The Rule Of...?

Deck: The legal system is a cornerstone of Hong Kong's economic might. Now, it's under attack

For much of 1997, barrister Audrey Eu has been arguing her toughest case ever. The 43-year-old chairman of the Hong Kong Bar Assn. is leading a nasty political fight against recent China-backed moves to reshape Hong Kong's legal system. She has been writing articles, lobbying policymakers and personally confronting Hong Kong's new boss C.H. Tung about how he and his advisers are tampering with Hong Kong's Bill of Rights, restricting political groups, and gaining sway over the selection of judges. The changes "have given rise to a lot of discomfort and anxiety," she says.

For Eu and other legal experts, these are troubling signs that Hong Kong's new rulers are willing to bend the system to accommodate China. The rule of law is a cornerstone of Hong Kong's economic influence. Without it, few international investors would have confidence in Hong Kong's future. Dent the legal system, and Hong Kong will be run like any other Chinese metropolis where the politically connected rule and the courts are often ignored. "When they put political considerations above the law, that's where the slipping begins," says Joseph Yu-shek Cheng, political scientist at City University of Hong Kong.

Some laws are already changing. China's handpicked representatives on the Provisional Legislative Council are approving proposals to tighten restrictions on public demonstrations and to stymie opposition political groups. Laws governing protest were liberalized in the final years of British rule, but the Chinese government wants them changed. Tung's advisers, including former Chief Justice Yang Ti Liang, argue that the statutes are simply bringing the legal system into sync with the Basic Law, Hong Kong's new constitution that will come into effect on July 1.

BEIJING'S BIDDING. But to Tung's critics, it all seems like just a way to justify doing Beijing's bidding. "They've never managed to give convincing reasons" that current laws are unconstitutional, says barrister Margaret Ng, a Beijing critic who is a member of the elected legislature that China is disbanding. The legal system has already begun deteriorating, she contends, and without a strong legal barrier between Hong Kong and China, "it will be very difficult to control interference."

For many local business leaders, a government that controls dissent may actually be a good thing. Indeed, the current business sentiment is that Tung should use his new authority to maintain stability and thus keep Beijing from any kind of heavy-handed intervention. Business cares about a "rule of law for foreign disputes," says James P.C. Tien, chairman of the Hong Kong General Chamber of Commerce, "not for protests and students demonstrating."

SLIPPERY SLOPE. But perhaps business should care. Many lawyers in Hong Kong say that trading off rights to please Beijing puts Hong Kong's legal system on a slippery slope. Bending laws for political convenience leads to Chinese-style rule by corruption and connections. A weakened Bill of Rights and court system could hurt businesses that are regulated by powerful government bodies. If you can't rely on the courts to fight government actions you'll turn to well-connected individuals who can, observes Neville Sarony, a local lawyer. "That will give enormous employment to Mr. Fix-its," he says.

Hong Kong is certainly vulnerable to inroads from a guanxi-style system. Even under the British, cronyism has been alive and well. Already, Beijing companies are able to buy stakes in some local stocks at steep discounts. And laws against insider trading, only recently passed, are not enforced vigorously.

The markets in Hong Kong are far less transparent than those in Singapore, says Peter D. Everington, chairman of Hong Kong-based Regent Fund Management Ltd. "So much gets swept under the carpet." When it comes to rules on disclosure, transfer of assets, and directors' roles, "Hong Kong is in the 19th century," he maintains.

Tung's supporters vow to be vigilant about preserving the legal system. Corruption and nepotism "come in quietly," says former Chief Justice Yang. "The danger is in five, six, seven years time, you find these things are very widespread." Legal experts worry, too, that plans to use Chinese in the courts may weaken the common-law system, which is based on English around the world.

"MATTER OF PRINCIPLE." Hong Kong's legal system won't crumble overnight, of course. Like Audrey Eu, many of the territory's lawyers, judges, and political activists are independent and strong-willed. They will fight any attempts to undermine the law and the courts. "We have a strong, independent bar," says Nihal Jayawickrama, a human-rights and constitutional law professor at the University of Hong Kong. And there have been some encouraging signs. Hong Kong's new chief justice, for example, will be respected barrister Andrew Li Kwok-nang, who was favored by Tung, rather than a more pro-Beijing candidate.

As the debate thunders on, Tung's supporters argue that the legal purists are misguided. Revamping laws on civil liberties and political demonstrations will in the end reassure Beijing that Tung won't allow Hong Kong to be a base for embarrassing anti-China activities they say. And that might make a healthier relationship with China that will ultimately give Hong Kong more autonomy. "The intention is to make the Chinese government feel at ease, to protect Hong Kong against China's wrath," says Lau Siu-kai, a sociology professor at the Chinese University of Hong Kong who supports Tung's legal moves.

That argument has yet to sway Eu. She vows to continue her fight. "It's a matter of principle," she says. The next big legal showdown will come soon when Hong Kong courts have to decide on the sensitive constitutional issue of whether the provisional legislature to be sworn in by Beijing on July 1 has any legal standing. Lower courts may rule against China, but there is no doubt that Beijing will win in the end: China's National People's Congress has the final say on interpreting Hong Kong's constitution. The strength of Hong Kong's legal system may ultimately ride on how often China decides to use that power.

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