Face to Face with Teresa Cheng Yeuk-wah GBS SC JP Secretary for Justice of Hong Kong

Teresa Cheng, who was appointed as Hong Kong’s Secretary for Justice last year, has been in her role during one of the most tumultuous periods in the city’s history – the 2019 extradition-bill protests. In this wide-ranging interview with the Hong Kong Lawyer, she discusses the impact of these protests on the city’s legal system, and the resilience of Hong Kong that will help it overcome the current challenges.

As we speak, protests continue in Hong Kong even though the extradition bill has been withdrawn. How do you expect the situation to play out?

Ultimately, all this violence will no doubt stop. We hope it is sooner rather than later. We expect people will continue to enjoy the rights of freedom of speech and the freedom of assembly as they always have. We also hope very much that we will revert to a situation where all citizens will respect the rule of law and will abide by the law.

I can see three outcomes here. First, we would have learnt and improved, particularly the way we work and we think. We will also be able to improve on our infrastructure in terms of our laws, governance, procedures and methods. As we progress we have already seen there are areas for improvement. Second, we would have acknowledged our deep-seated conflicts and our symptomatic problems, and thus be able to address them. This may not happen immediately, but at least we will effectively grapple with the issues that we have at hand and resolve them one by one. The third is that our rule of law will actually be reinforced. People will ultimately come and appreciate the importance of abiding by the law themselves, and therefore be able to understand the importance of the rule of law from a citizen’s point of view. Our judicial system will be reinforced in the sense that it will have worked very well.

Do you feel there are things that either you could have done as the Secretary for Justice, or the government could have done, earlier in the process that may have been able to reduce the duration and intensity of the protests?

What has happened cannot be undone. As the chief executive noted, the whole communication strategy perhaps has to be improved. We all recognised, additionally, that we should listen more to the young people, and understand them. We should communicate with them in a way that we will be able to see things from their perspective. Finally, we would also need to communicate better with the legislature, and also the political parties of all different affiliations. That is how we should formulate policies in the future, by enhancing our communications throughout all the stages.

Do you worry that the protests could make Hong Kong a less attractive venue for dispute resolution in the long run? If yes, what measures need to be taken to restore the faith in Hong Kong’s courts and arbitral institutions?

I think there may be some impact in the short run, but Hong Kong has a very strong foundation when it comes to the rule of law. It has a mature common-law tradition, and a very strong independent judiciary. Also, the arbitration culture is well-developed, and this will help Hong Kong ride out the storm. We will bounce back.

The Hong Kong International Arbitration Centre (HKIAC) and the China International Economic and Trade Arbitration Commission (CIETAC) Hong Kong Arbitration Center have told me that as far as hearings are concerned, they have not been affected. Foreign arbitrators are continuing to come here to sit in arbitration hearings, and have experienced no hiccups or disruptions. The unrest and the violence have fortunately not impacted the work directly.

Importantly for Hong Kong, the interim-measures arrangement with the Mainland came into effect on 1 Oct. This will secure Hong Kong’s long-term position in the arbitration community. Another development is the study of outcome related fee structures for arbitration - the Law Reform Commission approved the review recently.

We feel we can offer parties a complete package of legal services. When our reciprocal enforcement of judgments arrangement with the Mainland is put into force, we will be the only jurisdiction in the world that has IP-related cases enforced in the Mainland. All these things put Hong Kong in a unique position when it comes to legal and dispute resolution services.

One of the key sticking points has been the allegations of extra-legal methods employed by the police in quelling the protests. The government has commissioned the Independent Police Complaints Council (IPCC) to carry out an inquiry into the events. Can you tell us how this will work, and in your opinion, what are some of the goals it needs to achieve in order to alleviate the current heated environment?

We need to start by first looking at what existing infrastructure we have. Therefore, the IPCC has started looking into the complaints regarding police actions and alleged abuse of police power.

The IPCC has indicated that they will look at the events from 9 June to 2 July, and has also extended the scope of the fact-finding study to cover the events after 2 July. We expect it to provide a first phase report by the end of the year. It has already started the process by engaging international experts to provide views, opinions, and advice. It will thus not only be making reference to international standards, but the fact-finding exercise will be able to put things in context. The IPCC has been proactively appealing to the public for related information to facilitate it to examine and clarify facts. So, when it has all the information at hand, it will be able to provide a more complete picture.

The government recently passed an anti-mask law. How effective do you think it will be?

Forgive me if I do not go into too much detail, as judicial review cases are still pending. But the Emergency Regulations Ordinance provides the Chief Executive in Council the power to pass certain regulations. On any occasion which the Chief Executive in Council considers to be an occasion of emergency or public danger, she may make regulations she considers desirable in the public interest. The Prohibition on Face Covering Regulation is one such regulation.

As the Chief Executive has mentioned, the Regulation has been passed to deal with the public danger that we have at hand. The legislative intent is to deter people from further violent acts and to assist the police in its investigative work and the execution of its law enforcement duties.

As we all remember, a lot of the violence was committed by people wearing facial coverings, which concealed their identity. We hope that it will have a deterrent effect, and perhaps assist the police in law enforcement. The freedom of expression, the freedom of assembly, freedom of speech are of course guaranteed under our Basic Law. But these rights are not absolute, and they can be subject to certain restrictions. The Regulation prohibits the wearing of facial coverings in lawful and unlawful public order events, unless there is lawful authority or reasonable excuse. If you have a cold or are in a private place, the law doesn’t prohibit you from wearing it. So, it has very limited impact on one’s daily life. We have to strike a balance of such restriction with the public interest and the aim to restore law and order.

The other thing that is introduced in the Regulation is that the power of the police to request one to remove the mask in order to verify identity, after which one will be able to put the mask back on.

But of course, we will have to await the court’s decision of the judicial review. However, it would be useful to look at the reason for decision of application for interim relief suspending the regulation. The court said “it would be wrong to assume for present purposes that the law would not be obeyed, and it would be wrong not to allow a law that might objectively be justified otherwise to come into effect because there might be people who would resort to violence or other unlawful means in protest against it.” It is a very important message. When this is the right thing to do, this will have to be done. This is after all, a time of public danger, and the current public order situation is not what I would call normal.

Among other professions, lawyers have been prominent in the city’s protests as well. What role would you like to see lawyers play in bringing the current crisis to a resolution?

It is not really for me to say. But if I am thinking as a lawyer, I feel it’s important to act in a professional manner, with full observance of something we all believe in – the rules of natural justice. This means that one must understand and appreciate the views from different sides. One must also keep an open mind, and form a balanced view, and consider all relevant circumstances and evidence before coming to a conclusion.

As a lawyer, opinions on a particular event have a bearing on the broader community. Therefore, expressions of opinions should be more carefully considered. It’s important as a lawyer to denounce the mindless acts of lawlessness. It’s also important for a lawyer, particularly, to defend our judiciary against arbitrary and unfair criticisms. It’s very important that we protect the independence of the judiciary.

Lawyers need to be professional when expressing views, and refrain from conflating professional advice with one’s political inclinations. Being balanced, objective, informed is very important.

In spite of this summer of upheaval, many Hong Kongers have faith in the city’s resilience and the ability to overcome obstacles. Are you one of them? How do you see Hong Kong five or ten years from now?

Those who know our fundamentals, those who know our history, will tell you that they will have faith in Hong Kong’s future. They would know Hong Kong’s resilience, and Hong Kong’s ability to recover.

We went through the Asian Financial Crisis of 1997, and we learned from it. Likewise, we survived SARS in 2003, when property prices significantly dropped. We learned from that too, and were able to ride out the Global Financial Crisis of 2008.

The second point I want to mention is our fundamentals, including our strong rule of law and our very mature and well-regulated financial and securities markets. Every time we weather a storm, we come out better and stronger. That has been Hong Kong’s experience, and Hong Kong’s resilience is not just a slogan; it is a fact.

Looking ahead, first in the short term, we will capitalise on the opportunities of the Greater Bay Area initiatives.

Secondly, in the longer term, Hong Kong’s position as a deal making, and dispute resolution hub will be enhanced. We are working to increase the use of Hong Kong law and Hong Kong’s arbitration and mediation service. Given our deal making and dispute-resolution experience, we will be able to innovate and come up with fresh ideas and develop a hybrid conglomeration of mediation and arbitration in order to serve the community better.

I also believe we will have a stronger rule of law. By that time the protests will have finished, and I expect the criminal cases will have been dealt with in a very fair, independent way. So, when we come through it, people will have even stronger faith and belief in our systems. They will see the independence of our judiciary and our independent prosecutorial function clearly.

We will also focus more strongly on technology. We will have our online dispute resolution platform – the eBRAM system – ready.

As mentioned in the policy address, next year, we will launch a ten-year project which is called “Vision 2030 for Rule of Law”. This will highlight the inclusiveness of rule of law, access to justice, and that is consistent with why the Department of Justice set up the Inclusive Dispute Avoidance and Resolution (IDAR) office in January this year. This dedicated inclusive platform will further reinforce and promote the rule of law.

You are Secretary for Justice during one of the most tumultuous periods in Hong Kong’s history. What are some of the important lessons you feel you have learned during your tenure? If you had a chance to start it again, how if at all would you adapt your approach to the rigors of the job?

I had been in the private sector all my life prior to taking up this role last year. Working in the government has allowed me to see some differences. For example, I think there are more formalities and procedures than in the private sector. The considerations that have to be taken necessarily lead to a more cautious approach. I also find, for example, that the government understandably has a lower tolerance for risk-taking. Therefore, we are perceived to be lacking in innovation, and also imagination in taking things forward.

But all of this is not unique to just the Department of Justice, or the Government of Hong Kong. I think all the governments in the world will have to be like that if they are to be prudent and responsible. So one has to adapt to, and cater for that because you do not expect a government to take risks arbitrarily and without much thought.

If I had appreciated that move earlier, I would take into account the procedures and to plan for the formalities better.

I would have, for example, worked harder to encourage my colleagues to conclude and implement cooperation or partnership arrangements locally and with other jurisdictions and international organisations. I would be more flexible and innovative to take on new initiatives.

I would also have perhaps appreciated the careful thoughts of my colleagues and worked more closely with them to bring forth and addressed some of their considerations earlier. So, there are things that no doubt I can improve on.

Moving to mediation and arbitration, how is Third Party Funding working now that the law is in force?

We have adopted what we call a “Light Touch” approach because this is intended to allow the industry to develop, together with the Code of Practice for Third Party Funding of Arbitration, the standards by which the third-party funders are ordinarily expected to comply with in carrying out the activities. One of the very important things when people talk about third-party funding is the question of transparency.

In our code, we require the funded party to disclose to the other party and the arbitral tribunal the existence of a third-party funding arrangement, the identity of the third-party funder, and the termination of such funding arrangements when it takes place. This transparency is important because it reduces conflicts of interest. In some other jurisdictions, legal representatives are required to do the disclosure. If the lawyer doesn’t, then the particular lawyer may be subject to disciplinary actions. I think our way is better. We feel that by putting the burden on the funded party to disclose it is more direct, genuine, and would be more accurate.

We also have set up an advisory body to monitor and review the operation of the regime after three years and then ultimately to see whether there is a need to either further relax or tighten the code of practice which I believe has provided a very good guidance for third-party funding for international arbitrations.

The code of practice for third party funding of mediation is under discussion.

Should Hong Kong follow up and allow some sort of conditional fee arrangements for lawyers, if only limited to arbitration? Singapore has published a proposal in this regard. Is there a risk of HK falling behind (many other jurisdictions also allow lawyers to charge conditional type fee arrangements)?

The Law Reform Commission has set up a sub-committee to study outcome related fee structures for arbitration. At present, Hong Kong lawyers are prohibited from charging outcome related fee in arbitration. Lawyers in some jurisdictions could offer flexible fee structures to clients in arbitration. If outcome related fee arrangements are not allowed in Hong Kong, we may be losing out in the competitive market for dispute resolution service. Calling it outcome related fee structures, as proposed by one of the members of the Advisory Committee on Promotion of Arbitration, gives it a little bit more flexibility than contingency fee or conditional fee. The Outcome Related Fee Structures for Arbitration Sub-committee under the Law Reform Commission is reviewing the current position, consider whether reform is needed and, if so, make such recommendations for reform as appropriate.

The reciprocal enforcement of interim measures regime between HK and the Mainland came into force on 1 October 2019. What do you see as the benefits of that arrangement?

The Arrangement has been recognised by local and international arbitration practitioners as a game changer. Hong Kong is the first and only jurisdiction outside the Mainland where, as a seat of arbitration, parties to arbitral proceedings administered by eligible arbitral institutions would be able to apply to the Mainland courts for interim measures. One has to start by understanding that Mainland courts do not grant interim measures in aid of foreign arbitrations. Hong Kong, in the context of Mainland law, is seen as “foreign” because it’s outside the Mainland boundaries. So, prior to the Arrangement, only parties to Mainland arbitrations could go to Mainland court to seek interim measures.

With the Arrangement in place, parties to arbitral proceedings seated in the Hong Kong and administered by one of the eligible arbitral institutions will enjoy the rights to apply for interim measures before the Mainland courts, whether before the commencement of the arbitration or during the arbitral process, and irrespective of the nationality or domicile of the parties involved.

A lot of our transactions have a China related element: there might involve a Chinese party or Chinese investment or the project is in China or the goods are in China. This game-changing measure prevents one of the parties from deliberately destroying the evidence or transferring the property and also ensures that the arbitral proceedings can be carried out effectively.

It came into force only on the 1st Oct. As of 8th Oct there is already an application in the Shanghai Maritime Court and it has been successfully implemented. According to the HKIAC, another four are already in the pipeline.

There will be procedures under Chinese laws that have to be followed. The Department of Justice and the Supreme People’s Court have also organised a training session to teach practitioners how to operate under the new Arrangement at the HKIAC.

Are there other potential law reforms or legal developments for example in relation to the United Nations Convention on International Settlement Agreements Resulting from Mediation (the “Singapore Convention on Mediation”), the United Nations Convention on Contracts for the International Sale of Goods (the “CISG”), etc. in HK?

Yes, there are a lot. For example, the CISG, we’ve already discussed it at the Panel on Administration of Justice and Legal Services of the Legislative Council and we will be doing a consultation. This is important because along the Belt and Road countries, the majority is CISG Contracting States or it plays a major role in their contracts. Hong Kong is not a party to the CISG.

Next year is the 40th anniversary of the CISG and we’re holding the Asia’s anniversary programme in Hong Kong with UNCITRAL.

Under the Belt and Road Initiative, we are working, for example, with the Ministry of Commerce, State-Owned Assets Supervision and Administration Commission to establish a dialogue platform for Hong Kong lawyers and Chinese enterprises to discuss legal problems, so that they get more familiar with our services and we get more familiar with their needs.

There is the Greater Bay Area development. We have set up a joint platform with the Department of Justice of Guangdong Province, the Office of the Secretary for Administration and Justice of the Macao SAR, and the Department of Justice, to look at how the three jurisdictions can cooperate and enhance our development in legal and dispute resolution services in the Greater Bay Area. The first project we are going to do is to look at a mediation platform to understand how we should formalise the code of ethics for mediators, the rules, the register, and the qualifications. This will help us form standard and guidelines for the Greater Bay Area. Mediation is the first thing; another initiative we are pursuing is to try to see in the Greater Bay Area, in what one might call no foreign related element contracts, ie two Mainland parties entering into a contract in the Mainland and do not involve Hong Kong or Macao, whether the parties can choose Hong Kong law as their applicable law and whether they can choose Hong Kong as the place for arbitration. It is of course not easy as we are seeking to enter into other people’s market but there are also benefits in attracting
investments.

Other measures would be enhancing the legal services practice, setting up a special scheme for Hong Kong lawyers to take exams for PRC qualified lawyers, for practicing only in the Greater Bay Area and in certain limited areas of practice.

Another initiative is the Hong Kong and Mainland arrangements with the Supreme People’s Court. We are looking at cross-border insolvency and hoping to reach some agreements by next year.

With regard to the Singapore Convention on Mediation, China has already signed but not yet ratified it. We welcome the Convention because it encourages parties to mediate more.

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Lead Legal Editor, Hong Kong Lawyer