In the Wake of Hong Kong's Mass Protests, Global Lawyers are Watching
Are the escalating tensions between Hong Kong's citizens and the central Chinese government a sign of instability that could jeopardize the city's position as a global financial hub?
June 19, 2019 at 07:49 PM
7 minute read
Hong Kong is known for its social stability and rule of law. The prosperity of Asia's financial capital during the past few decades has attracted multinationals companies, financial institutions and law firms. But will the escalating tensions between local citizens and the central Chinese government upend it all?
The hope is certainly not. But a controversial new law triggered three mass protests in eight days – protests in which nearly a quarter of the city's 7.4 million people took to the streets. And that has rattled the global business community in Hong Kong, including Big Law.
"Questions definitely came up when I talked to other U.S. firm partners on whether it's viable for us to continue to be in Hong Kong longer term – if Hong Kong is too politicised or too risky," said one U.S. firm partner in charge of his firm's Hong Kong office, who like the other partners did not want to be identified because of the sensitivity of the topic.
The concern about risk stems from a proposed bill to amend Hong Kong's current law to allow fugitive extraditions to mainland China. Since introduced earlier this year, the proposal has been vehemently opposed by the city's pro-democracy political parties, which point out the lack of judicial independence on the mainland. The Hong Kong government's insistence on pushing the bill through the legislative process, despite fierce public opposition from enraged local citizens.
Public dissent is not new in Hong Kong – a city in which citizens regularly hold protests to voice all kinds of grievances. Much of the criticism has been directed against the Chinese government following Britain's 1997 handover of Hong Kong to China. Meanwhile, Hong Kong has become a gateway for companies doing business on the Chinese mainland, especially following the handover and the end of the Asian financial crisis that struck the region's economies in 1997.
Since then, foreign banks and law firms have flocked to the city, as Chinese companies rushed to list on Hong Kong's stock exchange.
Hong Kong's political gripes with China generally have had little bearing on the business community, including large law firms, which have frequent interactions with Chinese clients, intermediaries and even government regulators. The dichotomy has managed to continue in part because bankers and lawyers have traditionally avoided directly offending Beijing.
In addition, foreign banks and law firms may be stationed in Hong Kong, but they focus on cross-border transactions and rarely intersect with local life. And the professionals, as they are known, are part of an elite class in a city that suffers from severe wealth and social mobility inequality. They are often beneficiaries of the establishment and are removed from local citizens' political grievances.
But potential changes in the extradition law can lead to consequences that are no longer contained within the local political sphere.
"Most of us are not politically active in Hong Kong – we are not here to challenge the Chinese government on human rights and free-speech issues," said the U.S. firm Hong Kong partner. "But the extradition issue has leapt from politics to be something that affects business."
The proposed changes could allow, on a case-by-case basis, Hong Kong to surrender alleged criminals to China. Technically, political offences are non-extraditable, but the law could potentially have jurisdiction over foreigners in Hong Kong – even those passing through Hong Kong's airport.
That has made lawyers nervous about their clients' security and even about losing business.
"If lawyers are advising an individual or a company that's under some kind of investigation in China, historically it has been safe for people to come to Hong Kong," said the U.S. firm partner. "But with the extradition bill, people no longer feel comfortable doing that."
"This really struck a chord with us," he said.
Still, firms have mostly kept silent in public, as Law.com's The Asian Lawyer reported last week. Some are concerned about the security and compliance of their offices in mainland China. Officials there are keeping a close eye on what firms say to the press, firms said.
But in private, lawyers are expressing support. Some even joined the rally and more shared encouragement on social media. Another U.S. firm partner who did not wish to be identified posted an image of 加油 – a Chinese phrase that roughly translates as "Go!" It was intended, he said, as encouragement of the protesters and an expression of support for the fundamental rule of law in Hong Kong, which, "is directly correlated to business confidence in Hong Kong", he said.
Lawyers have been struck by the turnout at the protests.
The public's anger erupted on June 9, when one million people demonstrated against the bill. A second protest followed three days later on June 12, when protesters – a majority of them students and young people – clashed with the armed police force. Two days after that, the government caved and announced that the extradition bill would be suspended. Nevertheless, the following day, June 16, protesters staged a third demonstration, which had close to two million people, according to the demonstration's organiser, the Civil Human Rights Front.
"It's remarkable to see the government was forced to back down and make a U-turn on something like this," said one of the U.S. firm partners.
Nearly five years ago, Hong Kong experienced another act of civil disobedience when pro-democracy demonstrators demanded fully democratic elections for the city's Chief Executive, in a move to counter China's increased influence on the electoral process. That demonstration lasted 79 days and turned violent. It also renewed people's memories of Hong Kong's tradition of public dissent.
"This is a wake-up call again," another global firm partner who did not want to be named said of last week's protest on June 12, when the police deployed tear gas and pepper spray hoses and shot rubber bullets at protesters, as they tried to disperse the crowd blocking the government compound.
But the partner, who has lived in Hong Kong for more than two decades, said this time it feels different. There is a genuine concern about stability, given how violent the conflict turned and how quickly it escalated, he said.
The unease extends to worries about Hong Kong's long-term stability. "There's the increasing sense of Beijing's heavier hand in what makes Hong Kong special," the partner said.
At the end of the day, however, most global lawyers in Hong Kong continue to rely on Chinese businesses. Lawyers and bankers are not about to lose Chinese clients over a hot-button political issue. Many see the protests as an educational moment – a good civics lesson for their children. But back at work, it's once again business as usual.
Following the June 12 protest, Hong Kong Chief Executive Carrie Lam finally decided to suspend the bill indefinitely. Shy of a full withdrawal, the bill can technically be reintroduced by the government. But that is not likely to happen, given that vocal opposition was so much stronger than the government had anticipated and is what ultimately forced it to bend to the public's will. If it does not resurrect the bill before the Legislative Council recesses in July 2020, the proposed legislation will automatically lapse.
Lawyers, meanwhile, are not ready to desert Hong Kong. It's unlikely the recent unrest will drastically change their firms' business plan for Hong Kong. A few lawyers said they are pressing ahead with office expansion plans. However, now they say they may pay more attention to local politics and what frustrates Hong Kong's citizens.
"We are definitely watching closely," one U.S. firm partner said.
|Related stories:
As Thousands Condemn Hong Kong Extradition Bill, Global Law Firms Remain Silent
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