The Dependency of Business and Finance on the Common Law in Hong Kong - a Paradigm Jurisdiction: Bapsybanoo Marchioness of Winchester Lecture

Hong Kong is a common law jurisdiction, both historically and at present.  This is mandated by the constitutional document which governs the Special Administrative Region, the Basic Law.  Hong Kong has often been described as one of the great laissez-faire, free economies but this is an incomplete description of how business and finance in fact operate because of the need to take into account the legal infrastructure.  In this context, the common law (and equity), while seeking to achieve those two objectives essential to commerce -certainty in the law and what can be termed commercial justice- has also tried to develop the law in a principled, but flexible, manner.  And this development of the law has arisen from real, not theoretical, experiences, particularly in the aftermath of financial problems or crises.  It can be persuasively argued that the fundamental principles of commercial law are largely judge created and that statute recognises this.   This talk explores these facets of business and finance from a Hong Kong perspective.

 

 

This talk by Geoffrey Ma CJ is the first in a series ("The common law and finance: perspectives from the bench") to be given by leading appellate judges from four common law jurisdictions (USA, Hong Kong, Australia, and the UK) who have contributed to legal regulation of commerce and finance in the wake of the 2008 banking and investment crisis. Major market disruptions such as 2008 can throw up a host of thorny problems for the courts, including frustration and renegotiation of long term contracts, control of fiduciary powers and discretions involving potential conflicts of interest, characterization of security interests and ordering of priorities, and resolution of major bank liquidity crises. We are fortunate to hear the insights of four prominent judges, each leading jurists, as to how common law courts have approached such issues.

 

The role of the judiciary in common law systems has also provoked a long-running academic debate as to the general relationship between forms of law on the one hand and development of business and financial practices on the other. The seminal 1998 paper “Law and Finance”, published by La Porta, Lopez-de-Silanes, Shleifer, and Vishny in the Journal of Political Economy 106 (6): 1113, used empirical data to suggest that common law systems were especially hospitable to financial growth through pragmatic development of improved investor protection over time, compared to more structured civilian systems working under codes. The relative performance of financial systems in countries with civilian and common law origins since 2008 has placed the "Law and Finance" hypothesis under strain. Now, twenty years after the launch of the "Law and Finance" debate, the opportunity to have leading judges reflect on their work in the arena of business and finance is especially to be welcomed.

 

These lectures are generously sponsored by the Bapsybanoo Marchioness of Winchester Trust, the Travers Smith Fund, and the Commercial Law Centre, Harris Manchester College, Oxford.

 

 

This lecture is open to the public. To register your attendance, email clc@hmc.ox.ac.uk