Capitalise on the GBA development

It has been a great honour for me to attend the ceremony to mark the 40th anniversary of the establishment of the Shenzhen Special Economic Zone. Shenzhen has developed rapidly in the past 40 years with remarkable results, which are very promising. In his speech at the ceremony, President Xi Jinping mentioned that the development of the Guangdong-Hong Kong-Macao Greater Bay Area should be further manoeuvred, describing it as a major national development strategy in which Shenzhen is a “core engine”. President Xi also highlighted the importance of grasping the significant and historical opportunities brought by the development of the Greater Bay Area, strengthening the regulatory interface and connectivity of the economy of the three places.

Since the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area (the Outline Development Plan) was announced last year, the Department of Justice has been actively communicating with relevant Mainland authorities to reflect views and expectations of the department and Hong Kong legal sector, which are carefully considered by the Central Authorities. It demonstrates the unique position and advantages enjoyed by the HKSAR under the “One Country, Two Systems” principle.

I am delighted to learn that the guidelines of the pilot programme for Hong Kong and Macao legal practitioners to obtain Mainland practice qualifications and to practise law in the nine Pearl River Delta municipalities in the Guangdong-Hong Kong-Macao Greater Bay Area allow solicitors and barristers with five years of post-qualification experience to apply for the examination. Young legal practitioners will be able to grasp the opportunities brought by the development of the Greater Bay Area. Relevant legal training to be organised by the Ministry of Justice will help better equip Hong Kong's legal practitioners for the examination.

The guidelines published by the General Office of the State Council set out the requirements for the legal professional qualifying examination, the scope of practice and more. I outline the following provisions in the guidelines which are relevant to Hong Kong legal practitioners.

(1) Eligibility for examination:

* Hong Kong permanent residents who are Chinese nationals;
* Upholding the Constitution of the People’s Republic of China and the Basic Law of the HKSAR;
* Qualified solicitors or barristers with five-year post- qualification experience.

(2) Examination

* Legal practitioners can sit for the examination after attending the training course organised by the Ministry of Justice.

(3) Practising

* Hong Kong legal practitioners who passed the examination are required to enroll in a training course organised by the Guangdong Lawyers’ Association and undergo an assessment before they can apply to the Department of Justice of Guangdong Province for practice.

(4) Scope of practice

* Legal practitioners, who have obtained the legal qualification (for practice in the Greater Bay Area), can provide legal services regarding specified civil and commercial affairs (including litigation and non-litigation matters) to which the Mainland laws are applicable in the nine Mainland cities of the Greater Bay Area.

Since 2004, Hong Kong residents have been allowed to sit for the National Judicial Examination (now known as the National Unified Legal Professional Qualification Examination). However, the passing rate is far from satisfactory. The newly introduced measures will no doubt encourage more lawyers from Hong Kong to take part in the examination and provide legal services, after obtaining Mainland practice qualifications, to enterprises with investment in the Greater Bay Area. It will help the expansion of our professional legal services and further identify business opportunities. At the same time, enterprises which retain Hong Kong lawyers who are qualified for practice in the Greater Bay Area as well as in Hong Kong will be able to access to legal advice which form a solid legal basis of their investment, thereby attracting more investment in the area and leading to a win-win situation, reflecting the mutually beneficial relationship between the two places.

In addition, there are already various measures under the CEPA that facilitate the legal sector in developing the Mainland market, including association in the form of partnership and arrangement for Hong Kong legal practitioners (including barristers) retained as legal consultants by Mainland law firms. The Department of Justice will continue to enhance our collaboration on judicial and legal services with our counterparts in Guangdong and Macao under the Outline Development Plan.

The Department of Justice of Guangdong Province announced in August last year the “Trial Measures of the Department of Justice of Guangdong Province on Hong Kong Law Firms and Macao Law Firms Operating in the Form of Partnership Association with Mainland Law Firms in Guangdong Province (2019 Revision)” in which further liberalisation measures relating to partnership associations set up between Mainland and Hong Kong law firms in the Guangdong Province were implemented. These include the removal of the minimum capital injection ratio of 30 per cent by Hong Kong partner firms in the partnership associations set up between Mainland and Hong Kong law firms, as well as allowing Mainland and Hong Kong lawyers to be employed direct in the partnership associations’ own name with a view to encouraging more Hong Kong law firms to expand their business in the Guangdong Province. Also, Hong Kong legal practitioners, including barristers, are benefitted under the “Agreement Concerning Amendment to the CEPA Agreement on Trade in Services”, in which the current restriction of retention of Hong Kong solicitors and barristers as legal consultant by only one Mainland law firm has been relaxed, allowing them to be retained as legal consultant by no more than three Mainland law firms at the same time.

The amendment to the Shenzhen Special Economic Zone Qianhai Shenzhen-Hong Kong Modern Services Cooperation Zone Regulations was passed in August. Article 57 of the amendment allows Hong Kong, Macao, Taiwan and foreign-funded enterprises registered in the Qianhai cooperation zone to choose, by agreement, applicable laws in civil and commercial contracts. This liberalisation measure represents a breakthrough, indicating that the 11,000 enterprises registered in the Qianhai cooperation zone may now choose applicable laws, including Hong Kong laws, when entering into civil and commercial contracts.

We are now exploring and studying the possibility of introducing an initiative to allow “Hong Kong-owned enterprises to adopt Hong Kong laws and arbitration to be seated in Hong Kong”. We hope that wholly owned Hong Kong enterprises (WOKE) in the Greater Bay Area, in the absence of any foreign-related elements, may choose the law of Hong Kong as the applicable law when entering into civil and commercial contracts, and decide to choose Hong Kong as the seat of arbitration when disputes arise. Therefore, the agreement on choosing Hong Kong laws or using Hong Kong as the seat of arbitration will not be considered invalid due to the absence of any foreign-related elements. This initiative, if successfully implemented, will become another piece of good news to the Hong Kong legal sector and business and attract more investment in the Greater Bay Area.

The Constitution of the PRC and the Basic Law have laid a solid foundation for "One Country, Two Systems" which provides Hong Kong with a unique status and advantages. The plan on implementing pilot reforms in Shenzhen to build the city into a demonstration area of socialism with Chinese characteristics for the 2020-2025 period announced earlier calls for a higher level of cooperation between Shenzhen and Hong Kong, as well as improvement of cross-border cooperation in the area of the rule of law, international legal and dispute resolution services. We must seize the opportunity, capitalise on our strengths and complement with Shenzhen so as to achieve a win-win situation.

October 26, 2020