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Following is the speech by the Secretary for Justice, Ms Elsie Leung at the Symposium on "The Implementation and Prospects of 'One Country, Two Systems'" in Commemoration of the 9th Anniversary of the Promulgation of the Basic Law today (Saturday):

Madam Ko, Ladies and Gentlemen,

I am greatly honoured to be invited to speak on the 9th anniversary of the promulgation of the Basic Law of the Hong Kong Special Administrative Region.

In this speech, I will discuss developments under the Basic Law in three important areas, namely adaptation of laws, court challenges to legislation and acts of the executive, and mutual legal assistance between the Hong Kong SAR and the Mainland.

Adaptation of Laws

First, the adaptation of laws programme. Following Reunification, the laws of Hong Kong needed to be adapted in order to bring them into conformity with the Basic Law and with Hong Kong's status as an SAR of the People's Republic of China ("the PRC"). For example, references to "Governor" needed to be replaced by references to the "Chief Executive".

In the past year, a number of adaptation ordinances have been passed. They dealt with a wide range of matters, including references to foreign countries, courts and tribunals, interpretative provisions and nationality related matters. Twenty-six other adaptation bills have been introduced and are now going through the legislative process.

Amongst the provisions that were adapted last year was section 66 of the Interpretation and General Clauses Ordinance (Cap 1). This stated that the Crown was not bound by any Ordinance unless the Ordinance contained an express provision, or a necessary implication, to the contrary. This provision reflected a common law principle that applies in almost all common law jurisdictions. It was a rule of interpretation that did not create any privilege for the Crown. If any Ordinance was intended to bind the Crown, and this was so stated or implied, the Crown would still be bound by it.

In adapting the reference to the "Crown" in section 66, great care was taken to ensure that the scope of the new provision mirrored that which had applied before 1 July 1997. The purpose of the exercise was adaptation, not law reform. After careful consideration both in my Department and in the Legislative Council, the word 'Crown' was replaced by the word 'State', which was defined so as to encompass corresponding organs of the PRC.

The adaptation of the provision therefore did no more, and no less, than preserve the substance of the law before Reunification and reflect the change in sovereignty. It has, however, given rise to a number of misconceptions. Some press reports stated that Chinese State-owned Enterprises had been given a special status in the SAR. This is quite wrong. The definition of "State" expressly excludes any organs that exercise commercial functions. And assertions that the relevant State organs are "above the law" are equally misleading. No one ever asserted that the British Government, the British Forces in Hong Kong, or the former Hong Kong Government were above the law - because they were not. The same position holds true of the SAR Government and the relevant State organs.

The assertion that section 66 of Cap 1 was amended in order to shield the New China News Agency is also mistaken. The section was amended because it was necessary to adapt the provision to reflect Reunification. It did no more than reflect the resumption of sovereignty.

Judicial Challenges in Relation to the Basic Law

Let me turn now to judicial proceedings relating to the Basic Law. The new constitutional order brought about by Reunification has given an impetus to constitutional litigation. I regard that litigation as a welcome sign that Hong Kong's rule of law is in robust good health. It demonstrates the independence of the judiciary as well as the important constitutional status of the Basic Law: Article 11(1) of the Basic Law provides that no law enacted by the legislature of SAR shall contravene the Basic Law.

Regulation of the Civil Service

Last year saw two court decisions on constitutional litigation relating to regulation of the civil service. The first decision concerns the localization of colonial instruments for the administration of the civil service after 30 June 1997. Before Reunification, the regulation of the civil service was achieved by means of Colonial Regulations, issued by the Secretary of State to the Governor, and regulations made under them by the Governor. After Reunification, the Chief Executive issued an Executive Order in respect of the civil service, under Article 48(4) of the Basic Law, and issued regulations under that Order. These instruments were challenged by the Association of Expatriate Civil Servants. The Basic Law requires that the previous system in respect of public servants "shall be maintained", and that the appointment and removal of public officers shall be "in accordance with legal procedures". It was argued that these requirements had not been satisfied, as the new scheme had not been approved by the Legislative Council. The court rejected the challenge, holding that the previous system was established by executive action and could therefore be maintained in a similar manner.

The court did, however, declare that public officers were not bound by one provision which prohibited a public officer under interdiction from leaving the SAR without permission. It was held that this was a restriction on the freedom to leave the SAR, protected by Article 8(2) of the Bill of Rights, and the restriction was not "provided by law". The court therefore declared that holders of public office to whom the Executive Order applies were not bound by that restriction.

The other court decision relating to regulation of the civil service concerns the SAR Government's policy to develop a civil service which is at least bilingual in Chinese and English. The case was also brought by the Association of Expatriate Civil Servants, and the subject of the litigation was a circular issued by the Civil Service Bureau in November 1997 on the arrangements relating to applications for transfer to the permanent establishment by overseas officers on agreement terms. The judicial challenge proceeded on various grounds. One argument was that the decision of the Secretary for the Civil Service to apply the Chinese language proficiency requirement (as one of the criteria for considering applications for transfer) to overseas officers with permanent resident status and serving before 1 July 1997 was in contravention of Article 100 of the Basic Law.

Article 100 of the Basic Law provides that "Public servants serving in all Hong Kong government departments, including the police department, before the establishment of the Hong Kong SAR, may all remain in employment and retain their seniority with pay, allowances, benefits and conditions of service no less favourable than before."

The court dismissed the challenge and upheld the lawfulness of the arrangements under the Civil Service Bureau's circular. It held that Article 100 was designed principally to ensure continuity of employment so that no public servant suffered as a consequence of the transition itself. It was not intended to prohibit the introduction of new measures for the good governance of Hong Kong, including a measure to promote a bilingual Civil Service. This decision is highly relevant to the recently proposed civil service reforms.

Right of Abode

Without doubt, the constitutional cases which received most public attention in the past year were those relating to the right of abode in the SAR.

There has been an obvious need for Hong Kong to control the flow of immigrants from the Mainland, both before and after Reunification. Since 1982, the control of such immigrants had been achieved through a One Way Exit Permit System, which involved a daily quota of permits issued by the Mainland authorities. This system had worked well.

The Reunification introduced a new factor in respect of immigration, since Article 24 of the Basic Law confers a right of abode in the SAR on a number of categories of people. The effect of that article is to confer a right of abode in the Hong Kong SAR on tens of thousands of children born and raised in the Mainland who have not previously had such a right. If all these children arrived at once, the impact on local social support services would have been extremely difficult to bear.

The SAR Government therefore introduced amendments to the Immigration Ordinance, which took effect from 1 July 1997, to implement a Certificate of Entitlement Scheme in respect of Mainland children. The legislation provided that, to enjoy their right of abode, they must hold a valid travel document, which in practice meant a valid One Way Exit Permit issued by Mainland authorities, to which there was affixed a valid Certificate of Entitlement issued by the Department of Immigration. In order to obtain such a Certificate, they were required to prove to the satisfaction of the Director of Immigration that at least one of their parents had the right of abode in the Hong Kong SAR.

That Certificate of Entitlement was challenged before the SAR courts as being inconsistent with the Basic Law. On 29 January 1999, the Court of Final Appeal ("the CFA") delivered its judgments in four test cases relating to Chinese nationals born outside Hong Kong who claimed the right of abode. Time does not permit me to go through the judgments in detail. Therefore I would only briefly mention some salient points.

One of the issues which the CFA had to deal with was whether it had the jurisdiction to interpret the relevant provisions of the Basic law in adjudicating the cases in question or was bound to seek an interpretation of such provisions from the Standing Committee of the National People's Congress pursuant to Article 158 of the Basic Law.

On this reference issue, the CFA held that it was under a duty to make reference to the Standing Committee of the National People's Congress for interpretation if two conditions were satisfied:

a) First, the relevant Basic Law provision was an excluded provision, namely it concerned either affairs which were the responsibility of the Central People's Government, or the relationship between the Central Authorities and the Hong Kong SAR. The CFA referred to this as "the classification condition".

b) Secondly, the CFA in adjudicating the case needed to interpret such a provision and such interpretation would affect the judgment on the case. The CFA referred to this as "the necessity condition".

The CFA held that it was for it and for it alone to decide whether the above two conditions were satisfied. The test for whether the classification condition (i.e. whether the provision was an excluded provision) was satisfied, was what, as a matter of substance, was the predominant provision that had to be interpreted. If it was an excluded provision, the CFA was obliged to refer. If it was not an excluded provision, then no reference had to be made, although an excluded provision was arguably relevant to the construction of the non-excluded provision even to the extent of qualifying it.

In the CFA's opinion, the predominant provision to be interpreted in the cases before them was Article 24, and that being so, it did not have to make a reference to the Standing Committee of the National People's Congress. The fact that Article 22(4) (which provides that for entry into the Hong Kong SAR, people from other parts of China must apply for approval) was arguably relevant to the interpretation of Article 24 did not affect the court's decision in this respect.

Another issue which the CFA had to deal with was whether the Provisional Legislative Council was a legally constituted body. If not, it would follow that the legislation establishing the Certificate of Entitlement Scheme enacted by the Provisional Legislative Council would be unconstitutional. The CFA held that the Provisional Legislative Council had been validly constituted in accordance with the decision of the National People's Congress adopted on 4 April 1990.

The CFA also upheld the following aspects of the Certificate of Entitlement Scheme:

a) that a person claiming the right of abode under Article 24(2)(3) of the Basic Law must apply for and obtain a Certificate of Entitlement;

b) that such a person can only establish his status by holding a Certificate of Entitlement; and

c) that he must stay in the Mainland until the application procedures are completed.

The CFA held that the following aspects of the Certificate of Entitlement Scheme were inconsistent with the Basic Law:

a) the requirement for the Certificate to be affixed to a One Way Permit;

b) its retrospective effect from 1 to 9 July 1997;

c) its requirement that children born out of wedlock to derive their right of abode through their mother and not through their father; and

d) its exclusion of persons whose parents did not have the right of abode at the time of their birth.

Two aspects of the CFA's judgments in January gave rise to expressions of deep concern. One aspect was the consequences for Hong Kong of the immigration of persons who, in accordance with the CFA's judgments, have a right of abode here. Concern was expressed, both here and in Beijing, that the judgments would result in a large number of people coming here and exerting a great strain on Hong Kong's resources.

Concerns were also expressed about statements in the judgments regarding the relationship between the CFA, the National People's Congress, and the Standing Committee of the National People's Congress. The CFA had stated that the courts of the SAR had the jurisdiction to examine whether legislative acts of the National People's Congress or its Standing Committee were consistent with the Basic Law and to declare them to be invalid if found to be inconsistent. Some commentators, both here and in Beijing, regarded those statements to mean that the CFA had put itself above the National People's Congress, and that it had given itself the right to scrutinise and oversee each legislative act of the National People's Congress.

The Administration needed to address these issues. It considered a number of options, including applying for rehearing, awaiting fresh proceedings on the constitutional issue, asking the CFA to issue a practice direction, and applying for clarification of part of the judgment which related to the National People's Congress and its Standing Committee. The last option was eventually taken. An application to the CFA was duly filed, and the hearing took place on 26 February 1999.

The CFA ruled that it was prepared to take the exceptional course under its inherent jurisdiction of stating the following:

"The courts' judicial power is derived from the Basic Law. Article 158(1) vests the power of interpretation of the Basic Law in the Standing Committee. The courts' jurisdiction to interpret the Basic Law in adjudicating cases is derived by authorization from the Standing Committee under Articles 158(2) and 158(3). In our judgment on 29 January 1999, we said that the Court's jurisdiction to enforce and interpret the Basic Law is derived from and is subject to the provisions of the Basic Law which provisions include the foregoing.

The Court's judgment on 29 January 1999 did not question the authority of the Standing Committee to make an interpretation under Article 158 which would have to be followed by the courts of the Region. The Court accepts that it cannot question that authority. Nor did the Courts judgment question, and the Court accepts that it cannot question, the authority of the National People's Congress or the Standing Committee to do any act which is in accordance with the provisions of the Basic Law and the procedure therein."

It must be underlined that the above statement did not depart from the original judgments. It has, however, helped to dispel some of the concerns that were previously expressed about the judgments.

The application to the court has itself given rise to concerns. In particular, it has been said that, by making the application, the Administration had put political pressure on the court and had undermined the independence of the judiciary. I reject this allegation. Courts exist for applicants. If an application is misconceived, the courts are perfectly able to dismiss it.

Moreover, the Administration did not subject the CFA to any political pressure whatsoever. To regard the application itself as applying political pressure on the court is entirely wrong. The CFA itself regarded the application as proper in the exceptional circumstances, since it proceeded to entertain it and clarify the position. Anyone who suggests or implies that judges of the CFA would or may give in to political pressure of any sort is manifestly not familiar with the calibre and the integrity of the judges who man the CFA.

In my view, the application to the CFA have been entirely beneficial to Hong Kong. It has led to a better understanding of issues of great constitutional, public and general importance. The rule of law, independence of the judiciary, and faithful implementation of the Basic Law have all been strengthened. Indeed, the positive ramifications of the CFA's clarification statement on the constitutional development of the SAR cannot be stressed too strongly. It has enabled us to move forward in the historic constitutional project of "one country, two systems", the success of which is critical to modern China and, of course, the SAR itself.

Uncharted Waters

The CFA's decisions and the controversy arising from them have highlighted the fact that, since 1 July 1997, we have been sailing through uncharted waters. The interplay between the Chinese Constitution and the Basic Law are new to us, but must be grasped if we are to have a proper understanding of our new constitutional order. In this regard, I believe that the legal profession and academics can make valuable contributions to the ongoing debate.

I note that useful views have recently been expressed by academics and practising lawyers on, among other things, the criminal jurisdiction of the Mainland and the SAR; the powers of the Standing Committee of the National People's Congress and the SAR courts to interpret the Basic Law under Article 158; and the procedures for amending of the Basic Law under Article 159. On these and many other Basic Law issues which are yet to be clearly resolved, I am optimistic that we can together work out satisfactory solutions which live up to the breadth of vision and high ideals of the principle of "one country, two systems".

Recently, the judgment on the defilement of the national flag and regional flag was delivered. As the Government is appealing against the decision of the Court of Appeal, I am prohibited from saying more on the case by the rule of sub-judice.

Mutual Legal Assistance

Another important area to be developed under the Basic Law is that of mutual legal assistance between the Hong Kong SAR and the Mainland. Progress in this area has been encouraging. For instance, in January this year, an agreement was signed in respect of the mutual service of judicial documents in civil and commercial proceedings between the Mainland and SAR courts. This agreement was made pursuant to Article 95 of the Basic Law which provides that the SAR may, through consultations and in accordance with law, maintain juridical relations with the judicial organs of other parts of the PRC, and they may render assistance to each other. The agreement provides the necessary rules to regulate the service of judicial documents in civil and commercial proceedings between the SAR and the rest of China, and fills the vacuum created when the relevant Hague Convention ceased to apply to cross-boundary service after Reunification. Following this agreement, appropriate amendments have been introduced to the Rules of the High Court to give effect to its terms. It is our first experience under Article 95 and is a step in the right direction. I am sure that it will lead to other forms of mutual legal assistance.

In November last year, major principles were agreed with relevant Mainland authorities on the new arrangements for direct and mutual recognition and enforcement of arbitral awards between the SAR and the Mainland. A draft agreement is being discussed, with only a small number of issues still outstanding. Since Reunification, the New York Convention no longer applies as between the SAR and the Mainland. However, the approach adopted in the discussions between the SAR Government and the Central People's Government is that the enforcement of arbitral awards should be based on the principles set out in that Convention. Given the widespread acceptance of those principles, it is believed that this approach should be widely welcome. When implemented, the proposed new scheme for the reciprocal enforcement of awards between the SAR and the Mainland will involve few substantial changes to the scheme that existed before 1 July 1997. The progress of the discussions between the SAR Government and the Central People's Government is encouraging. It is hoped that agreement will be reached shortly.

These positive developments are examples of close cooperation between the Mainland and the SAR. With such cooperation, and the consolidated effort of the SAR Government and the people of Hong Kong, I trust that our collective enterprise of translating the high principles and values enshrined in the Basic Law into reality will be a huge success.

Conclusion

In conclusion, I am pleased to report that there have been significant developments in the SAR's constitutional law in the past year. Steady progress has been made in the adaptation of laws exercise. The body of jurisprudence developed by SAR courts has facilitated a better understanding of the implications and effect of the Basic Law, and provided important guidance for its faithful implementation. Important steps have been taken to develop mutual legal assistance between the SAR and the Mainland.

Although we have less than two years' experience of operating under the Basic Law, its strengths are already apparent. The fact that controversial issues have arisen should come as no surprise. Every new constitutional order must throw up such issues. In the case of the Basic Law, the situation is further complicated by the existence within one country of two different socio-economic and legal systems. This is all the more reason why we must all strive to improve mutual understanding of the two systems. I am confident that, with goodwill on both sides and improved mutual understanding, the controversial issues that must from time to time arise can all be satisfactorily resolved within one country in accordance with the Basic Law.

End/Saturday, April 10, 1999

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