Clifford Chance

Dealing with foreign and the PRC states in Hong Kong

2 October 2011

Prior to the 1997 handover of Hong Kong, originating proceedings / suit could be maintained in Hong Kong in respect of a foreign or the Chinese state's commercial (as opposed to sovereign) activities, and enforcement could be sought against a foreign or the Chinese state's commercial (as opposed to sovereign) assets. This is known as "restrictive immunity".

Two recent decisions have confirmed that since the handover, the Hong Kong courts do not have jurisdiction to hear proceedings (including both suit and enforcement proceedings) against a foreign or the Chinese state ( i.e. PRC), unless that state waives its right to immunity. This is known as "absolute immunity".

These decisions give rise to some important issues which must be considered when dealing with a foreign or the Chinese state, and associated entities, such as State Owned Entities and Sovereign Wealth Funds. Different law (legislation) deals with the circumstances in which claims may be advanced against the Hong Kong Government.

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