By setting a clear regional development strategy, the State Council’s Outline Development Plan (“Plan”) for the Guangdong-Hong Kong-Macao Greater Bay Area (“Greater Bay Area”) aims at coordinating the cooperation and development holistically among the nine Pearl River Delta Municipalities (including Guangzhou, Shenzhen Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen and Zhaoqing in Guangdong Province, the “nine PRD municipalities”) and the two Special Administrative Regions, Hong Kong and Macao.
The Greater Bay Area, covering a total area of 56,000 square kilometers, had a combined population of about 70 million and gross domestic product at around RMB70 trillion in 2017. Hong Kong, along with Macao, Guangzhou and Shenzhen, has been identified as one of the four core cities to drive and lead the development of the Greater Bay Area.
The Plan covers the immediate term from now to 2022 as well as the longer term to 2035. The framework, by which each city contributes its unique functionalities to complement the overall development of the city cluster, is to be established by 2022 and fully implemented by 2035.
Long Term Positioning
A number of areas mentioned in the Plan are relevant to the legal profession in Hong Kong. They are certainly important factors to consider when law firms and practitioners plan their long-term business and career development.
Hong Kong’s leading position as an international centre of finance, trade, asset management, transportation, aviation and legal and dispute resolution services is reaffirmed in the Plan. Leveraging on Hong Kong’s capabilities in these areas, the Plan supports Hong Kong to be the regional centre for IP trading, financing for high tech industries in the Greater Bay Area, mediation and arbitration with respect to economic and trade activities in the Greater Bay Area, servicing for investment, financing and resolution of commercial disputes arising from the Belt and Road Initiative and an active player in the operation of the Asian Infrastructure Investment Bank. The legal services to support the implementation of these strategic policies will be in demand.
Practice within Greater Bay Area
The Plan also highlights that further studies will be undertaken on practice qualification and scope of practice for Hong Kong legal practitioners in the nine PRD municipalities.
Modelling on our Overseas Lawyers Qualification Examination (“OLQE”), the Law Society has been lobbying for years for the adoption of a similar route to qualification as a Mainland lawyer for Hong Kong solicitors. The OLQE is a special examination set for legal practitioners qualified outside Hong Kong to gain admission as Hong Kong solicitors, giving proper regard to the practice experience of the candidates in their home jurisdictions. The development of the Greater Bay Area enhances the flow of capital, talent and knowledge creating opportunities of close interaction, exchanges and collaboration at all levels within the Greater Bay Area. Yet, taking into account the differences in culture, social and economic structures and legal systems, the process can be challenging. Mistrust often arises from a lack of mutual understanding. The facilitation of Hong Kong lawyers gaining Mainland legal qualifications through a special examination similar to our OLQE will incentivise more Hong Kong lawyers to actively pursue a better understanding of the Mainland legal system through studying for the examination. It will provide an avenue to enable experienced Hong Kong solicitors in identified practice areas to qualify as Mainland lawyers who will help strengthen the talent pool to support the growing demand for multi-jurisdictional legal services in the Greater Bay Area and nurture deeper mutual understanding of the differences in the legal systems. The Law Society takes every opportunity to explain this “win-win” proposal to the relevant authorities and in our recent visit to Beijing in April, the Council had a good discussion with the Ministry of Justice on it. We will continue to work on it.
The Plan also strongly supports the cooperation of Guangdong, Hong Kong and Macao law firms through partnership associations to strengthen the legal services industry in the Greater Bay Area.
However, as pointed out from time to time by the Law Society, the thresholds governing the establishment of partnership associations between Hong Kong law firms and Mainland law firms remain high. The Hong Kong law firm in a partnership association is subject to a limit in the capital injection ratio of not less than 30 percent and not more than 49 percent. There is also a total capital injection requirement of not less than RMB5 million to the association. Capital injection should be a matter for the parties to an association to decide.
Further, a partnership association set up in the China (Guangdong) Pilot Free Trade Zone is currently permitted to engage, in the name of the partnership association, Hong Kong and Macao lawyers, but not Mainland lawyers. Only law firms, not individual lawyers, are permitted to be partners of a partnership association.
The Law Society has been lobbying for a relaxation or removal of these rigid governing provisions. We took the opportunity to raise our proposals again with the Ministry of Justice in our April visit. We were pleased that we had received positive feedback from the Mainland authorities and we will continue to work hard to progress them.