Hong Kong’s reputation as an international financial center has been tarnished by the resignation of two British judges from the city’s highest court, businessmen and lawyers have warned.
The Chinese territory’s common law legal system, which it shares with the United Kingdom, sets it apart from mainland China where the ruling Communist Party plays a direct role in the country’s courts.
The city’s legal system offered Hong Kong-based foreign companies the assurance that the courts were free from political interference and the guarantee that they would be able to enforce contracts against Chinese state-owned companies.
Almost two years ago, the government used the introduction of a tough national security law to impose a sweeping crackdown on civil liberties promised to Hong Kongers after the UK handed over to China in 1997.
Lord Robert Reed, President of the UK Supreme Court, and Lord Patrick Hodge, who also sits on the UK’s highest court, resigned last week as non-permanent judges on the Court of Final Appeal of Hong Kong, citing the implementation of the security law.
“Supreme Court justices cannot continue to sit in Hong Kong without appearing to endorse an administration that has strayed from the values of political freedom and freedom of expression,” Lord Reed said.
Lord Nick Phillips, Lord Leonard Hoffmann, Lord David Neuberger, Lord Lawrence Collins and Lord Jonathan Sumption, retired British judges who sit on the Hong Kong court, said in a joint statement that they and their Australian colleagues would remain Canadian and local. .
Senior officials from Hong Kong’s legal and business community said that if the continued presence of foreign judges in the court mitigated the effect of the resignations, there was no doubt that its reputation would suffer.
“Many businessmen are concerned about the decisions of the remaining judges, if all the judges leave, there is [a risk] to common law prudent management and which affects Japanese companies,” said Masakazu Yagyu, Secretary General of the Japanese Chamber of Commerce and Industry in Hong Kong.
Despite the presence of other foreign judges, Yagyu feared “a misinterpretation of the end of Hong Kong common law” was the message that business leaders in Japan were hearing.
Hong Kong’s image with foreign businesses has already been damaged over the past two years as the territory was forced to align itself with Beijing’s tough pandemic policies, which effectively closed its borders to the mainland and to the rest of the world.
A local banker said that, from a financial market perspective, the effect of the judges’ withdrawal was a matter of perception “rather than the immediate effect of the erosion of Hong Kong’s judicial system” which could weaken confidence international investors. “And the perception has indeed deteriorated,” added the banker.
The British Chambers of Commerce in Hong Kong called on the remaining judges to stay, adding they were “highly valued” by business and insisting that the opportunities in China “remain very significant”.
After the introduction of the vaguely worded Security Law, Hong Kong’s political system, educational institutions and civil society were all overhauled to expel anyone disloyal to Beijing.
More alarming for lawyers was the use of threats, arrests and lawsuits to intimidate those seen as sympathizers with the protesters. Forty-seven opposition activists were arrested in dawn raids in early 2021. Most remain in jail awaiting trial.
While it was highly unlikely that non-permanent foreign judges had ever sat on a security law case, campaigners such as Britain’s Baroness Helena Kennedy claimed they had given a veneer of respectability to the authorities’ actions . “Higher courts will increasingly be expected to dance to China’s beat,” she said.
A senior legal official said UK Supreme Court justices would have liked to avoid appearing in potentially embarrassing rulings by their Hong Kong colleagues in national security law cases. “I’m a little surprised they stayed that long,” the person said.
Such a view, however, is rejected by many in Hong Kong’s legal community, where the resignations have been met with dismay. “I am personally devastated. . . Someone just took a giant hammer on the value of Hong Kong law,” a commercial lawyer said.
The legal community argued that the resignations removed the last barrier protecting ordinary Hong Kongers from mainland influence. “Why not stick with your colleagues who you think are independent and fight the good fight,” asked a prominent local lawyer.
Hong Kong officials have accused the British government of political interference in its justice system after the judges’ announcement was applauded by Liz Truss, the British foreign secretary.
However, Beijing hardliners seized the resignations as an opportunity. “The withdrawal of judges. . . will only further minimize Britain’s interests and influence in Hong Kong,” said Tian Feilong of the China Association for Hong Kong and Macau Studies, a semi-official think tank. Lau Siu-kai, his colleague, said it was a chance for Hong Kong to develop a judicial system with national security as a priority.
“It’s another step down the slippery slope,” groaned a prominent business lawyer. “It can’t be helpful. . .[but]a lot of damage has already been done.