Nation's top legislature rules SAR's courts have no jurisdiction over African republic

The Standing Committee of the National People's Congress (NPC) on Friday adopted an interpretation of certain articles of the Basic Law, stipulating that SAR's laws must "be consistent with the rules or policies on state immunity that the central government has adopted".

The interpretation effectively means that the Hong Kong's Court of Final Appeal has no jurisdiction in a case arising from debts owed by the Democratic Republic of the Congo (DR Congo) to a US firm.

The interpretation of Articles 13 and 19 of the Basic Law by the NPC Standing Committee had been requested by the city's highest court when it was confronted with the case.

Deputy Director Li Fei of the Legislative Affairs Commission of the NPC Standing Committee told a news conference that the interpretation will not affect Hong Kong's business environment.

Instead, it gives investors an expectation that a stable, longstanding legal system will safeguard their investments, Li said.

He also said the diplomatic immunity will not be taken advantage of by China's State-owned enterprises to evade debts in Hong Kong, as it only applies to foreign entities.

Speaking in Beijing, Rita Fan, a member of the NPC Standing Committee, said the interpretation of the Basic Law provisions is a "milestone" and it will not affect the principle of "One Country, Two Systems".

Commercial acts have nothing to do with sovereign powers, she said.

Chairman Anthony Wu of Hong Kong General Chamber of Commerce said the interpretation will not at all affect the business environment in Hong Kong, as very few companies will be involved in diplomatic immunity.

To the contrary, Wu said, it clears investors' doubts about diplomatic immunity.

The NPC Standing Committee on Friday reached a unanimous decision on the interpretation of the Basic Law provisions after a three-day meeting.

In accordance with the Basic Law, foreign affairs and the defense of Hong Kong are handled by the central government, which also decides the policy on diplomatic immunity.

China offers absolute diplomatic immunity to DR Congo. As a result of the interpretation, Hong Kong courts should follow suit when dealing with litigations they ruled.

It was the fourth time the NPC Standing Committee had been requested to make an interpretation of the Basic Law, but the first time the request has been made by the judiciary.

The case had been brought by a US vulture fund, FG Hemisphere Associates, which was attempting to recover an unpaid debt of around $100 million from the African republic.

FG Hemisphere was not the original creditor, but it purchased the debt from a Yugoslav company which had contracted to build infrastructure projects in DR Congo in the 1980s.

The republic defaulted on payment. The US firm chose Hong Kong as the venue for legal action as China Railway Group, which entered into infrastructure projects with DR Congo in 2008, is a Hong Kong-listed company.

Since DR Congo asserted Hong Kong should follow China's absolute diplomatic immunity policy instead of limited diplomatic immunity under the common law system, the Court of Final Appeal sought interpretation from China's top legislature.

According to Li, after the NPC Standing Committee has made its own interpretation of the provision, the city's highest court will make its final judgment on the basis of the interpretation.

joseph@chinadailyhk.com

China Daily

(HK Edition 08/27/2011 page1)