China - Hong Kong - Macau - Opportunities For The Legal Industry In China’s Greater Bay Area.
Legal News & Analysis - Asia Pacific - China - Hong Kong - Macau - Regulatory & Compliance
12 September, 2019
The Guangdong–Hong Kong–Macau Greater Bay Area is a key national strategy of China, and was initially proposed in 2008. It incorporates nine cities in Guangdong Province: Dongguan, Foshan, Guangzhou, Huizhou, Jiangmen, Shenzhen, Zhaoqing, Zhongshan and Zhuhai; and two special administrative regions, Hong Kong and Macau.
On 1 July 2017, the National Development and Reform Commission and the governments of Guangdong, Hong Kong and Macau signed the Framework Agreement on Deepening Guangdong–Hong Kong–Macau Cooperation in the Development of the Greater Bay Area (the ‘Framework Agreement’). It sets out the goals and principles of cooperation in the Greater Bay Area, which are mainly on transportation, economy and technologic development in the Greater Bay Area. The Greater Bay Area undoubtedly fosters regional advantages because its establishment offers abundant business opportunities, but also poses some challenges. The task of building the Greater Bay Area involves connecting physically and economically the nine cities, and coordinating relevant laws and policies.
The first and the main challenge is the coordination of the legal system in the Greater Bay Area, which brings together the three legal systems and sets of tax rates and controls over people, goods and capital that exist under the principle of ‘one country, two systems’. Macau law is based on the Portuguese law system, which originates from Roman law and is based on written legislation, and differs fundamentally from the Hong Kong jurisdiction. Hong Kong law is a combination of English common law and local legislation codified in the laws of the special administrative region. The Chinese legal system is officially referred to as a ‘socialist legal system with Chinese characteristics’ and is based mainly on the civil law model.
The need for cooperation within the legal industry ultimately increases with the growing interaction and conflict between the Chinese cities and two special administrative regions. The business growth in the three regions may also demand legal services of a higher quality. Although this is a challenge, it is also a great opportunity for the legal profession and for the development of legal systems in the Greater Bay Area. There is expected to be an increase in the collaboration between law firms, and it would be worthwhile for joint venture law firms to be established with legal professionals from mainland China, Hong Kong and Macau. A joint venture law firm would boost the legal cooperation between the jurisdictions and unite legal professionals, who could work collaboratively in resolving disputes. This view is outlined in the Outline Development Plan for the Guangdong–Hong Kong–Macau Greater Bay Area promulgated by the central government on 18 February 2019. The plan also mentions expanding ‘pilot areas for Guangdong, Hong Kong and Macau law firms to operate in the form of partnership associations’ as a method of enhancing cooperation in legal matters.
The challenges can be overcome by establishing policies for the exchange of legal professionals, recognition of legal qualifications and the exchange of judicial personnel. The exchange of legal professionals and the recognition of qualifications may necessarily facilitate cooperation in seeking solutions to conflict. However, it needs a careful study since the recognition must also guarantee the qualification and scope of practice. Moreover, although the Outline Development Plan only points out the need to ‘strengthen judicial cooperation and exchanges between Hong Kong and Shenzhen’, these ‘judicial cooperation and exchanges’ should also be sought in the nine cities because most difficulties in interregional conflicts of law arise from the lack of judicial connection and communication, which the cities also experience.
An agreement that regulates and coordinates the three jurisdictions is also fundamental. A similar challenge was met while integrating European countries at the start of the European Union. Its present legal system is a good example for legislators and governors in China, Hong Kong and Macau. Nonetheless, it is clear that the EU legal system has evolved and it is both a long-term goal and a difficult task.
Presently, it seems difficult to build a legal system in the Greater Bay Area in the image of the EU because there is no solid foundation for cooperation between the regions.
Therefore, an interregional agreement to resolve the conflicts of law and jurisdiction should be ratified to start building a legal system in the Greater Bay Area.
Furthermore, signed agreements between the regions are in place, but none are signed by all three.
These include the Arrangement Concerning Mutual Enforcement of Arbitral Awards Between the Mainland and the Hong Kong Special Administrative Region (1997), the Arrangement for Mutual Service of Judicial Documents in Civil and Commercial Proceedings between the Mainland and Hong Kong Courts (1998), the Arrangement for Mutual Service of Judicial Documents in Civil and Commercial Proceedings between the Mainland and Macau Courts (2001) and the Arrangement between the Mainland China and the Macau Special Administrative Region on the Mutual Recognition and Enforcement of Civil and Commercial Judgments (2001). Agreements signed by all the jurisdictions are therefore necessary.
In conclusion, while the Greater Bay Area inevitably presents challenges, it is also a great opportunity for legal professionals to become part of interregional legal matters and to work with lawyers from different cities.
This update was first published in the International Bar Association Newsletter, and is reproduced by kind permission of the International Bar Association, London, UK. © International Bar Association.
Pedro Cortés, Partner, Rato, Ling, Lei & Cortes - Advogados