Laws of Banking and Finance in the Hong Kong SAR (review)

One of the best arguments for exponentially increasing the training of international lawyers and businesspeople in the comparative languages, cultures, and mindsets of their several worlds is that the differences and problems are so numerous and subtle. They multiply geometrically across the water, especially between two languages and cultures that organize the world so differently as English and Chinese. World-class executives must know this.¹ Chinese speakers and English speakers process information in different ways.² How do such differences play out in international law and business?

Once Americans obtain some grounding in the "common law," it is easy for them to think that doing business in a place like Hong Kong will be a breeze because, of course, Hong Kong, too, is (or was) a common-law country with its legal roots in Britain.³ Or they may assume that its capitalistic legal system is overwhelmingly the construct of the "optimizing choices" of individuals. Such naive heuristics can lead to disaster.⁴ An American lawyer might assume that Laws of Banking and Finance in the Hong Kong SAR is merely another "Restatement " of what is so familiar in U.S. law, without realizing that other and different kinds of forces are at work in Hong Kong law. The need is great for deep study of both comparative law and preventive law across cultures and languages.

Hence my interest, as an American lawyer and language teacher, in this new book by Berry Hsu, an associate professor of law at the University of Hong Kong, and a barrister and solicitor trained in Canada, England, and the United States. He is the author of the 1992 volume, The Common Law System in Chinese Context: Hong Kong in Transition.⁵ Hsu gives us glimpses of a legal system that has a familiar (common-law) ring to it yet in subtle but substantial ways is all its own. It is a book that raises many questions and concerns beyond banking and finance.

Hsu's lengthy opening chapter, "The Legal Framework of Banking and Finance, " caught me by surprise at almost every page. Americans who are inclined to think that no good thing can come out of the communist government in Beijing will be surprised to learn that the new People's Republic of China Hong Kong Special Administrative Region Basic Law (hereafter the Basic Law),⁶ which took effect at the handover of Hong Kong to China in 1997, might actually reflect a few of the constitutional principles Americans hold so dear: separation of powers and checks and balances, to name but two.⁷ There has never been a test case quite like the present Hong Kong. The Basic Law guarantees that Hong Kong will retain its present form of capitalistic, democratic government for fifty years after the 1997 handover.⁸ Article 109 of the Basic Law mandates that the Hong Kong Special Administrative Region (HKSAR) provide "an appropriate economic and legal environment for the maintenance of the status of Hong Kong as an international financial center."⁹ The lessons that come out of that fifty-year experiment will show the world much about politics and money.¹⁰

Hsu's thesis is that Hong Kong does not have that status now, has never had it, and does not yet have the "appropriate economic and legal environment" to make it so in the near future (pp. 293-304). Hence—and here is the surprise—the mandate of the Basic Law actually purports to create a "new legal order" in Hong Kong out of the patchwork, laissez-faire, and cronyism of the colonial past—that is, new for Hong Kong and new for China (p. 294).

Hsu manages to use a minimum of jargon for an otherwise very jargonized subject. He provides many charts showing the flow of authority and jurisdiction among various...