the Gazette – as a young, student-run, and academic journal – can strive towards excellence?

editorial committee and as advisers. The Hong Kong Law Journal, incidentally, was founded by my ex-pupil master Henry Litton (who became a Permanent Judge of the CFA and is now a Non-Permanent Judge). It was conceived as a “partnership between town and gown”.

Most of the editorial committee members, including of course our Chief Editor Prof Glofcheski, are from the Law Faculty of HK University. This is now our 44th year.

May you continue in your pursuit of excellence and may your Journal flourish for many years to come! I hope you will continue to ask yourselves and explore fundamental questions such as “What is law”?

“What are human rights?” Those who habitually fight shy of asking any really basic questions may still be good legal technicians but are unlikely to become great lawyers.

I’d like to congratulate you for the high standards you have already achieved and for your dedication and professionalism. I think you’re on the right track. Do keep up your contacts with practitioners, judges and of course your own teachers and fellow students! Get more people involved, both on the HKSLG · SPRING 2015 · ISSUE 6

32

INTERNATIONAL

Can There Be Too Much Freedom of Expression in the Media?

F

reedom of expression is an important and fundamental right, as it cultivates a free and healthy society in a number of ways. Apart from promoting good governance by enabling citizens to freely criticise governments or influential leaders, it also facilitates the pursuit of knowledge by allowing the free exchange of ideas and information in society. The media is one of the platforms for the exercise of this fundamental freedom. Due to this very nature, however, the media is particularly vulnerable to attacks, especially when sensitive topics are involved. In light of the recent attack on the French satirical magazine Charlie Hebdo, it is important for society to re-evaluate the boundaries of freedom of expression, as well as the measures taken to protect this fundamental right.

Justification for censorship Restrictions on the freedom of expression may be justified in certain instances. According to Art. 19(3) of the International Covenant on Civil and Political Rights (ICCPR), limitations on the freedom of expression are permissible provided that they are: 1) ‘provided by law’ with sufficient precision and accessibility; 2) ‘necessary for respect of the rights or reputations of others, [and] the protection of national security, public order, or public health or morals’, and 3) proportionate. Conformity to this international standard ensures that the restriction will be a proportionate measure achieving the right balance between enjoyment of HKSLG · SPRING 2015 · ISSUE 6

such fundamental right and other policy interests.

Censorship of religious satire Should religious satire be censored applying this test under the ICCPR? It is understandable to censor hateful mockery or ridicule towards religious groups because such forms of expression infringe upon religious freedom, as well as the freedom to be free from discrimination and harassment.

However, there is a clear line between the right to offend and the right to hate speech – the former may involve legitimately criticising or challenging religious beliefs while the latter often comes in the form of gratuitous insult. Where satire falls into the former category, it should be zealously safeguarded.

Since freedom of expression serves to promote public debate and the exchange of ideas, banning certain speech to prevent it from offending specific groups of people would be an unnecessary suppression of such fundamental right.

Jessica Chu

Extra protection for the media In response to the threats to the freedom of expression, there have been increased international collaboration to safeguard press freedom and journalist safety. One example is the United Nation Plan of Action on the Safety of Journalist and the Issue of Impunity, which proposes to establish an inter-agency mechanism for journalist safety, as well as to assist countries in developing legislative protection for press freedom. Another example is the Icelandic Modern Media Initiative, a non-profit research initiative set up in 2010 to crowdsource the best legal practices worldwide or academic proposals on press freedom, such as source protection and whistle-blower protection.

Conclusion It is important to protect the freedom of expression because it is a core value vital to a democratic society. Yet, freedom of expression is not an absolute right and a balance must be struck by considering other social interests and fundamental rights. Nevertheless, threats to the freedom of expression must be strongly condemned: provocative speech does not justify the use of physical violence as in the Charlie Hebdo incident. In an open society, surrendering to such pressures would essentially deprive the meaning of press freedom, and the government has a duty to ensure that our constitutional freedoms can be exercised without fear.

INTERNATIONAL

33

Bolivia Sends Its Children to Work Fontaine Wong

I

n 2014, Bolivia passed the new Code for Children and Adolescents (CCA) to lower the minimum working age from 14 to 10.

Although there are requirements of mandatory free education, comprehensive healthcare, and a clause for parental permission, it has been the subject of much controversy as its content departs from international labour conventions in other developing countries.

Background This decision had been facilitated by mass protests by childrenworker unions, including Bolivia’s Union of Child and Adolescent Workers, with children as young as eight on the streets advocating for their rights to work legally. The Bolivian Government did comply – a mark of democratic governance under normal circumstances – but it is unreasonable to allow minors to decide on waiving protections of their own fundamental rights, especially when the views of these few children advocates are not representative of the general public opinion in Bolivia. In the absence of a comprehensive consultation, using the mass protest to justify the legislative amendment lacks credibility.

The United Nations Convention on the Rights of the Child recognises fundamental rights to education, to play, and other rights which prohibit child labour. Legalising child labour is feared for its heavy association with human trafficking, abuse, and depriva-

tion of education that perpetuates the vicious cycle of poverty. It is no exception in Bolivia – with a low officer-to-child ratio of approximately 1 to 10,900, such an environment is conducive to entrapment, enslavement, and exploitation of unregistered child labourers. Additionally, this new law as listed in the State Gazette lacks a clear and orderly implementation plan to fulfill its alleged aim of eradicating child labour.

age school attendance. Such policy could effectively monitor the problem of uneducated children working illegally today.

However, prostitution is legal in Bolivia. Legalising child labour may offer an easier path for children to fall into an industry heavily linked with trafficking and handling illegal drugs. In a country with extreme poverty, there is a danger for the local government to see this as an opportunity for sex tourism.

Role of the international community Developed countries often criticise developing countries for poor implementation and enforcement of laws in safeguarding children’s rights. Yet, developed countries willingly or not support such exploitation through the consumption of ‘immorally-made’ products.

Bolivia in perspective While the CCA remains objectionable, it is important to consider culture-specific reasons when analysing the legislation.

Firstly, Bolivia’s indigenous heritage encourages children to work in family businesses. There is heavy emphasis on unity, and it is an admirable duty to raise the family income.

Secondly, the emphasis on education in Bolivia – a prerequisite for children under 14 for self-employment – arguably forms the basis of the policy decision to encour-

Perhaps international watchdogs should step back and respect the Bolivian way of life, for as long as adequate safeguards are in palce to protect the children, it remains their private family life. Given that bringing children to work on the streets is a large motivation behind having large families, alternative solutions to protect the Bolivian children range from implementing domestic laws, such as adopting a one-child policy to tackle poverty resulting from large families, to imposing international pressure on the Bolivian Government to prevent it from turning into a ‘Brazilian highway of death’.

HKSLG · SPRING 2015 · ISSUE 6

34

INTERNATIONAL

Ebola and Charterparty Considerations Tonny Yu

T

he outbreak of Ebola in West Africa has caused widespread panic in the shipping industry.

There have been incidents where ship crews refused to enter ports in countries affected by the virus. This calls into question whether a shipowner can refuse to sail the ship to an affected port as ordered by the charterer.

Safety concerns in port nominations The charterer’s rights and obligations regarding port nominations are different under the two major types of charterparties used for hiring ships. Under a time charterparty, the charterer is usually conferred the right to nominate loading and discharging ports within a given geographical range. The Master is generally bound to follow the charterer’s nominations without undue HKSLG · SPRING 2015 · ISSUE 6

questions, subject to his overall responsibility for the vessel’s safety.

Since safety is a priority, the charterer’s right to nominate ports is often qualified by an express safety warranty, which imposes on the charterer an obligation to nominate ports that are prospectively safe. If the port becomes unsafe after nomination, the charterer is obliged to nominate an alternative prospectively safe port. If, however, it is impossible for the charterer to re-nominate, such failure will not be in breach of the warranty.

In enforcing such safety warranties under time charterparties, the courts have upheld the validity of express safety warranties even in cases where the port is specified in the charterparty rather than being nominated by the charterer. Nonetheless, other clauses in the charterparty may exclude the application

of an express warranty. In the absence of an express safe port warranty, the courts may imply one.

However, no such warranty can be implied if the charterparty has already specified a port and does not provide the charterer with the right to nominate. Nor can the courts imply a safe port warranty where the charterers have a right to trade the vessel in a known war zone.

On the other hand, under a voyage charterparty, the loading and discharging ports are usually specified.

The charterer is primarily obligated to nominate safe ports at the time of the charter. Nonetheless, there is no general duty imposed upon the charterer to re-nominate port in the event of subsequent unsafety, unless the charterparty contains a liberty clause allowing the shipowner to refuse to sail the vessel to such unsafe ports.

INTERNATIONAL

What renders a port unsafe In his famous judgment in The Eastern City [1958] 2 Lloyd’s Rep 127, Sellars LJ stated that a port would be safe if in the relevant period of time, the particular ship can reach it, use it, and return from it without, in the absence of some abnormal occurrence, being exposed to danger which cannot be avoided by good navigation or seamanship.

A port can be considered unsafe for two broad reasons. First, ports may be regarded as politically unsafe during a riot or an outbreak of war. Second, ports have been found to be unsafe due to physical characteristics or features. For instance, in The Marinicki [2003] 2 Lloyd’s Rep 655, an underwater obstruction in the designated route into the port was held to render the port unsafe. Similarly, in The Houston City [1954] 2 Lloyd’s Rep 148, an inadequate fendering to protect the vessel from the pier was held to be another example of physical unsafety.

Ebola and port safety For long, it has been widely accepted that instead of the crew, it is the ship and cargo which principally bear the risks associated with an unsafe port. However, some practitioners have suggested that risks posed to the crew can also render a port unsafe even where there is no risk to the ship. For instance, if several crew members are afflicted with Ebola and require repatriation, the ship may be left inadequately manned, causing potential risks to its safe operation. Nevertheless, the validity of such argument remains to be decided by the courts.

Whether a particular port in Ebolaaffected areas is safe will depend on an assessment of the facts of the alleged unsafety, such as the possibility for the crew to be exposed

to Ebola. The risk of the unsafety must be more than negligible such that it would not amount to an ‘abnormal occurrence’ within the definition of safe ports in The Eastern City. Shipowners bear a very onerous evidential burden when proving a port is unsafe. Numerous port unsafety claims failed during the Indian plague period in 1994, as the courts were not satisfied that the likelihood of the crew being infected with the virus was high enough to render the port unsafe.

Moreover, according to the definition formulated in The Eastern City, there will be no breach of safety warranty if the sole cause of damage is a failure of the Master and the crew to exercise the standard of navigation and seamanship expected of them. The World Health Organisation has advised that Ebola infections can be avoided if appropriate precautions are taken. Since it appears that exercise of reasonable care could prevent the crew from getting infected, it seems difficult, if not impossible, to argue that the current outbreak of Ebola will render any affected ports unsafe in the legal sense.

Consequence of breach of the warranty

35

port at the time of nomination. The shipowner’s unmeritorious refusal may be regarded as an anticipatory breach of the contract, entitling the charterer to claim damages when time for performance comes. Accordingly, it would be better for the shipowner to accept the nomination first and claim damages for breach of the safety warranty if things turn out badly later. However, shipowner may lose its entitlement to damages if its compliance with the charterer’s order is so unreasonable as to amount to a break in the chain of causation. This may happen when shipowner allows its ship to suffer damage that could have been prevented.

Conclusion From the above discussion, a port may not be unsafe in the legal sense simply because it is affected by the outbreak of Ebola. Whether the shipowner is entitled to refuse to take the ship to an affected port depends on the true construction of the underlying charterparty. In practice, it may be the shipowner’s vital task to warn the crew of the risks of outbreak and ensure that appropriate precautions are implemented to minimise such risks.

When the charterer nominates a prospectively unsafe port, the shipowner is entitled to refuse the nomination and request for a new port. Upon breach of the safety warranty, a charterer is obliged to pay damages to the shipowner for losses suffered by reason of entering the unsafe port. The charterers will be liable for any physical damage suffered by the vessel as a consequence of entering the unsafe port.

Charterers will also be held liable for other economic consequences.

Nevertheless, it may be difficult to assess the risk associated with the HKSLG · SPRING 2015 · ISSUE 6

36

INTERNATIONAL

A New Affront to Women’s Rights in Myanmar Christina Ling

Despite having come out of nearly 50 years of military rule, democratically elected its government in 2010 and amended its Constitution to foster human rights protection, Myanmar has recently stalled in its transition. Last spring, Myanmar’s government published drafts of the ‘Protection of Race and Religion Laws’ (PRRL) which proposed new regulations on interfaith marriage, religious conversion, population control and polygamy. The draft laws were initiated by a coalition of Buddhist monks known as Ma Ba Tha, or the ‘Association for the Protection of Race and Religion’. According to Ma Ba Tha, the proposed laws aimed to prevent minority Muslims from spreading their faith by marrying Burmese women. Such legislation reflects widespread anti-Muslim sentiment, as well as the rise of religious extremism in Myanmar.

The PRRL have attracted torrents of controversy from both the international community and Myanmar’s civil society. The strongest voices have come from Myanmar women, protesting in particular that the interfaith marriage regulation restricts the freedom of love, of religion and the right to start a family.

Despite calls to drop the bills, they have since been submitted to the Myanmar Parliament for debate.

The proposed legislation on interfaith marriage Under the Myanmar Buddhist Women’s Special Marriage Bill (the Bill), women would be required to HKSLG · SPRING 2015 · ISSUE 6

Amy Barrow

from their families. The proposed law also would not apply to Buddhist men seeking to marry nonBuddhist women.

Ramifications

obtain legal permission from township authorities before marrying a man of non-Buddhist faith. If the woman is under 20, parental consent is an additional requirement.

The interfaith engagement would then be announced by public notice and only permitted if no objections to the union were raised.

Any non-compliance would result in imprisonment.

Despite its severity, the Bill was ambiguous on what factors would be considered by the authorities in granting permission, or who could raise an objection to the marriage.

It is clear, however, that men are not required to obtain consent

By requiring registration and consent of marriages specifically between Buddhist women and nonBuddhist men, the Bill does not apply equally to all citizens. It encroaches on a private area of women’s lives while exacerbating an existing societal pressure on women to marry within the same faith and caste. Such discriminatory restrictions on women interfere with their unqualified right to marry and found a family regardless of race, nationality or religion enshrined in Art. 16 of the Universal Declaration of Human Rights, as well as Art. 16 of the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW). Myanmar, a signatory of CEDAW in 1997, is committed under the instrument to take measures to prevent, prohibit, and end discrimination against women.

This includes ensuring equality for both men and women, abolishing discriminatory laws, and enacting legislation that prohibits discrimination. Apart from falling short of international human rights standards, the Bill is arguably contravenes the 2008 Constitution of Myanmar, in which Art. 348 provides that ‘[t]he Union shall not discriminate any citizen… based on race, birth, religion, official position, status, culture, sex and wealth.’

INTERNATIONAL The bigger picture: a conversation with Professor Amy Barrow The PRRL casts doubt on the overall development of women’s rights in Myanmar. This is the issue that Professor Amy Barrow, from the Faculty of Law at the Chinese University of Hong Kong, explores in her direct grant project titled Women’s Status in Myanmar’s Transition.

In an interview with Professor Barrow, she discusses how the interfaith marriage bill and the PRRL package in general reflect on women’s rights and Myanmar’s transitional progress as a whole.

Q: Why are transitional periods such a critical and sensitive time for women’s rights issues?

A: Periods of ‘transition’ potentially open up spaces for marginalized groups in society, including women, to negotiate identity politics and challenge gender stereotypes.

However, the recent interfaith marriage bill and series of proposed bills potentially undermine women’s ‘space’ within society and bodily integrity.

Q: And this threat to ‘space’ is felt all the way down to the grassroots level?

A: I undertook fieldwork in Yangon in December 2014 with civil society actors, who expressed serious concern at the release of these bills. Interviewees explained that the bills were driven by a Buddhist Nationalist movement to restrict interfaith marriage between Muslims and Buddhists. Also, the Population Control Healthcare Bill, which was recently passed by the Upper House (amyotha hluttaw), effectively allows the Myanmar Government control over women’s reproductive rights. The law clearly contravenes Article 16(e) of

the CEDAW. under which parties should take appropriate measures to eliminate discrimination in relation to marriage and family relations.

Q: The progression of these four bills from draft to Parliamentary debate happened relatively quickly – within one year. How does this compare with the drafting of new bills to protect women’s rights?

A: Gender Equality Network (GEN), a civil society organization based in Yangon, has been providing technical assistance in the drafting of Myanmar’s first law specifically focused on violence against women together with the Ministry of Social Welfare.

While the Ministry also initiated a ten year National Strategic Plan for the Advancement of Women (NSPAW) in October 2014, progress on the draft anti-violence against women bill has been protracted whereas the four bills’ passage through the Parliament seems to have accelerated. These developments suggest that periods of transition also potentially allow for the reinforcement of ethno-nationalist sentiment, which can be detrimental to women’s status and equality.

Q: This ethno-nationalist sentiment, strongly linked to religion, seems to dominate rights issues in Myanmar. To sum up, how would you say these values and the PRRL reflect on the Government’s progress

37

in recognising and protecting women’s rights as part of Myanmar’s transition?

A: While the adoption of the NSPAW suggests that the Myanmar Government acknowledges that women’s status and equality are integral to Myanmar’s development, the acceleration of these four bills on marriage and family relations suggest that the government’s understanding of gender equality, in line with international law standards, is clearly lacking. A broader question arises as to the nature of the reforms initiated by President Thein Sein and whether the ‘transition’ taking place in Myanmar can be effectively recognised as ‘transition’ in any meaningful sense, particularly given that protracted armed conflict continues in Kachin State and other regions.

Conclusion Myanmar has witnessed a sea of significant legal, political, economic, and social changes since the end military rule. However, as evidenced by the PRRL, the transitional period has brought ethnic tensions that are inimical to women’s rights. The Myanmar Government, instead of prioritising the values of interest groups, should strive for a genuine understanding of gender equality that, in the future, may serve as a model for other transitional governments to follow.

HKSLG · SPRING 2015 · ISSUE 6

38

INTERNATIONAL

The Real Debate in R (Carlie) v Home Secretary: the Distribution of Power Between the Executive and the Judiciary

F

or fear of retaliation against UK nationals and property, the UK Secretary of State refused to allow Iranian dissident politician Mrs Maryam Rajavi to speak at the Palace of Westminster, on grounds that it ‘was not conducive to the public good’. The issue in R (on the application of Lord Carlile of Berriew QC and others) v Secretary of State for the Home department [2014] UKSC 60 was whether the Secretary of State’s interference with the appellants’ rights to freedom of expression under Art. 10 of the European Convention of Human Rights (the Convention) was justified as a proportionate response to the threat of national security. With varying reasoning, the United Kingdom Supreme Court held, by a majority of 4-1 with Lord Kerr dissenting,

HKSLG · SPRING 2015 · ISSUE 6

that the intervention was proportionate. Lord Sumption, delivering the leading judgment, applied the proportionality test in coming to the decision.

The case was more than just a discussion on the restriction of a fundamental right under the Convention: it called into question the very basis of the proportionality test.

While the executive was undoubtedly the primary decision-maker, the judiciary could review administrative acts which are alleged to be disproportionate. Indeed, this case’s judgments focused on discussing the respective roles of the executive and the courts, as well as the extent to which the latter could override disproportionate administrative decisions.

Louisa Wong

Deference to the executive Although the Justices agreed on the justiciability of infringement of the Convention rights under s.6 of the Human Rights Act 1998, which states that an act incompatible with the Convention rights may be rendered unlawful, the Justices differed on the extent of judicial assessment on a contravention of a Convention right.

Lord Sumption opined that certain subject matters call for greater respect for the executive’s judgment.

For matters of national security, the Court is entitled to and should attach special weight to the assessments of an institutionally competent decision-maker. On the other hand, while Lord Kerr accorded

INTERNATIONAL due deference to the Secretary of State for assessments on security risks, he considered it the Court’s constitutional duty to assess the importance of the right infringed against other conflicting interests, including national security. The constitutional duty to assess the significance of a Convention right was also recognised by Lord Neuberger, Lady Hale, and Lord Clarke in the majority.

tion of fact to be decided by the administration. Deference to the executive branch in national matters and heavy reliance on political accountability to check against administrative decisions constitute a form a respect for democracy.

The judiciary’s constitutional duty Such lack of consensus on the extent of judicial assessment stemmed from diverging views on the respective roles of the executive and the courts. To Lord Sumption, a court is not entitled to substitute its own decision for that of the decision-maker, no matter how rigorous the standard of judicial review is: decision-makers are the appropriate candidates to be politically responsible for national security issues and the consequences of their administrative decisions. With no political accountability, judges should readily accept a reasonable assessment by a competent decision-maker and avoid preferring one policy option over another.

Opponents to such a view would regard the Lord’s comment as relegating the courts from the ambit of judicial review and undermining the separation of powers. While the executive is held in check by being indirectly accountable to its electorate through the Parliament and its political party, the courts remains in an effective position to check and balance against executive decisions being challenged for review. Political accountability may be an incentive for the executive to act within the legal framework and to take into account individual rights, but it cannot be denied that the courts bear the constitutional

39

duty to enforce such rights if the executive has not already done so. Moreover, the supremacy of the Parliament is not absolute, as noted by Lord Hope in Jackson and others v Her Majesty’s Attorney General [2005] UKHL 56.

Not only did the judiciary’s constitutional duty stem from the age-old doctrine of separation of powers, it was also conferred by the legislature. In R (Carlile), Lord Kerr and Lord Neuberger rightly stated that Parliament has given the courts the solemn duty to decide whether political reasons can justify administrative interference of Convention rights. While one must acknowledge the respective institutional competence of the executive and the judiciary in assessing political matters, the latter’s constitutional duty should not be overlooked.

The better version of democracy One reason behind the divergent views on the distribution of power between the two branches would be the interpretation of the Human Rights Act 1998 against the Justices’ democratic values. To Lord Sumption, although infringement of rights is justiciable under the Human Rights Act, the executive’s judgment remains a ques-

However, this perception of democracy is limited to the electorate’s ability to remove government officials in case of an incorrect or inappropriate administrative decision. Political accountability would only be one of the means to enforce individual rights in a democratic society in addition to the courts’ power to review administrative acts. Should a court give undue deference to the executive’s assessment in relation to an infringed right, its independent power to review administrative decisions would be usurped by the executive, hence violating the doctrine of separation of powers and disrespecting the constitutional duty granted by the Parliament. Therefore, relying on political accountability alone to dispense with judicial review exhibits an inappropriately narrow view on the two institutions’ roles in a democratic society.

Conclusion While the proportionality test itself is quite settled in its formulation, the real debate in most judicial review cases lie in whether the courts have the power to apply the proportionality test in the first place due to considerations of the need of deference to the executive. Since any judicial review on an administrative interference of rights is immensely intertwined with the boundaries and overlaps of the constitutional duties of the two institutions, discussions on the applicability of the proportionality test would not be complete without considering the issues within a constitutional context.

HKSLG · SPRING 2015 · ISSUE 6

40

INTERNATIONAL

Outdated Policy for Police Immunity Keith Cheung

T

he justification that the police should not be liable to negligence claims is an example of a legal doctrine developing out of public policy. In a recent 5-2 decision, the Supreme Court of the United Kingdom revisited the issue of whether the police owes a common law duty of care to a civilian and held that they did not in Michael v Chief Constable of South Wales [2015] UKSC 2. In arriving at that decision, the Court was unable to agree on a legal test to impose a duty. In addition, the Court was swayed by policy arguments to refuse finding a duty of care.

However, as the House of Lords acknowledged, the common law is ‘capable of evolving in the light of changing social, economic and cultural developments’. As society changes, these policy concerns become outdated and should be abandoned. The Court’s reluctance to expand common law principles of duty of care in Michael reaffirmed traditional policy concerns which are not in line with modern thinking and expectations.

Facts Joanna Michael lived alone with her two young children. One night her ex-boyfriend visited her home and saw her with another man. He forcefully took Michael’s friend away while making threats to Michael’s life. Michael phoned the Gwent Police and reported the threats to her life. The Gwent Police graded the call as needHKSLG · SPRING 2015 · ISSUE 6

ing immediate response (G1) and transmitted it to the responsible police team, the South Wales Police. Unfortunately, the threat of life against Michael was not communicated, so the call was downgraded to G2. This means that the police only had to visit within an hour, even though Michael lived only five minutes away from the nearest police station. Later, Michael called again but the call was cut short. The police rushed over but found her dead. Her estate took an action in common law duty of care and alleged a breach of Art. 2 of the European Convention on Human Rights (ECHR).

The police applied for summary judgment against Michael’s estate to strike out the two claims.

Winky Lee

Policy changes Policy balances judicial reasoning against social, economic, and administrative impacts of judicial decision-making. As policies erode over time, the law should reflect such changes as well. The House of Lords extended court advocate’s immunity from negligence claims to the police in Hill v Chief Constable of West Yorkshire [1989] AC 53.

As time passed, advocate’s immunity disappeared in England and Wales (Arthur JS Hall & Co v Simons [2002] 1 AC 615) and police immunity was reformulated as ‘the absence of a duty of care’ (Brooks v Commissioner of Police of the Metropolis [2005] UKHL 24).

INTERNATIONAL Although there have been nuanced changes, the law remains determined to safeguard police interests.

Lord Toulson, representing the majority in Michael, echoed the same concerns that holding the police liable would lead to changes in police priorities and impose a burden on police budget. However, such concerns may be unfounded. Lady Hale noted that ‘it is difficult…to see how recognising the possibility of such claims could make the task of policing any more difficult than it already is’. In fact, this very reasoning had led to the abolition of court advocate’s immunity, since liability does not necessarily complicate operations. Lord Kerr also noted that there is a ‘complete absence of evidence to support’ the view that imposing liability would result in a diversion of police manpower.

On the contrary, imposing liability may actually incentivise active operations to reduce domestic violence. A recent study in the UK also found that while domestic abuse was regarded as the police’s top priority, it was not always directed as an operational reality. Given these new findings, the Court should have noted a change in social expectations.

Lord Kerr’s dissent raises another policy concern against upholding police immunity: in the interest of justice, the courts should not deny a remedy where there has been a wrong. Because the finding of a duty of care is essential to admitting a plaintiff’s case under the tort of negligence, it is often wrought with tensions between redress for individuals and social policy. The inconvenient truth remains that judges decide cases by weighing one policy against another. Yet, one should bear in mind Lord Bingham’s observation that the ‘injustice of denying redress’ could out

weigh other concerns (Fairchild v Glenhaven Funeral Services Ltd [2003] 1 AC 32). As noted by Lord Dyson in Jones v Kaney [2011] 2 AC 398, the general rule remains that ‘where there is a wrong, there should be a remedy’ because this is ‘a cornerstone of any system of justice’. In the absence of any new evidence to substantiate these policy concerns, the general rule in favour of remedy should be preferred.

Public law Increasingly, the courts are relying on public law as an alternative for victims claiming civil compensation. Although Michael’s estate has an alternative claim in public law against the police, this is undesirable for the victim’s family or general jurisprudence. In the Court of Appeal, Richards LJ recognised that the victim’s claim in public law was ‘marginal’ and Davis LJ opined there was ‘no realistic prospect of success’. As such, while the Supreme Court’s decision allowed a cause of action under the ECHR to proceed to trial, it is in effect a futile claim to pursue.

From a jurisprudential perspective, reliance on public law restrains the development of the tort of negligence. Prof. Francois du Bois explains that the distinction between tort and public law ‘can

41

be expressed by saying that while tort law focuses on the reasonableness of behaviour, human rights law focuses on the reasonableness of outcomes’. Yet, such distinctions originated from outdated policy concerns that courts should not impose a burden on public authorities operating on public funding.

Characteristic of this line of reasoning, Michael essentially recognises that a public duty to protect citizens may have been breached but still rejects a finding of duty of care. The fact that a single scenario can produce separate legal implications reveals that duty of care is an artificial construct founded on policy. Moreover, in light of Tory’s pledges to abolish the Human Rights Act, public law redress may be short-lived.

Conclusion The courts should not be concerned with preserving social resources through distributive justice because an imposition of liability would not necessarily lead to defensive policing. Redress should not be denied because of unsupported speculations and an unwillingness to disturb an area of law.

Instead, it would be fair, just, and reasonable for the law to readjust so as to align with changes in social attitudes and expectations.

HKSLG · SPRING 2015 · ISSUE 6

42

INTERNATIONAL

Civil Forfeiture and Its Draconian Measures Lisette Chan

O

n 16 January 2015, US Attorney General Eric Holder announced his intention to reform civil forfeiture laws, under which prosecutors and law enforcement agencies are authorised to seize private property from persons suspected of illegal activity before conviction. Unlike criminal forfeiture, civil forfeiture is a legal action in rem (against the property) rather than in personam (against the property owner). Constitutional protections available to a person in a criminal action are therefore inapplicable, making confiscations easier and faster. While civil forfeiture has certain advantages, the injustice involved in the process has undermined public confidence in the judicial system.

Why civil forfeiture?

Civil forfeiture has a long history in common law and became an integral part of US law enforcement as part of the War on Drug, a campaign to reduce illegal drug trade.

The purpose of civil forfeiture is not limited to putting wrongdoers behind the bars, but also to remove the tools and proceeds of their crimes. Doing so may prevent the wrongdoers from re-offending and reduce the resources available to others members of their organisations.

Indeed, this is convenient and costeffective in prosecuting drugs trafficking crimes. Imagine finding a vehicle with concealed compartments along with a brief case full of cash, yet the passenger in the car insisted that the cash found was HKSLG · SPRING 2015 · ISSUE 6

not his and the owner was nowhere to be found. In this case, civil forfeiture would be most efficient because there is: 1) no need for a crime to take place; 2) no need to establish guilt before seizing; and 3) the confiscation is not limited to property belonging to a particular person. Moreover, where there are innocent victims involved, allowing recovery of property is the most effective form of compensation. Alternatively, seized cash can be used as restitution payment to those innocent victims. Most importantly, when the crime at issue is a minor one, it is in the interests of justice to not trigger the full criminal arrest and trial procedures. Such valuable time and resources can be redirected towards arresting and prosecuting more serious and complex crimes.

The need for reform Although civil forfeiture has its attractive features, it remains a draconian measure which comes with serious problems and unanticipated circumstances.

1. Overly wide scope of application Nowadays, civil forfeiture is also prominently used outside of drugs cases. There is currently no single regulation governing civil forfeiture in the United States. Instead, the Congress has enacted different rules for different offences, such that what can be forfeited varies from one offence to another. In drugs cases, authorities can only seize private properties that are used to facilitate the offence. On the other

hand, authorities have the power to seize any properties ‘involved’ in money laundering offences and any property that provides a criminal ‘a source of influence’ over a racketeering enterprise, regardless of whether that property was actually involved in the offence. Where a joint bank account was used to commit fraud, the whole account would be confiscated thereby eliminating the criminal tracing process entirely. In such cases, the portion derived from other innocent sources will not be returned. These examples suggest that there seems to be an unlimited scope of what can be seized.

2. Arbitrary arrest and inadequate appeal system Since the prosecution can initiate forfeiture without needing to prove beyond a reasonable doubt that a crime is committed, any person who fits the profile of a drug courier or a white-collar fraudster are more susceptible to the risk of having their properties seized. This gives rise to arbitrary arrests. In 1989, 49-yearold Ethel Hylton was stopped at the Hobby Airport in Houston because a drug dog was sniffing around her luggage. Although no drug was found, the police confiscated USD 39,110 worth of cash from an insurance settlement and her life savings, on grounds that the sum was suspected proceeds from drug trafficking. More recently in 2012, two brothers, also business partners, had their bank account totalling USD 446,651.11 confiscated on the assumption that they were avoiding the reporting

INTERNATIONAL

43

4. Violation of liberty: undermining the judicial system Lastly, the concept of civil forfeiture is a violation of fundamental civil liberties, such as presumption of innocence and the right of an accused to a fair trial. These are basic principles of justice to be found in a sophisticated criminal system. Therefore, over-reliance on civil forfeiture may undermine the court’s role in upholding the rule of law and ensuring fairness. In the words of Chief Justice Robert French of the High Court of Australia, ‘each step in the direction of proof by allegation is a step towards a society in which the politician or official becomes the judge’. This apt comment was made in response to the Australian equivalent of civil forfeiture, known as an ‘unexplained wealth order’, under which the presumption of innocence does not apply due to the reversed burden of proof.

Conclusion requirements of the Bank Secrecy Act, simply because they had made some deposits under USD 10,000.

Although the money was later reclaimed through legal action, it took almost two years and nine months and high costs. This was equivalent to offering the government an interest-free loan of nearly half a million US dollars.

3. Abuse of power

Indeed, innocent victims of forfeiture do have the opportunity to recover wrongly seized properties by submitting evidence that the properties were legally acquired. In reality, however, it involves costly and lengthy procedures, such that not many lawyers are willing to take up cases of wrongful forfeiture due to low remuneration and the uncertain prospects of success.

According to the Washington Post, it was reported that ‘[s]ince 2008, state and local agencies have seized $3 billion worth of property through more than 55,000 stops and seizures, and 80% of the proceeds go to local police departments or drug task forces’. As Sarah Stillman noted in her article on forfeiture abuses, many police departments across the US depend on forfeiture funds to fill budget gaps.

Civil forfeiture often leads to abuse of power by the police due to the Equitable Sharing Programmes, which allows proceeds of liquidated seized assets to be shared between the state and police officers. Inevitably, this policy results in corruption and misbehaviour.

Many critics argued that the distinction between civil and criminal forfeiture is not meaningful because in either case, the forfeiture process has a punishing or deterrent effect unique to criminal proceedings. It is therefore unjustified that while civil forfeiture yields similar effect as criminal forfeiture, the burden and standard of proof in civil forfeiture are reversed and lowered respectively in favour of the prosecution.

The transfer of a property’s title from an individual to the government is a serious matter. The costs of an unfair process being applied to an individual potentially outweigh the convenience it brings.

On this premise, all forfeiture cases should be made criminal and a constitutional prohibition should be applied to all civil forfeiture cases.

HKSLG · SPRING 2015 · ISSUE 6

Hong Kong Student Law Gazette Contact us for more information The CUHK Graduate Law Centre, 2/F, Bank of America Tower, 12 Harcourt Road, Central, Hong Kong Website: http://hongkongstudentlawgazette.com