Hong Kong Student Law Gazette Spring 2013 · Issue 2
Feature Interview with The Honourable Mr. Justice Kemal Bokhary
Articles 專訪中國維權律師滕彪博士 Buyer’s Stamp Duty: A Mere Band-Aid Solution for a Much Bigger Problem Lessons from the Lamma Island Ferry Collision Sensible Gun Laws Save Lives – Application of the Second Amendment with Proportionality
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TABLE OF CONTENTS
P4. The Abandonment of Trademarks P5. Beyond a Theoretical Need? Improved Access to Legal Aid Services in Hong Kong P6. Society’s Orphans: Advocating for Orphan Disease Legislation in Hong Kong P8. The New Concept of No Par Value Regime in Hong Kong Company Law P10. 淺談《調解條例》推行後香港調解之發展 P11. Fusion of the Legal Profession in Hong Kong P12. The Impact of Financial Assistance Prohibition on Leveraged Buyouts P14. Lessons from the Lamma Island Ferry Collision P16. Buyer’s Stamp Duty: A Mere Band-Aid Solution for a Much Bigger Problem P18. The Tiger Asia Case and its Impact on the Hong Kong Regulatory System P20. Privacy vs. Transparency: Should the Government Withdraw the Section on ‘Disclosure of Board Members’ Personal Information’? P22. Impact of the Competition Ordinance on Mergers and Acquisitions P23. C v Director of Immigration – A New Mechanism for Determining Refugee Rights in Hong Kong
P24. Interview with The Honourable Mr. Justice Kemal Bokhary
P28. 專訪中國維權律師滕彪博士 P32. The Real Purpose of Internet Real-name Registration: Information Safety or State Censorship? P34. What to Expect from the Reform of Re-education Through Labour?
P35. Kaesong: a Keystone Bridging North and South Korea P36. Disclosure Rules on Executive Pay in Investment Banks P38. Reconciling the Enforcement of Full and Half Secret Trusts: A Re-interpretation of Blackwell v Blackwell P40. Sensible Gun Laws Save Lives – Application of the Second Amendment with Proportionality
P42. Interview with Akiko Mikumo, Managing Partner of Weil, Gotshal & Manges LLP P44. Interview with Christine Loh, Under Secretary for the Environment
HKSLG · Spring 2013 · Issue 2
LETTER FROM THE EDITOR he past year has been an exciting time to be a law student in Hong Kong. Media attention, difficult decisions and public interest in the inner workings of the legal system has reached a level probably not seen since the seminal Ng Ka Ling decision. One of the most highly debated events has been the retirement of The Hon. Mr. Justice Syed Kemal Shah Bokhary from his position as a Permanent Judge of the Court of Final Appeal in October 2012, and his warning of clouds heralding a “storm of unprecedented ferocity” over Hong Kong’s rule of law. We were honoured to be invited to Justice Bokhary’s home for tea and hear his views on some of the most important issues facing Hong Kong’s legal system. We were also delighted to meet The Hon. Mrs. Justice Verina Saeeda Bokhary and hear laughter-filled accounts of their beautiful family. Hong Kong owes a debt of gratitude to the tireless work of both judges. We have been fortunate to have Dr. Teng Biao (滕彪博士) at CUHK as a Visiting Scholar. We took this opportunity to ask him for his views on one of the most controversial issues in the region: human rights in China. Dr. Teng Biao’s contributions as a leading Chinese human rights activist and lawyer, including his work on the famous Sun Zhigang case and with Chen Guangcheng, should be read by anyone interested in public law. The past semester has also been an exciting one for the Gazette. This issue marks the first time that undergraduate law students of CUHK have been invited to participate. As the undergraduate and postgraduate law student bodies are instructed on different campuses, we were delighted to have the opportunity to get to know our undergraduate peers. Following feedback from our readers, we have included an advice section in this issue. This is a platform for industry leaders to share invaluable, practical insights into their work and success. Ms. Akiko Mikumo, Managing Partner of Weil, Gotshal & Manges LLP’s Hong Kong office, and Dr. Christine Loh, Under Secretary for the Environment, kindly agreed to be interviewed for in this section. Both studied law yet pursued very different paths to become leaders in their respective fields. Despite this, the single thread that unites both careers is unabashed hard work. In addition, our exclusive interview with The Hon. Chief Justice Geoffrey Ma Tao-li in the Fall 2012 issue was featured on the front page of the South China Morning Post on 24 January 2013. In February, we also launched our online platform, hongkongstudentlawgazette. com. All past and current issues can be found on this website, along with exciting Online Exclusive content. This issue marks the last under the current Editorial Board. We are indebted to the CUHK Law Faculty and Clifford Chance LLP who have supported us throughout the year. In particular, we would like to thank Ms. Jeannie Kow, who has helped us almost every step of the way. More than anything, I would like to personally thank the editors, layout team and writers who have poured their efforts into the success of the Gazette. It’s been a joy to work with all of you this year, and I’m so glad to see the friendships that have formed and will undoubtedly last beyond our brief time at law school.
Editor-in-Chief HKSLG · Spring 2013 · Issue 2
Additional Thanks (in alphabetical order) Ms. Akiko Mikumo Mrs. Anne Carver Prof. Bryan C. Mercurio Dr. Christine Loh Kung-wai Prof. Christopher Gane Clifford Chance LLP CUHK Law Faculty Ms. Esther Li
Prof. Eva Pils Ms. Florence Wong Ms. Jeannie Kow Mr. Jeffrey Liu Ms. Joyce Wong Mr. Leon Ren Ms. Louise Mitchell Ms. Magdalena Tang Prof. Nathan Alexander Lloyd Tamblyn
Mr. Richard Morris Ms. Selina Cheung Mr. Steven Brian Gallagher The Hon. Mr. Justice Syed Kemal Shah Bokhary Dr. Teng Biao The Hon. Mrs. Justice Verina Saeeda Bokhary HKSLG 路 Spring 2013 路 Issue 2
The Abandonment of Trademarks Catherine Leung
n recent decades, the number of trademark battles has risen. Major cases include the Apple and Samsung patent dispute in 2012, and trademark litigation as seen in the Akai Holdings’ liquidation cases in 2005. In today’s technologically advanced economy, intangible property, such as trademarks, are often regarded as significant business assets. As a result, their protection will be of particular interest to stakeholders.
of non-use and intention to abandon under section 52(2)(a) of the Trade Marks Ordinance is not explicit, such intention can be inferred from circumstances of each case.
Provisions governing abandonment of trademarks In common law jurisdictions, continuous non-use of a trademark between three (Australia and United States) to five years (United Kingdom) will amount to, prima facie, legal abandonment. In Hong Kong, the Trade Marks Ordinance (Cap 559) section 52(2)(a) states that a trademark will be revoked when it “…has not been genuinely used in Hong Kong by the owner or with his consent…for a continuous period of at least 3 years, and there are no valid reasons for non-use…”. Establishing non-use will free a trademark so subsequent holders may use it without recourse from the original owner. However, although there is such a general provision governing the revocation of trademarks, there are also precedents that exist to establish exceptions to the rule of what amounts to actual abandonment. Additional elements to constitute an actual loss of trademark If the requisite three or more years HKSLG · Spring 2013 · Issue 2
In Riv-Oland Marble Co (Vic) Pty Ltd v Settef SpA  12 IPR 321, a mere desertion of the trademark for six years did not suffice for abandonment. The Court ruled that “some evidence indicating an intention to abandon the trademark to result in the right to proprietorship being lost” must also be present. Furthermore, in Mouson & Co. v Boehm  LR 26 Ch D 398, limited sales between 1876 and 1881 did not amount to the abandonment of the trademark. Discontinuance by the user due to lack of market demand, even if coupled with non-registration of the trademark and non-assertion of any right is not equivalent to abandonment. Non-registration would lead to forfeiture of certain statutory rights, but ownership of the
trademark will still remain unaffected. In general, unless the Court can observe non-use along with a reasonable intention to abandon, the right to proprietorship generally remains. The question as to how a reasonable person will construe an intention to abandon is controversial. How can mere non-use be distinguished from an actual intention to abandon? In Hassan-el-Madi’s Application to Register a Trademark (the Magic Carpet case)  71 RPC 348, a trademark had not been used for years but the holder maintained proper registration in two countries. The Court ruled that there was no intention to abandon. Moreover, in Rael Marcus v Sabra International Pty Ltd  30 IPR 261, it was ruled that mere discontinuance of a trademark would not destroy the underlying goodwill associated with the intangible asset. Even if the trademark is no longer involved in the firm’s daily operations, its residual value remains. This allows proprietors to resume their access to the trademark whenever they deem suitable. While there are statutory provisions governing non-use periods of trademarks in Hong Kong, persuasive cases have demonstrated that mere physical abandonment is insufficient to constitute the loss of a trademark. So long as a trademark is not considered abandoned, it will still retain its realisable value. The courts are then left with the difficulty of establishing whether there is a reasonable, and possibly inferred, intention to abandon the trademark.
Beyond a Theoretical Need? Improved Access to Legal Aid Services in Hong Kong
n Hong Kong, the Legal Aid Scheme (LAS) is one of the main providers of legal aid that funds representation in Hong Kong courts. The primary objective of the scheme is to ensure an “independent, efficient and cost effective legal aid service”, and to guarantee that lack of means does not prevent anyone with meritorious grounds from pursuing a case. This article discusses the extent to which the Executive interferes with the Legal Aid Department (LAD) to prohibit the LAS from thoroughly fulfilling its raison d’être.
The LAS is administered by the LAD under the Home Affairs Bureau, rather than by an independent legal aid authority. Accordingly, the Executive has the capacity to influence the LAS by way of formulating policies, authorising the budget, appointing the Director of Legal Aid (DLA), and conducting performance appraisal. The Executive tends to exert heavy control over the LAD for judicial review cases because such cases impede administrative efficiency.
For instance, the successful judicial review of Re Pham Van Ngo and Others  1 HKLR 499 encouraged thousands of Vietnamese asylum seekers to apply for legal aid. It was alleged by the Hong Kong Human Rights Monitor Report in 1998 that the Attorney General’s Chambers and LAD made an agreement to delay or refuse legal aid to asylum seekers while the Immigration Department purposely sent refugees back to Vietnam before their cases could be decided. Such agreements between the LAD and other
government departments influencing LAD decisions would exceed the scope of section 5 of the Legal Aid Ordinance (Cap 91), because an applicant’s eligibility should only be determined by the individual’s means and the merits of the case. The Executive’s interference with the LAD not only encroaches upon the LAD’s independence, but also directly impairs its ability to carry out its statutory purpose to provide legal aid for meritorious applicants.
The Hong Kong Bar Association noted in a recommendation that many applicants were unjustifiably denied legal aid where practitioners thought the case should be further explored. Although section 9(d) of the Legal Aid Ordinance allows the LAD to refer an application to counsel or solicitor on the appropriate panel for further investigations, this request is often exercised only after a legal aid application has been refused and the applicant decides to appeal. Thus, it appears that the LAD only uses these opinions to support its preconceived decisions, thereby defeating the purpose of the Legal Aid Ordinance. As suggested by the Bar Association, section 9(d) should be used more frequently as a mechanism to render more transparent decisions and to protect the public interest. When the neutrality of the provision of legal aid is at risk and the demand for legal services remains unrealised, it is clear that access to legal aid must be reformed. First, the LAD should become an independent body to break free from its conflict of interest with the Executive. A possible solution could be found in setting up a body directly under the Judiciary rather than under the Home Affairs Bureau. Second, the Legislative Council should assume responsibility for funding the LAD to reduce its conflict of interests with the Executive. Finally, deeper structural reform, including the formation of a financially and administratively independent legal aid authority, may be necessary to ameliorate the administration of justice in Hong Kong. HKSLG · Spring 2013 · Issue 2
Society’s Orphans: Advocating for Orphan Disease Legislation in Hong Kong
rphan diseases are extremely rare diseases. The European Union (EU) defines such diseases as those with an incidence rate of less than 0.05% of the population. Due to their rarity, the public overlooks them, the medical community knows little about them, and the pharmaceutical companies seldom invest in them. Patients suffering from these diseases become society’s neglected orphans. Thus, many legal jurisdictions have legislated for orphan diseases – the United States (US) and EU are bellwethers, and many Asian countries have followed suit. Two professionals were interviewed for this article, to gauge the need for similar laws in Hong Kong. Spinocerebellar Ataxia neglected non-liquet
Even though patients are desperately hoping for a cure, research is difficult due to the lack of financial support. Dr. Chan noted, “Understandably, granting agencies prefer research which benefits more people…but when budget for disease research is insufficient, projects focusing on rare diseases may never obtain financial backing. From one angle, 300 people represent only a
published his findings in the scientific journal Proceedings of the National Academy of Sciences. Even after such a significant result, local research remains slow. While potential cures are undergoing clinical trials abroad, the absence of an SCA patient database renders any local trial arduous. It was only recently that Dr. Chan began collaborating with the Department of Health and the Prince of Wales Hospital to begin profiling local
One of the problems of rare diseases is that understanding of them is limited, but it is difficult to obtain funding for research. Dr. Chan Ho-yin Edwin, Associate Professor at The Chinese University of Hong Kong lamented that local research has received “minimal” financial support. Dr. Chan specialises in research on spinocerebellar ataxia (SCA) – a group of rare genetic diseases which causes the cerebellum to degenerate irreversibly. The disease currently has no proven cure and there are an estimated 300 patients in Hong Kong. Available forms of treatment can only alleviate symptoms or decelerate disease progresHKSLG · Spring 2013 · Issue 2
sion.Thus, SCA is effectively a protracted death sentence.
minute fraction of the Hong Kong population, but to the patients, their families, and friends, every one of the 300 is an individual.”
patients. The journey ahead is long.
A systematic lack of funding
Even when remedies are known, access to orphan drugs in Hong Kong can be difficult, as expressed by Dr. Huen Kwai-fun, a paediatrician from the Tseung Kwan O Hospital.
The lack of funding is systemic; it extends to private foundations and a shortage of fund-raising events. But for contributions from patient organisations, Dr. Chan would not have obtained sufficient funding for his research. It was only due to these contributions that he discovered the common cause of six types of SCA in 2012, and subsequently
The million-dollar disease: mucopolysaccharidosis
Mucopolysaccharidosis (MPS) is a family of orphan diseases caused by a lack or dysfunction of lysosomal enzymes needed for the proper breakdown of mucopolysaccharides.
HONG KONG The accumulation of abnormal metabolites can cause multiple organ damage, growth delay, and eventual death. Several types of MPS may be treated by administering functioning enzymes into the patient’s bloodstream. This can enhance life expectancy and quality of life significantly. However, the cost is prohibitive. The rarity of MPS necessitates that research and development costs must be recuperated from only a handful of patients. Limits of the public health care system Thus, in 2008 the Hospital Authority (HA) established a fund for six types of lysosomal disorder patients in public hospitals. Dr. Huen explained, “The use of this funding is under the scrutiny of an expert panel in HA consisting of administrators and medical experts to assess the medical indications for treatment.”
nately, Hong Kong remains lethargic in legislating for this problem. Singapore established its orphan drug legislation in 1991. The legislation accelerates importation of orphan drugs which have been approved abroad but not locally. Taiwan enacted the Rare Disease Control and Orphan Drug Act in 2003. In addition to introducing foreign-approved drugs, it also renders obligatory subsidies to patients. The supply of orphan drugs are ensured under the legislation. In comparison, the situation in Hong Kong is much more difficult. For most orphan drugs, our independent research shows that public hospital patients rely on HA’s formulary. However, limited finance, coupled with an emphasis on cost-efficiency, means that the small number of orphan disease patients will inevitably be sacrificed. Over 60% of the orphan drugs listed in EU law are not even listed in the HA’s formulary; most of the available ones are non-subsidised.
Nonetheless, subsidised patients are subject to reviews, as ultimately HA is financially constrained. Dr Huen commented, “HA is quite passive and depends very much on the funding from [the Government]. HA also has their own priorities and burning issues… It’s already a big jump for HA to have the Expert Panel and the funding.”
As a result, the responsibility to secure drug access falls solely on doctors. Dr. Huen said, “Clinicians take up all the responsibilities, including looking up for a long term sustainable source, which may not be backed by administrators and HA and appreciated by patients and families.”
The right to health ensured by legislation
Orphan drugs: beyond securing drugs
The International Covenant on Economic, Social and Cultural Rights guarantees the right to “the highest attainable standard of physical and mental health”. To ensure the implementation of this right, many jurisdictions, including the US, EU, and a number of Asian countries, have enacted orphan disease legislation. Unfortu-
However, beyond securing drug access, orphan drug legislation usually provides research incentives for related products. The EU and US legislation encourage research by providing tax credit and extra patent protection for orphan drugs development. The Taiwanese legislation reserves funding for researching and developing orphan
products, thereby securing treatments in the long run. Dr. Chan remarked, “Setting aside a pot of money for rare disease research would be a good policy, but it must be on a competitive basis between researchers of the field.” Beyond financial support, both interviewees repeatedly emphasized that raising public awareness remains paramount. Dr. Chan observed that public awareness remains relatively low. Dr. Huen also emphasized that any legislation should do more than subsidise research and drugs. The Taiwanese legislation includes information regarding diagnosis, treatment, prevention of rare disease, and cooperation with international rare disease organisations. Cost efficiency or human lives? Legislating to promote awareness and medical support of orphan disease will increase healthcare expenditure, but experts have echoed a need for legislation. Dr. Chan says that the patients are tired of “being told repeatedly that SCA is incurable”, and only being prescribed vitamin pills. Dr. Huen also expressed that, “It takes a lot of initiative and passion of the clinicians to introduce and get these new medications for the patients.” She added, “without [legislative support], everything we get is only piecemeal”. Such piecemeal approach must stop. In 2010, the Government only spent a little more than 5.0% of the GDP on healthcare, an unacceptably low amount compared to other developed countries. With Hong Kong’s latest budget at $64.9 billion, there is simply no excuse for legislation to be further delayed.
HKSLG · Spring 2013 · Issue 2
The New Concept of No Par Value Regime in Hong Kong Company Law
he par value regime has been viewed as a cornerstone of company law. Nevertheless, in the past few decades, it has become evident that the regime suffers from several shortcomings and there have been numerous discussions concerning its efficiency for businesses today. Since mid-2006, company law in Hong Kong has been reviewed with the aim of enhancing Hong Kong’s status as a major international centre of business and finance. As a result, the new Companies Ordinance has abolished the old-fashioned concept of nominal value for shares and adopted the concept of no par value shares for all local companies with share capital. This conforms to the international trend of modernising company law. Upon the new Companies Ordinance coming into effect in 2014, a company’s shares will have no nominal value. The new Companies Ordinance does not establish any legislative control on the setting of the issue price – it can be based on current market value or other reasonable valuation. Directors will have the right to issue shares at prices according to their discretion, subject to their fiduciary duty to do so in good faith. The no par value regime is not a new or revolutionary concept. Countries such as Australia, Singapore, New Zealand and the United States have already adopted this regime. However, it represents a fundamental change for Hong Kong because it is compulsory in the HKSLG · Spring 2013 · Issue 2
new Companies Ordinance. This means that companies with share capital do not have the option to decide whether or not they would like to have no par value shares. Shortcomings of the par value regime Par value, or nominal value, is the minimum price at which shares can be issued. The original purpose of the concept was to protect creditors and company shareholders. Judge Finkelstein summarized its benefits in Wright v Mansell  116 FCR 46 :“We can see that requiring a company to set and abide by a par value for its shares was a great protection to creditors who knew of the company’s permanent or issued capital. It also had a subsidiary benefit. It ensured that all shareholders were treated equally by requiring them to make an equal contribution for their shares.” However, the development of modern company law shows that the par value regime does not meet these original purposes.
Antiquated purpose of ‘nominal value‘ When forming a company, shareholders subscribe for shares at their nominal value. The total amount of the nominal value of the shares issued by the company represents the share capital of the company. During the life of the company, the share capital fluctuates and the share price is determined by factors, such as the goodwill of the company and expectation of future growth. Therefore, the nominal value of the shares represents neither the amount of actual capital of the company nor the amount originally contributed by its shareholders. In this respect, the nominal value loses its meaning. Illusory protection The idea that a share has a nominal value was considered a significant element of the capital maintenance regime. As the total amount of the nominal value of shares constitutes the share capital, an unsuspecting
HONG KONG creditor may believe that the company’s share capital is equivalent to ample security. However, in reality, capital maintenance rules do not prevent the company from using its share capital for operational expenses, so these funds are not necessarily available to provide security for creditors. Therefore, the amount of the share capital may be misleading for creditors of a company.
panies will be able to (i) increase share capital without allotting and issuing new shares if funds are provided by its shareholders, (ii) capitalize profits with or without allotting and issuing new shares, and (iii) allot and issue bonus shares with or without
increasing its share capital. The concept also simplifies the processes of consolidation and subdivision of shares, which can now be achieved by changing the number of shares only with no effect on the total amount of share capital.
to be flexible and able to react promptly to these ever-changing conditions.
Company law should follow and reflect the development of modern business practices and be able to quickly adapt to ever-evolving conditions in global financial markets. In turn, modern companies need
Financial inflexibility In large companies, the purpose of share issuance is not simply to allocate control over the company, but also to raise finance. The value of a company and its profitability depend on its successful business activities. Particularly nowadays, companies face unstable market conditions, and these unfavourable circumstances may hamper the company’s ability to raise its share capital. This occurs when it becomes impossible for a company to raise its share capital when the market value of its shares is below their nominal value, as capital maintenance rules prohibit the issuance of shares at below their nominal value. Advantages of the no par value regime Truthful representation A share without nominal value will better represent a proportional part of the monetary value of a company’s capital than a share with a fixed face value. Instead, the assets of a company, which better reflect the performance of a company, will determine the value of the share. Financial flexibility The no par value environment will provide increased flexibility for alterations of share capital. Com-
Simplified accounting Under the current Companies Ordinance (Cap 32), a company is required to create a share premium account, in which any surplus over the par value received is deposited when the company issues shares. The current laws restrict the disposal of these funds. By adopting the no par value regime, current laws relating to share premium lose their relevance and will therefore be abolished. The implications for a company are that its capital structure will be simplified and its corporate accounts will be more comprehensive.
The abolition of par value reflects economic reality. The main advantage of the no par value concept for companies is that it brings greater flexibility for the alteration of a company’s share capital through issuance of new shares with less transaction costs, and eliminates the problem of issuing shares at a discount. Evidently, the no par value regime overcomes many of the weaknesses of the par value regime – it does not undermine shareholders’ rights or the position of creditors, and more importantly, brings flexibility for companies in their business activities.
HKSLG · Spring 2013 · Issue 2
淺談《調解條例》推行後 香港調解之發展 Stacey Shen
2009年香港民事司法改 革以來，調解(Mediation) 作為一種替代性糾紛解決方式 (ADR)漸漸受到越來越多的關 注與青睞，對其進行立法也變 得勢在必行。在大環境的推動 下，立法會在2012年6月通過了 《調解條例》(第620章)，並於 2013年1月1日正式推行。此條 例的推出明確了調解的定義， 為調解作出了框架性的指引， 並強調說明了調解的幾大特 色。 《調解條例》第4條將調解定 義為“由一個或多於一個分節 構成的有組織程序，在該等 分節中，一名或多於一名不 偏不倚的個人在不對某項爭 議或其任何部分作出判決的 情況下，協助爭議各方…… (a)找出爭議點；(b)探求和擬訂 解決方案；(c)互相溝通；(d)就 解決爭議的全部或部分，達成 協議。”該定義闡明了香港使 用的是斡旋性調解(facilitative mediation)，即調解員只能向爭 議方提供幫助而非引導以及裁 決，明確地與其他調解模式進 行區分。 《調解條例》還為調解的以下 特點進行了立法規管。首先， 調解應當是一個自願的過程。 第3條說明該條例目的為“提
HKSLG · Spring 2013 · Issue 2
倡、鼓勵和促進以調解方式解 決爭議”。盡管民事司法改革 中推出的實務指示31(Practice Direction 31) 第四條賦予法庭 對沒有合理解釋拒絕調解的爭 議方發出不利訟費令的權利， 但從本質上來說，法院並沒有 權利強迫調解成為訴訟前必經 的一個過程，它亦不能取代訴 訟，更不會影響基本法第35條 賦予香港居民向法院提出訴訟 的權利。 其次，調解過程中的調解通訊 應當是保密的。在S v T (CACV 209/2009)一案中，法官指出調 解最關鍵的特點就是保密。 《調解條例》第8條第(1)款規 定，“任何人不得披露調解通 訊”。第(2)及(3)款則列出了例 外情況，例如：“各方同意作 出披露、通訊內容是公眾已可 得的資料、該項披露是為徵詢 法律意見而作出”等等。第10 條則訂明“調解通訊內容是否 可被接納作為證據需留由法庭 決定，主要考慮事項包括「公 眾利益」、「秉行公義」”等 等。這樣的立法保護了爭議各 方的權益，可有效防止調解被 濫用為訴訟前試探對方立場的 工具，變相鼓勵了調解。 《調解條例》的推出雖然為調 解作出了上述的立法規管，但
並未涉及部分頗受爭議的議 題，例如調解是否該遵行既 定步驟、調解員的認證機制等 等。這些不足相信會是立法會 未來需要研究的課題。 近幾十年來，替代性糾紛解決 方式在各國備受推崇，香港推 出《調解條例》也被視為不甘 落後之舉。 在香港，傳統訴訟 的程序相對繁復且費用高昂， 而且訴訟的結果中總有明確的 輸家。調解恰恰彌補了這些缺 陷。它不僅經濟效益高，而且 爭議各方可以主導調解過程， 謀求多樣化的解決方法以達到 雙贏的局面。例如，調解曾在 2008年雷曼兄弟迷你債券危機 扮演著十分重要的角色，特別 是為許多沒有法律援助的中產 階級尋求了正義。 更重要的是，調解還與傳統中 國文化“和諧中庸”之道相輔 相成，這也為調解在華人社會 的推行奠定了文化基礎。 《調解條例》雖不盡完善，但 該條例的出台可被視為重要的 里程碑。相信在各方的努力 下，不久的將來，香港將擁有 一個成熟的调解機制，成為亞 太區解決爭議的中心 。
Fusion of the Legal Profession in Hong Kong Suzuko Chung
nder Hong Kong’s Legal Practitioners Ordinance (Cap 159), solicitors are denied the right to appear in Hong Kong’s higher courts while barristers are allowed unlimited rights of audience. However, the Legal Practitioners (Amendment) Ordinance 2010, relaxed the restriction on solicitors and allowed higher rights of audience to those who have either taken prescribed advocacy assessments or applied for an exemption based on extensive practical experiences. Primarily, expensive legal fees stemming from the current split profession denies equal access to justice, which is contrary to the rule of law. Though solicitors can speak on behalf of litigants in lower courts, barristers enjoy a monopoly on representing litigants in higher courts. Such division requires solicitors to refer counsel to carry out advocacy work, thus incurring additional legal fees for the client. In a July 2012 article published in The Standard, lawyer Wong Kwoktung suggested that renowned barristers could charge between HK$10,000 to HK$50,000 an hour just to study documents, possibly amounting to more than HK$10 million a case. These exorbitant figures suggest difficulties for those unqualified for legal aid to obtain quality legal representation, thus contradicting the Basic Law’s promise for the right to ‘access to the courts [and] choice of lawyers’. The current model fails to uphold the rule of law and provides clear evidence for the need of a fused profession that can better respond to consumer demands.
dle a case from beginning to end, as opposed to having multiple parties participate at different times of the proceedings.
Critics argue that a fused profession, if implemented in Hong Kong, will lower the overall quality of advocacy. This is due to the significant differences between the training processes for barristers and solicitors. Advocacy can be regarded as an extension of skills, such as persuasive writing and client service, which solicitors already possess. Furthermore, a solicitor’s ability can definitely be cultivated and refined through practice. The current model compels solicitors to outsource advocacy work to counsel when the case proceeds or has reasonable prospects of proceeding to higher courts. This often mandates a shift of duties between practitioners while handling the same case – such practice can hinder efficiency. A meticulous and thorough understanding of each client’s situation is vital, especially for matrimonial and child welfare cases. A fused profession will therefore allow the same lawyer to han-
Some construe the current division indispensible because it offers barristers independence and impartiality, which are crucial elements of a just legal system. However, does mere isolation from direct client communication really make a barrister less susceptible to bias? For example, barristers that depend upon regular instruction from the same solicitors are not necessarily more independent than employees of law firms. More importantly, maintenance of independence has been made a professional mandate for solicitor-advocates by the Law Society. Since the distinction between independence and objectivity is often artificial, such concern should not impede a fused profession. The experiences of Malaysia, Singapore, and Canada have shown that although a fused profession may not be perfect in upholding absolute independence, it does serve to improve access to justice while sustaining high quality courtroom advocacy. Perhaps it is time for Hong Kong to re-evaluate its current position and determine whether a fused profession can better satisfy society’s needs.
HKSLG · Spring 2013 · Issue 2
The Impact of Financial Assistance Prohibition on Leveraged Buyouts Elliot Leung
t all started in the United States (U.S.) in 1988 with the fierce takeover bidding war between RJR Nabisco’s own management, private equity firms, and other investment banks. The battle ended with a leveraged buyout of the corporate giant Nabisco by a private equity firm, Kohlberg Kravis Roberts & Co. (KKR), for US$31.1 billion. That was the largest-ever buyout deal at the time. What followed was a proliferation of leveraged buyouts in the U.S. and the investment strategy soon travelled to Europe and Asia. Concept of an LBO
A leveraged buyout (LBO) is a transaction in which an acquirer (also known as the financial buyer or sponsor) purchases a company or its assets using high leverage, i.e. significant levels of debt from banks and other creditors, in addition to minimal equity. To finance the acquisition, the sponsor would often raise funds by borrowing from a group of lenders. After the takeover is completed, the sponsor will typically hold the company for several years, during which it will
HKSLG · Spring 2013 · Issue 2
seek to improve the value of the firm through corporate and/or financial restructuring. They would then either sell off the entire company or portions of the firm’s assets at profitable prices. High leverage would magnify the sponsor’s potential profits and allow them to invest in mega-sized transactions that would have been impossible as a sole investor. General prohibition on financial assistance In Hong Kong, there are very few LBOs and most are smaller in size than those in the U.S. One major reason is that the presence of legislation prohibiting a company from giving financial assistance (FA) for the purpose of an acquisition of its own, or its holding company’s, shares. Such statutory restrictions are absent in the U.S. The provisions on FA can be found in sections 47A to 47G and section 48 of the current Hong Kong Companies Ordinance (Cap 32), whose origins can be traced back to sections 42 to 44 of the English Companies Act 1981.
While FA can take on many forms, its meaning includes “financial assistance given by way of guarantee, security or indemnity, other than an indemnity in respect of the indemnifier’s own neglect or default, or by way of release or waiver” (section 47B(b)). In effect, section 47A makes it illegal for a target company to provide financial guarantee or security for creditors who are participants of an LBO. In other words, creditors of an LBO deal are restricted from providing recourse debt in most cases. After the collateral has been seized, recourse debt lenders will not be allowed to go after the borrower’s other assets. If the acquired company becomes financially distressed, the creditors do not have priority over secured creditors or trustees in bankruptcy. Coupled with a high leverage ratio, this type of transaction possesses an extremely high default risk, which partially explains the scarcity of debt capital for LBOs in Hong Kong. Trends in the common law world The prohibition on FA exists in many common law jurisdictions. While the prohibition has remained strict in some countries, such as Malaysia, the trend in other jurisdictions, such as the United Kingdom (UK), Australia, Canada and Singapore, is towards liberalisation. Since Hong Kong’s jurisprudence emanates from UK law, it is more practical to consider recent developments in the UK.
HONG KONG The English Companies Act 1985 relaxed the restriction on FA in certain circumstances. This exception to the FA prohibition is commonly referred to as the ‘whitewash’ procedure (sections 155 to 158 English Companies Act 1985). The procedure allows private companies to give FA if, subject to shareholders’ approval, directors determine that the company is solvent and will remain solvent for a foreseeable period of time.
32) adopted a similar ‘whitewash’ procedure for private firms (sections 47E to 47G and section 48). However, Hong Kong seems to be more reluctant to lift the entire prohibition on private companies. Hong Kong’s stance in keeping the general prohibition on FA is
the Ordinance. Although the general prohibition (section 275) and the ‘whitewash’ procedure (section 284 and 285) remain, the prohibition is somewhat relaxed for FA under 5% of shareholders funds (section 283). Moreover, similar to the former Companies Ordinance, no exception has been granted for
The ‘whitewash’ procedure does not only apply to private companies, but also to public firms, albeit in a convoluted way. A common practice is that the sponsor will take the target public company private with recourse debt, ‘whitewash’ the new company and then turn some of the existing debt into non-recourse debt. Although the ‘whitewash’ procedure can reduce the credit risk to potential lenders and attract more capital to an LBO, it is criticised for being overly cumbersome and expensive. The Law Commission estimated that the ‘whitewash’ procedure cost the UK economy ₤20 million in 2000. In response to pressures for further elimination of the FA rules, the UK Parliament passed the Companies Act 2006. This Act abolished FA prohibition on private companies, and eliminated the need for the ‘whitewash’ procedure (section 682(1)(a)). However, the general prohibition on public companies remain. Hong Kong’s position Hong Kong has followed most of the FA amendments in the English Companies Act. Following the amendments in the English Companies Act 1985, the Hong Kong Companies Ordinance (Cap
unyielding. In February 2000, the Standing Committee on Company Law Reform considered the proposal to possibly repeal the entire provision on the general prohibition of FA (section 47A). In their report, the Committee considered criticisms on FA prohibition, including how it would prevent transactions that are economically beneficial, how the U.S. does not have such a statutory prohibition and how the ‘whitewash’ procedure is too cumbersome and expensive. However, the Committee concluded that “while...reforms are clearly needed, we cannot accept an immediate elimination of section 47A without any substitutes”. The Committee also argued that although statutes forbidding FA are absent in the U.S., other effective legal substitutes are readily in place to regulate LBOs. In 2012, the new Companies Ordinance was passed. The latest rules on the prohibition of FA are contained in sections 274 to 289 of
private companies. Despite the economic benefit that a further relaxation of FA rules may bring to Hong Kong, we must bear in mind certain risks that could potentially emerge. It is apparent that highly leveraged companies are at a greater risk of default, especially if credit is suddenly exhausted, making refinancing impossible. Additionally, the U.S. Government Accountability Office (GAO), after reviewing academic research, concluded that although LBOs may improve the financial performance of acquired companies, these transactions have been associated with the targeted firm’s low employment growth. Liberalisation of LBO transactions involves many stakeholders and extends beyond the scope of financial assistance. It is therefore sensible that any relaxation of FA prohibition should be approached cautiously, bearing in mind socioeconomic implications. HKSLG · Spring 2013 · Issue 2
Lessons from the Lamma Island Ferry Collision Tiffany Cheng
n National Day 2012, Lamma IV of The Hongkong Electric Company collided with the Hong Kong & Kowloon Ferryoperate vessel, Sea Smooth. This tragic accident may have faded from the minds of some people in Hong Kong, but the loved ones of the 39 deceased will never forget it. Was there someone liable for the accident? Would the number of casualties have been reduced if a higher standard of care was taken by the captains? Answers to these questions have to be sought for. The Chief Executive appointed a Commission of Inquiry on 22 October 2012 under the Commissions of Inquiry Ordinance (Cap 86) section 2 to ascertain the cause of the incident and evaluate possible shortcomings of Hong Kong’s current shipping laws (the Inquiry). The Commission, led by Mr. Benjamin Tang and Justice Michael Lunn, is determined to reveal important findings and hopefully prevent recurrences of similar tragedies. Historical background In 1991, a Yau Ma Tei ferry, Man Loy, collided with a pleasure boat immediately after the Lunar New Year fireworks show, causing the death of two passengers. Based on the inquiry of that accident, the Marine Department (MarDep) issued new safety guidelines for vessels during every fireworks display event. The biggest question now is how did such a near-identical accident happen again 21 years later? Are there inherent weaknesses in current shipping legislation or the HKSLG · Spring 2013 · Issue 2
enforcement of such? Problem 1: mere advisory nature of the guidelines Since the 1991 inquiry, MarDep has been issuing Notices which are highly similar for every fireworks display event to ensure safe navigation of vessels. Items in the Notice include: (1) coxswains keeping a name list of the passengers; (2) passengers who are unfamiliar with the vessel should be shown the location of life jackets and how to don one; and (3) children are to wear life jackets at all times. However, these guidelines are merely advisory; ship owners and coxswains have ultimate discretion on whether to adopt these measures. In other words, these measures are not legally enforceable. In fact, coxswains of Lamma IV did not keep a name list of the passengers, which added difficulty to the rescue operation after the collision. No safety demonstrations took place upon boarding either vessel and there were no
children lifejackets onboard Lamma IV. After the Lamma Island collision, MarDep has maintained its advisory role for the aforementioned safety measures, while tightening inspections on spectator vessels during fireworks displays. If deficiencies were found, a direction under section 24 of the Merchant Shipping (Local Vessels) Ordinance (Cap 548) would be issued to the person-in-charge of the vessel and immediate remedial action would be requested. If the direction is not complied with, the person-in-charge may be prosecuted. However, this potential prosecution is not found explicitly in any statute. As of now, there has been no clear criminal or civil precedent for non-compliance with any MarDep direction. In the long run, there is a need for MarDep to expand beyond its advisory role and find ways to ensure their safety measures are legally binding.
Problem 2: weak enforcement of the requirement for children lifejackets Of the eight deceased children on Lamma IV, at least four were not wearing lifejackets. Subsequent findings revealed that there were no children lifejackets onboard at all. According to section 32 of the Merchant Shipping (Local Vessels) (Safety and Survey) Regulation (Cap 548G), every vessel must have children lifejackets amounting to 5% of total passenger capacity. However, according to The Hongkong Electric Company, MarDep survey officers never asked about children lifejackets during their annual inspections, despite having checked the adult lifejackets. In 2009-2010, the survey certificate issued by MarDep even showed that there were no children lifejackets on Lamma IV. Therefore, the strictness of safety enforcement by MarDep officers is seriously called into question. Was it this willful negligence of MarDep overlooking the necessity for child-sized lifejackets that ultimately caused the death of these innocent children? This remains an issue to be debated. Problem 3: inadequate access to life-saving gear on board In times of emergency, the ease of retrieving and wearing a lifejacket can be essential to saving one’s life. According to testimonies of passengers on Lamma IV and Sea Smooth, they had difficulties retrieving and wearing their lifejackets. Also, there was no demonstration on how to put on a lifejacket, except for simple guidelines posted on cabin walls. Of the 39 deceased, 11 were merely holding lifejackets or had lifejackets near them, but none of them were wearing them properly. More lives might have been saved if they had easier ac-
cess to a user-friendly lifejacket or had been instructed on how to wear one. Currently, there is no regulation in place to define the standards of a lifejacket. Hence, MarDep should seriously consider the expert evidence given by Dr. Neville A. Armstrong during the Inquiry, which specified the acceptable standard of lifejackets (e.g. ISO 12402-3:2006) and also evaluated the need to legislate for lifejacket demonstrations and provision of clear user guidelines under
proper use of radar, thus breaching Rule 5 of Cap 369N. Consequently, the competency and skills of the captain are also called into question. According to Captain Pryke, it seems to be the industry culture (or at least the two captains in question) not to rely on radar. Therefore, MarDep may need to legislate the necessity of providing more intensive training on the use of radar and navigation safety, and also to require a second person on the bridge with the captain to supervise the radar at all times.
Cap 548 and any of its subordinate legislations.
Problem 4: tenuous regulation on seafarers’ training and skills According to maritime expert, Mr. Nigel Robert Prkye, the captain of the Sea Smooth seriously breached the Merchant Shipping (Safety) (Signals of Distress and Prevention of Collision) Regulations (Cap 369N), by turning to the left instead of right when facing Lamma IV. If both vessels abided by the regulation and turned right (which Lamma IV allegedly did), the collision might have been avoided. The Commission of Inquiry further concluded that the cause of the Lamma Island ferry collision was the failure to keep a proper lookout by both vessels, including the
The Inquiry has revealed many inadequacies in our current shipping regulations. Having two nearly identical ferry collisions within 21 years is simply unacceptable. It is time for MarDep to conduct a thorough evaluation on current shipping laws in order to give the loved ones of the 39 passengers the solace they deserve. MarDep should also review the adequacies of Hong Kong’s current shipping regulations and must consider strengthening them to prevent similar accidents in the future.
HKSLG · Spring 2013 · Issue 2
Buyer’s Stamp Duty: A Mere Band-Aid Solution for A Much Bigger Problem
f C.Y. Leung’s maiden policy address provides any indication, the most current pressing social issue in Hong Kong is housing. The city’s property prices have surpassed the peak levels of 1997 due to low interest rates and significant cash inflows from quantitative easing measures. Not only are there concerns for cage homes and subdivided flats for the poor, expensive housing has also become a significant burden for the middle class. The Government has introduced pre-emptive measures in hopes of stabilising property prices. The Stamp Duty (Amendment) Ordinance 2011 implemented the Special Stamp Duty (SSD) in an effort to eliminate speculators from the market by applying a special tax for properties that are resold within two years. In August 2011, Leung further announced measures to cool the property market (“梁十 招”), i.e. by increasing land supply designated for residential use, accelerating completion of Government subsidised flats and introducing the policy of “Hong Kong land for Hong Kong people” (“港人港 地”). So far, the most controversial policy adopted by the Government was the sudden announcement of the Buyer’s Stamp Duty (BSD) in October 2012. The Stamp Duty (Amendment) Bill 2012 introduced the BSD as a 15% flat tax on all residential properties purchased by individuals or companies who are not Hong HKSLG · Spring 2013 · Issue 2
Kong permanent residents. The BSD is payable in addition to all existing stamp duties. Moreover, the holding period of the SSD was extended from two years to three years.
The Hamptons development in Happy Valley to shell companies with the intention of transferring the shares to potential buyers. Assuming the unit, valued at HK$ 93 million, is sold to a non-Hong
Unfortunately, the BSD has failed to achieve its objectives. According to the Centa-City Leading Index (a tracker of Hong Kong’s secondary property market), home prices rose 3.5% in the three months following the initial announcement of the BSD. Moreover, pursuant to the Chief Executive’s policy address in January, market sentiment has become even more bullish.
Kong permanent resident, potential tax avoidance of up to HK$ 21.9 million can be achieved. Compared to the sale of property, the rate of the existing stamp duty is much lower for share transfers. According to the Stamp Duty Ordinance (Cap 117), a sale of a HK$5 million flat will result in up to 6% duty compared to a rate of only 0.1% for the sale of shares with an equivalent value. Recently, Cheung Kong’s piecemeal sale of the Horizon Apex Hotel demonstrates another loophole exploited by developers. As hotels are classified as commercial properties, such transactions are not subject to stamp duty. Further, there are
The BSD was poorly construed and there are several reasons why it has not worked. Primarily, loopholes exist in the BSD and previous stamp duties. Following the introduction of the BSD, CSI Properties Limited assigned two units of
HONG KONG concerns that these purchases will use the property as home residences and unresolved legal issues remain pending investigations by authorities. The courts have made attempts to restrict tax loopholes, as seen in the case of The Collector of Stamp Revenue v Arrowtown Assets Limited  1 HKLRD 77. However, this case cannot be easily applied to the common purchase and sales of residential units due to its complexity involving a multi-billion dollar commercial real estate transaction. Moreover, relevant statutory provisions have also not been strictly adhered to. For example, section 61 of the Inland Revenue Ordinance (Cap 112) which contains a general anti-avoidance clause. We must therefore ask whether the courts and even the Inland Revenue Department are the most cost effective places to control social behaviours over the property market. Secondly, tax laws are legislated by the Government as policy tools. As a tax that targets transactions, stamp duty is effective in removing speculators from the market. The implementation of the SSD has already accomplished this objective. Between November 2010 to December 2012, transaction volume has fallen 39% while property values has risen 31%. The significant fall in volume clearly indicates the absence of speculators. The city’s low interest rate environment, which make mortgages unreasonably easy to access, is the real culprit of the property bubble. Upon the U.S. Federal Reserve’s decision to lower interest rates beginning in December 2008, consequent to the financial crisis, the value of outstanding mortgage loans in Hong Kong had risen from HK$588 billion to HK$868.3 billion by December 2012.
The direct importation of American monetary policies dangerously encourages Hong Kong buyers to overextend their lending capacities. The dollar peg also instigates unwanted inflation in Hong Kong and the devaluation of the Hong Kong dollar. The rise in home prices is driven by the use of property investment as a hedge against the peg. Our tax laws should indeed target the behaviour of reckless borrowing to counteract the unintended consequences of the peg. The true cause of Hong Kong’s current asset bubble is the correlation our economy has with the U.S. due to the dollar peg. Consideration of re-pegging or un-pegging of the Hong Kong dollar might be the best way for Hong Kong to exercise our own monetary controls necessary for sustainable growth. A capital gains tax on real property will diminish enthusiasm in the property market by reducing the overall return on investment. Due to Hong Kong’s favourable tax structure, residential property is often viewed as an investment instead of a home. If the Government is serious about changing this perception, imposing capital gains tax will be a good method to favour end-users over investors and speculators.
Another measure that can restrain property prices more effectively is by introducing a wealth tax on owners of multiple residential properties. An annual tax based on the assessed market value of their properties may appear to be a drastic change in tax policy, but such modification is necessary to systematically shift the housing market in favour of, again, the end users. Otherwise, any actions by the Government to increase land supply will be ineffective, as investors and speculators will continue to put upward pressure on prices. Nevertheless, the most effective way to normalise the housing market is not via new tax laws. After all, Hong Kong takes pride in its simple tax system and any alternative tax scenarios will impose significant administrative costs. The BSD is merely a band-aid solution that has disappointed the people of Hong Kong. A change in local economic policies, not enacting new tax laws, should be the best method to adjust abnormal behaviors of the property market. However, such a change from the status quo will involve much courage, as it will surely ruffle the feathers of the city’s land developers and elites.
HKSLG · Spring 2013 · Issue 2
The Tiger Asia Case and its Impact on the Hong Kong Regulatory System
Background of the Tiger Asia case
n 5 August 2009, the Securities and Futures Commission (SFC) initiated proceedings against Tiger Asia Management LLC (Tiger Asia), alleging that Tiger Asia had contravened market misconduct provisions. The SFC sought orders from the Court of First Instance (CFI) under section 213 of the Securities and Futures Ordinance (Cap 571) (SFO) to freeze Tiger Asia’s assets and prohibit further trading in Hong Kong markets. Subsequently in Securities and Futures Commission v Tiger Asia Management LLC  HKEC 946, the CFI struck out the application on the basis that it did not have the jurisdiction to determine if such contravention existed. It emphasised that this matter should first be determined either by the Market Misconduct Tribunal (MMT) under Part XIII of the SFO, or by a criminal court under Part XIV of the SFO. According to the CFI, the purpose of section 213 is only to serve interim relief, HKSLG · Spring 2013 · Issue 2
and is subject to the final conclusion made either by the MMT or by the criminal court. On appeal, the Court of Appeal (CA) took a different position in Securities and Futures Commission v Tiger Asia Management LLC  2 HKLRD 281. By considering the natural meaning of section 213(1)(a), the CA believed that section 213 served a different purpose from Parts XIII and XIV. Whereas Parts XIII and XIV were “punitive”, section 213 was “remedial in nature”. The CFI can give the following orders under section 213: restraining orders, orders requiring payment of damages, orders for restorative steps to be taken, orders for the appointment of an administrator to property and declarations that contracts are void. There is no indication that a preceding decision has to be made before giving these orders – the CA believed that the legislature would have said so if this had been its intention. Furthermore, since the CFI has to first examine the nature of the contravention before
making orders under section 213(2), the CA held that the CFI did have jurisdiction to determine whether there had been a contravention, based on the SFC’s submission. In response, Tiger Asia filed an appeal to the Court of Final Appeal (CFA) and the case will be heard in April 2013. Significance of the case The SFO, which became effective on 1 April 2003, is an ordinance that consolidates ten pre-existing ordinances, including the Securities Ordinance (Cap 333) and the Stock Exchange Unification Ordinance (Cap 361). Its scope is extensive – it covers all securities, futures, derivatives and intermediates markets in Hong Kong and empowers the SFC to oversee such. Since it is a relatively new ordinance, its limits and powers have not yet been fully tested and understood. In the past, the general understanding of the SFO was that it could
either initiate civil proceedings in the MMT or bring prosecution in a criminal court. Such proceedings were mutually exclusive – only one could be initiated, but not both. If it is determined by the CFA that the SFC can seek orders from the CFI directly, this provides a third route for the SFC to pursue enforcement. If permitted, this third route will be a very convenient tool for the SFC. Section 213(1) (a)(i)(A) of the SFO provides that “where a person has contravened any of the relevant provisions” the CFI may make a range of orders (as stated above) on the SFC. These orders show that both the coverage and the remedies of the SFO are very broad. Hence, section 213 gives the SFC vast power to pursue activities of market misconduct. If this third route does exist, the wide range of orders that the SFC can obtain may seriously affect the defendant. When giving orders, the CFI relies on the submission of the SFC. At that stage, the defendant is unable to cross-examine the contested evidence or to explain his version of the situation. Furthermore, instead of facing either civil or criminal charges as in the past, the defendant can in theory face both civil and criminal charges based on the same matter. Therefore, when deciding on the existence of the third route, the CFA should consider whether such an arrangement is just and fair to the defendant. However, on the contrary, the CA did not think that “it is reasonable or desirable that investor protection under [section] 213 should come at the price of forgoing criminal prosecution”. Ultimately, the CA believed that “section 213 provides valuable tools to the [SFC] to protect the
investing public which is an important objective of the SFO”. In addition, the defendant is a New York-based hedge fund that trades in Hong Kong markets. A relevant concern is whether the SFC can bring effective disciplinary actions to such offshore operators. The Tiger Asia case shows that the SFC is willing to pursue litigation rigorously even if companies or individuals are not based in Hong Kong. At the same time, this case has also exposed the limits of Hong Kong’s jurisdiction. As Hong Kong courts are generally reluctant to exercise extraterritorial jurisdiction, the SFC’s power will most likely be confined to Hong Kong only.
Beyond the reach of the SFC, investment funds may be discouraged from registering in Hong Kong, choosing instead to operate offshore. As Hong Kong’s freemarket economy is recognised as one of the most open economies in the world, these offshore funds can still trade in Hong Kong without much difficulty. The SFC lacks effective means of enforcement if
offshore funds do not register in Hong Kong, unless the SFC cooperates with overseas authorities. The Tiger Asia case marks the first time that the SFC has used section 213 since the SFO came into force. The liberal interpretation of section 213 by the CA contradicts the previous assumption that the SFC can only commence proceedings through either civil or criminal means. Such an interpretation has surprised the market because it is effectively changing the rules; the market did not expect that there would be a third route to commence proceedings. The CFA’s imminent decision should not be to interpret the meaning of the Ordinance narrowly by considering only academic and legal principles. Instead, the CFA should take a step back and examine the case from a broader perspective, namely by taking public policy into account. The CFA should consider whether its decision would disrupt regulatory consistency and market certainty in Hong Kong. These concepts are vitally important because they require many years to establish, and it would be difficult to restore confidence in the regulatory system once they are lost. Therefore, regardless of the CFA’s decision, it will certainly impact Hong Kong’s regulatory system, and invariably affect its status as an international centre of finance.
HKSLG · Spring 2013 · Issue 2
Privacy vs. Transparency: Should the Government Withdraw the Section on ‘Disclosure of Board Members’ Personal Information’?
n March 2013, the Hong Kong Government finally yielded to public pressure, and decided to shelve controversial legislation restricting public access to board members’ personal information after intense public debate. Last year, the Legislative Council passed the new Companies Ordinance. Amongst the changes, restrictions on the disclosure of board members’ personal information sparked severe criticism. The Government’s decision to temporarily hold back the legislation indicates that the previous consultation process was questionable, and had neglected the core values of the Hong Kong people. At present, the public has unrestricted access to documents delivered to the Companies Registry (CR) for registration, which contains board members’ residential addresses and full identification numbers. However, under the new Companies Ordinance, such information will no longer be available for public inspection. Board members will also be able to apply for their personal details to be blocked on the database. The proposed subsidiary legislation, which will be voted upon in July 2013, specifies the “types of person” who will have full access to such protected information. These persons include: public officials, public institutions, liquidators, receivers, and trustees HKSLG · Spring 2013 · Issue 2
in bankruptcy. The public and the media are not included in the list and will only be able to obtain correspondence addresses and partially retrieve identity card numbers of board members. The media, labour unions, and small and medium enterprises (SMEs) were dissatisfied with the limited coverage of the “types of person” in the proposed subsidiary legislation, and urged the Government to withdraw their proposal entirely. The Government, however, explained that their intention in introducing these new restrictions is to protect personal privacy, which corresponds with the need to increase privacy protection in view of the Octopus card personal data-leak scandal in 2010. The Government refers to similar legislation in the United Kingdom to buttress support, namely the Companies (Disclosure of Address) Regulations 2009. It is important
to consider these restrictions, however, in the light of Hong Kong’s socio-economic context. First, the privacy argument submitted by the Government is unconvincing because identification numbers are for identification, not authentication, and thus should not be normally regarded as “personal data”. As it is common for individuals to share identical names, partial disclosure of identification numbers is insufficient in order to distinguish between them. According to Webb-site, a free database that compiles information pertaining to Hong Kong organisations and people for public access, approximately 1,000 individuals share the same partial identification number and may also share the same full names. The Law Society of Hong Kong explicitly states, “Identification numbers should be recorded and disclosed in full as it is a unique piece of
HONG KONG information for identifying a person.” Clearly, it is impossible to identify an individual using partial identification numbers. In any case, this argument by the Government is inherently flawed, because identification numbers are one of the only methods to accurately identify one’s true identity, and thus should be exempt from qualifying as “personal data”. The new restrictions also infringe upon press freedom, which is one of Hong Kong’s core values. Personal information published on the CR is a valuable tool for investigative journalists to uncover corruption and shady practices of dishonest companies. For example, the Secretary for Development, Paul Chan, was embroiled in the subdivided apartment scandal and this was discovered through CR documents. International media also relied on the CR in exposing financial scandals in the Mainland. Last year, the New York Times revealed outgoing Premier Wen Jiabao’s family had accumulated vast amounts of wealth during his tenancy in office, while Bloomberg uncovered President Xi Jinping’s family wealth and their web of business relationships. It is apparent that without granting the press immunity from the newly proposed restrictions, it threatens not only the freedom of the press, but also the public’s fundamental right to information. Hong Kong is an esteemed international financial centre, in part because of its free flow of information. Yet, the new restrictions undermine Hong Kong’s competitive edge, with regard to the transparency of information. A survey conducted by Hong Kong
Small and Medium Enterprises General Association revealed that 70% of interviewed SMEs opposed the restrictions, because it would become difficult to inspect the personal background of potential business partners and to check for overlapping directorships. This would deter international business collaborations between foreign companies and local SMEs. As SMEs are an important driving force to Hong Kong’s economic development, contributing over 98% of the city’s business units and accounting for 48% of private sector employment; the Government needs to take their concerns into account. Additionally, the full disclosure of board members’ residential addresses and identification numbers is an effective deterrent against commercial fraud and money laundering. The Hong Kong Association of Banks perceives such disclosure as an additional protective mechanism for money laundering, while also imposing further responsibilities on company directors. Labor unions including the Hong Kong Federation of Trade Unions, opposed the restrictions because the only means for them to contact employers in cases of company closures or where wages are in arrears, was by their residential addresses obtained via the CR. It would therefore be unwise of the Government to protect so-called “personal data” at the cost of Hong Kong’s reputation as a transparent business center. Most importantly, the 2009 consultation process for the new Companies Ordinance was inadequate. First, the media was not properly consulted. Second, the
major chambers of SMEs and submissions from three important professional bodies (the Association of Banks, the Bar Association, and the Institute of Certified Public Accountants) were unequivocally against the restrictions. Furthermore, the Government stated clearly that it was inclined to maintain the current system in its December 2009 consultation paper. However, it made a complete U-turn in its consultation conclusions in August 2010, recommending instead restrictive access to board members’ personal data. This stark reversal of policy was published immediately after the exposure of several Chinese leaders’ secret family wealth, which fuelled public suspicion regarding the Government’s real intentions. The Government’s decision to hold back the legislation has a far-reaching impact. It illustrates the paramount importance of the freedom of press in scrutinizing the Government’s activities. It also serves as a warning to the Government that the public will not accept hasty and non-comprehensive consultation. The law operates to protect public interests. With regards to the freedom of press and business transparency, the proposed restrictions are clearly against public interest. The Government’s initiative to withhold the legislation is a pragmatic step that can restore the public’s confidence toward them. Although the debate on whether the legislation should be permanently removed will continue, it is now likely that the Government will conduct a genuine and in-depth consultation before withdrawing the legislation if necessary. HKSLG · Spring 2013 · Issue 2
Impact of the Competition Ordinance on Mergers and Acquisitions Cynthia Or
ong Kong’s first competition law, enacted last June after decades of heated debate, was finally implemented in January 2013. Although it is expected that businesses will come under greater regulatory burden under the Competition Ordinance (Cap 619), many criticised the new law as being overly lenient compared to its foreign counterparts. Notably different from its foreign counterparts is the lack of merger control in the legislation. Since mergers and acquisitions (M&A) are a commonplace business activity that increases market concentration, it is an area that attracts major scrutiny in other jurisdictions. For most regulatory regimes in the European Union, Australia and even China, M&A deals are subject to the assessment and approval of a reviewing agency. This allows regulators to either preemptively block an anti-competition merger, or to demand concessions as a condition of granting approval. However, the Hong Kong Government explicitly renounced any introduction of merger controls under the new Ordinance, only maintaining the existing regulations over mergers in the telecommunications and broadcasting industries. Such omission is therefore viewed as compromising the law’s control over a substantial aspect of business activity that should be regulated by competition law. Although M&A transactions are not subject to the Ordinance, it is wrong to assume that post-merger entities also fall outside the law’s jurisdiction. They will still be subHKSLG · Spring 2013 · Issue 2
ject to the Second Conduct Rule (CR2) as indicated in section 21 of the Ordinance. CR2 prohibits undertakings with a “substantial degree of market power” from acting unilaterally to restrict or distort competition. In effect, post-merger entities will still be barred from abusing its market power to drive out competitors or limit production by manipulating prices. Like any other firm, a merged entity, if suspected of anti-competition
conduct, will also be subject to investigations from the Competition Commission, as well as the Competition Tribunal. Instead of exercising preemptive, ex-ante controls over M&A activities like other jurisdictions, Hong Kong’s regime seeks to monitor entities after the M&A to ensure sustainable competition. As outlined in the Ordinance, the CR2 aims not at barring entities from gaining market power, but at combating business activities that
hurt consumer interests. It seems that the Ordinance does not explicitly discourage the emergence of dominant market players through M&A, as long as the merged entity does not engage in predatory behaviours afterwards. The Ordinance may indeed be too lenient for allowing market concentration through M&A, but it might also have benefits. Not all M&A activities have anti-competitive motives, since many of them are prompted by economies of scale – consolidated entities are expected to enjoy streamlined production and savings in infrastructure investment. Hong Kong is a vibrant venue for M&A transactions and related leveraged buyouts, accounting for approximately 14% of total M&A volume in Asia, with an approximate total deal value of US$16 billion in 2011. In light of the level of M&A activities and the associated benefits discussed, post-merger regulation rather than pre-merger control might be more suitable for Hong Kong, since it provides the new regime with greater flexibility. Such practice is also consistent with Hong Kong’s deep-rooted laissez-faire culture and its role as an international financial centre.
C v Director of Immigration – A New Mechanism for Determining Refugee Rights in Hong Kong
n 25 March 2013, the Court of Final Appeal (CFA) handed down a landmark judgment in the field of refugee protection. In C v Director of Immigration  HKEC 428, the CFA held that the Government was under a duty to consider claims made on the Refugee Convention ground of persecution according to a “high standard of fairness”. Under the 1951 Refugee Convention, no contracting State shall expel or return a refugee to territories owing to a well-found fear of persecution on account of their race, religion, nationality, membership of a social group or political opinion. Hong Kong is not a party to the Convention. Indeed, the Government has consistently maintained that it owes no obligations to admit asylum seekers into the territory and to consider their cases. Instead, the authorities permit asylum seekers to enter and remain in the territory to file a claim with the United Nations High Commissioner for Refugees (UNHCR). Under this ‘practice’, the Government would then exercise its immigration discretion subject to the findings of the UNHCR. If an individual is not considered a refugee, then he will be deported. If it is determined that he is a refugee, then he may remain in Hong Kong pending their resettlement to a safe third country. Yet, there was widespread concern that the claims of asylum seekers were not being properly considered. As the Bar Association observed, the UNHCR screening procedure did not afford even the
most basic procedural protections to asylum seekers. Indeed in an earlier decision, Prabakar v Secretary for Security  7 HKCFAR 187, the CFA ruled that delegating the responsibility to the UNHCR to assess Torture Convention claims, without independent assessment by the Immigration Department, would not accord with a “high standard of fairness”.
In Prabakar, there was a clear legal foundation for the conclusion that the Government must assess torture claims to a high standard of fairness. In particular, Hong Kong is a party to the Torture Convention. Whilst not incorporated into domestic law at the time, the Government had elected to take the Torture Convention into account when exercising its statutory discretions under the Immigration Ordinance (Cap 115). In having regard to the Torture Convention, it was incumbent on the Government to correctly direct themselves as to these international standards, noting the “momentus importance” of the torture claim to the individual concerned. Despite Hong Kong not being a party to the Refugee Convention, this should not cloud the issue. In C, the CFA regarded the reasoning in Prabakar to be directly on
point. That is, the Government elected through its longstanding practice to take into account the Refugee Convention as a relevant consideration in the exercise of its discretions. Having embraced the interests of refugees in administrative decision-making, there was a need for the Government to provide proper consideration of refugee claims commensurate with a “high standard of fairness”. The ramifications of C will become apparent with time, although one thing is clear: the Government will have to reform its present status determination procedures, in order to properly consider claims made under the Refugee Convention. The role of the UNHCR in status determination is now also open to question. Following Ubamaka Edward Wilson v Secretary for Security and Director of Immigration  HKEC 1757, another recent CFA decision, the Government must also observe its obligations under the International Covenant on Civil and Political Rights (ICCPR), particularly not to return an individual to a country where they are put at risk of inhuman and degrading treatment. Given the inevitable overlap between claims made on torture, persecution and human rights grounds, it makes no sense for the Government to operate separate assessment mechanisms. Following C, there is a powerful case to be made for a unified mechanism that embraces the standards embodied in the Torture Convention, Refugee Convention, and ICCPR.
HKSLG · Spring 2013 · Issue 2
Interview with The Honourable Mr. Justice Kemal Bokhary Aaron Mak
he Honourable Mr. Justice Syed Kemal Shah Bokhary was one of three Permanent Judges of the Court of Final Appeal from 1997 until his retirement in October 2012. He currently remains on the bench as a NonPermanent Judge. Widely recognised as a liberal judge, Justice Bokhary’s dissenting views are regarded as valiant attempts to defend Hong Kong’s rule of law against possible threats. We met with Justice Bokhary on the afternoon of 26 February 2013 to ask him about his thoughts on judicial independence, the rule of law, and the current legal and political climate in Hong Kong.
On judicial independence One aspect of judicial independence that most people know about is the freedom of a judge to make a decision without governmental threat or favour. Sir Anthony Mason pointed out that judicial independence extends to the institutional autonomy of the judiciary. The government does not threaten the judges or offer them favours. But seeking interpretations or reinterpretations outside the judicial system adversely affects the institutional autonomy, which is an aspect of judicial independence. On interferences and reinterpretation The Dred Scott decision, where Chief Justice Taney led the majority, is a good example of what happens when politics enters judicial decision-making. It was said that Chief Justice Taney thought that the majority’s decision would help prevent a civil war, but in fact it precipitated the civil war. When you are dealing with law at the very HKSLG · Spring 2013 · Issue 2
frontiers, you are involved with policy choices. But these highly charged matters do come before the Courts, and the Courts have to make such choices. But the choice must remain judicial, and must not involve playing politics. I do not say this in relation to any particular judge, or suggest that this type of judge even exists, but theoretically you could have a judge who takes the view that a reinterpretation is to be avoided even at the cost of deciding otherwise than one would if not for fear of a
reinterpretation. You should not decide with such fear in mind. That would be to jump for fear of being pushed. I have always felt that judges should give decisions without fear of a reinterpretation. Judges should give decisions without any thought of reinterpretation at the back of their minds. I think the people of Hong Kong understand that. They understand that we have a job to do, and we do our job. That is what happens. If the Standing Committee chooses to step in, that is its choice.
FEATURE The Court should just give a correct decision. If there is a reinterpretation, there is a reinterpretation. At least the people of Hong Kong will know that the judges have played it straight. I have always said that the fact that there was reinterpretation shows that it is a straight game because it proves that there was no collusion. Asked by the Government, the Standing Committee chose to reinterpret. It would be very bad if people begin to suspect that the judges are deciding just so as to avoid a reinterpretation. The existence of Hong Kong as a Special Administrative Region is the result of the Mainland’s respect for Hong Kong’s unique nature. Having gone to the trouble of creating a Special Administrative Region shows that the Mainland is commited to respecting Hong Kong’s situation, and people should give Beijing credit for that. If Beijing ever says that judges have erred in law and reinterpret the law, then that cannot be helped. But we must never give the impression that the judges are trying to avoid a reinterpretation at all cost. On the rule of law John Philpot Curran, an 18th century Irish advocate, said that “the condition upon which God hath given liberty to man is eternal vigilance”. This is an idea you see put into practice even in mature and liberal democracies, which is that people have to be eternally vigilant. You cannot bury your head in the sand. Even in mature democracies, people are astute to examine anything that might affect fundamental rights and freedom. We in Hong Kong should certainly do the same.
Perfect democracy may be unattainable. But if you have a reasonable way for people to participate effectively in democracy, probably with a balance between representative democracy through elections and some direct democracy on certain issues through referendum, then I think that is acceptable. A good lesson to learn from America is that if you look at the United States Supreme Court, whatever the differences that arise between the liberal and conservative judges, institutional respect for the Court still prevails. I hope always to see this sort of respect for our Court as
an institution, despite differences in people’s political opinions. Also in America, you can see the Court progressing very much by way of a dissenting view becoming the majority view. There were dissents in Dred Scott v Sandford, in Plessy v Ferguson, and in Lochner v New York, where there was a famous dissent by Mr Justice Holmes. Dissents do not destroy a court, but rather point the way for future decisions. No one should ever, however much they agree with a dissent, regard the dissent
as an attack on the Court as an institution, but only as a view of what it is hoped that the Court would do in the future. By and large, Hong Kong people are quite prepared to support the rights of minorities, even those contrary to their own interests. They respect the law. There are a lot of people who come from very privileged positions who do not need constitutional rights or democracy to protect them, yet they support constitutional rights and democracy. Sir David Li is a good example of this sort of person. I think there are certain aspects of
Hong Kong’s arrangements that are good examples of the rule of law in action. But democracy in Hong Kong may always be limited for the simple reason that while the election of the Legislative Council will move towards universal suffrage, the selection of the Chief Executive will involve nomination. Even so, a Chief Executive has to get on with the Legislative Council to get all his or her policies implemented effectively. I think there is some prospect of real democracy in practice.
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The law does accord a lot of procedural protection, which the guilty and troublesome can exploit. It is not as if government policies being challenged in court never causes inconvenience. It might do so. The system is not perfect. I think a lot of people think that some of us are starry-eyed about the rule of law and legal process. But in truth these are necessary safeguards. The people who believe in the rule of law realise that some inconvenience must be accepted to safeguard the rule of law. It is the price we must pay. We have a system of social welfare without vetting as stringent as some would like. If it becomes more stringent, there is no doubt that we will weed out some of the undeserving. But we would subject a lot of honest people in need to strain and delay. I think the ideal is difficult to attain, but we must work towards it. Article 23 is directed to let Hong Kong pass the laws concerned rather than having them passed in the Mainland. But Article 23 has become a focus of what the Hong Kong people worry about. In what sense has the Mainland been threatened, and in what sense has Hong Kong been threatened, by the absence of this legislation so far? Could someone really threaten the security of the State without breaching some existing law? If people want to undermine the Government, they would have to take some active steps. These active steps, such as resorting to violence, would put them in breach of the existing law. People are afraid of the ramifications of Article 23. You cannot talk people out of this fear. HKSLG · Spring 2013 · Issue 2
On signs of a “storm of unprecedented ferocity” over the rule of law and the judiciary It is one thing to say that the Court has made a wrong decision. Anyone is free to say that. But if you say that the Court does not understand the relationship between Beijing and Hong Kong, then that sounds like calling for reinterpretation. If this storm breaks, it will be of unprecedented ferocity. I see the clouds on the horizon, but I do not say the storm will definitely break. Maybe there will not be a storm, but the clouds are there. If those clouds turn to storm, I think it would be more than we have ever experienced in terms of a blow against the rule of law. I have stated on numerous occasions that I have some anxiety as to tomorrow, but faith in the day after tomorrow. A big part of that is my faith in the young people of Hong Kong. But it is not only faith
in young people, but also faith in ‘one country, two systems’ and in China itself. Because you cannot be optimistic about Hong Kong if you are wholly pessimistic about China. If you are totally pessimistic about China, then I do not see any basis for optimism over Hong Kong. I think Hong Kong has gone much further than the rest of China when it comes to court-enforced human rights. But remember that there was a time when if you even mentioned the word ‘law’, you would get an adverse reaction from the Mainland. Now the concept of ‘law’ is well-respected in China. There was a case where a factory was polluting a river, and the Mainland courts made orders to stop them. Those orders were ignored. The Government took matters into its own hands, and appointed a
FEATURE manager who then stopped the pollution. That is not how we do it here. But it worked there. I have great faith in China, but the problem of corruption has to be tackled. If the problem of corruption is not tackled, then China will just fade to her former lack of glory. If corruption is tackled, then China will be a very great country indeed. If I did not have faith in the Mainland, then how could I have faith in Hong Kong, realistically? There may be storms, but you have to believe that the ship can weather the storm. If you think the ship cannot weather the storm, you might just as well jump off and drown straightaway. But I do believe that these problems will be overcome by confronting them, not ignoring them. And I believe we can do it. Why not? There are a lot of greater problems elsewhere in the world which we do not face. Let us not be fearful. We have problems here, but why should we not be optimistic in tackling them? On Hong Kong’s relationship with China I have always felt that the decision to have the Hong Kong Special Administrative Region and ‘one country, two systems’ was made at the highest level at the heart of Beijing. There is genuine respect for Hong Kong views. Wisely, there were second thoughts after strong reactions to things like national education and Article 23. This is a sign of wisdom and tolerance on the part of the Mainland. It is not a sign of weakness. If you take something that truly belongs to ‘one country’, and allocate
it to ‘two systems’, you will completely skew the relationship under the ‘one country, two systems’ principle. The things belonging to the ‘one country’ component of the principle are obvious. They are not things likely to come before the courts. The real danger is of allocating to ‘one country’ things that belong to ‘two systems’. In every developed society, there will always be a mix of admirable and unfortunate characteristics. In America, Marbury v Madison was decided by the Supreme Court long before judicial review took root in Hong Kong. On the other hand, it was not until 1865 that slavery ended there. Yet, Americans might long before that have been against Britain’s colonisation practices. You should not brand any country as full of problems or suggest that it has no problems at all. So if you see something that you do not like about the Mainland and you criticise it, that is not an attack against the country. It is simply a suggestion for improvement. That is not unpatriotic. What happened on 4 June was not between people who were patriots and people who were not. So I
think it is necessary to debate certain things without accusing each other of being unpatriotic. True patriotism is working to improve the country. I do not think Hong Kong people in general are promoting antiMainland sentiments. In fact, frequent demonstrations are a sign of faith in the Mainland. They show that people believe that making their views known can be effective. Advice to aspiring barristers and judges My advice is to see as much of a barrister’s work as possible and decide, on an informed basis, whether it is the life for you. If it is, put in every ounce of effort to make yourself useful to the law and the public it serves. In the course of time, it will become clear to you whether going on the bench is the right course for you. Life at the bar and on the bench is extremely onerous, but it is a great opportunity to be of valuable service to the community. Therein lies its greatest reward.
HKSLG · Spring 2013 · Issue 2
專訪中國維權律師滕彪博士 Jason Shamdas
權是香港重要的核心價值之一。回歸後，香港和內地在社會民生方面的聯繫日益緊密，中國 內地的人權現狀也越來越受到港人關注。本報有幸請來中國維權律師滕彪博士，聽他分享中 國人權的發展現狀及維權工作的使命。
問: 當初爲什麽想成為維權人 士？有什麽促使您加入這個行 列？ 答: 其實也不是說故意想當。 從1991年到2002年期間，我在 北大法學院完成了本科、碩 士、博士的學習，2003年就到 中國政法大學工作，然後很快 就碰上了孫志剛事件。孫志剛 事件是我從事人權工作的開 端， 之後逐漸就成爲一個維權 人士。其實我上學時並沒有認 真計劃要從事這項工作。 問: 很多人都知道您跟陳光誠 有聯繫。您曾經幫助過他而且 你們的感情也相當深厚。可以 跟我們分享一下你們是如何認 識的嗎？ 答: 2005年7月他來北京找我， 拿著一份材料，題目叫《臨沂 計劃生育株連十族》。他是一 個盲人，自己也懂法律，曾經 幫助那些被強制墮胎或強制結 扎的受害者起訴當地政府。那 時，他曾試圖找媒體反應這個 問題，但就是沒有媒體敢介 入。他覺得力不從心，所以就 到北京去找律師，希望律師能 夠到臨沂去。 我是那個時候認識他的。當 時看完他帶來的資料，聽他 講了情況後郭玉閃、涂畢 升和我就去臨沂做了很多 調查，然後寫了一個調查 報告放到網上，反應非常 強烈。後來西方媒體就開 始關注陳光誠事件了。 HKSLG · Spring 2013 · Issue 2
問: 可是陳光誠後來4年都被關 在監獄裏？ 答: 對。在臨沂跟他分別的時 候我就跟他說，我們回去會寫 一個調查報告，但可能會給你 帶來麻煩，我叫他慎重考慮一 下要不要發這份報告。但他非 常明確地說：“如果我們不想 讓更多人知道的話那就不會來 找你，找你就是想要更多的人 去了解情況。” 我們三個從臨沂回到北京之 後，直到2006年3月16日，陳光 誠和他的家人都一直被軟禁。 有些人試圖去探望他們可是都 被趕出來、被打，然後相機什 麽的都被搶了！後来他被抓， 有3個月的時間都不知道被關 在哪裡，6月12日，陳光誠正 式被逮捕。隨後，很多維權律 師就立刻趕過去調查證據、 為他提供法律援助、開庭等 等。但每一次去，總有律師被
打或相機被搶之類的事件。 有一次是李蘇濱律師和李勁松 律師兩個人，本來要開我的 車，但後來租了一輛車就開過 去了。那些看守一看到就把車 掀翻了！當時那兩個律師還在 車裏面！他們真的把車子九十 度立了起來！ 還有一次李方平和李勁松他們 從北京再去臨沂，車剛到臨 沂，就上來了一些不明來歷的 人，這些人把他們兩個打了一 頓，其中李方平的頭也給打破 了！還有許志勇博士準備替陳 光誠在開庭時當辯護，結果就 被當地警察抓了，說他涉嫌偷 東西之類的，一直到開庭結束 之後才把許志勇釋放。 另外有一次開庭我想去看，但 在法院大門口就被人攔住，幾 個人過來把我弄倒，兩部手機 也被他們搶走。後來更來了一
CHINA 車帶鋼盔帶槍的武警把我抓起 來送到一個派出所，直到開庭 結束後才放了我。後來的事情 大家都清楚，（陳光誠）被判 刑4年3個月，即使出獄之後還 是沒有獲得自由。 問: 爲什麽您覺得中國政府， 哪怕只是一個像臨沂這樣的小 地方，當地官員總是不愿意公 開自己的錯誤或問題？ 答：首先，地方政府侵犯人權 的情況非常普遍、非常嚴重， 並不局限於山東臨沂一個地 方。臨沂附近的城市在處理計 劃生育的過程中也面臨著類似 的問題。其他城市在工作中也 常有打死人、導致一些人自殺 或是導致胎兒和嬰兒死亡的 事件。其他的包括冤案、拆遷 等等侵犯人權的情況也一直存 在。如果容許去公開這種侵犯 人權的現象，那就不得了了。
“總要有人去承擔這個 責任，總要有人在中國 繼續捍衛人權、推動法 治。我們作爲知識分 子、作爲法律人士，是 義不容辭的。” 問：我們在網絡上看過您和陳 光誠曾經通過電話，您也積極 地游說他離開中國。最後他到 了美國，其實對於中國的維權 人士來説，美國是不是你們最 後的退路？只有到了美國，你 們才可以得到安全？ 答:也不是說美國是最後的退 路，這個問題分兩個層面：首 先對於陳光誠來説，第一他是 盲人、第二他已經被政府迫害 得非常慘。一個盲人被關在監 獄裏四年多，出來之後還被軟 禁，受的監控比監獄還嚴。他 的家人包括他兩個孩子都犧牲 巨大，這個時候我作爲他的朋 友而不是說一個旁觀者，我當 然希望他能夠到一個自由安全 的地方去。我不希望他留在國 内作出更大的犧牲，尤其是當 他有機會逃到（美國）領事
館。他有一個那麽接近美國的 機會，我當然極力主張他到那 裡去。他離開後也可以繼續學 習、寫回憶錄等等。
他們在工作中能夠看到越來 越多的人站起來、看到民 間的力量一點一點地生長，這 就是希望。
第二個層面，對於維權人士來 説，只要留在國内繼續做事就 不可能是安全的。每一年都有 人權工作者被抓進監獄、被勞 教。嚴重的被軟禁、被毆打、 酷刑、綁架，那輕一點的就是 家人被騷擾、丟工作、律師証 被吊銷等等。我們既然選擇做 人權這方面的工作就應該去承 受面臨的風險。總要有人去承 擔這個責任，總要有人在中國 繼續捍衛人權、推動法治。我 們作爲知識分子、作爲法律人 士，是義不容辭的。
問: 當你們看到陳光誠等朋友 為民運付出了那麽多，到最後 也不能在中國立足。對你們還 留在國内打拼的人權工作者會 有負面影響嗎？ 答： 1989年的時候走了一批， 這三、四年離開的人又多了。 有些律師、作家像廖亦武、維 權人士像高燿潔、做研究的像 張博樹和王天成等等都走了。 第一，這是他們自己的選擇， 他們認爲在國内沒有繼續做事 情的空間，比如説感到自己和 家人受到極大的威脅，他們 選擇流亡也是無可厚非。第 二，對於沒有走的人來説，
也未必有很大的負面影響。 據我了解，還留在國内工作 的人他們都是比較樂觀的。
答：他一直說他要回來。幾周 前（2012年十月）跟他在美國 碰過面，他很有信心在不遠的 將來會回到中國。 問：他現在還在紐約大學嗎？ 他的日常工作是什麽？ 答：對。他在那裏當一個特殊 學生，每天就上課和寫傳記。 因爲他相對比較有名，所以找 他演講和採訪的人也不少。
“……還留在國内工作 的人他們都是比較樂觀 的。他們在工作中能夠 看到越來越多的人站起 來、看到民間的力量一 點一點地生長，這就是 希望。” 問：對於民主，西方社會會適 時對中國施加壓力。您認為這 是出於正義， 真正想捍衛中國 人權價值，還是另有所圖？ 答：這需要不同層面的分析。 中國內地的知識分子往往把美 國當作是自由民主的一個符 號。美國的自由民主制度的確 比較成熟，但實際上美國在 目前國際關係當中也會被自己 的國家利益所限制。一個政治 人物必須對自己的選民負責。 在這種情況下，我們也看到很 多例子，無論是美國還是歐洲 國家，他們的一些決策會先考 慮自己國民的利益或選票而忽 視了國際人權或是普遍人權的 價值……這也是很掙扎的。但 是我覺得西方國家也應該認識 到，任何一個獨裁制度或是專 政制度威脅到的不僅僅是本國 人……
HKSLG · Spring 2013 · Issue 2
問：您在公開演講中曾經提到 過國家的“公權力”和人民 的“私權力”是有深層次的矛 盾。中國在一黨專政的前提下 很難解決這個不平衡。對於建 立民主社會，您覺得中國現在 準備好了嗎？我們始終有十三 億人口，有太多社會和經濟的 問題尚未解決，很多沒有受過 教育的人民對權力或是人權的 認知還是非常淺薄。在這種環 境下貿然推行民主會讓社會變 得更亂嗎？ 答：這個僅是官方的理論。政 府告訴我們因爲民衆的素質還 不夠所以推行民主後一定會 引起社會混亂、天下大亂，而 且沒有一個組織能夠像共產黨 那樣管理好中國。要不就是不 要民主，要不就是民主要慢慢 來，等民衆素質提高之後再來 實行民主。
“任何一個獨裁制度或 是專政制度威脅到的不 僅僅是本國人……” 不過，這些理論都是很容易反 駁的。我們看看歷史，有些國 家在二、三百年前就已經實現 民主。難道二、三百年前人的 素質會比現在的人高嗎？所以 用民衆的思想或素質來反對民 主是不成立的！民主要求的是 民衆設計自己的公共事務，讓 他們有發言權、有投票選擇的 權利。 簡單來説，一個村子誰當代表 或者誰當管理者最能夠符合村 子的利益是每個村民都知道的 事！如果一個村民知道自己的 地是不能夠被隨便搶走的，那 他就已經完全具備實行民主的 素質。 相反，一些知識分子、大人物 等，他未必知道這個村子該如 何管理，他也可能不會真正清 楚村子的事實環境。只有村民 才可能對自身所面臨的問題有 比較深的感受，反而不會盲目 追崇從上而下的決定。 HKSLG · Spring 2013 · Issue 2
問：您也提過唯一解決權力不 平衡的方法就是推行民主，基 於中國現在的政治環境，民主 可以如何實際地推行呢？ 在一 個如此不民主的社會，人權會 繼續衰退嗎？ 答：簡單來説，沒有民主體制 的話，人權就不能夠得到很好 的保障。如何在一個沒有民主 的制度下推動民主、在一個缺 少自由的制度下爭取自由，那 就是我們每一天日常工作當中 在奮力爭取的事情。
內地爭取民主的性質不同，但 兩者卻緊密相關。內地的知識 分子同時也應該關注香港爭取 民主的努力、關心香港和了解 香港人所面臨的困境。 問: 基於網絡普及化，民衆廣 泛使用像微博的媒體平台去發 聲，這有助於推動中國的言論 自由。對於新聞自由您又覺得 中國的現狀如何?
“香港無論在回歸前或 後都對中國的民主起到 不可替代的作用……” 我不同意整體主義的想法，不 是說如果大的公權力和政黨結 構不變那其他的就沒有意義。 因爲那些不是一夜之間就可以 轉變的，我們必須在民間積累 民衆對民主和法制的觀念，這 是重要的。不能以民衆的素質 來反對民主，同時也不能否定 民衆教育、法制意識和推動民 主理念的重要性！所以我們做 的工作一方面會在具體的案件 中維護公民權利和提高他們的 法制意識，另一方面也會盡量 通過這些案件和群體事件讓更 多的人去參與爭取自己的合法 權利。 問：您覺得中國內地跟香港的 民主自由是息息相關嗎？ 答：香港無論在回歸前或後都 對中國的民主起到不可替代的 作用。回歸之後，我們看到了 很多，比如香港的維園紀念活 動、2003年的23條遊行等等。 香港ＮＧＯ和媒體對於内地問 題的關注、23條和國民教育遊 行，這些都反映出越來越多的 香港人認識到香港的命運與内 地的民主化是不可分割的。 當然，香港自己也有民主化的 問題，像議會選舉、功能組 別、爭取雙普選……雖然這跟
答: 中國應該是世界上新聞最 不自由的國家之一。RSF (Reports without Borders) 作了一個 全世界的比較研究，中國的新 聞自由指數往往都排在倒數第 六、第七、第八名。中國還沒 允許私人辦電台、電視和報業 等等。每年還有很多記者和作 家因言獲罪！中國對於每條新 聞都會進行非常嚴格的事前審 查，對於網絡的過濾和審查也 都非常嚴格。
“……沒有民主體制的 話，人權就不能夠得到 很好的保障。” 從製作層面上看，新聞與言論 自由的狀況的確非常差，但是 也要看到兩點：第一，從技術 上來講，像微博這種社交媒體 的控制，政府是不可能做到像 電視控制那麽嚴厲。在互聯網 上儘管有過濾、審查和控制， 言論自由還是相對比較高的。
CHINA 第二，對於傳統的媒體尤其是 報紙雜誌來説也有一些促進自 由的力量。我主要講的是市場 競爭的力量。沒有人願意掏5 塊錢去買人民日報，但是很多 人願意掏錢去買南方周末、南 方都市報。這種競爭是拓寬媒 體空間的主要因素。 更值得一提的是新聞媒體從業 者的自由化，這就跟律師和大 學教師一樣。無論一所大學 管得多嚴，自由化的教師總是 能發揮一定的作用。像南方報 刊，官方能夠換它的編輯、領 導，甚至因爲一些報導去處罰 它，可是從業者的立場和觀念 還是自由的存在，也會繼續給 傳統媒體帶來一定的自由度。 問：作爲北京興善研究所的所 長，您當初成立這個機構的目 標以及原因是什麼？ 答：最早在2007年我去了法國 參加世界反死刑會議（World Congress against Death Penalty） ，然後我就覺得中國也需要一 個機構去推動限制和廢除死刑 的工作，尤其中國是判處和執 行死刑最多的一個國家 。中國 的死刑數據是不會公開的，但 我個人估計起碼佔全世界死刑 的百分之八十五！
“……民主要求的是 民衆設計自己的公共事 務，讓他們有發言權和 有投票選擇的權利。” 在中國廢除死刑這條道路非常 漫長，必須要提前做工作。而 這個工作不僅是法律層面上 的，也包括整個社會，從文 化、哲學、思想上來認清爲什 麽要廢除死刑。 所以大約在2010年5月，我們就 算是正式成立了興善研究所， 開了一個網站，有了辦公室， 可是還沒有申請註冊。後來在 申請註冊的過程中我就被抓 了，被關了起來。雖然在國内 做NGO或是這些廢除死刑的工
作非常艱難，但我覺得還是應 該繼續推動下去。 問：今年3月全國人大通過了 《刑事訴訟法修正草案》，裏 面首次提到了憲法所謂“尊重 和保障人權”的理念。在法規 上我們是多了這層保障，可是 實際上可行嗎？ 答：2004年的時候國家就把“ 尊重和保障人權寫入了憲法” ，但我們也沒有看到在人權方 面有什麽實際性的進步。把保 障人權寫進《刑事訴訟法》從 理論上來説是有一定意義，因 爲中國的刑事訴訟制度，包括 刑事司法實踐最重要的理念就 是打擊犯罪。因此，在刑事訴 訟的過程當中往往會忽視嫌疑 人和被告人的人權 。 從理論上講，把人權寫進《刑 事訴訟法》裏是有進步的，可 是因爲整個刑事制度以至中國 的整個司法制度根本有結構性 的問題，所以我們也很難指望 這個新的《刑事訴訟法》通過 後能為人權事業帶來實質性的 好轉。 問： 在中國沒有任何規範和審 查律師和法官的政策，曾經聽 聞一些不是本科專業的人士都 可以因爲不同的原因而做到像 法官這麽重要的職位。法律制 度在這樣的一個環境下可以怎 麽去執行法治的理念？ 答：首先內地是沒有司法獨立 的。 中國的法院都是被領導和 黨委控制，而且觀念上法官們 也不覺得他們是應該獨立的。 他們覺得法庭只是一個衙門， 民衆也認爲法院是一個衙門， 法官不也就是官！法院跟公安 局、工商局、民政局一樣！對 於政府的管理，比方説一個縣 委書記，他也會把法院當作一 個下屬部門。 雖然說中國有一個“一府兩 院”的制度，就是人民法院、 檢察院跟人民政府是平行的，
但在實際的理念和操作上，很 多財政、人事安排和具體行政 工作都往往把法院當作一個行 政部門。法官很多時候基於要 服從政府還有黨的理念，反而 不會把自己在大學裏學到的理 念融入到工作中。 我覺得一個法學院學生在受教 育的時候無疑會接觸到法制的 意識，包括人權、法治和民主 觀念。我想有幸受到比較正規 法律教育的人會對這些法制意 識有比較深層次的理解，而這 些想法也會對他的行爲有一定 的影響。盡管如此，這種理念 和理想的力量往往都無法抵擋 現實和官場潛規則的洪流。例 如，領導交給他一個案子，叫 他應該如何判決，如果他不聼 這個領導的意思，那麽他的獎 金和升遷等等都會受到影響。 這種道德困境不光是法官，還 有一些官員也都會面對：假如 他還有良知或理念，他就會經 常遇到這種無奈。聽領導的 話，他就會面對内心的掙扎； 聽從自己的良心，現實的利益 就會受到負面影響，他甚至無 法繼續在這個官僚體系中繼續 生存下去。 問：作爲維權人士，你們經歷 和犧牲了很多，您會希望維權 運動可以延續到下一代嗎？如 果您的小孩說他要繼續您的理 念，您會鼓勵他嗎？ 答：我希望下一代不需要做這 麽多的人權工作。每一個國家 都會有人權問題，但是最起碼 也要有一個人權制度的及格 綫，像最基本的新聞自由和司 法獨立。實現了這些當然還是 會有其他問題， 可是那個時候 人們就不會因爲要爭取自由等 最基本的人權而被綁架、被判 刑。在一個正常的社會中，從 事人權工作的人不應面對那麽 大的風險，不應時常受到坐牢 或綁架的威脅。
HKSLG · Spring 2013 · Issue 2
The Real Purpose of Internet Realname Registration: Information Safety or State Censorship?
n 28 December 2012, the Standing Committee of China’s National People’s Congress (NPCSC) adopted the Decision on Enhancing the Protection of Network Information (the Decision). The Decision requires Internet users to reveal actual details of their identity to Internet service providers, and requires Internet companies to delete prohibited posts and report illegal online activity to governmental authorities. The supposed purpose of the Decision is to “ensure Internet information security, safeguard the lawful rights and interests of citizens, legal entities or other organisations and safeguard national security and social public interests”. However, a broader concern is that the tighter Internet policy embodied in the Decision may further burden the already restricted freedom of expression in China. Many individuals in China are wary of the Decision and suspect that the real intention behind it is not what Chinese officials claim, but rather it is to extend the control of the authorities to monitor online activity. Furthermore, the Decision coincided with the dismissal of more than ten officials last year due to their involvement in a series of scandals which were exposed on Weibo (a Chinese micro-blog). Therefore, it is feared that the bottom-up anti-corruption campaigns by Internet users will become untenable because corrupt officials may persecute online whistle-blowers. HKSLG · Spring 2013 · Issue 2
Besides exposing alleged corruption cases, Weibo and other social networking platforms are also used to promote social and rights activism in China. A well-known example is the Yihuang Incident in 2010. In this case, two sisters were planning to travel to Beijing to petition against the forced demolition of their house, but were arrested by local government officials at the airport. Fortunately, this incident was exposed after a local reporter posted the sisters’ text messages online for help. These were reposted many times before drawing the attention of mainstream media, and were eventually deleted. Only two days later, the responsible local officials were investigated and later dismissed. The Central Government may have wielded
its influence in this incident. In an effective way, it is clear that social activism through Weibo is a serious concern to Chinese security forces. Besides China, many countries have Internet-related legislation, though few have mandated the verification of Internet users’ identity. The South Korean Act on Information Protection is an example often referred to by Chinese state media to bolster support for realname registration in China, but the media conveniently ignores its highly controversial status even in South Korea. In recent years, hackers have attacked many large South Korean sites, causing a major leak of personal information that has affected millions of online users.
According to Chinese official media, the information leaks in South Korea were caused by an incompetent information protection system. Its inefficiency and susceptibility to risks were recognised as major flaws of the real-name registration system in South Korea. Indeed, the Chinese Government appear fully confident in their ability to build an ‘Information Protection Wall’ compatible with the ‘Great Firewall of China’. However, it would be impossible to operate this information protection system flawlessly, because the online name verification in South Korea only applied to Information Communication Service Providers regularly used by more than 100,000 people daily, whereas the NPCSC’s Decision requires every Internet service provider to be part of the real-name registration system. The sheer size of China’s population makes compliance with this Decision a major obstacle, even if it is technically conceivable.
A flaw of the real-name registration system is its restriction on the freedom of expression. Last August, the Constitutional Court of South Korea ruled that the law requiring online name verification to be unconstitutional. As the court said in its judgment, “restrictions on freedom of expression can be justified only when it is clear that it benefits the public interest”. The Chinese Government has provided several reasons to justify the
online real-name registration system. Authorities have stressed the need to regulate online illegal acts, such as the spreading of rumours, the distribution of pornography, fraud, and slander. These assertions may prima facie serve a legitimate purpose, but whether they can genuinely justify real-name registration requirements also depend on the nature of the conduct being monitored, at the very least. While ‘spreading rumours’ has been criminalised to the extent that it can ‘create social disturbance’ (尋釁滋 事), as defined by the PRC Criminal Law, this crime is ill-defined and not in accordance with the PRC Constitution or international human rights norms. Moreover, precisely because so many rules have already been introduced, the existing legal system covers private law remedies and criminal sanctions, which already gives the State ample opportunity to censor and control speech. In addition, the State has at its disposal a vast system of informal filtering of ‘sensitive’ keywords and individualised deletion of posts that are deemed undesirable. It is therefore implausible for the Government to claim that it needs real-name registration to further control ‘illegal expression’. Furthermore, it is highly questionable if the obligation to use one’s real identity can substantially reduce online illegal acts. Since the South Korean Act came into force, the reduction in slanderous posts has been insignificant, but the overall number of posts has reduced sharply. This phenomenon is explained by legal academics as the “Chilling Effect” – that is, ordinary Internet users do not dare
to use sensitive words in fear of being punished. In reality, there are cases where ordinary citizens have been punished for a single post, or for merely passing on other people’s Weibo posts. For example, in Chongqing, Peng Hong was placed in a ‘re-education through labour’ camp (one of China’s controversial administrative penalties where individuals are detained in the absence of a court conviction and are forced to perform hard labour) simply because he forwarded a picture of a black umbrella though the subtext implied that local officials had protected criminal gang members during Bo Xilai’s reign. To avoid retribution, Internet users in China practice self-censorship before posting anything, and they are likely to more vigilantly do so under the decision, which makes it easier for the Government to identify the online user. Therefore, the objective to curb wrongful acts is clearly disproportionate to the restriction on the freedom of expression. Ultimately, the real-name registration system, along with other types of network-monitoring measures in China, reflects the arbitrariness of decision-making within the Government. The real-name registration system is not only ineffective in promoting the supposed intention of the Decision, but also infringes upon the freedom of speech guaranteed in the PRC Constitution. After all, websites and social media are among the few, if not the only, platforms where individuals can voice their complaints. If we are deprived of that, what other options will we be left with? HKSLG · Spring 2013 · Issue 2
What to Expect from the Reform of Re-education Through Labour? Tiffany Hon
he closer Yu Hong approaches the police at Tiananmen Square, the greater the risk she faces of being sent to a labour camp again for disturbing the peace. Even after countless attempts, Yu Hong continued to petition the PRC Central Government for an investigation of her son’s death. The news of his death was shocking and mysterious – local officials incinerated his body the night he was found dead at his workplace. Currently in China, there are many others like Yu Hong who travel to Beijing to petition against injustices, but end up being sent to labour camps. This ‘re-education through labour’ system (or laojiao) was originally approved by the top legislative body and established in the 1950s as a non-judicial process to penalise minor convicts expeditiously and restore social order. Over time, however, laojiao has been excessively abused by the PRC police to suppress heated complaints from citizens. Laojiao has clearly failed the legality test on both local and international grounds. In a local context, the nature of the system innately violates Article 37 of the PRC Constitution, which prohibits unlawful detention. Laojiao’s flawed structure in sentencing offenders without a fair trial also violates Article 14 of the International Covenant on Civil and Political Rights, HKSLG · Spring 2013 · Issue 2
regardless of China’s reluctance to ratify the treaty. However, recent news suggests that the Government is finally considering reforming this notorious system due to social dismay. The public is now speculating about the Government’s reform strategy and hoping that it will make the system more just and effective. Some propose that laojiao should be abolished entirely. In an interview published in China Daily on 30 January 2013, Yan Zhichan, Director of the Guangdong Provincial Department of Justice, indicated that Guangdong has begun its preparatory work to become the “leading and exploratory region to stop the laojiao system”. However, such an option seems overly idealistic. The large number of minor offenders may overburden the courts and correctional facilities in China should laojiao be discontinued immediately. Others suggest that any reform will be meaningless unless the Government sets bars on the unrestrained powers of the police. It is arguable that laojiao is necessary, but it
definitely requires greater legitimacy to justify its existence. Imposing judicial oversight will put a halt to the illegality of laojiao, albeit incurring greater costs. This can be achieved by requiring police officers to submit a brief report on the offender’s alleged offence and have the judge decide on two issues: whether the alleged offence is lawful and, if so, whether or not a trial is needed before sending the accused to a labour camp. However, China’s judiciary is closely monitored by a plethora of administrative and judicial organs, making the judiciary weak. The suggested measure limits the power of police officers, but the extent will be limited again due to China’s inherent system. The future of laojiao is still unknown, but an outright abolishment seems impractical. No matter how ideal one envisions the reform to be, it will still be susceptible to abuse by high-level government officials due to China’s current political structure. The Communist Party’s new leader has implemented measures targeting the crackdown on corruption. If successful, this may shed some light on the future of laojiao and encourage greater preservation of rights and fairness, specifically the irreversible deprivation of freedom.
Kaesong: a Keystone Bridging North and South Korea Jack Bates
nvestments are the core of a capitalistic society and serve as fuel to drive the economy forward. However, investment incentives are accompanied by the necessity to part with the immediate benefit of one’s money. The potential drawbacks of an investment can be sizeable in nature and none may be more significant than those located in the Kaesong Industrial Complex (KIC) at the border of North Korea. The KIC is a joint South-North project that commenced in December 2004, allowing South Korean companies to settle and employ cheaper labour from the North. It is located at the border between the Republic of Korea (ROK; South Korea) and the Democratic People’s Republic of Korea (DPRK; North Korea), and its creation and continued existence reveal a diversion from usual forms of investment incentives. Indeed, South Korean firms may find economic advantages in the prospect of investing in the KIC, such as cheap labour from the North and tax incentives from the South. However, private investors still choose to invest in the North, despite sacrificing certain privileges, such as the non-inclusion of DPRK-made products in the KORUS Preferential Trade Agreement. Additionally, over the past two years, a majority of South Korean firms out of the 123 present in the region have reg-
istered significant net losses. Many companies have complained to South Korean officials about wilful departures of their North Korean employees, mainly for marriage or military service reasons. These sorts of complications hindering the productivity of the KIC are becoming more frequent. Further complicating the matter is North Korean authorities’ requirement that workers should receive severance pay, despite their voluntarily resignation.
A recent development in the legislation covering the region has made it even more unprofitable to set up factories in Kaesong. In August 2012, the DPRK Government enacted a law regarding taxation of the firms present in the KIC. As of October 2012, swift implementation of this new regulation has led North Korean authorities to levy up to US$160,000 on eight of the
largest firms in the KIC. Officials from the North have put pressure on the Unification Ministry in Seoul to urge firms to comply with the new policy, despite the Kaesong joint-venture agreement between North and South, which requires both parties to consent to any change in regulation. The North is also threatening to limit access to the region should the companies not comply. The KIC’s continuing existence, despite obvious investment drawbacks, is due to its unique political nature. It could be argued that the KIC is simply a gift from the South to the North in the same spirit as the 1,001 cows sent across the border in 1998 by Chung Ju Yung, CEO of the Hyundai Industrial Group at the time. The KIC is crucial to the pursuit of peace in the Korean peninsula. However, given the recent heightening of tensions, the maintenance and future of the Kaesong region is unclear. South Korean managers being refused entry into Keasong, as of 2 April 2013, casts a large shadow of doubt on future relations between the two States. One can only hope that tensions will eventually relax and that labour and capital may flow between the North and South once again.
HKSLG · Spring 2013 · Issue 2
Disclosure Rules on Executive Pay in Investment Banks Tina Wong
n the last few years, the financial industry has experienced much furore regarding the high remuneration packages for top executives in investment banks. Many decisions over executive pay have been subject to increasing regulatory supervision amidst poor financial market performance and dissatisfied investor expectations. While these new regulatory standards should improve remuneration disclosure and are likely to pressure banks into making rational remuneration decisions, it is dubious whether they can effectively curb the potential exploitation of loopholes. It is also dubious whether regulatory bodies in Hong Kong are capable of enforcing these new standards. Recent trend in executive pay Scrutiny of executive pay has been steadily on the rise, especially in the wake of the 2008 sub-prime mortgage crisis and the Eurozone sovereign debt crisis. While global economic growth continues to be sluggish due to correspondingly weak financial industry performance, executive pay continues to be exorbitant. This has cast doubt on the supposed correlation between high executive pay and strong executive performance. The J.P. Morgan multibillion-dollar trading disaster is a prime example. In 2011, the CEO received US$23 million as remuneration. Given such high pay, it failed to incentivise senior management to exerHKSLG · Spring 2013 · Issue 2
cise stricter scrutiny over company activities. Eventually, due to the CEO and other chief officers’ negligence and lack of supervision, the bank suffered a multibillion-dollar loss in derivatives trading in 2012. In light of this, regulatory bodies have been more active in introducing and amending regulatory standards. These regulations require public disclosure of detailed information regarding the remuneration of all directors and executives, with the aim of increasing transparency and promoting market discipline. Hence, banks are under pressure to give credible justifications for their remuneration decisions, so as to avoid further public backlash.
In the United States, strict regulations on compensation disclosure have been introduced. These include the Executive Compensation and Related Party Disclosure rules prescribed by the U.S.
Securities and Exchange Commission (SEC). These rules require a bank’s full board of directors to approve and be legally responsible for the proxy statement’s report on pay practices. In revising the disclosure rules in 2006, the SEC also required the submission of a Compensation Discussion and Analysis (CD&A) template, which should provide investors with a clearer and more complete picture of the company’s remuneration practices. Accordingly, the CD&A should reveal specifically how a company arrives at executive remuneration decisions and policies. Similarly in Europe, the EU Commission has also recommended that publicly traded companies disclose their policies on executive remuneration, as well as their executive pay structure. Although investments banks in Hong Kong typically follow the remuneration policies of their headquarters, they are still subject to Hong Kong disclosure rules. To improve supervision over the remuneration systems of authorised institutions (AIs), including investment banks, the Hong Kong Monetary Authority (HKMA) issued the Guideline on a Sound Remuneration System, in Part 3 (Disclosure on remuneration) of the Supervisory Policy Manual, in 2010. The Guideline requires AIs to disclose information on their remuneration systems and the
INTERNATIONAL aggregate data on remuneration for senior management and key personnel in a timely manner. Potential exploitation of loopholes in the regulations Despite regulations requiring stricter disclosure of compensation policies, it is unavoidable that banks will exploit loopholes. SEC Chairman, Christopher Cox, stated that companies have often found ways to disguise how much they really pay – through lucrative severance packages (golden parachutes), stock options, and executive perks. It is unsettling that some companies may not be disclosing full information regarding compensation, even though it is currently required by regulations to be disclosed. Bank executives are worried about disclosing too much regarding their remuneration plans under the disclosure regulations, and thus have found loopholes to exploit. Such exploitation is rampant in the United States. For example, the SEC rules require remuneration committees to reveal the financial targets they use to set annual bonuses and long-term incentives, in hopes of reassuring investors of how they link pay to performance. However, if including those details may result in a competitive disadvantage, companies can choose to exclude them in their proxy statements. The SEC has ignored this loophole, allowing companies to potentially use this “competitive disadvantage” to the company as an excuse to shield them from potential liabilities for failing to disclose the required information. According to the consulting firm, Towers Watson, not all firms in the United States disclose pay tar-
gets in their proxy filings, although there are an increasing number of complying firms (i.e. 68% in 2008 as opposed to 54% in 2007). Consequently, there is still considerable doubt as to whether all banks can really adhere to the remuneration disclosure requirements.
pointment, the CEO of HSBC still pocketed a 33% pay rise. This case raises concerns that even when disclosure rules are enforced and complied with, such regulations have a negligible impact on compelling banks to make justifiable remuneration decisions.
Effectiveness of rule enforcement
In Hong Kong, it is questionable whether the HKMA has the power to vigorously enforce regulations on investment banks. Although the Guideline imposes a duty on banks to disclose relevant remuneration information to the public, it is non-statutory and thus lacks the force of law. Compared to the strict CD&A requirement that is subject to liability provisions filed under the SEC, the HKMA Guideline is undoubtedly more lax. This will likely undermine its effectiveness in deterring wrongful disclosure, loophole exploitation and irrational remuneration decisions. To improve this situation, an adequate solution will most likely materialise when the 2013 Banking (Disclosure) (Amendment) Rules (Cap 155M) is passed. These rules suggest imposing statutory liability on banks to disclose the extent of compliance with the Guideline.
Disclosure rules are intended to provide investors with a more comprehensive understanding of an investment bank’s remuneration scheme for senior management and key personnel, and are likely to pressure investment banks into making rational remuneration decisions. The newly enforced regulations have, to a limited extent, led to a change in the behaviour of companies’ remuneration committees. For example, shortly after the introduction of the Executive Compensation and Related Party Disclosure by the SEC, 17 Standard & Poor’s 500 Companies announced plans to eliminate or reduce tax reimbursement on golden parachutes. However, there are some notable cases where banks have flagrantly failed to comply with disclosure rules. In 2012, HSBC set aside US$1.9 billion to settle moneylaundering probes in the United States, instead of holding its executives accountable for corporate governance problems and the bank’s disappointing performance by adjusting their remuneration practices. On 4 March 2013, HSBC disclosed that 204 employees were each paid more than US$1.5 million, compared to the 192 employees who received more than this amount in the previous year, despite the 6% drop in profit before taxes. To the public’s disap-
Conclusion The new stricter regulations should improve transparency and shareholders’ scrutiny of investment banks’ compensation practices. However, the success of these regulations is contentious. It is still uncertain whether all investment banks can fully comply with the disclosure mechanisms, and this underscores the public’s concern that banks may exploit loopholes, thus further derogating the effectiveness of the regulatory standards. HKSLG · Spring 2013 · Issue 2
Reconciling the Enforcement of Full and Half Secret Trusts: A Re-interpretation of Blackwell v Blackwell Introduction
secret trust arises when a testator leaves his assets on trust outside of his will, relying upon the promise from the secret trustee that he or she will carry out the terms of the trust after the testator’s death. Secret trusts exist in two forms: full secret trusts (FST) and half secret trusts (HST). In FST, there is no mention of any trust on the face of the will. In HST, the existence of a trust is apparent on the face of the will, but not its terms.The universal requirement for the enforcement of FST is that the testator must have communicated the terms of the trust to the secret trustee before the testator’s death (“universal requirement”). The requirement for the enforcement of HST is the same in Ireland, Australia, and America. In contrast, English jurisprudence requires the testator to have communicated the terms of the trust before or contemporaneous with the execution of the will (the “distinction”). Much has been written by legal scholars to both criticise and justify this distinction. But instead of an ex post facto evaluation of its merits, this article argues that the distinction is an error of law by examining its underlying pedigree of authorities. Pedigree of authorities The distinction originated from Johnson v Ball (1851) 5 De G & HKSLG · Spring 2013 · Issue 2
Sm 85. In Johnson, the testator left his property in a will to two trustees until “such uses appointed by letter signed by them and [the testator]”. Before executing the will, the testator orally communicated the terms of the trust to the trustees. Parker VC refused to enforce the trust because the oral communications were inconsistent with the express terms of the will, requiring the trust terms to be communicated by a signed letter. Thus, the ratio decidendi did not lend itself to the distinction. In obiter, the judge added that the trust would still fail even if it was constituted by a signed letter after the execution of the will because “a testator cannot by his will prospectively create for himself a power to dispose of his property by an instrument not duly executed as a will”. In Blackwell v Blackwell (1929) AC 235, Sumner VC paraphrased Parker VC’s obiter in Johnson, stating that “a testator cannot reserve to himself a power of making future unattested dispositions by merely naming a trustee and leaving the purposes of the trust to be supplied afterwards”. This part of the dictum has been repeatedly cited as the leading authority for the distinction. However, Sumner VC immediately followed his dictum by adding that “nor can a legatee give testamentary validity to an unexecuted codicil by accepting an indefinite trust, never com-
municated to him in the testator’s lifetime”. Both dicta must be read conjunctively. On its own, the word “afterwards” in the first sentence could take two possible time frames: (1) after the execution of the will, or (2) after the testator’s death. But read conjunctively, the former would contradict the second part of Sumner VC’s dictum because, where communication and acceptance occurs after the execution of the will, but before the testator’s death, the trust would concurrently be invalid (because accepted after the execution of the will) and valid (because accepted within “the testator’s lifetime”). Therefore, the only time frame “afterwards” could refer to is after the testator’s death. In which case, Sumner VC’s dictum was, in fact, a restatement of the universal requirement intended to correct Parker VC’s obiter in Johnson. This interpretation is further strengthened by Sumner VC’s immediate statement following his dicta: “It is communication of the purpose to the legatee, coupled with acquiescence or promise on his part, that removes the matter from the Wills Act and brings it within the law of trust as applied in this instance to trustees.” If it is the communication and acceptance of the trust that takes the trust outside of the will, then whether or not the existence of the trust is
stipulated in the will should have no relevance in terms of its enforcement. Unfortunately, Lord Wright MR in Re Keen (1937) Ch 236 misinterpreted Sumner VC’s dictum in Blackwell as authority for the distinction. Citing Blackwell, Lord Wright MR put the distinction in concrete terms: “The trusts referred to but undefined in the will must be described in the will as established prior to or at least contemporaneously with its execution.” More regrettably, Lord Wright MR’s dictum is also the leading authority for the distinction, and was further applied in Re Bateman’s Will Trust (1970) 1 WLR 1 463. Basis for the enforcement of secret trusts Secret trusts are enforced in order to prevent equitable fraud on the testator from the secret trustee. As Lord Haldane stated in Nocton v Lord Ashburton (1914) AC 392, equitable fraud is broader than common law fraud. While the latter requires cogent evidence to prove mala fide deception, the former covers any bargains that the Court of Equity deems unconscionable. If the testator has made the terms of the secret trust clear to the trustee, and the trustee has promised to carry out the trust in accordance with the testator’s intention, then the trustee’s conscience is affected
because he knows that the testator died relying upon his promise. Equitable fraud would be perpetrated on the testator if the trustee does not restitute his conscience by carrying out the exact terms of the promise. Yet, the Courts in Johnson and Re Keen replaced the focus from fraud upon the testator committed by the trustee, to fraud on the Wills Act committed by the testator. No justification for this derailment in law has been put forward by any of the judges. Theories for the distinction David Wilde has attempted to explain the distinction on the basis that the testators of HST might have received legal advice to write down the existence of a trust on the will, so as to minimize the risk of fraud by the trustee. As such, following the same logic in Re Keen, a legally informed testator should not be allowed to flout the requirements of the Wills Act. The obvious flaw in the theory is that not all testators of HST are legally informed: a mere conjecture is untenable as the sole premise for a theory. But even assuming arguendo that such assumption is true, it remains the case that the enforcement of secret trusts is an exception to the Wills Act. To deny the testator the force of law, simply because he was aware of its existence, is nonsensical.
entitled The Secret is Out There: Searching for the Legal Justification for the Doctrine of Secret Trusts through Analysis of the Case Law, Gregory Allen has argued that the distinction could be explained because the testator imposed a trust obligation onto the trustee without the trustee’s undertaking, only procuring his acceptance after the execution of the will. As such, the trustees’ conscience would be comparably less affected in HST. But the fact of the matter remains that the trustee accepted the obligation knowing the terms of the trust. Had the trustee declined the obligation, the testator would have amended the will. In other words, although the testator did not rely on the trustee’s promise to create a trust, he certainly relied on the promise to not amend it. That promise thus binds the trustee’s conscience on which the Court of Equity seeks to restitute. Conclusion Therefore, it is submitted that the distinction in English jurisprudence is an error of law premised upon a misinterpretation of Sumner VC’s dicta in Blackwell. It is important that the distinction be addressed to reconcile the enforcement of secret trusts.
On the other hand, in his essay HKSLG · Spring 2013 · Issue 2
Sensible Gun Laws Save Lives – Application of the Second Amendment with Proportionality Introduction
ollowing the recent mass shootings in the United States of America, President Obama signed executive actions to propose new gun-control laws on 16 January 2013. Every American’s right to keep and bear arms is guaranteed by the Second Amendment of the United States Constitution. Despite its brevity, the right has long been the subject of debate within political, legal and academic spheres. This right is sine qua non for the protection of a free State, but the prevention of its abuse is also necessary. Whether a restriction is constitutional is a matter of constitutional interpretation. This article argues that Obama’s current proposal, depending on the content, may be constitutional by applying the proportionality test. Purpose of the Second Amendment It is well-established American jurisprudence that a statute should be interpreted in accordance with its legislative purpose. The Second Amendment was drafted under the backdrop of an offshore revolution against a colonial British government. As the Federalists confirmed in the 1788 ratification debates, the raison d’être of the Second Amendment was to secure a citizen militia ready to resist any form of tyrannical rule in America. ThereHKSLG · Spring 2013 · Issue 2
fore, a purposive interpretation of the Second Amendment would suggest that the legislative intent of the provision was only to ensure a free and independent State.
Amendment would invariably deprive any purpose of the provision in today’s context. Constitutional construction of the Second Amendment In Heller, the Supreme Court held that the prefatory clause of the Second Amendment, “a well regulated Militia, being necessary to the security of a free State”, merely states one purpose of the provision. It does not limit the scope of the operative clause, “the right of the people to keep and bear arms, shall not be infringed”, to purely a military context. Instead, the right is an individual right accorded to all Americans.
Living constitution But the antiquity of such legislative intent cannot be ignored. The U.S. Supreme Court made it clear in the landmark case of District of Columbia v Heller  554 U.S. 570 that it would be dubious to solely rely on history to interpret a text that was widely understood to codify a pre-existing right. Similarly, in Missouri v Holland  252 U.S. 416, Justice Holmes stated that the Court must consider what the country has become when interpreting constitutional amendments. To adopt a purely purposive interpretation of the Second
However, the Supreme Court noted that the Second Amendment is not absolute. The Executive may pass laws prohibiting the possession of firearms by criminals and the mentally ill, or impose conditions on the commercial sale of arms. There is a particular need to rebalance the right to bear arms in light of gun owners abusing such rights by infringing innocent individuals’ right to life under the pretense of ‘self-defense’. Proportionality test When there is a need to balance States’ interest against constitutional rights, the American Courts have traditionally applied
INTERNATIONAL different standards of judicial scrutiny depending on the right in question. Justice Breyer, in his dissenting judgment in Heller, rightly recognised that “any attempt in theory to apply strict scrutiny to gun regulations will in practice turn into an interest-balancing inquiry, with the interests protected by the Second Amendment on one side and governmental public-safety concerns on the other”. As such, Justice Breyer “unprecedentedly” adopted the proportionality test embedded in European jurisprudence. The proportionality test requires: (1) there to be a legitimate aim or pressing social need for the restriction; and (2) that the restriction is proportionate to the legitimate aim pursued. President Obama’s gun proposal Obama does not advocate a total ban of firearms in his gun-control proposal. His proposal, inter alia, provides for (1) criminal background checks before all gun sales; (2) limiting ammunition magazines to ten rounds; (3) reinstating the ban on assault weapons that was in place from 1994 to 2004; and (4) prohibiting sales of armour-piercing bullets. The objective of the proposal is to minimise the severity and the number of possible deaths in the event of mass shootings. Obama’s proposal is proportionate to achieve the aim First, the recent mass shooting tragedies in Aurora and Newtown reveal that there is a legitimate need to restrict the Second Amendment right to mitigate the loss of lives.
Second, criminal background checks are necessary because 40% of gun sales made by private sellers are currently unregulated. On the contrary, only 12% of gun sales are made with dealers who run criminal background checks. Therefore, extending mandatory criminal background checks to private sellers is proportional. Third, limiting ammunition magazines to ten rounds and banning assault weapons are necessary because the perpetrators in the Aurora and Newtown shootings both used semi-automatic rifles and magazines holding more than ten rounds. Re-imposing the ban is a step no more than necessary to protect citizens from gun violence. However, in regards to the armourpiercing bullets, the intended victims of a mass shooting would probably not be wearing armour. Consequently, prohibiting such bullets would be irrelevant to the concern of a victim’s life and death. The ban actually appears to contravene one of the purposes of the Second Amendment in preventing tyranny because a standing army would be equipped with bulletproof armour. Therefore, this restriction alone fails the proportionality test. An alternative justification for gun-control Guns represent power. A gun holder yields absolute power over the life of an unarmed person. Likewise, a collective mass of gun holders have the potential to overthrow any Government as recognised by the Second Amendment. This power, whether against the Government or against the community, underlies the reason why it is a sensitive
topic. Nevertheless, the age-old adage rings true: power corrupts and absolute power corrupts absolutely. Currently, the only restraint on the potential corruption of such power comes in the form of criminal and penal sentences. However, such measures merely deter the abuse by those who are sufficiently rational to contemplate the consequences of their actions. Unfortunately, as past incidents have indicated, true abusers of the Second Amendment have typically been either completely irrational or wholly apathetic about the consequences. Obama thus announced his preventive measures, restricting the abuse of power and safeguarding the interests of the community in a manner that cannot be achieved by criminal sentences alone. Conclusion A mass shooting is not just another routine episode which attracts temporary attention. It leaves behind lifelong trauma on the families of the deceased and deserves concrete action from the Government. In addition, the modern industrial military complex has evolved to such an extent that it is best to prevent tyranny by an informed and educated public, rather than allow it to happen and resolve it through a revolution. The U.S. Congress, while respecting the culturally entrenched right to bear arms honoured by Americans, should not neglect public-safety concerns. Prevention is better than a cure. Congress should therefore adopt Obama’s proposal to reduce the loss of innocent lives in mass shootings before another tragedy occurs.
HKSLG · Spring 2013 · Issue 2
Interview with Akiko Mikumo Managing Partner of Weil, Gotshal & Manges LLP Vivien Li
Profile Education: Bachelor’s from University of California, Berkeley (1978); J.D. from New York University Law (1982). Career: Joined Weil, Gotshal & Manges LLP after graduation, holding positions in New York, London and Hong Kong.
aving previously worked in New York and London, how have you found practising law different in Hong Kong? It’s an evolving practice here. The market is still in its early stages, so it’s not as developed a legal market. Historically, there has been a lot of work in things like project finance and capital markets. Now it has evolved into other kinds of transactions, like M&A – which is the area I practise in. To put it bluntly, it is not as sophisticated as New York or London, where things like that have been going on for a much longer period of time. But I think Hong Kong is moving so fast that what took 50 years in New York can be achieved here in half that time. Also, the people practising here come from all walks of life. We’re seeing more people coming from New York and London who have that experience. So I think it’s going to be very quick in terms of catching up. HKSLG · Spring 2013 · Issue 2
Most of your clients are multinationals. Have you also seen an increase in Chinese clients?
They are more comfortable with lawyers who are from the PRC and have an international background.
A lot of Chinese companies use international law firms to do major acquisitions abroad. But there’s just not enough volume of that. Obviously our firm is here to develop more of a Chinese base. We certainly hope to do more China work and represent the Chinese, but I see that will take another five to ten years.
How does Weil stand out in a city where there are so many law firms vying for the same deals?
Chinese clients are very cost-conscious. They understand that international law firms are very important and charge very high fees. However, I think they are beginning to understand that there is no such thing as bargain legal service – you pay for what you get. The PRC law firms are also beginning to increase their fees, so the spread is not as big as it once was. I think language and having the same background also makes a lot of difference to Chinese clients.
The primary focus of most international law firms has been capital markets. We don’t do capital markets; we do only M&A. We have a particular focus on doing private equity funds. So that’s one way we distinguish ourselves – we’re a pure M&A shop, which is sort of unusual. The other is the quality of service. [Clients in China] are becoming more sophisticated, so they see the value in experienced lawyers providing legal services with the right legal skill set. It’s to their advantage: it facilitates a transaction, they get better protection and that’s what they want. So that’s what we sell.
ADVICE Are the skills required of a lawyer the same as those required of a managing partner? As a lawyer of course you have to have a legal mind, and that means being organised, being attentive to detail and thinking five steps ahead. [As a managing partner] it’s more of a balance. You need to have people skills, you need to have a vision, you need to be able to lead people, you need to be able to inspire people, you need to watch the money, you have to think about where the revenue growth is going to be. But I rely on the help of a lot of people who are better than I am in various aspects of running a law firm. I don’t have all of those traits. It’s impossible for a single person to have all of those traits. So you have to get the most out of people. You have previously mentioned that women have a lot of demands placed upon them. Do you have any advice for women entering the profession? We’ve been born this way; it’s not like we have a choice. Only women can have children biologically. It’s not a burden, it’s just something you have to deal with. That may take you out of the job market, it may take you away from your job for a while and you have to make some decisions. I don’t think any one decision is the right decision. If you want to do both, fine, but I think it takes quite a lot of juggling. If you don’t want to do both, I think that is a very legitimate decision. It’s all up to that person. I think it’s the same with men. Men participate in bringing up children and taking care of the family. Not just financially, but on every level on a far more equal basis. So it’s a
lot harder for them too. What was the best advice that you were given as a young lawyer? I remember one of the partners telling me when I was a first-year associate, “You’re paid to think. Can you think?” He said, “You’re not paid to think the obvious; everyone can do that.” So that’s what I tell my associates. Of course I have already thought about the obvious and I’m not asking you to come up with the obvious answer. What do our clients pay us to do? We are paid to worry for them, which means you’ve got to think of not only what is obvious, but also what is not obvious. You have to think five steps ahead. But you also can’t be neurotic about it. You have to use judgment. You worry for them, yet they are looking to you for judgment. The other advice I would give is that private practice is not for everyone. There are so many things you can do with a law degree. You can really help people. You can really make the world a better place. So don’t think that private practice is the only measure of success. It really isn’t. Frankly, a lot of people don’t have the mindset, personality, stamina, or the interest in commercial law. You have to keep in mind what is going to keep you excited and get you out of bed. And going to a law firm to do IPOs may not be for everybody. Did you ever want to do something other than private practice? Yes, I wanted to be a public interest lawyer. When you’re young you want to help the world. However, I just found private practice more interesting. Public interest law really takes a special kind of person. It takes a lot of guts to do that sort of work.
Joining a law firm is a lot easier. I went to NYU, which is known for its public interest programmes, so a lot of people go there with that in mind. I’ve looked at what [former classmates] have been doing since and your heart goes out to them because obviously they’re not making a lot of money, but their lives are devoted to helping others. I don’t have that kind of courage. How do you strive for a work-life balance? I work all the time. If you are ambitious and you want to be successful, you just have to work all the time. That’s just the reality. Now that I am a lot older and have greater control over my life, I can do a lot more. But I remember when I was younger I worked all the time. I keep telling my lawyers, “when you wake up and you’re in the shower, you had better be worrying about the particular transaction you’re working on – whether you’ve done everything, what else you might have missed…”. Otherwise, you’re not going to excel. It’s not a nine-to-five job. If you want a nine-to-five job, don’t go into private practice. The way I look at it is that you have one life. You’d rather be successful in what you’ve decided to put a lot of energy into than not. So you just have to work hard at it. If that is not important to you, then you can treat it like a nine-to-five job. But the consequence is that you are basically going to be a rank lawyer. You’re not going to be working on the most interesting matters. It’s not going to be the most challenging matters. You’re not going to be working with the biggest clients. It comes with the territory in a way. For more of the interview, check out hongkongstudentlawgazette.com HKSLG · Spring 2013 · Issue 2
Interview with Christine Loh Under Secretary for the Environment
Profile Education: LLB from University of Hull; LLM in Chinese & Comparative Law from City University Hong Kong; Doctor of Law, honoris causa from University of Hull. Selected career: Undersecretary for the Environment (2012-present); Founder and CEO of Civic Exchange (2000-2012); Chairperson of the Citizens Party (1999-2006); Legislative Council Member (1992-2000); commodities trader (1980-1991).
hat are the greatest environmental challenges for Hong Kong and your agenda during your term of office? The agenda for the Environment Bureau reflects the key issues of our term of office from 20122017. These are (a) air pollution; (b) waste management; (c) energy and climate change; and (d) biodiversity. The need for policy focus on air pollution is obvious – Hong Kong’s air pollution level is high and we must work hard to reduce it to better protect public health. As for waste management, Hong Kong is at a crisis point although most people are unaware of it because they don’t see waste piling up. Our waste collection system is very effective in removing the rubbish from public view! Our problem is that Hong Kong people generate a lot of waste, and we don’t HKSLG · Spring 2013 · Issue 2
have a comprehensive system to reduce waste at the source, recycle more waste, and treat different types of waste. We throw everything in landfills right now and they are filling up fast. In energy, we have a chance to review and revise Hong Kong’s energy policy from changing the fuel mix to reducing coal usage, to achieving higher levels of energy efficiency (especially in buildings), to reconsidering the city’s schemes of control for electricity generation, to linking these opportunities to also reduce air pollution as well as greenhouse gases. Lastly, Hong Kong has amazing biodiversity but there is also pressure from development. The challenge is to develop and protect biodiversity at the same time. What is the timetable for implementing the new air quality standards that include PM2.5?
We have just tabled an amendment bill to the Legislative Council (LegCo). The Council will set-up a committee to scrutinise the draft bill very soon. The scrutiny process will likely take a few months to complete and then the bill needs to be voted upon to pass. I hope we can get it all done within this year and for the new Air Quality Objectives (AQO) to become effective in 2014. Do you think you are able to make a better contribution to environmental protection by working in the Administration, as compared to your previous roles as a LegCo member or CEO of a public policy think tank? Working in the Administration, in LegCo and at a think tank are very different in nature. As a ministerial appointee, my responsibility is to help my minister, the Secretary for the Environment, make policy,
ADVICE which impacts society at large. LegCo’s role includes passing legislation, voting for funding, and acting as a watchdog of the administration. Thus, ministers need to work closely with LegCo to get policies implemented. For example, to pass the amendment bill on the new AQO requires working with LegCo. LegCo will also monitor our policies by asking for briefings and raising questions about the progress and results of programmes. When I was in LegCo, I knew the importance of each of those roles in pushing the administration to be accountable for its decisions and programmes. While legislators can influence policies, legislation and funding, they are not the key drivers for policy-making. At a think tank, I focused on policy research and solutions, but I could not make policy.
Throughout your experience in law, business, politics, think tanks and government, has there been a single ethos that has guided you? The thread running through every career I have had is professionalism. I want to do my job well and at a high standard. While it is not so much an ethos, I also found taking a multi-disciplinary approach to be really important in real life decision-making. For example, in improving Hong Kong’s air quality, you need to grasp the science, the public health impacts of pollution, as well as the social and economic costs involved. It is certainly helpful to be able to understand the use of regulation to control emissions, and even to have some idea of how to communicate information and ideas so people understand the complexities involved.
As I have been in LegCo and also done a lot of policy work, now that I am in the Administration with policy responsibility, I am putting past experience into practice.
Studying law is in fact a very good general degree that is useful for many types of jobs. You can study law without intending to be a practising lawyer. The law and legal system are fundamental aspects of society – having an understanding of legal concepts and legal reasoning helped me to understand many aspects of how society and business work.
of summary (précis). For me, this skill is a killer app! It is the foundation for many essential skills. I am sure law students and young lawyers already have some experience of this. Law students and lawyers have to read a lot – can you grasp the essential aspects of a case or a judgment? You have to talk to clients and attend meetings – can you summarise accurately what your clients said or want; and when you attend a long meeting – can you summarise it orally and in writing? If you do this well, it really helps your own thinking, as well as being able to communicate with others. How can law students and lawyers help protect the environment? As lawyers, you can specialise in environmental law. As a citizen, you can care about the environment and be an active citizen. Your lawyerly skills will always be useful! How do you strive to maintain a work-life balance? My life is out of balance. I work a lot... in fact, more and more. I work long hours and intensely. I relax with friends over meals, I like going to concerts, shows and art exhibitions, and I like to read and sleep.
You originally studied law, but chose a career outside of law. Have you found your legal training useful outside of law? Yes, I have found my legal training to be useful as a business person (my first job), as a legislator, as a policy researcher, and also now as a ministerial appointee.
What was the best advice you were given early in your career? What advice would you impart to young people, in particular law students and young lawyers?
However, my life is mostly about work. I have been fortunate that I have always enjoyed my work, so it doesn’t always feel like a chore.
The best advice ever for me is to listen, make sure I understand what is being said or what is happening, and to be able to describe it succinctly. We may call this the art HKSLG · Spring 2013 · Issue 2
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2nd Issue of the Hong Kong Student Law Gazette