International corporations working on deals in Asia, or entering into joint ventures with Chinese and other Asian counterparties, are considering excluding Hong Kong from governing law and arbitration clauses in legal contracts, the Financial Times has reported.
In June last year, Beijing imposed a sweeping national security law on the former British colony after months of pro-democracy protests. The law punishes anything China considers subversion, secession, terrorism or collusion with foreign forces with up to life in prison. Since then, Hong Kong's legal system and judiciary have come under immense pressure, leading companies to worry about whether they will be treated fairly, the article stated.
However, the Financial Times added that lawyers are still advising clients to stick with the territory, although in the case of infrastructure contracts that could last several decades, companies need to think where the city will be at that time.
In response, Teresa Cheng SC, Secretary for Justice for the Hong Kong SAR, issued a statement that said the article "unfortunately illustrates an incomplete picture of Hong Kong."
"We continuously strive to improve and meet market demands to ensure Hong Kong remains one of the world’s leading international legal hubs for deal-making and dispute resolution services," the statement said.
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