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Following is the speech by the Secretary for Justice, Ms Elsie Leung at the People to People International Conference - 'The Promise of Asia: Hong Kong - A City in Transition' today (November 9):

Good morning, ladies and gentlemen. It is my great honour to address you this morning, and to welcome those of you who are visitors to Hong Kong.

We should all be thankful for President Eisenhower's vision. Promoting international understanding through direct people-to-people contacts is a mission that must appeal to all who value peace and goodwill.

I have no doubt that the need for such understanding is as great now as it was when PTPI was founded in 1956. As Hong Kong experiences its first few years under the unique concept of 'one country, two systems', we welcome greater international understanding of both our new constitutional order, and of the way in which it is operating.

PTPI 1988 Conference

When People to People International met here in 1988, the Reunification of Hong Kong and Mainland was still nine years away. Although the Sino-British Joint Declaration had been signed in 1984, Hong Kong's own mini-constitution, the Basic Law, was still being drafted and would not be finalised until 1990. 1997 has come and gone. For a few months before and after the Reunification, Hong Kong was the centre of world attention. In June 1997, Fortune Magazine made a pessimistic prediction that 'Hong Kong is Dead'. Earlier in September this year, Fortune Multi-Media selected Hong Kong as the location for its 2001 Fortune Global Forum. It shows that Hong Kong has survived the change of sovereignty and has remained essentially the same.

Change for the better

The theme that runs through the Sino-British Joint Declaration and the Basic Law is stability and prosperity. This is achieved by ensuring that all the Chinese government's principles and policies regarding Hong Kong shall remain unchanged for 50 years and be enshrined in the Basic Law of the HKSAR. The Basic Law particularly provides that the socialist system and policies shall not be practised in Hong Kong and the previous capitalist system and way of life shall remain unchanged; the social and economic systems, the system for safeguarding the fundamental rights and freedoms of its residents, the executive, legislative and judicial systems and the relevant policies shall be based on the provisions of the Basic Law. I would add that the Sino-British Joint Declaration is a binding international agreement registered with the United Nations and since it came into existence, China has been adhering faithfully to this treaty. The emphasis of the Joint Declaration and the Basic Law is on continuity. This gives some people the impression that Hong Kong is in a stalemate and that the clock should stop at mid-night on 30 June 1997. This is wrong. In the competitive environment of the 21st century, Hong Kong will not survive if it does not retain its vibrancy and continue to grow and develop. Hong Kong is very much a city in transition - a change for the better.

The Effect of Reunification

First I would like to deal with the transition in our constitutional status, and its impact on our legal system. Later on, I will discuss some of the other changes that are affecting Hong Kong as a city in transition.

The legal system

When Hong Kong was under British administration, the common law system applied. The system in the Mainland is, however, based on the civil law system. Many people around the world were, and are, interested in knowing whether Hong Kong could retain its distinctive legal system after becoming a Special Administrative Region of the PRC. The answer is a resounding 'yes'.

Article 18 of the Basic Law provides that national laws shall not be applied in Hong Kong except those listed in Annex III which shall be confined to those relating to defence and foreign affairs as well as other matters outside the limits of the autonomy of Hong Kong as specified by the Basic Law.

Article 8 of the Basic Law ensures that the laws previously in force in Hong Kong, that is, the common law, rules of equity, ordinances, subordinate legislation and customary law shall be maintained, except for any that contravene the Basic Law, and subject to any amendment by the legislature of Hong Kong.

In February 1997, the Standing Committee of the National People's Congress, acting under Article 160 of the Basic Law, adopted all the laws previously in force, save for 24 Ordinances which were found (in whole or in part) to contravene the Basic Law. This means that the common law principles, and nearly all the 600-odd Ordinances, that were previously in force, continue to apply in Hong Kong SAR.

In the early hours of the l July 1997, the Provisional Legislative Council enacted the Hong Kong Reunification Ordinance which endorsed the re-appointment of judges, confirmed the re-establishment of courts and the continuity of legal proceedings, vesting of rights, continuance of public service, the right of barristers, solicitors and notaries public to continue their practices, and ratified the bills passed before the l July 1997 in anticipation of the Reunification. General principles for adaptation of laws laid down by the Standing Committee of the National People's Congress(NPCSC) were also incorporated into the Ordinance, although the textual amendments of the Laws of Hong Kong takes some time. I would emphasize that the adaptation exercise mainly relates to appropriate terminology, rather than to the substance of the law.

Apart from the transition of laws, there are specific guarantees in the Joint Declaration and the Basic Law to ensure the maintenance of the legal system:

* an independent judiciary with security of tenure,

* the use of the English language, in addition to Chinese, in the courts,

* reliance on judicial precedents from other common law jurisdiction,

* an independent public prosecution service,

* the continuing ability of overseas lawyers and law firms to practise in Hong Kong,

* a Hong Kong based Court of Final Appeal, which has replaced the Privy Council in London as the final appellate court for Hong Kong,

* a requirement that the International Covenant on Civil and Political Rights as applied to Hong Kong shall remain in force and shall be implemented through the laws of the HKSAR.

The Judiciary

An independent judiciary is very essential in upholding the rule of law. Article 81 of the Basic Law provides that the judicial system previously practised in Hong Kong shall be maintained except for those changes consequent upon the establishment of the Court of Final Appeal of the HKSAR. The judges of the Court of Final Appeal were all appointed by the Chief Executive, in accordance with the recommendations of an independent Judicial Officers Recommendation Commission('JORC'), and those appointments have been endorsed by the legislature.

The jurisdiction and procedures of the Court of Final Appeal were modelled on those of the Judicial Committee of the Privy Council. The system of appeals therefore follows a familiar path, but appellants benefit from the fact that the highest appellate court is now in Hong Kong, not in the other side of the world. The other courts and tribunals that were previously in existence were re-established on 1 July 1997. The only changes that took place were the re-naming of certain of those courts.

I mentioned earlier that the Basic Law provides that the courts of the HKSAR shall exercise judicial power independently, free from interference. This provision is underpinned by other articles in the Basic Law which require judges to be appointed by a majority of 7 out of 9 members of JORC. The Commission comprises representatives of the Bar Association and the Law Society, as well as distinguished members of the community. Judges enjoy security of tenure.

The continuity of the judiciary was achieved on 1 July 1997 when the Chief Executive, acting in accordance with the recommendations of the JORC, re-appointed all judges who were in service on the previous day. Most of the judges retiring since the Reunification served beyond their normal retirement age of 65 years. They were not dismissed, nor did they resign because they were not happy with the new regime.

Bilingualism in Law

Until 1989, laws were promulgated only in English in Hong Kong. Since then, laws have been enacted in both English and Chinese languages whilst translation of the pre-existing legislation into Chinese was completed by May 1997. Until comparatively recently, the Hong Kong courts operated only in the English language, and evidence given in Cantonese had to be translated. The process of using Chinese language in the courts has been a gradual one, and started in the magistracies in 1974.

Whilst the increasing use of Chinese as an official language both in and outside the courts is of immeasurable value to the community, since it removes a language barrier, helps to de-mystify the law and promotes the ideal that the law belongs to the people, great care has been taken to ensure that the quality and integrity of the legal system are not compromised by the use of the Chinese language, particularly in the common law system where a lot of reliance is placed on precedents. Continuous efforts have been made by the Judiciary as well as the Department of Justice, the legal profession and the universities in promoting bilingualism in law so that equal importance is given to the two languages as stated in Article 9 of the Basic Law. These developments in no way prejudice English-speaking individuals or businessmen that make Hong Kong their home or business-centre.

International Rights and Obligations

Hong Kong is an international business and financial centre. It benefits from many international agreements, which play a vital role in facilitating its legal and commercial links with the international community.

About 200 multilateral international agreements continue to apply to the Hong Kong SAR, and were unaffected by the Reunification. These include agreements in the fields of civil aviation, merchant shipping, private international law, protection of labour standards, and customs cooperation. They also relate to many international organisations in which Hong Kong participates, such as the World Trade Organisation, the Asia Development Bank, the World Health Organisation, the Customs Cooperation Council, the International Maritime Organisation, and the World Intellectual Property Organisation. Hong Kong has ratified the following human rights conventions : ICCPR, ICESCR, CEDAW, ICRC, ICAT and ICEAFRC.

Reunification did, however, mean that the SAR had to build up its own bilateral agreements. In accordance with the Basic Law and in some cases with the authorisation of the Central People's Government, the SAR is able to negotiate and conclude bilateral agreements in areas such as air services, investment promotion and protection, surrender of fugitive offenders, mutual legal assistance, and transfer of sentenced persons etc. A number of bilateral agreements have already been concluded. Negotiations are continuing with additional partners in order that a reasonably comprehensive framework of bilateral agreements can soon be in place.

The impact of Reunification on the legal system therefore is a mixture of continuity and change. The system is essentially the same, but is underpinned for the first time by a written constitution. The judiciary is essentially the same, but is headed for the first time by a local Court of Final Appeal. Legislation and litigation are essentially the same, but bilingualism has taken hold for the first time. Our multilateral international agreements remain firmly in place, but we have to build up our bilateral agreements.

Legal developments since Reunification

That mixture of continuity and change is reflected in legal developments since Reunification. I would like to outline two significant developments - constitutional litigation and the right of abode issue.

Constitutional litigation

As I mentioned earlier, the fact that we now have a written mini-constitution - the Basic Law - enables litigants to challenge legislation, and government administrative action, on the basis that it is unconstitutional. This is a process that is well known to those of you from the United States, but is new in Hong Kong.

On the first day that the SAR courts opened in July 1997, the validity of all common law offences, and of all laws enacted by the Provisional Legislative Council, and indeed its own constitutionality, were challenged on the basis that they contravened the Basic Law. Needless to say, those challenges created great public interest! However, I am happy to report that they were rejected by the Court of Appeal.

Since then, other claims that the Basic Law has been contravened have been made. For example two years ago, two individuals were prosecuted for desecrating the national flag and the regional flag by publicly and wilfully defiling them. The defendants claimed that the offences with which they were charged contravened freedom of expression, which is guaranteed by the Basic Law. The case went all the way to the Court of Final Appeal, which held in December 1999 that the offences were a justifiable restriction on freedom of expression. The court emphasized that they only banned one mode of expressing a message, including criticising the government, and did not interfere with the freedom to express the same message, by other modes. In the particular case, we introduced for the first time the use of 'Brandeis brief' which we borrowed from the American system to provide the court with materials to reflect social sentiments in constitutional cases.

The right of abode issue

The most controversial litigation since Reunification is related to the the right of abode cases. The Basic Law specifies who has the right of abode in Hong Kong, and the Immigration Ordinance contains further provisions on this issue. Some individuals brought proceedings, claiming that provisions in the Immigration Ordinance which denied them the right of abode were inconsistent with the Basic Law. The government opposed this claim and was largely successful at first instance and in the Court of Appeal. However, the Court of Final Appeal upheld the claim and struck down the relevant provisions in the Immigration Ordinance.

The decision caused great concern to the government and to the community. It was estimated that, as a result of the decisions, an additional 1.67 million people from the Mainland would be entitled to settle in Hong Kong within the next decade or so. The demand in education, housing, social and medical services would be a colossal burden on the government if our population were increased by 25% within 10 years. There was strong community call for this position to be altered. Since the domestic legislature does not have the power to amend the Basic Law, the Administration approached the NPCSC to interpret those provisions of the Basic Law relevant to the issue. The power of interpretation of law by legislature is unique in the Chinese legal system and is unheard of in many common law jurisdictions. The interpretation given by the Standing Committee in June last year was a lawful and constitutional way to resolve a problem that Hong Kong could not have itself resolved which could have posed a serious threat to the continued stability and prosperity of Hong Kong.

I will not pretend that this solution was not controversial. But I do not accept that either the rule of law or the independence of the judiciary has been undermined as a result because (1) the NPCSC has only power to interpret the Basic Law but not the other laws enacted in Hong Kong; and (2) whether the Interpretation will apply to a particular case, the interpretation of the Interpretation and the effective date of the Interpretation, etc. are to be decided by the courts of Hong Kong. Indeed, four senior retired judges have publicly expressed their view that judicial independence has not been affected by these events.

Nevertheless, the SAR Government hopes that it will not in future be faced with a problem of the magnitude of the right of abode problem that can only be solved by an approach either to the National People's Congress or its Standing Committee.

Our overseas position

In June 1997, a District Court in the United Sates held that a Hong Kong company could not institute legal proceedings in the US State Courts on the ground that it was not a citizen or subject of a foreign state (see Matimak Case). In November 1999, a US Federal Court held that a Hong Kong company, being a Chinese legal person, could invoke the alienage jurisdiction of the US courts (See Favour Mind Case). Earlier on, a District Court in the US refused to surrender a fugitive offender to Hong Kong on the ground that Hong Kong not being a state, could not enter into an agreement with the US on the surrender of fugitive offenders according to the US laws. On the 24 May 2000, a US Federal Court of Appeal overturned this decision, confirming the validity of the agreement signed between the HKSARG and the US Government on the surrender of fugitive offenders and agreeing that the fugitive offender should be returned to Hong Kong.

Through these cases, we now have a better understanding of the relationship between the Central People's Government and HKSAR, the interface of the Basic Law and the domestic laws, and the status of Hong Kong as a Special Administrative Region of the People's Republic of China. With the accumulation of precedents, the local and foreign communities gradually acknowledge that Hong Kong is now under a new constitutional order, and that the legal system of the HKSAR must continue to develop to maintain its vitality.

Maintenance of human rights

From what I have described above, you would be surprised why, if Hong Kong has undergone such smooth transition, are the negative media reports? They claim that Hong Kong's rule of law and judicial independence being impaired, freedom of press and academic freedom, and freedom of expression and freedom of demonstration being violated and that there is retrograde of democracy. I would ask you to see for yourselves, whilst in Hong Kong, whether people do enjoy the rights and freedoms promised by ICCPR and the Basic Law. Thousands of people claiming their right of abode still have the confidence to submit their cases to the courts for adjudication. Would they do so if they have no confidence in our judiciary? Turn over the pages of newspapers and look at the criticisms they have of the Government. Don't they enjoy press freedom? Universities have complete autonomy over the determination of their goals, programmes, management and staff etc. They continue to conduct public opinion polls which are not in favour of the government. Don't they enjoy academic freedom? People are hosting demonstration almost every day on all issues ranging from educational and civil reforms to protection of prostitutes, right of homosexuals or the right to demonstration without complying with any regulatory measure. Don't they enjoy freedom of assembly and of demonstration? Things speak for themselves.

Under the ICCPR, few rights and freedoms are absolute. They are subject to such reasonable restrictions as are necessary in a democratic society for the protection of national security, public safety, public order and morale and rights of others. What you see actually confirms the findings of the European Commission and European Parliament i.e. Hong Kong remains one of the freest societies in Asia. This is confirmed by Mr. Tony Blair, Prime Minister of the United Kingdom , who remarked in the recently published First Magazine that the Government of Hong Kong has exercised the high degree of autonomy promised in the Sino-British Joint Declaration and the Basic Law of Hong Kong, that the way of life and essential freedoms of the Hong Kong people remain intact, and Hong Kong remains a great international city.

Many controversies arose to a large extent because of the mentality of some people in Hong Kong, particularly intellectuals. As I have mentioned, our emphasis, during the period leading up to the Reunification, was on maintaining the systems formerly existed in Hong Kong. We are anxious to maintain these systems because we cherish the values of such systems, e.g. the rule of law, the principles of equality before the law, the presumption of innocence etc. and would jealously protect them. Under the colonial rule, people lived on borrowed time in a borrowed place. Many of them were not willing to take roots in Hong Kong. With the approach of the Reunification, they had the feeling that we were standing at a precarious moment in our history, that the future of the people of Hong Kong was inseparable from that of China, but they had neither the faith in the future of China, nor that of Hong Kong. Whilst accepting that the concept of 'one country, two systems' is a creative totem of ideological pragmatism, they would have rejected the metamorphosis of Hong Kong from a British colony to Special Administrative Region if there were any alternatives. Therefore, whenever there is a perception that any right or freedom is likely to be threatened, they would raise hue and cry, but often it was no more than a perception.

During the years leading up to the Reunification, many reforms were held in abeyance. The problems have become aggravated with the passage of time and the needs for change become imminent. It is always the pace and priorities in reform that people cannot agree upon. For example, the pace of democracy. Democracy means more than one man one vote. It means that whilst the will of the majority prevails, the voice of the minority get heard. Having been under colonial rule for 156 years, democracy has to come progressively and steadily. This was the consensus reached for political reform when we published the White Paper and the Green Paper in the eighties. The consensus is reproduced in the Basic Law and we have to abide by the provisions in the Basic Law.

It takes time for the government to convince people that their fears and perceptions are not justified. It is a healthy sign of a society that moves forward that controversial issues may be freely debated and the good sign is it that those supporting the government are no longer the silent majority, and you have more people willing to stand up and speak on any public issue which might not affect them personally.

Hong Kong's evolution as an international city

That brings me to the second aspect of my theme - 'A City in Transition' - Hong Kong's remarkable ability to adapt to a changing world.

In the 1950's, the UN trade embargo against China's involvement in the Korean War provided the catalyst for the birth of the great 'Made-in-Hong Kong' era. It was an era that would last almost three decades. The entrepreneurial spirit flourished, and the rewards of hard work and enterprise became obvious to more of the community than ever before.

In the 1960s, the social upheavals of the Cultural Revolution spilled over into Hong Kong. Hundreds of thousands of relatives and friends flooded into Hong Kong from the Mainland. Social services, health care, schools and housing were under an enormous strain. But we coped, and moved onto better things.

In the 1970s, Hong Kong overcame the difficulties of a world recession sparked by the OPEC oil crisis, while the end of the Vietnamese War brought a new wave of arrivals to our crowded city.

As we entered the '80s, Deng Xiaoping's opening up of China changed forever the face of Hong Kong economy. Within the space of two decades most of our manufacturing industries relocated to the Mainland, taking advantage of cheaper land and labour. In turn, we have become the services and marketing centre for the booming markets of Southern China and beyond. Indeed, Hong Kong is the largest external investor in all of Mainland China, with total investments of about US$156 billion.

Services now account for 85% of our economy. Hong Kong became very good at making things happen, rather than simply 'making things'. Management, marketing and design; transport and logistics; accounting, legal and corporate services; finance and insurance. All of these value-added services are carried out in Hong Kong by a well-educated and flexible workforce.

China's greater openness brought new opportunities not only for Hong Kong business concerns. International companies flocked to Hong Kong, to tap into our language and cultural links as well as our experience and acumen in dealing with the Mainland.

As local and international businesses reached into the Mainland, the need for investment capital and financing increased., Hong Kong has grown to become the world's fourth largest banking centre. We have the biggest stock market in Asia behind Japan.

The birth of the SAR, with the Hong Kong people running Hong Kong, provided the platform on which to build new strategies for growth, prosperity and pride in our new identity. The onslaught of the Asian financial turmoil posed another unexpected challenge. It brought with it the chance to respond with the restructuring required to meet the ever-growing demands of globalisation in the new century.

A series of long-term strategies have taken shape in recent years. For example:

(1) Hong Kong now has one of the world's most liberalised telecommunications markets;

(2) The over-dependence on property has been broken;

(3) The stock and futures markets and their clearing houses have been merged and demutualised and are being plugged into the most sophisticated of e-trading systems;

(4) A Mandatory Provident Fund (MPF) has been launched to provide protection for an ageing population. Initially, the MPF will inject $10 billion annually into the financial markets, rising to $60 billion annually by 2030;

(5) A set of initiatives, including the opening of Hong Kong Disneyland near the Hong Kong International Airport is designed to revitalise the tourism industry;

(6) A far-reaching strategy is in place to tackle environmental problems;

(7) A $100 billion railway building programme will help improve living standards by expanding the transport network mainly in the New Territories, open up new areas for development and provide a powerful new impetus to Hong Kong's cross-boundary capabilities;

(8) Finally, set against the backdrop of China's anticipated accession to the World Trade Organisation (WTO), Hong Kong commands the advantages of natural access and cultural and linguistic links to the Mainland from which to launch a new chapter in its remarkable story of growth.

Conclusion

In conclusion, I hope I have been able to give you some indication of the way in which Hong Kong is a city in transition. The constitutional transition has come and gone and all the cornerstones of our way of life remain firmly in place - the rule of law, the protection of human rights, and an independent judiciary.

It is a matter of time that China will enter into WTO when its markets, including services, will be open to other countries. It will soon ratify the ICCPR and ICESCR. China will have to meet the international standards of economic order and human rights. Hong Kong's experience will be useful in assisting China to fulfil its obligations under these international agreement and conventions. The concept of 'one country, two systems' shows how transfer of sovereignty could be achieved without violence and disturbance and may be a lesson for resolving disputes elsewhere in Asia and in other parts of the world.

In his recent Policy Address, the Chief Executive Mr. Tung Chee-hwa recalled what he said in his manifesto. It runs:

"I see a stable, equitable, compassionate and democratic society with clarity of direction and unity of purpose; I see an increasingly affluent and well-educated population, proud of our new identity and our Chinese heritage; I see an economy that is one of the most important in the world; I see Hong Kong, as a Special Administrative Region of China, making significant contributions as China emerges as a leader amongst the community of nations."

That was his vision for Hong Kong and that is what we are striving for. The promise of Asia must be : equitable and sustainable development economically, socially and politically, and Hong Kong as a city of transition is heading towards this direction.

Thank you.

End/Thursday, November 9, 2000

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