Tuesday, August 11, 2020

Lusina Ho on Unjust Enrichment and Equity (new book chapter)

"Unjust Enrichment and Equity"
in  Elise Bant, Kit Barker, Simone Degeling (eds), Research Handbook on Unjust Enrichment and Restitution (Edward Elgar, July 2020), Chapter 7
Summary: The proper relationship between unjust enrichment and equity has long been the subject of spirited debates. At the theoretical level, there is debate as to whether the idea of conscience is better than unjust enrichment in explaining and categorising instances of restitutionary liability previously available under quasi-contract. At the doctrinal level, it has been argued that the equitable doctrines of knowing receipt and undue influence are better classified as claims to reverse unjust enrichment. Furthermore, where both common law and equitable rules are applicable to a claim in unjust enrichment, there are calls to assimilate the rules to achieve coherence and consistency. The present chapter explores all these issues.

Sunday, August 9, 2020

Syren Johnstone on Secondary Markets in Digital Assets: Rethinking Regulatory Policy in Centralized and Decentralized Environments (Stanford J of Blockchain Law & Policy)

Syren Johnstone
Stanford Journal of Blockchain Law & Policy,  
June 2020, Vol. 3 No. 2, pp. 146-188
Abstract: This paper considers the pathway options for the development of a regulated secondary market in digital assets. It explores the conditions necessary to develop a regulatory framework that serves to facilitate the possibilities offered by cryptographic consensus technologies such as blockchain and distributed ledger technology. While centrality has been a useful and hitherto inevitable nexus point for regulatory agencies, the prospect of alternative decentralized environments signals a need to reconsider how regulatory oversight can work to service its intended functions. Existing market integrity controls are also presented with novel challenges in the context of multiple market places for the same digital asset.
     The structural forms of centralized and decentralized cryptoexchange models and the functions served are considered in the context of historical development of exchanges in traditional markets. The different operational concerns, and how regulatory accountability can be established in decentralized contexts, are explored. The non-exchange-like activities that may be undertaken by exchange operators and the challenges arising in relation to intermediary services are reviewed.
     The analysis suggests the development of regulatory policy should be model-neutral, form-independent and focused on functions and outcomes. It should not be imposed in a manner that may inhibit the ability of private markets to develop effective outcomes that align with public policy concerns, or which may cause industry development to cycle back toward extant models rather than evolving more optimal models of commercial and financial activity. Addressing intermediary services, whether provided by a cryptoexchange, intermediaries from traditional markets, or specialized cryptointermediaries, will be part and parcel of effective secondary market regulation. While the different nature of digital assets compared to traditional securities presents difficulties in applying existing regulations, it may also present opportunities for regulatory approaches that utilize their unique digital characteristics. Regulatory agencies must engage the concept of attraction regulation by playing a formative role in directing the industry toward shared goals.

Giuliano Castellano Contributes to World Bank Group's Guidance Notes on Distributed Ledger Technology & Secured Transactions

Dr Giuliano G. Castellano's immense expertise on the use of digital assets as collateral has helped to shape and inform three substantial guidance notes published in May 2020 by the World Bank Group. The guidance notes are part of new series on Distributed Ledger Technology (DLT) & Secured Transactions: Legal, Regulatory and Technology Perspectives. A DLT system is defined as a "distributed computerized system that enables participants (nodes) to submit, validate, and store information into a database (distributed ledger) that is disseminated, synchronized, and maintained fully or partially across nodes, without the need for intermediaries". 
     The first note is titled "Collateral Registry, Secured Transactions Law and Practice". It "examines the potential of DLT within the context of the UNCITRAL Model Law on Secured Transactions" (p 7). The second note considers the regulatory implications of integrating digital assets and distributed ledgers in credit ecosystems. Dr Castellano developed the primary technical content for this note. The third note provides a "primer on [DLT] and highlights the junctures at which this new technology meaningfully impacts secured transactions frameworks" (p 7). DLT is described as a "new paradigm" with the following facets: a "novel database technology", a "novel form of pure intangibles" and "transactional automation" (p 10).
     Dr Castellano was recently appointed by UNIDROIT to be a member of its Working Group on the Model Law on Factoring. Factoring is an important type of financing that is increasinly being used around the world.  "In 2019, global factoring volume reached 2.9 trillion euros." (UNIDROIT website).  Dr Castellano will share his knowledge on teh regulatory aspects that might affect the development of this international instrument.    

Friday, August 7, 2020

New Book: Authoritarian Legality in Asia Formation, Development and Transition (CUP)

Authoritarian Legality in Asia: Formation, Development and Transition
Edited by Weitseng Chen and Hualing Fu
July 2020, 500 pages
Description: A cluster of Asian states are well-known for their authoritarian legality while having been able to achieve remarkable economic growth. Why would an authoritarian regime seek or tolerate a significant degree of legality and how has such type of legality been made possible in Asia? Would a transition towards a liberal, democratic system eventually take place and, if so, what kind of post-transition struggles are likely to be experienced? This book compares the past and current experiences of China, Hong Kong, South Korea, Japan, Taiwan, Singapore, and Vietnam and offers a comparative framework for readers to conduct a theoretical dialogue with the orthodox conception of liberal democracy and the rule of law.
  • Provides a comparative perspective of authoritarian legality to enrich the understanding of legality and liberal rule of law and democracy
  • Introduces an intra-Asia comparison approach that provides a new set of metrics for evaluating legal reforms in authoritarian countries such as China
  • Explores various phases of authoritarian legality development and discusses not only the transition of authoritarian legality but also the post-transition struggles in various countries
Weitseng Chen is Associate Professor at the National University of Singapore (NUS) Faculty of Law and Deputy Director at the NUS Center for Asian Legal Studies. He specializes in comparative Chinese law within greater China as well as law and development in East Asia. Before joining NUS Faculty of Law, he was Hewlett Fellow of the Center on Democracy, Development and the Rule of Law at Stanford University and also practiced as a corporate lawyer at Davis Polk & Wardwell.
     Hualing Fu holds the Warren Chan Professorship in Human Rights and Responsibilities at The University of Hong Kong, Faculty of Law and is Interim Dean of The University of Hong Kong Faculty of Law. He specializes in constitutional law and human rights with a particular focus on the Chinese criminal justice system, Chinese media law and land law. Other areas of research include the constitutional status of Hong Kong and its legal relations with China. He has previously taught at the City University of Hong Kong, University of Washington, New York University and University of Pennsylvania.

Weitseng Chen, Hualing Fu, Jacques deLisle, Michael Dowdle, Eva Pils, Thomas E. Kellogg, Richard Cullen, David Campbell, Michael C. Davis, Kevin Y. L. Tan, Tom Ginsburg, Do Hai Ha, Pip Nicholson, Jianlin Chen, Yen-Tu Su, Koichi Nakano, Erik Mobrand

Thursday, August 6, 2020

Marco Wan on Same-sex Marriage in the Context of Hong Kong (JP Morgan Webinar)

Marco Wan spoke on the timely and important issue of same-sex marriage at a recent webinar at the Hong Kong office of the US investment bank JP Morgan on 24 June 2020. His presentation gave an update of the recent cases in Hong Kong, including QT, Leung Chun KwongInfinger, and MK, and also explored international developments. The talk further explored Hong Kong's marriage history as a way of thinking about the twenty-first century debate about marriage equality; this part of the talk drew on his forthcoming article entitled "The Invention of Tradition: Same-sex Marriage and its Discontents in Hong Kong". The talk concluded by noting the need not only to focus on marriage, but on other issues central to sexual minority rights such as employment discrimination. 

Patricia Ho Recognised in Trafficking in Persons Report 2020

Congratulations to Patricia Ho who was recognised by the United States Department of State as one of ten 2020 Trafficking in Persons Report Heroes from around the world.  In the award ceremony, Patricia was awarded the honour, 
'In recognition of her dynamic leadership in defending the rights of human trafficking victims and marginalized groups by challenging government policies and laws and her relentless work to promote the better treatment of victims through elevation of survivor voices and a trauma-informed approach'.
  Patricia has been advocating for the rights of persons from margialised groups through her work as a public law solicitor and founder of the non-governmental organisation, Hong Kong Dignity Institute. In the Faculty of Law, Patricia is a principal lecturer who teaches in the Clinical Education Programme (both General and Refugee Streams) and Administrative Law in the LLB programme.  HKU law students gain valuable knowledge and experience in working with Patricia who has been instrumental in bringing important human rights issues before the Hong Kong courts.

Wednesday, August 5, 2020

Congratulations to HKU Law Scholars Awarded Tenure in 2020

Congratulations to Kelvin Kwok, Dr Peter Chau and Dr Shitong Qiao on being awarded tenure and the title of Associate Professor at HKU's Faculty of Law.
     The Faculty of Law is the longest established law school in Hong Kong. It adopts a rigorous process of external review for all tenure and promotion applications. The award of tenure is a recognition of the all-round excellence in research, teaching, service and knowledge exchange demonstrated by these individuals in their years as tenure-track assistant professors.
     Kelvin Kwok researches in the areas of competition law and consumer protection. He has been the principal investigator of two General Research Fund (GRF) grants awarded by the Hong Kong Research Grants Council. He was awarded the Faculty Research Output Prize 2015 and the King’s/HKU Fellowship Award 2018-19. He has served as an editor of the Oxford University Commonwealth Law Journal, Hong Kong Law Journal, and China Antitrust Law Journal
     Dr Peter Chau researches in the area of legal theory, initially on the topic of criminal punishment and now increasingly on private law areas such as tort law. He  received two GRF grants. From 2015 to 2017, his funded project was on “Proportionality in Criminal Punishment”. In 2018, he obtained a grant on “Examining Non-Instrumental Justifications for Tort Compensation”.
      Dr Shitong Qiao is well-known for doing research in  Chinese property law and theory.  He was the Ken Young-Gak Yun & Jinah Park Yun Visiting Assistant Professor of Law at Duke University in Spring 2019 and the inaugural Jerome A. Cohen Visiting Professor of Law at NYU in Spring 2020. His monograph, Chinese Small Property: The Co-Evolution of Law and Social Norms, was published in 2017 by Cambridge University Press and won the inaugural Masahiko Aoki Award for Economic Paper from Tsinghua University. In dissertation form, it won the Judge Ralph K. Winter Prize (awarded annually to the best student paper written in law and economics at Yale Law School).  All the very best to our three colleagues as they move on to the next phase of their academic careers.

Tuesday, August 4, 2020

Daisy Cheung: Magistrates Must Improve Approach to Mental Disability in the Courtroom (HKFP)

"Magistrates must improve approach to mental disability in the courtroom"
June 22 2020
I have read with great disappointment and concern reports of two recent magistrate cases dealing with the topic of mental disability.
    The first involved a schoolteacher who was found guilty of assault on June 12 at the Fanling Magistrates’ Court. It was reported that the magistrate had questioned the mental state of the defendant on the basis that his testimony was full of lies, that he showed no remorse, and that his testimony about the police wanting to throw him off a bridge was so outlandish that she suspected he had both mental and personality disorder.
     She further commented that she did not think his mental state was such that he could continue to teach. The defendant was remanded to Siu Lam Psychiatric Centre until June 26, where two psychiatric reports would be obtained.There are clearly many concerns with the magistrate’s cavalier usage of technical medical terminology (in an area in which she has no apparent expertise) and perhaps with her decision to remand the defendant to Siu Lam Psychiatric Centre on the basis of his testimony in court, but I would like to focus in particular on the unnecessarily stigmatising effect of the magistrate’s words.
    First of all, anyone with courtroom experience will know that lack of remorse and testimony that appears untruthful or difficult to understand can be shared by many defendants, and that by itself, these behaviours are not indicative of mental or personality disorder.
    What the magistrate is doing here is equating undesirable human behaviour with mental illness, which is incredibly stigmatising for individuals with mental disability, already one of the most vulnerable and stigmatised groups in society. ... Click here to read the full text. 

Chinese version: 
June 25 2020
     裁判官進一步質疑被告的精神狀態是否足以使他繼續教書,並將案件押至6 月26 日判刑,以索取兩份精神科報告、心理及背景報告。期間被告還押小欖精神病治療中心。
    裁判官將不良行為與精神疾病等同起來,這種做法嚴重污名化患有精神障礙的人士——況且他們已是社會上最弱勢和最被污名化的群體之一。 ... Click here to read the full text. 

Friday, July 31, 2020

Liability for Imposing Sanctions under Hong Kong's National Security Law (Albert Chen and Simon Young)

Liability for Imposing Sanctions under Hong Kong’s National Security Law
 Albert H.Y. Chen* and Simon N.M. Young**
31 July 2020

1. Introduction
Under Article 29(4) of Hong Kong’s National Security Law (NSL), a person who “receives instructions”(接受外國的指使)from a foreign country to commit (實施)the act (行爲) of “imposing sanctions against the Hong Kong Special Administrative Region (HKSAR) or the People’s Republic of China” (PRC) (對香港特別行政區或者中華人民共和國進行制裁) commits a criminal offence.[1] Recently, some foreign countries have taken steps towards imposing sanctions against the HKSAR, PRC and their officials. International banks and financial institutions in Hong Kong are worried that they may be in breach of Article 29(4) if as a result of their regulatory obligations they must give effect to these sanctions in their ordinary business operations.[2] Prima facie it may appear arguable that such institutions are “receiving instructions” from a foreign country to “impose a sanction on the HKSAR and PRC” and thus appear to be in breach of Article 29(4).
     This commentary examines the scope of Article 29(4) and considers the possible liability risks for banks and financial institutions who must give effect to external sanctions or other measures directed at the HKSAR or PRC. It argues that the scope of Article 29(4) consists of acts which are only capable of being performed by a state, head of state or international organisation, and thus a financial institution, giving effect to sanctions against Hong Kong, cannot be regarded as receiving instructions to “impose sanctions”, which have already been imposed by a foreign state. It cannot be guilty of a criminal offence under Article 29(4) merely by participating in the implementation of the sanctions concerned to comply with a foreign law applicable to it. However, in certain exceptional and special circumstances to be discussed below, it is possible for banks and financial institutions to become liable (as a non-principal offender) for providing financial services to a foreign head of State or political leader who (as a principal offender under Article 29(4)) has received funding or other support from a third party for the purpose of the State concerned imposing a sanction on the HKSAR or the PRC.

2. The Structure of Article 29
Discerning liability under Article 29 is made difficult by its clumsy drafting, block structure, and absence of clear subsections and paragraphs. Inserting numbering for subsections/paragraphs and other formatting can improve readability without altering the meaning of the article. Consider the following Chinese and unofficial English versions of Article 29 with new section numbering in red and other formatting inserted for clarity:

[A] 為外國或者境外機構、組織、人員竊取、刺探、收買、非法提供涉及國家安全的國家秘密或者情報的;
[a] 請求外國或者境外機構、組織、人員
[b] 與外國或者境外機構、組織、人員串謀
[c] 直接或者間接接受外國或者境外機構、組織、人員的指使、控制、資助或者其他形式的支援

Article 29[3] 
[A] A person who steals, spies, obtains with payment, or unlawfully provides State secrets or intelligence concerning national security for a foreign country or an institution, organisation or individual outside the mainland, Hong Kong and Macao of the People’s Republic of China shall be guilty of an offence;
[B] a person who
[a] requests a foreign country or an institution, organisation or individual outside the mainland, Hong Kong and Macao of the People’s Republic of China, or
[b] conspires with a foreign country or an institution, organisation or individual outside the mainland, Hong Kong and Macao of the People’s Republic of China, or
[c] directly or indirectly receives instructions, control, funding or other kinds of support from a foreign country or an institution, organisation or individual outside the mainland, Hong Kong and Macao of the People’s Republic of China,
to commit any of the following acts shall be guilty of an offence:
(1) waging a war against the People’s Republic of China, or using or threatening to use force to seriously undermine the sovereignty, unification and territorial integrity of the People’s Republic of China;
(2) seriously disrupting the formulation and implementation of laws or policies by the Government of the Hong Kong Special Administrative Region or by the Central People’s Government, which is likely to cause serious consequences;
(3) rigging or undermining an election in the Hong Kong Special Administrative Region, which is likely to cause serious consequences;
(4) imposing sanctions or blockade, or engaging in other hostile activities against the Hong Kong Special Administrative Region or the People’s Republic of China; or
(5) provoking by unlawful means hatred among Hong Kong residents towards the Central People’s Government or the Government of the Region, which is likely to cause serious consequences.

3. Discussion
Hong Kong’s criminal laws are to be interpreted with reference to the words used in the law, the purpose of the law, and the context in which the law is found. Article 29 is found in Part 4 of the NSL which is titled “Collusion with a Foreign Country or with External Elements to Endanger National Security”. Its purpose is to criminalise a person’s acts of collusion with an ‘outsider’ for the commission of specific acts that endanger national security. An ‘outsider’ means a “foreign country or an institution, organisation or individual outside the mainland, Hong Kong and Macao of the [PRC]”. While the offenders are likely to be insiders (i.e. a Hong Kong resident), they need not be and can also include bodies such as companies. 
     For present purposes, we are focusing only on section [B] of Article 29. Section [B] has three limbs, each of which constitutes wholly or partly the actus reus of a criminal offence under Article 29[B]: [a], [b] and [c], corresponding to the three forms of collusion proscribed by Article 29. They are acts of “requesting”, “conspiring with” or “receiving instructions, … funding, etc” that the person must commit with the outsider. But to commit the offence, those acts must be done to achieve certain objectives, as specified in paragraphs (1) to (5). The prohibited acts referred to in these paragraphs (e.g. waging a war, etc) do not need to materialise for the offence to be committed.[4] The relevant acts specified in paragraphs (1) to (5) represent the intended objects of the collusion, while the collusion itself lies at the heart of the offence. The essence of the offence targets the acts of “requesting”, “conspiring with”, or “receiving instructions, … funding, etc from” an outsider in order for one or more of the five prohibited acts to be committed. 
     While the accused person must commit an act of “requesting”, “conspiring” or “receiving …”, questions will arise as to the scope of each of the five intended objects. For example, must the accused or outsider also be an intended party to the collusion object? Who is capable of committing the collusion object? The answer to these and other questions concerning the scope of the intended object will depend on two main considerations: (1) the logical connection between the relevant actus reus limb and the specific collusion object; and (2) nature of the specific collusion object.
     Limb [a] involves the person requesting an outsider “to commit” one or more of the collusion objects (1) to (5). This clearly contemplates the outsider committing the prohibited act in (1) to (5), e.g. if A requests State B to wage a war against the PRC it is State B who will wage the war, not A. Limb [b] involves the person conspiring with an outsider “to commit” one or more of the collusion objects. The law of conspiracy in Hong Kong requires an agreement between two or more person to commit an offence by at least one of those party to the agreement.[5] Applying this law of conspiracy implies that under limb [b] any party to the conspiracy (including the person and outsider) may commit the intended collusion object, e.g. if A conspires with State B to rig or undermine an election in the HKSAR (paragraph (3)), it is intended that anyone party to this conspiracy, including A or State B, will be actually rigging or undermining the election. Finally, limb [c] involves the person receiving instructions or other kinds of support from an outsider “to commit” the collusion object. The natural and logical meaning of these words suggests that it is the person (though perhaps jointly with others) who will commit one or more of the prohibited acts in (1) to (5). For example, if A receives instructions or funding from State B to rig or undermine an election in the HKSAR, this suggests at least A will be the person performing the act of rigging or undermining the election. 
     Once one appreciates the significance of the logical connection between the actus reus limb and collusion object, it is necessary to consider the text and nature of the collusion object to fully appreciate its scope. 
     Collusion object (4) concerning sanctions reads as follows in the original Chinese (with translated English terms inserted):

對香港特別行政區或者中華人民共和國進行(impose)制裁(sanctions)、封鎖(blockade)或者採取(engage in)其他敵對行動(other hostile activities)”

The ‘imposition’ of ‘sanctions’ and ‘blockade’ are acts which can only be performed by one State as against another State. If the ejusdem generis rule of interpretation is applied, then in this provision, ‘採取其他敵對行動’ (‘engaging in other hostile activities’) should be interpreted to mean acts of a similar nature as ‘imposing sanctions and blockade’ (進行制裁、封鎖), so the acts must also be acts performed by a State against another State. This is confirmed by our research into the use of the term didui xingdong (敵對行動) (‘hostilities’ or ‘hostile activities’) in works on public international law and legal documents in China, which shows that didui xingdong (敵對行動) is usually an action taken by a State (including its military forces) against another State (and may also include military conflicts in circumstances of civil war), although individual human beings may participate in (參與) didui xingdong (敵對行動).[6]
     It follows that in Article 29(4), the subject (or actor) performing the acts of ‘imposition of sanctions or blockade’ (進行制裁、封鎖) or ‘engaging in other hostile activities’ (採取其他敵對行動) was intended to be a State (including the government of the State), a person with authority to act on behalf of a State (eg the Head of State), or an international organisation whose membership consists of States. In other words, where the first paragraph of article 29 (immediately following limb [c] and immediately before object (1))refers to “…實施以下行為之一的” (“to commit any of the following acts”), the relevant 行為 (“act”) in object (4) may only be committed by a State, a person with authority to act on behalf of a State, or an international organisation and cannot be committed by any other person or entity such as a bank or financial institution.
     If one accepts this State-centred approach to the understanding of paragraph (4), there is still the question of liability from the perspective of the three actus reus limbs. Limb [a] involves persons requesting an outsider (which is a State) to impose sanctions, etc, on the HKSAR or PRC. This (i.e. Article 29[B][a](4)) is the most logical combination between any of limbs [a], [b] and [c] with the object in paragraph (4). The prohibition of such “requesting” (the latter actually occurred in 2019 during the anti-extradition movement in Hong Kong[7]) falls directly within “the mischief” or purpose of Article 29(4). Similarly, under limb [b], those who conspire with an outsider (being a State) for the State concerned to impose sanctions on the HKSAR or PRC would also be caught (i.e. Article 29[B][b](4)).
     Banks and other financial institutions will not be caught by limbs [a] or [b] as combined with paragraph (4) so long as they abstain from any “requesting” of the imposition of sanctions against the HKSAR or PRC and from any conspiracy with a State for this purpose. The critical question for our present purpose is whether they might be caught by limb [c] if, for example, they are required by the law of a foreign State to perform any act (in their business activities) that would form part of the implementation of a sanction imposed by the foreign State on the HKSAR or the PRC, and they comply with such a legal requirement. Would they be “receiving instructions …” from an outsider, including a foreign State, to impose sanctions on the HKSAR or PRC? 
     In our view, a bank or financial institution acting in compliance with a foreign law which requires it to participate in the implementation of such a sanction cannot be guilty (as a principal offender) of any offence created by the combination of limb [c] with paragraph (4). This is because the relevant act (行為) in the expression “…實施以下行為之一的” (to commit (or perform) any of the following acts) (in the first paragraph of article 29 immediately following limb [c] and immediately before paragraph (1)) cannot, as far as paragraph or object (4) is concerned, be committed by a bank or financial institution. A bank or financial institution (complying with a foreign law imposing a sanction on the PRC or the HKSAR, or on individual persons or corporate entities in the PRC or the HKSAR) may participate in the implementation of a sanction imposed by a foreign State against the PRC or the HKSAR, but it cannot “impose a sanction” against the PRC or HKSAR. Such a bank or financial institution would only be liable if the wording of object (4) were amended to include not only “imposing a sanction … on the PRC or the HKSAR” (對香港特別行政區或者中華人民共和國進行制裁) but also “participating in the implementation of a sanction imposed by a State against the PRC or the HKSAR” (參與外國對香港特別行政區或者中華人民共和國進行的制裁的實施).
     In our opinion, the act described in object (4) as “imposing a sanction, …” against the HKSAR or PRC (which in our view is an act (行為) that can only be performed or committed (實施) by a State, a person acting on behalf of a State (such as a head of State or the president, premier or prime minister of a State), or an international organisation composed of States) is different and distinct from any act of ‘participating in the implementation of a sanction imposed by a State against the PRC or the HKSAR’. The latter act is an act that can be performed by individuals or corporate entities, but it is not covered by object (4). The act (行為) covered by object (4) can be committed or performed (實施) in the context of Article 29[B][a](4) (i.e. a person requesting a foreign State to impose sanctions on the PRC or the HKSAR), or in the context of Article 29[B][b](4) (i.e. a person conspiring with a State so that the State would impose a sanction on the PRC or the HKSAR). But the combination of limb [c] and object (4) (i.e. the operation of Article 29[B][c](4)) will only be possible in rare and exceptional circumstances as discussed below.
     Conceivably, there is possible liability under limb [c] for a bank or financial institution where the head of State A (or its president, premier or prime minister) receives “funding” from an outsider for the purpose of State A imposing sanctions on the HKSAR or PRC. If the outsider is a bank or financial institution outside of the mainland, Hong Kong and Macau, then it could be liable under the last paragraph of Article 29 (on accomplice liability).[8] Given the severity and stigma of the offence, it is likely it would need to be proven the outside bank or financial institution acted with full knowledge of the relevant circumstances constituting the collusion offence for the head of State A. 
     Another example of possible liability under limb [c] for a bank or financial institution is through the vehicle of the common law principles of accessorial liability, assuming they apply to extend the net of liability of NSL offences. Take the same example of the head of State A receiving funding (e.g. in the nature of a political donation or bribe) from an outsider for the purpose of State A imposing sanctions on the HKSAR or PRC. If a bank or financial institution provides the services to enable the head of State A to receive those funds from the outsider, again with full knowledge of the circumstances of the facts that constitute the collusion offence, it could be argued that the financial institution aided and abetted the receipt of those funds. Under the common law principles of accessorial liability, if the institution acts with knowledge of the essential matters constituting the offence and with the intention of assisting or encouraging the principal offender (in this example the head of State A) to do the things which constitute the offence, then the institution will also be liable for that offence as a secondary party.[9]
     In these two examples of possible liability for assisting or encouraging a State official to impose sanctions on the HKSAR or PRC, the liability can be prevented most likely by existing compliance and due diligence procedures and systems. In both examples, liability is based on the financial institution enabling the transfer of funds to a State official, who has the authority to impose sanctions on another State and decides to authorise such sanctions because of the receipt of those funds. In such situations, existing anti-money laundering systems will flag such transactions as they relate to a politically exposed person (PEP) and call for enhanced due diligence screening. Compliance officers will know to inquire into the origins of the funds and its intended purpose and use. But in addition to inquiring into the usual forms of crime-tainted property, e.g. proceeds of crime, bribe, instrument of crime, etc, compliance officers will now also need to ask if the PEP is receiving the funds on account of a decision to impose a sanction or blockade on or to engage in another form of hostile activity against the HKSAR or PRC.

4. Conclusion
In our view, banks and financial institutions, which may be required by the law of a foreign state to implement sanctions against the HKSAR, PRC or their officials who are their customers, will not commit an offence under limb [c] of Article 29(4) as they are not capable of performing the act of imposing a sanction or blockade or engaging in other hostile activities. Such an act may only be performed by a State, an individual acting on behalf of a State (such as a head of State or political leader), or an international organisation. However, this does not mean that a bank or financial institution may never be liable as a result of the operation of Article 29[B][c](4) of the NSL. In the exceptional and special circumstances discussed in this article, liability may still be possible under limb [c] either as an outsider or secondary party who has knowingly facilitated a head of State or political leader in receiving funding or support to impose sanctions against the HKSAR or PRC.

Appendix I
The use of the term“敵對行動”(hostile actions or hostilities)
The Agreement on the Cessation of Hostilities in Cambodia (which, together with the Agreement on the Cessation of Hostilities in Vietnam and the Agreement on the Cessation of Hostilities in Laos, formed the Geneva Agreement of 1954), is called in Chinese 關於在柬埔寨停止敵對行動的協定. Thus敵對行動 is the Chinese term for “hostilities”.
     On-line Searches reveal the following contexts of the use of the Chinese term 敵對行動:

河北法学, 2014, Vol.32 (11), p.98-105

南京理工大学学报:社会科学版, 2013, Vol.26 (6), p.36-43

阅读, 2013 (21), p.33-33

法治研究, 2013 (5), p.100-109

晏明 李超碧
瞭望, 1993 (21), p.39-39

世界知识, 1995 (10), p.18-19

4页 发布时间: 2012年03月16日

休战不是战争状态的结束,而只是敌对行动的中止。 (A) 118. 战争开始后,交战双方...

积极敌对行动停止后应立即释放并遣返 满分:2 分 9. “国际法不加禁止的、其有形...

10. 提供几个国际法条款
13条回复 - 发帖时间: 2010年10月5日
第二, 严重违(正的对面)国际法既定范围内适用于国际武装冲突的法规和惯例的其他行为,即下列任何一种行为: (1 )故意指令攻击平民人口本身或未直接参建敌对行动的个...

* Cheng Chan Lan Yue Professor in Constitutional Law, Faculty of Law, University of Hong Kong; member, Hong Kong Basic Law Committee of the National People’s Congress Standing Committee.
** Professor and Associate Dean, Faculty of Law, University of Hong Kong; Barrister, Parkside Chambers, Hong Kong.
[1] The offence is punishable up to life imprisonment in grave cases for individuals (Article 29) and by unlimited fine for companies (Article 31). If a company is punished under the NSL, its operations may be suspended and business licences and permits may be revoked (Article 31).
[2] See, eg, “Businesses in Hong Kong fear collateral damage from security law”, Financial Times, 2 July 2020; “Banks in Hong Kong audit clients for exposure to US sanctions”, Financial Times, 10 July 2020.
[3] Unofficial English translation published by the Xinhua News Agency on 30 June 2020 (see http://www.xinhuanet.com/english/2020-07/01/c_139178753.htm) and re-published in the HKSAR Government Gazette.
[4] There is another view that some of the acts in these paragraphs, such as that in paragraphs (2), (3) or (5), may actually need to materialise and thus form part of the actus reus of an offence, say, under Article 29[B][c]. But in the case of the operation of Article 29[B][a](4), the act of the imposition of a sanction against the HKSAR or PRC may also materialise, though it will not form part of the actus reus of the offence under Article [B][a](4), as the actus reus in this case is confined to the “requesting”.
[5] See Crimes Ordinance (Cap 200), s 159(1)(a).
[6] See Appendix I of this commentary.
[7] See, e.g., “Hong Kong pro-democracy lawmakers in US to discuss city’s crisis with politicians and business leaders”, South China Morning Post, 16 Aug 2019,
https://www.scmp.com/news/hong-kong/politics/article/3023015/hong-kong-pro-democracy-lawmakers-us-discuss-citys-crisis; “Hong Kong activist seeks U.S. support for pro-democracy protests”; Reuters, 15 Sept 2019,
[8] This last paragraph may be translated as follows: “The institution, organisation and individual outside the mainland, Hong Kong and Macao of the People’s Republic of China referred to in the first paragraph of this Article shall be convicted and punished for jointly committing the offence with the principal offender”. We consider the above a more accurate translation than the following version in the English translation of the NSL published by the Xinhua News Agency and reproduced in the HKSAR Government Gazette: “The institution, organisation and individual outside the mainland, Hong Kong and Macao of the People’s Republic of China referred to in the first paragraph of this Article shall be convicted and punished for the same offence. The Chinese original is as follows: “本條第一款規定涉及的境外機構、組織、人員,按共同犯罪定罪處刑。”
[9] HKSAR v Chan Kam Shing (2016) 19 HKCFAR 640, [11].

Thursday, July 30, 2020

Johannes Chan on National Security and Judicial Independence in Hong Kong

National Security and Judicial Independence: A Response

Prof Johannes Chan, SC (Hon)
Chair of Public Law, The University of Hong Kong

Mr Zhang Yong, Vice-Chairman of the Legal Affairs Committee of the Standing Committee of the National People’s Congress, recently made three points in relation to the proposed national security law for Hong Kong.  First, he argued that there is no necessary relationship between judicial independence and jurisdiction of the courts.  Secondly, the appointment of judges is a political process. The power of the Chief Executive to appoint judges for national security cases does not impact on judicial independence.  Thirdly, it is conducive to the better discharge of judicial duties and fairness by excluding judges of foreign nationality to handle national security cases, as this would avoid the problem of split loyalty and will not affect judicial independence.   This article provides a reply to these points in the spirit of rational discussion of legal issues.

Judicial Independence and Jurisdiction
It is true that there is no necessary relationship between judicial independence and jurisdiction of the courts, but there is an interactive relationship between them.  The more limited the court’s jurisdiction is, the less relevance judicial independence becomes.  If the jurisdiction of the courts is severely confined to cases of little importance, judicial independence is meaningless.  If cases that should fall within the jurisdiction of the courts are taken out of its jurisdiction, this would undermine judicial independence.  Personal liberties are at stake in criminal prosecution.  The judiciary plays an important role in safeguarding personal liberty against arbitrary prosecution by the state in all criminal cases.  If criminal offences with heavy penalties are removed from the jurisdiction of the courts so as to deprive the defendants of the right to a fair hearing by an independent and impartial tribunal, this would amount to an interference with judicial independence.  In this regard, judicial independence in the Mainland is a narrow concept that is confined to the court trying a case independently, whereas judicial independence in the common law system is a much wider concept.

Appointment of Judges as a Political Process
The suggestion that the appointment of the judiciary in most countries is a political process is questionable.  The independence of the appointment process of the judiciary is one of the most important safeguards in guaranteeing judicial independence. Indeed, in most common law countries, painstaking efforts are made to ensure the independence of the system of appointment of judges.  Members of the judiciary are usually appointed or recommended by an independent commission.  While the appointment itself may be made by the executive, such appointment power is formal rather than substantive.  The only exception is arguably the United States, where Supreme Court judges are nominated by the President on political grounds.  However, there is an elaborated and complex process of confirmation under which judges of the US Supreme Court are to be confirmed by the Senate, which is a democratically elected body.  The President of the United States is himself democratically elected.  This is a very different system from the situation in Hong Kong.

Appointment of Judges by the Chief Executive
The current proposal suggested that the Chief Executive shall appoint judges for national security cases.  There is no indication of the criteria for the exercise of such power of appointment, and the criteria are clearly not confined to nationality.  In fact, the proposed power is not a general power to appoint judges.  It is a power to assign judges to try a particular type of cases, a power which is normally reserved for the judiciary and forms part of the fabric of judicial independence.   It is to be noted that in national security cases, the HKSAR Government is the prosecution, and the Chief Executive is the chairperson of the proposed National Security Committee.  There is a serious conflict of interests to allow the Chief Executive to nominate judges in this type of cases, and allowing a party to the litigation to assign judges is a fragrant violation of the principle of judicial independence.  So far, there is no convincing justification why interference by the Chief Executive is considered necessary and why this power could not be exercised by the Chief Justice. 
     It is said that the Chief Executive will not nominate a single judge but will just designate a list of judges so that it will still be for the judiciary to assign a particular judge on the list for any national security case.  Yet this does not explain why it is necessary for the Chief Executive to draw up a list of eligible judges to try national security cases in the first place.  It will create an impression of a list of state-approved judges and will undermine public confidence in the independence of the judiciary.
     Further, if the Chief Executive has the power to draw up a list of approved judges, it follows that she would have the power to remove any judges from the list.  In other words, the Chief Executive could decide who could and who could not try national security cases, and worse still, she may remove eligible judges from the list because she is not satisfied with their judgments.  It is the anti-thesis of judicial independence if judges could be appointed and removed at will by the Chief Executive.

Split Loyalty
Not all national security cases would involve the question of split loyalty.  When such a situation arises, the judge concerned would simply recuse himself.  This is the usual principle when there is a conflict of interests on the part of the trial judge.  There is no reason why this general principle could not address the problem of split loyalty.  There is no need for the Chief Executive to draw up a list of approved judges to address this issue.

Judicial Independence
Judicial independence is the cornerstone of the rule of law and the common law system.  The approach of the national security law is to restrict judicial power in national security cases.  What lies behind the arrangement is a lack of trust and confidence in the judicial system.  If the courts are not to be trusted; if restrictions are to be imposed here and there to confine the power or the jurisdiction of the judiciary; and if there is no confidence in judicial independence, it would be very difficult if not impossible to maintain One Country, Two Systems any further.

24 June 2020

Chinese Version:




所謂在大多數國家,法官任命都是一個政治過程,這論點值得商榷。法官的任命是司法獨立中最重要的一環,在大部份的普通法國家,法官任命都是一個獨立的過程,以保障司法獨立。雖然最後的任命可能是由行政長官作出,但這行政任命是禮節性而非實質性的。美國是唯一的例外, 美國聯邦法院的法官任命確實是一個政治任命,但總統提名的法官人選必須得到參議院的同意,而參議院是民選產生的,美國總統也是由民選產生的,這和香港目前的情況不能相提並論。




Wednesday, July 29, 2020

Richard Cullen on Moving Hong Kong beyond the Colonial Shadow (China Daily)

"Moving HK beyond the colonial shadow"
June 22 2020
In late 1984, China declared, in Article 1 of the Sino-British Joint Declaration (JD), that it would recover all of British Hong Kong with effect from July 1, 1997. In Article 2, the United Kingdom declared that it would restore Hong Kong to China on the same date.
     Almost 33 years later, in March 2017, the US State Department published a fact sheet entitled “Dependencies and Areas of Special Sovereignty”, where Hong Kong is listed. A special footnote explains that: “Under a Sino-British declaration of September 1984, Hong Kong reverted to Chinese control on July 1, 1997. It is now a semi-autonomous entity that exists pursuant to international agreement and maintains its own government apart from the People’s Republic of China.”
     Just 20 years after China recovered Hong Kong from the UK, Washington still speaks, in this note, of China as having “control” over a semi-autonomous Hong Kong, rather than sovereignty. Moreover, despite the fact that in the first two articles of the JD, both China and the UK each refer to making a declaration, the State Department claims that China’s control of Hong Kong arises from an agreement. 
     All Chinese governments since the 19th century have regarded the treaties governing Hong Kong (and other forced foreign concessions) as unequal and thus not valid at international law. This is a primary reason why the JD explicitly avoids the use of the term agreement. The JD signals a clear mutual understanding between London and Beijing that they shall each declare their position. 
     Oriol Caudevilla recently argued convincingly (China Daily Hong Kong Edition, on June 15, 2020, Don’t mistake Hong Kong for a foreign concession) that the HKSAR can never be regarded as some sort of foreign concession like the city of Tangier (now part of Morocco) was from 1923 to 1956. Yet this is a distinct impression which lingers when one reads this recent State Department fact sheet. Indeed, it sometimes feels like Washington still regards Hong Kong as a (manifestly successful) Far East version of Puerto Rico... Click here to read the full text. 

New Issue: HKU Law's SSRN Legal Studies Research Paper Series (June 23 2020)

Vol. 10, No. 8: June 23, 2020


Table of Contents

Haochen Sun, The University of Hong Kong - Faculty of Law

Dirk A. Zetzsche, Universite du Luxembourg - Faculty of Law, Economics and Finance, Heinrich Heine University Dusseldorf - Center for Business & Corporate Law (CBC)
Douglas W. Arner, The University of Hong Kong - Faculty of Law
Ross P. Buckley, University of New South Wales (UNSW) - Faculty of Law
Attila Kaiser-Yücel, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH

Anna Dziedzic, The University of Hong Kong - Faculty of Law, University of Melbourne - Melbourne Law School
Dinesha Samararatne, University of Melbourne - Law School, University of Colombo - Faculty of Law

Shahla F. Ali, The University of Hong Kong - Faculty of Law
Erick Komolo, Kenya School of Law (KSL), Strathmore University - Strathmore Law School

Shahla F. Ali, The University of Hong Kong - Faculty of Law

Monday, July 13, 2020

Interview with HKU Law Recipients of RGC Prestigious Fellowship in Humanities and Social Sciences

In 2019, two senior scholars of HKU's Faculty of Law were awarded the RGC Humanities and Social Sciences Prestigious Fellowship (HSSPF). Professor Johannes Chan was awarded HK$508,949 to study constitutional review and judicial independence under one country, two systems, asking whether the two systems are converging or diverging. Professor Frank He was awarded HK$494,000 to further his research on gendered divorce litigation in China. HKU Legal Scholarship Blog's Ivy Lai caught with both scholars to find out how they are progressing with their projects.

Thursday, July 9, 2020

Three Decades of International Financial Crises : What Have We Learned and What Still Needs to be Done? (ADB Paper Series)

"Three Decades of International Financial Crises:What Have We Learned and What Still Needs to be Done?"
Ross P. Buckley, Emilios Avgouleas, and Douglas W. Arner
ADB Economics Working Paper Series No. 615
Published in June 2020
Abstract: Fragility that periodically erupts into a full-blown financial crisis appears to be an integral feature of market-based financial systems in spite of the emergence of sophisticated risk management tools and regulatory systems. If anything, the increased frequency of modern crises underscores how difficult it is to diversify away systemic risk and that perceptions of perfectly stable financial systems are normally flawed, even if the source of the next crisis remains well concealed to the expert eye. 
     Although it is impossible to forecast a financial crisis with a high degree of accuracy and certainty, earlier crises always leave lessons useful in preparation for future crises, from whatever source. It is thus clear that the best way to deal with preventing and addressing major financial crises is to build the defenses of the financial system, including effective institutions, while at the same time trying to identify potential sources of crisis. We should take every opportunity to learn and work to build stronger and more effective financial systems. This paper compares and contrasts the three major crises of the past 3 decades, both to distill the lessons to be learned from them and to identify what more can be done to strengthen our financial systems. As the world addresses the financial impact of the COVID-19 pandemic, the centrality of these lessons is clear.

Brian Tang on Being a Successful 21st Century Legal Professional (HK Lawyer)

Brian Tang
Hong Kong Lawyer
June 2020
Lawyers as a profession have long been well known as domain experts, client advocates and problem solvers. However, there is increasing recognition and analysis of the broader core skillsets and mindsets required for lawyers and future legal service professionals to succeed. 

T-shaped lawyer 
The concept of the T-shaped professional has long been promoted in different contexts, from computing at IBM, to management consulting at McKinsey, and creative design at IDEO...

Delta Competency Model for Legal Professionals 
In 2018, a small group comprising law professors from Northwestern and Michigan State and legal professionals from Mayer Brown and legaltech giant Thomson Reuters met at a conference hosted at Michigan State's LegalRnD Lab run by Dan Linna. The group recognised the value of the T-shaped lawyer and the need for lawyers to expand their competency to process, data and technology, and then in the words of Northwestern Law School's Alyson Carrel "flipped the T-shaped Lawyer on its side" and added a third component, Personal Effectiveness Skills, to better capture the human element of lawyering that enables him or her to be a counselor and trusted advisor. Key personal effectiveness skills include relationship management, entrepreneurial mindset, emotional intelligence, communication and character. They called this the Delta Competency Model...

O-shaped lawyer 
Across the Atlantic, another initiative has emerged that is driven instead by 18 leading UK general counsel – ie, the important corporate clients of law firms and major users of legal services. The O-shaped lawyer (oshapedlawyer.com), as described by Network Rail’s General Counsel (Regions) Dan Kayne, exudes optimism and is open, opportunistic, original and takes ownership.... Click here to read the full text.