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Parties entering into foreign-related contracts in the Mainland are encouraged to negotiate and execute their contracts in Hong Kong, choose the law of Hong Kong as the applicable law and the court or the arbitral institutions of Hong Kong as the forum for dispute solution, the Secretary for Justice, Ms Elsie Leung said today (September 20).
Addressing the opening of the "Conference on China's Accession to World Trade Organisation: Implications for Legal Education and Training in Hong Kong", Ms Leung said, "this would increase the foreign investors' confidence in investing in the Mainland, relieve some of the pressure that the Mainland courts might face at the early stage of China's accession to WTO and will provide opportunities for Hong Kong lawyers".
According to the law of China, parties to most foreign-related contracts may choose Hong Kong law, Hong Kong courts or Hong Kong arbitral organs to settle their contractual disputes.
"According to Article 145 of the General Principles of Civil Law and Article 126 of the Contract Law of China, the parties to a foreign-related contract may choose the applicable law for the settlement of contractual disputes, unless otherwise stipulated by law.
"In addition, under Article 244 of the Civil Procedure Law, parties to a dispute over a contract concluded with a foreign element, or over property rights and interests involving a foreign element may, through written agreement, choose the court of the jurisdiction which has practical connections with the contract to settle their disputes.
"According to this stipulation, if any dispute has practical connections with Hong Kong, the parties involved may choose the exclusive jurisdiction of Hong Kong courts for the solution of disputes. The place where a contract is signed can be regarded as a signal of practical connection concerning the contract.
"Article 15 of the Law on Chinese-foreign Equity Joint Ventures and Article 26 of the Law on Chinese-foreign Contractual Joint Ventures both provide that disputes arising between the parties to an equity joint venture, which the board of directors has failed to settle through consultation, may, upon agreement of the parties, be settled through arbitration by an arbitration agency of China or through arbitration by another arbitral organ, including arbitral organs of Hong Kong," Ms Leung explained.
"Foreign businessmen will find it appealing. It is internationally recognized that the legal system of Hong Kong is comparatively sound. It adopts the common law, to which foreign businessmen in general are familiar. The official languages of Hong Kong are Chinese and English," Ms Leung said.
"The proposal is beneficial to the Mainland. Should foreign businessmen insist on using foreign law as the applicable law and a foreign court as the venue for resolution of disputes, the Mainland parties may as well choose the courts and the laws of Hong Kong as the applicable law.
"Hong Kong and the Mainland are parts of the same country. The people of the two jurisdictions speak and write the same language and are of the same race. Mainland parties can communicate directly with lawyers in Hong Kong.
"With their experience and international perspective, Hong Kong lawyers are in a position to provide high quality professional services. Hong Kong lawyers are more willing to transfer their expertise to their colleagues in the Mainland so as to enforce the development of the legal professions of both places," Ms Leung said.
"The proposal is, of course, most beneficial to Hong Kong. Apart from bringing new opportunities to Hong Kong lawyers, the proposal will strengthen the status of Hong Kong as an international financial and service centre providing strong support to foreign businessmen investing in the China market," Ms Leung said.
End/Thursday, September 20, 2001
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